Posts Tagged ‘International Monetary Fund’

IMF chief warns about trade war — Could mean a drop in growth, a drop in trade — “And it will be fearsome.”

March 7, 2018


© AFP/File | International Monetary Fund (IMF) Managing Director Christine Lagarde warned Wednesday a trade war will have a fearsome impact on global growth

PARIS (AFP) – The head of the International Monetary Fund warned Wednesday that a trade war US President Donald Trump apparently intends to provoke with tariffs on steel and aluminium would snuff out global growth.”If international trade is called into question by these types of measures, it will be a transmission channel for a drop in growth, a drop in trade and it will be fearsome,” Christine Lagarde said on RTL radio.

“In a trade war that will be fed by reciprocal increases of customs tariffs, no one wins,” she added.

Trump boasted last week on Twitter that trade wars are “easy to win” after his initial announcement of 10 percent tariffs on imports of aluminium and a 25 percent levy on steel brought into the United States provoked a global outcry.

US allies have threatened to retaliate by slapping tariffs on US goods entering their markets. The EU is expected to detail its retaliatory measures on Wednesday.

“We are anxious that these are not triggered, we are urging the sides to reach agreements, hold negotiations, consultations,” said Lagarde.

The IMF chief said that to a certain extent she understood the US president’s frustration with the global trade system.

Trump “has good reasons to protest against the current situation. There are countries that don’t always respect WTO agreements, which have technology transfer requirements, one thinks naturally of China, but China isn’t the only country to have such practices,” said Lagarde.

The Trump administration has made the World Trade Organization (WTO) a preferred target of its “America First” policy, threatening to pull the US out of the trade body it says is hampering its ability to compete.


Global watchdog to put Pakistan back on terrorist financing watchlist: sources

February 23, 2018


ISLAMABAD (Reuters) – A global money-laundering watchdog has decided to place Pakistan back on its terrorist financing watchlist, a government official and a diplomat said on Friday, in a likely blow to Pakistan’s economy and its strained relations with the United States.

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A masked protester sits next to a flag of Pakistan during an anti-Indian protest in Srinagar, November 25, 2016. REUTERS/Danish Ismail

The move is part of a broader U.S. strategy to pressure Pakistan to cut alleged links to Islamist militants unleashing chaos in neighboring Afghanistan and backing attacks in India.

It comes days after reports that Pakistan had been given a three-month reprieve before being placed on the list, which could hamper banking and hurt foreign investment.

The United States has spent the past week lobbying member countries of the Financial Action Task Force (FATF) to place Pakistan on a so-called grey list of nations that are not doing enough to combat terrorism financing.

Pakistan had launched last-minute efforts to avoid being placed on the list, such as taking over charities linked to a powerful Islamist figure.

But the campaign proved insufficient and the group decided late on Thursday that Pakistan would be put back on the watchlist, a senior Pakistani official and a diplomat with knowledge of the latest FATF discussions told Reuters.

“The decision was taken yesterday. The chair (of FATF) is expected to make a statement some time this afternoon in Paris,” the diplomat said.

Both officials spoke on condition of anonymity.

Pakistan’s foreign ministry spokesman declined to confirm or deny the news at a regular news briefing on Friday, saying the FATF would make an announcement on its website.

“Let the things come out, and then we can comment on the U.S.-Pakistan relationship,” spokesman Mohammad Faisal said.

Pakistan was on the list for three years until 2015.


Earlier in the week China, Turkey, and the Gulf Cooperation Council (GCC) were opposing the U.S.-led move against Pakistan but by late on Thursday, both China and the GCC dropped their opposition, the diplomatic source said.

He added that the financial consequences would not kick in until June, which, in theory, could allow Pakistan time to fix financing issues.

“But the odds of that, particularly in an election year, seem slim,” he added.

Pakistani officials and analysts fear being on the FATF list could endanger Pakistan’s handful of remaining banking links to the outside world, causing real financial pain to the economy just as a general election looms.

Under FATF rules one country’s opposition is not enough to prevent a motion from being successful. Britain, France and Germany backed the U.S. move.

Pakistan has sought to head off its inclusion on the list by amending its anti-terrorism laws and by taking over organizations controlled by Hafiz Saeed, a Pakistan-based Islamist accused by the United States and India of being behind 2008 militant attacks on the Indian city of Mumbai in which 166 people were killed.

On Tuesday, Foreign Minister Khawaja Asif tweeted that Pakistan had received a three-month reprieve, adding that it was “grateful to friends who helped”.

U.S. President Donald Trump last month ordered big cuts in security aid to Pakistan over what the United States sees as its failure to crack down on militants.

Pakistan rejects accusations that it sponsors Taliban militants fighting U.S. forces in neighboring Afghanistan and says it is doing all it can to combat militancy.

Pakistan avoids spot on global terrorism-financing watch list

February 21, 2018

Pakistan’s Foreign Minister Khawaja Muhammad Asif. (Vasily Maximov/AFP)
ISLAMABAD: Pakistan will not be placed on a global terrorism-financing watch list, foreign minister Khawaja Muhammad Asif revealed in a tweet.
During a meeting in Paris, money-laundering watchdog the Financial Action Task Force (FATF) failed to reach agreement on a motion co-sponsored by the United States
“Our efforts paid, no consensus for nominating Pakistan (for the grey list),” Asif posted on Twitter.
However, the decision might only be temporary. He added that the FATF proposed a three month pause, “asking APG (Asia/Pacific Group on Money Laundering) for another report to be considered in June.”
The APG is an inter-governmental organization, consisting of 41 member jurisdictions including Pakistan, focused on ensuring that its members effectively implement the international standards against money laundering, terrorist financing and proliferation financing related to weapons of mass destruction.
Asif also thanked the countries that had supported Pakistan. “Grateful to friends who helped,” he tweeted.
He is currently in Moscow at the invitation of his Russian counterpart, Sergey Lavrov, and the pair have discussed Islamabad’s concerns about the FATF motion, in an attempt to secure Russian support in opposing it.
The draft resolution to place Pakistan on the FATF list was led by the US, with the support of the UK, France and Germany. US-Pakistani relations hit a new low last year when Washington, unveiled its new strategy for Afghanistan, and accused Islamabad of harboring and supporting terrorists.
The day before Asif’s tweet, interior minister Ahsan Iqbal, speaking in Pakistan’s National Assembly, described the FATF motion as “a tactic by the United States to pressure Pakistan.”
He added: “If Pakistan is placed on the watch-list, this will affect our budget and subsequently our military operations against extremists and militants.”
Last year, FATF’s International Cooperation Review Group resolved to scrutinize Pakistan’s perceived support of proscribed groups operating on its soil, and requested a report on the country’s efforts to combat the financing of terrorism.
Pakistan sent a delegation to Paris to defend the country in the face of the motion. It was led by Syed Mansoor Shah, director-general of the financial monitoring unit of State Bank of Pakistan, and included representatives from the Foreign and Interior ministries.
Dr. Miftah Ismail, adviser to the prime minister on finance, also joined the delegation in Paris on February 20. The previous week, he visited Germany, the Netherlands and Belgium in an attempt to win support in opposing the motion.
FATF is an intergovernmental body that was established in July 1989 during a Group of Seven (G7) summit in Paris. Its objectives are to set standards and promote the effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.
It currently comprises 35 members and two regional organizations, representing most major financial centers around the globe, along with observer countries, organizations and associate members.
Pakistan was on the FATF watch list from 2012 until 2015. It is desperate to avoid the financial restrictions that a return to the list would bring, as it tries to keep its economy growing with help of international financial institutions such as the International Monetary Fund, World Bank and Asian Development Bank.


Pakistan Hopes Not to Be Placed on Terrorist Financing Watch List

February 20, 2018


FILE - A photo shows a Facebook site that features one of India’s most wanted, Hafiz Saeed, the founder of Lashkar-e-Taiba, a banned organization and a U.S. declared terrorist group, in Islamabad, Pakistan, July 7, 2017.

FILE – A photo shows a Facebook site that features one of India’s most wanted, Hafiz Saeed, the founder of Lashkar-e-Taiba, a banned organization and a U.S. declared terrorist group, in Islamabad, Pakistan, July 7, 2017.

The United States and its European allies are trying to put Pakistan on a global terrorist-financing watch list for failing to comply with anti-terrorist financing and anti-money laundering regulations.

They are making their case to the Financial Action Task Force (FATF), a global body that combats terrorist financing and money laundering, at a meeting that concludes later this month in Paris.

“I hope that the international community does not take any actions that prevent our efforts to fight against terrorism,” Ahsan Iqbal, Pakistan’s interior minister, told the media Monday.

A published report says Iqbal called Washington’s efforts an insult to his country’s sacrifices in the war on terror.

Pakistan was on the list from 2012 to 2015. With new signs that its economy is entering choppy waters, the return of the designation could further deter foreign investment and hurt Pakistan’s access to international financial markets.

In an attempt to demonstrate compliance with international anti-terrorist financing regulation, Pakistan amended its anti-terrorism law last week. The change authorizes the government to blacklist charities linked to Islamist leader Hafiz Saeed. Saeed has been wanted by the United States since 2012 for planning the 2008 Mumbai terrorist attacks.

The list includes Saeed’s Jamaat-ud-Dawa (JuD) and its subsidiary, the Falah-e-Insaniat Foundation (FIF), which according to experts, serve as the front organizations for Lashkar-e-Taiba, a U.S and European Union-designated terrorist group that is accused of carrying out attacks in India.

FILE - A supporter of Islamic charity organization Jamaat-ud-Dawa (JuD) carries a sign during a protest demonstration in Karachi.
FILE – A supporter of Islamic charity organization Jamaat-ud-Dawa (JuD) carries a sign during a protest demonstration in Karachi.

The FATF meetings in Paris will involve more than 700 delegates from the 203 jurisdictions of the Global Network, including the U.N., the International Monetary Fund and the World Bank.

The U.S., France, the U.K. and Germany are expected to introduce the motion to FATF and suggest placing Pakistan on a global terrorist financing watch list.

Expert opinion

Some analysts in Washington believe that once Pakistan is placed on the so-called gray list, it would be difficult to be taken off.

“This sanction would eliminate the opportunities that could be used to solve other problems,” said Stephen Tankel, assistant professor in the School of International Service at American University.

Economists are concerned that placing Pakistan on the gray list would not only close the doors of financial aid to the country, but would prevent it from exporting its goods.

Mike Casey, a partner at the Kirkland & Ellis law firm in London, told Reuters that the decision would heighten Pakistan’s risk profile, and some financial institutions would be wary of transacting with Pakistani banks and counterparties.

“Others might elect to avoid Pakistan altogether, viewing the legal risks associated with doing business there to outweigh any economic benefits,” he said.

But Daniel Markey, a South Asia expert at the School of Advanced International Studies at John Hopkins University, told The Associated Press that the downgrade would be primarily symbolic, demonstrating the Trump administration’s intent to ratchet up the pressure.

“It suggests that more serious moves could be coming,” Markey said, noting the U.S. could exercise similar pressure if Pakistan seeks a bailout from the IMF.

Washington suspended aid worth $2 billion to Pakistan last year, and is pressuring Islamabad to cut its alleged ties to Islamist militants waging war in Afghanistan.

Pakistan denies any links with militants.

VOA Deewa contributed to this report.

Frightening market tremor is a first warning of trouble in 2019, Ambrose Evans-Pritchard says — “The Trump Crash”

February 12, 2018

man in front of screen

The Trump Crash is probably just a teaser, but it shows just how sensitive the world is to a slight rise in borrowing costs

By Ambrose Evans-Pritchard

The key lines of defence have held on Wall Street. The S&P 500 index of equities bounced off its 200-day moving average at the end of last week’s brutal sell-off, triggering a surge of buying by well-armed funds waiting for the technical signal.

Relief comes in the nick of time. The 10.2pc crash was starting to infect credit, the mechanism that can so easily cause what looks at first like a ‘healthy correction’ to metastasize into an economic downturn.  Borrowing costs on BBB-rated corporate debt in the US have surged by 57 basis points to a 14-month high of 6.26pc since late January.

Credit default swaps measuring bankruptcy risk for junk bonds spiked on Friday to 356 after having weathered the first phase of the rout relatively untouched. This was becoming ugly for stretched debtors – potentially 20pc of the US corporate universe, says the International Monetary Fund – with California…

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“Hunger is killing people.” — Venezuela — Mobs attack trucks to get food

January 30, 2018

IMF chief Christine Lagarde finds common cause with Donald Trump

January 26, 2018

IMF chief Christine Legarde found common ground with US president Donald Trump on encouraging fair trade and protecting intellectual property rights. (AP)

LONDON: International Monetary Fund (IMF) Managing Director Christine Lagarde found at least some common cause with US President Donald Trump on Friday in supporting the global fight against intellectual property (IP) theft.

Speaking on a panel at the World Economic Forum in Davos, Lagarde echoed a similar sentiment delivered by Trump earlier in the day, stating that he would not “tolerate” IP theft.
Lagarde also stressed that it was important to tackle “unfair” trade practices.
“We need to have more, better trade and fair trade, but for this we need international cooperation,” she said. “We need a reset, we need to look at IP rights, but it needs to be looked at in a cooperative way. The World Trade Organization is a forum where this should happen.”
The IMF expects global economic growth of about 3.9 percent this year and next year. “We are in a sweet spot and we should celebrate,” said Lagarde.
She said this was the result of good policies, but there were risks, including excessive inequalities and lack of international cooperation.
The IMF chief stressed that a lack of international cooperation could lead to “significant” geopolitical risks. She added that “lagging productivity” could be boosted with more investment into R&D to facilitate innovation.
“We need more trade not less,” she said. “And the fight against corruption is vital to give more hope and encourage our economies.”
Speaking on the same panel, Mark Carney, governor of the Bank of England, told the WEF audience that more investment relative to savings was leading to monetary “normalization.”“For central banks, there is a regime shift toward normalization,” he said.
Carney added: “UK banks have five times more capital than before the 2008 crisis and the Bank of England is confident it can withstand the shock of the hardest of hard Brexits.”

Jordan ends bread subsidy, doubling some prices, to help state finances

January 26, 2018

Image result for King Abdullah II of Jordan, 2018., photos

King Abdullah II of Jordan arrives on stage during the annual meeting of the World Economic Forum in Davos, Switzerland, Thursday, Jan. 25, 2018

AMMAN (Reuters) – Jordan said a decision to end subsidies on staple pitta bread that will lift its prices by between 60 and 100 percent will take effect on Saturday, the first such step in over two decades to ease the country’s budget woes.

The price of a kilo of white pitta bread was raised 60 percent to 0.40 dinars from 0.25 dinars and prices of large pita bread were nearly doubled. Other types of bread that most middle class Jordanians consume are not affected.

The government has put in place a mechanism to offset the impact on the poor by cash transfers.

The move, which takes effect after midnight, is the first major rise since 1996. A move to raise prices then sparked civil unrest when the government was forced to push for it to comply with International Monetary Fund requirements for extending new credit.

The bread move comes 10 days after Jordan’s cabinet announced a major package of IMF-guided tax hikes it says are crucial to gradually lower record public debt needed to get the economy hit by regional conflict growing again.

Image result for Jordan, bread, protests, photos

Toying with the bread subsidy is never popular

Although lifting bread subsidies were not asked by the IMF this time, the Fund has long said Jordan’s ability to maintain a costly subsidy system was increasingly untenable in the absence of large foreign capital inflows or infusions of foreign aid.

Prime Minister Hani al-Mulki said the delay in implementing the much needed reforms to generate extra revenues would increase the already high financing needs and threatens to hit the country’s finances.

$1=0.7090 dinars

Reporting by Suleiman Al-Khalidi; Editing by Matthew Mpoke Bigg

Modi In Davos: “India is removing red tape and laying out the red carpet. Almost all areas of our economy [are] opened to foreign direct investment.”

January 24, 2018

India’s Prime Minister Narendra Modi 

India’s Narendra Modi swept into Davos with half his top cabinet and an army of retainers, basking in glory as leader of the world’s rising “super-tiger” and the defender of global free trade.

The self-styled “Thatcher” of India vowed to tear down barriers and build a $5 trillion economy by 2025, vaulting into third place far ahead of Japan , Germany.

The large claims had a ring of plausibility after the International Monetary Fund said hours earlier that India now has the fasted growing economy among major nations, forecasting growth of 7.4 per cent this year and 7.8 per cent next – ignoring warnings by critics that the country’s GDP data is no longer reliable.

“India is removing red tape and laying out the red carpet. Almost all areas of our economy have been opened to foreign direct investment,” he said, addressing the World Economic Forum in what was supposed be the highlight of this…

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Modi to deliver first keynote speech at World Economic Forum in Davos

January 23, 2018

 Image may contain: 5 people, people smiling

India’s Prime Minister Narendra Modi waves to his supporters as he arrives to address them .PHOTO: REUTERS

DAVOS, SWITZERLAND (AFP, BLOOMBERG) – After a gala opening set against spectacular snowfall, the World Economic Forum (WEF) starts in earnest on Tuesday (Jan 23) basking in robust global growth but facing warnings that the world’s have-nots are missing out more than ever.

Indian Prime Minister Narendra Modi is to deliver the first keynote speech of the WEF in Davos, where his key message will be that India is open for business and the economy can contribute to world growth as living standards improve at home, said Vijay Gokhale, New Delhi’s top diplomat for economic affairs.

Modi’s debut at the WEF comes a year after Xi Jinping became the first Chinese leader to address the conference, mounting a strong defense of globalisation amid US President Donald Trump’s trade threats.

Modi’s speech is scheduled for 11am in Davos (6pm Singapore time).

At the end of the forum, Trump is expected to deliver an address, a year after he took office on a populist platform.

The president’s trip to the Swiss ski resort had seemed in doubt due to a government shutdown triggered by congressional warfare last week. But a deal that took shape on Monday freed him to travel, the White House said.

Undermining rosy data on the world economy are warnings that elite fora such as Davos must start finding solutions for everyone else down the income ladder as the “one percent” amass untold riches a decade since a major financial crisis erupted.

“We certainly should feel encouraged, but we should not feel satisfied,” International Monetary Fund (IMF) chief Christine Lagarde said on Monday in presenting an upbeat update to the organisation’s forecasts for global growth.

“First of all, there are still too many people left out from the recovery and acceleration of growth,” she said.

Accounting group PwC underscored the IMF’s positive outlook with survey findings pointing to record confidence among company bosses worldwide.

The survey had good news for Trump, touting his party’s huge corporate tax cut as a boon for the US and foreign investors.

But in a separate report unveiled in Davos, Oxfam said the world’s richest one percent raked in 82 per cent of the wealth created last year while the poorest half of the population received none.

The British charity described a global economy in which the wealthy few amass ever-greater fortunes while hundreds of millions of people are “struggling to survive on poverty pay”.

“The billionaire boom is not a sign of a thriving economy but a symptom of a failing economic system,” Oxfam executive director Winnie Byanyima said.

And in a message to the Davos forum, Pope Francis warned that debates about technological progress and economic growth must not supplant concern for humanity at large.

“We cannot remain silent in the face of the suffering of millions of people whose dignity is wounded,” the pontiff’s message said.

Few countries display the abyss between rich and poor as much as India, where newly minted billionaires live in close proximity to street urchins. The gap endures despite rapid growth under Modi’s right-wing government.

The Hindu nationalist leader – accompanied by several ministers, a high-powered business delegation, and two yoga instructors – will advertise India’s appeal for investors as he vies to untangle decades-worth of red tape.

Bollywood superstar Shah Rukh Khan was one of three celebrities awarded on Monday night by the WEF for their humanitarian work, along with singer Elton John and actress Cate Blanchett.

That ceremony was followed by a ballet performance featuring music derived from Antonio Vivaldi’s “Four Seasons” – fitting on a night that saw the Alpine resort of Davos hit by its heaviest snowfall in two decades and avalanche warnings raised.

After Tuesday, the week will continue with appearances by some 70 other leaders including French President Emmanuel Macron, whose campaign for a “French Renaissance” kicked into overdrive Monday as his government welcomed 140 multinational business leaders en route to Davos.

Perhaps looking on enviously was British Prime Minister Theresa May, who faces the challenge in Davos of persuading many of the same bosses that Britain remains a safe haven for investment, despite its messy Brexit divorce from the European Union.