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IMF SEEKS $150BN FROM ITS GLOBAL MEMBERS

Posted by Gilmour Poincaree on January 15, 2009

13 January 2009

Foreign Staff – Sapa-DPA

PUBLISHED BY ‘BUSINESS DAY’ (South Africa)

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘BUSINESS DAY’ (South Africa)

Posted in BANKING SYSTEMS, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FINANCIAL SERVICES INDUSTRIES, IMF, INTERNATIONAL, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS | Leave a Comment »

BLAIR, HEAD OF WORLD BANK, IMF, WARN ISRAEL AGAINST RESTRICTIONS CASH FLOW TO GAZA

Posted by Gilmour Poincaree on December 16, 2008

3:25 AM EST, December 15, 2008

by Karin Laub – Associated Press Writer

PUBLISHED BY ‘NEWSDAY.COM’ (USA)

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘NEWSDAY.COM’ (USA)

Posted in ECONOMY, IMF, INTERNATIONAL, ISRAEL, PALESTINE, THE ISRAELI-PALESTINIAN STRUGGLE, WORLD BANK | Leave a Comment »

CENTRAL BANK PRESIDENT SURPRISED AT LOW NOVEMBER INFLATION DATA (Hungary)

Posted by Gilmour Poincaree on December 12, 2008

12 December 2008, Friday

MTI – THE HUNGARIAN NEWS AGENCY

PUBLISHED BY ‘THE HUNGARIAN NEWS AGENCY’

Budapest, December 11 (MTI) – Hungary’s central bank (NBH) and the markets were taken by surprise after the sharp drop in the November inflation rate, the bank’s president Andras Simor said on Thursday.

Annual consumer price inflation slowed to 4.2 percent in November from 5.1 percent in October, the Central Statistical Office (KSH) said on Thursday.

Analysts in the latest Reuters poll and those surveyed by the business daily Napi Gazdasag put November CPI at 4.8 percent while the average estimate of London-based emerging markets analysts polled by MTI-Econews was 4.58 percent.

Simor told a conference that the bank would nevertheless pursue a cautious interest rate policy and convince foreign investors that the bank is aware of the risks of cutting interest rates.

Simor added that were foreign investors to stay away from the Hungarian government securities market in 2009, funds from the IMF loan package would be available to finance Hungary’s external debt expiries.

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE HUNGARIAN NEWS AGENCY’

Posted in BANKING SYSTEMS, CENTRAL BANKS, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, HUNGARY, IMF, INFLATION, INTERNATIONAL, RECESSION, STOCK MARKETS, THE FLOW OF INVESTMENTS | Leave a Comment »

ANOTHER GROWTH FORECAST CUT FOR RP (Philippines)

Posted by Gilmour Poincaree on December 11, 2008

Friday, December 12, 2008 – Vol. XXII, No. 100

MANILA – PHILIPPINES

PUBLISHED BY ‘BUSINESS WORLD’ (Philippines)

The Asian Development Bank (ADB) has joined other multilateral institutions in downgrading growth forecasts for the region to take into account worsening global financial conditions.

In its Asia Economic Monitor for December, the Manila-based multilateral institution kept its 2008 forecast for the Philippines unchanged at 4.5%, but cut next year’s outlook to 3.5% from 4.7%.

The Washington-based World Bank has revised its Philippine projections to 4% from 5.9% for this year and 3% from 3-4% for 2009, while the International Monetary Fund (IMF) cut its 2008 and 2009 forecasts to 4.4% from 5.8% and 3.5% from 3.8%, respectively.

While the ADB’s forecast for 2008 remains within the government target of 4.1-4.8%, next year’s estimate falls below the official goal of 3.7-4.7%.

The ADB said growth in developing Asia could slow to 5.8% next year from a likely 6.9% this year. Growth in the Association of South East Asian Nations was forecast at 4.8% and 3.5% this year and the next.

“The external economic environment for developing Asia is likely to worsen as major industrial economies contract further, global financial conditions remain constricted, and world trade growth slows sharply,” the ADB said in a report.

While growth remains relatively robust, a sharper or prolonged global recession, persistent financial stress with volatile capital flows, further tightening of external and domestic funding conditions, and excessively volatile foreign exchange markets present downside risks, it added.

Policymakers, the ADB said, should institute reforms aimed at exploring other sources of growth and reduce an over-reliance on exports.

Monetary policy, it added, must remain flexible to allow for a growth stimulus when needed, especially now that the balance of risks is shifting to slower growth from rising inflation.

The Bangko Sentral ng Pilipinas (BSP) raised policy rates by a percentage point earlier this year as inflation peaked on rising commodity prices. But with the numbers having eased in the last three months, expectations of a rate cut are high.

The BSP’s last rate-setting meeting for the year will be held next week. — GSDLP

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PUBLISHED BY ‘BUSINESS WORLD’ (Philippines)

Posted in BANKING SYSTEMS, CENTRAL BANKS, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, IMF, INDUSTRIES, INFLATION, INTERNATIONAL, PHILIPPINES, RECESSION, THE FLOW OF INVESTMENTS | Leave a Comment »

AFRICOM CHINA AND CONGO RESOURCE WARS

Posted by Gilmour Poincaree on December 10, 2008

Tuesday, Dec 09, 2008

by F. William Engdahl – Online Journal

PUBLISHED BY ‘INFOWARS’

Just weeks after President George W. Bush signed the order creating a new US military command dedicated to Africa, AFRICOM, events on the mineral-rich continent have erupted which suggest a major agenda of the incoming Obama Presidency will be for the son of a black Kenyan to focus US resources, military and other, on dealing with the Republic of Congo, the oil-rich Gulf of Guinea, the oil-rich Darfur region of southern Sudan and increasingly the Somali ‘pirate threat’ to sea lanes in the Red Sea and Indian Ocean. The legitimate question is whether it is mere coincidence that Africa appears just at this time to become a new geopolitical ‘hot spot’ or whether it has a direct link to the formal creation of AFRICOM.

What is striking is the timing. No sooner had AFRICOM become operational than major new crises broke out in both the Indian Ocean-Gulf of Aden regarding spectacular incidents of alleged Somali piracy, as well as eruption of bloody new wars in Kivu Province in the Republic of Congo. The common thread connecting both is their importance, as with Darfur in southern Sudan, for China’s future strategic raw materials flow.

The latest fighting in the eastern part of the Congo (DRC) broke out in late August when Tutsi militiamen belonging to the Congrès National pour la Défense du Peuple (CNDP, National Congress for the Defense of the People) of General Laurent Nkunda forced loyalist troops of the Forces armées de la République démocratique du Congo (FARDC, Armed Forces of the Democratic Republic of Congo) to retreat from their positions near Lake Kivu, sending hundreds of thousands of displaced civilians fleeing in the process and prompting the French foreign minister, Dr. Bernard Kouchner, to warn of the imminent risk of ‘huge massacres.’

Nkunda, like his mentor, Rwanda’s Washington-backed dictator, Paul Kagame, is an ethnic Tutsi who alleges that he is protecting the minority Tutsi ethnic group against remnants of the Rwandan Hutu army that fled to Congo after the Rwandan genocide in 1994. MONUC UN peacekeepers reported no such atrocities against the minority Tutsi in the northeast, mineral rich Kivu region. Congolese sources report that attacks against Congolese of all ethnic groups are a daily occurrence in the region. Laurent Nkunda’s troops are responsible for most of these attacks, they claim.

Strange resignations

The stage for political chaos in Congo was further set in September when the Democratic Republic of Congo’s 83-year-old prime minister, Antoine Gizenga, resigned after two years. Then at end of October, with suspicious timing, the commander of the United Nations peacekeeping operation, the Mission de l’Organisation des Nations-Unies au Congo (MONUC, Mission of the United Nations Organization in the Congo), Spanish Lieutenant General Vicente Diaz de Villegas, resigned after fewer than two months on the job, citing, ‘lack of confidence’ in the leadership of DRC President Joseph Kabila. Kabila, the Congo’s first democratically elected president, has also been involved in negotiating a major $9 billion trade agreement between the DRC and China, something which Washington is clearly not happy about.

Nkunda is a long-standing henchman of Rwandan President, US-trained, Kagame. All signs point to a heavy, if covert, USA role in the latest Congo killings by Nkunda’s men. Nkunda himself is a former Congolese Army officer, teacher and Seventh Day Adventist pastor. But killing seems to be what he is best at.

Much of Nkunda’s well-equipped and relatively disciplined forces are from the bordering country of Rwanda and the rest have been recruited from the minority Tutsi population of the Congolese province of North Kivu. Supplies, finance and political support for this Congolese rebel army come from Rwanda. According to the American Spectator magazine, ‘President Paul Kagame of Rwanda has long been a supporter of Nkunda, who originally was an intelligence officer in the Rwanda leader’s overthrow of the Hutu despotic rule in his country.’

As the Congo News Agency reported on October 30, ‘Some have bought into the pretext of an endangered Tutsi minority in Congo. They never fail to mention that Laurent Nkunda is supposedly fighting to protect “his people.” They have failed to question his true motives which are to occupy the mineral-rich North-Kivu province, pillage its resources, and act as a proxy army in eastern Congo for the Tutsi-led Rwandan government in Kigali. Kagame wants a foothold in eastern Congo so his country can continue to benefit from the pillaging and exporting of minerals such as columbite-tantalite (coltan). Many experts on the region agree today that resources are the true reason why Laurent Nkunda continues to create chaos in the region with the help of Paul Kagame.’

The USA role and AFRICOM

Evidence which was presented in a French court in a ruling made public in 2006 claimed that Kagame was responsible for organizing the shooting down of the plane carrying Hutu President of Rwanda Juvénal Habyarimana, in April 1994, the event that set off the indiscriminate killing of hundreds of thousands of people, both Hutu and Tutsi.

The end result of the killings in which perhaps as many as a million Africans perished was that US and UK backed Paul Kagame — a ruthless military dictator trained at the US Army Command-General Staff College at Fort Leavenworth Kansas — was firmly in control as dictator of Rwanda. Since then he has covertly backed repeated military incursions by General Nkunda into the mineral-rich Kivu region on the pretext it was to defend a small Tutsi minority there. Kagame had repeatedly rejected attempts to repatriate those Tutsi refugees back to Rwanda, evidently fearing he might lose his pretext to occupy the mineral riches of Kivu.

Since at least 2001, according to reports from Congo sources, the US military has also had a base at Cyangugu in Rwanda, built of course by Dick Cheney’s old firm, Halliburton, conveniently enough near the border to Congo’s mineral-rich Kivu region.

The 1994 massacre of civilians between Tutsi and Hutu was, as Canadian researcher Michel Chossudovsky described it, ‘an undeclared war between France and America. By supporting the build up of Ugandan and Rwandan forces and by directly intervening in the Congolese civil war, Washington also bears a direct responsibility for the ethnic massacres committed in the Eastern Congo, including several hundred thousand people who died in refugee camps.’ He adds, ‘Major General Paul Kagame was an instrument of Washington. The loss of African lives did not matter. The civil war in Rwanda and the ethnic massacres were an integral part of US foreign policy, carefully staged in accordance with precise strategic and economic objectives.’

Now Kagame’s former intelligence officer, Nkunda, leads his well-equipped forces to take Goma in the eastern Congo as part of an apparent scheme to break the richest minerals region away from Kinshasha. With the US military beefing up its presence across Africa under AFRICOM since 2007, the stage was apparently set for the current resources grab by the US-backed Kagame and his former officer, Nkunda.

Today the target is China

If France was the covert target of US ‘surrogate warfare’ in 1994, today it is clearly China, which is the real threat to US control of Central Africa’s vast mineral riches. The Democratic Republic of Congo was renamed from the Republic of Zaire in 1997 when the forces of Laurent Désiré Kabila brought Mobutu’s 32-year reign to an end. Locals call the country Congo-Kinshasa.

The Kivu region of the Congo is the geological repository of some of the world’s greatest strategic minerals. The eastern border straddling Rwanda and Uganda, runs on the eastern edge of the Great African Rift Valley, believed by geologists to be one of the richest repositories of minerals on the face of the earth.

The Democratic Republic of the Congo contains more than half the world’s cobalt. It holds one-third of its diamonds, and, extremely significantly, fully three-quarters of the world resources of columbite-tantalite or “coltan” — a primary component of computer microchips and printed circuit boards, essential for mobile telephones, laptops and other modern electronic devices.

America Mineral Fields, Inc., a company heavily involved in promoting the 1996 accession to power of Laurent Kabila, was, at the time of its involvement in the Congo’s civil war, headquartered in Hope, Arkansas. Major stockholders included long-time associates of former President Clinton going back to his days as governor of Arkansas. Several months before the downfall of Zaire’s French-backed dictator, Mobutu, Laurent Desire Kabila based in Goma, Eastern Zaire, had renegotiated the mining contracts with several US and British mining companies including American Mineral Fields. Mobutu’s corrupt rule was brought to a bloody end with the help of the US-directed International Monetary Fund.

Washington was not entirely comfortable with Laurent Kabila, who was finally assassinated in 2001. In a study released in April 1997 barely a month before President Mobutu Sese Seko fled the country, the IMF had recommended “halting currency issue completely and abruptly” as part of an economic recovery programme. A few months later upon assuming power in Kinshasa, the new government of Laurent Kabila Desire was ordered by the IMF to freeze civil service wages with a view to “restoring macro-economic stability.” Eroded by hyperinflation, the average public sector wage had fallen to 30,000 new Zaires (NZ) a month, the equivalent of one US dollar.

According to Chossudovsky, the IMF’s demands were tantamount to maintaining the entire population in abysmal poverty. They precluded from the outset a meaningful post-war economic reconstruction, thereby contributing to fuelling the continuation of the Congolese civil war in which close to 2 million people have died.

Laurent Kabila was succeeded by his son, Joseph Kabila who went on to become the Congo’s first democratically elected President, and appears to have held a closer eye to the welfare of his countrymen than did his father.

Now, in comes the new US AFRICOM. Speaking to the International Peace Operations Association in Washington, D.C., on Oct. 27, General Kip Ward, commander of AFRICOM defined the command’s mission as ‘in concert with other US government agencies and international partners, [to conduct] sustained security engagements through military-to-military programs, military-sponsored activities, and other military operations as directed to promote a stable and secure African environment in support of US foreign policy.’

The ‘military operations as directed to promote a stable and secure African environment in support of US foreign policy,’ today, are clearly aimed squarely at blocking China’s growing economic presence in the region.

In fact, as various Washington sources state openly, AFRICOM was created to counter the growing presence of China in Africa, including the Democratic Republic of Congo, to secure long-term economic agreements for raw materials from Africa in exchange for Chinese aid and production sharing agreements and royalties. By informed accounts, the Chinese have been far shrewder. Instead of offering only savage IMF-dictated austerity and economic chaos, China is offering large credits, soft loans to build roads and schools in order to create good will.

Dr. J. Peter Pham, a leading Washington insider who is an advisor of the US State and Defense Departments, states openly that among the aims of the new AFRICOM is the objective of ‘protecting access to hydrocarbons and other strategic resources which Africa has in abundance . . . a task which includes ensuring against the vulnerability of those natural riches and ensuring that no other interested third parties, such as China, India, Japan, or Russia, obtain monopolies or preferential treatment.’

In testimony before the US Congress supporting creation of AFRICOM in 2007, Pham, who is closely associated with the neoconservative Foundation for Defense of Democracies, stated, ‘This natural wealth makes Africa an inviting target for the attentions of the People’s Republic of China, whose dynamic economy, averaging 9 percent growth per annum over the last two decades, has an almost insatiable thirst for oil as well as a need for other natural resources to sustain it. China is currently importing approximately 2.6 million barrels of crude per day, about half of its consumption; more than 765,000 of those barrels — roughly a third of its imports — come from African sources, especially Sudan, Angola, and Congo (Brazzaville). Is it any wonder, then, that . . . perhaps no other foreign region rivals Africa as the object of Beijing’s sustained strategic interest in recent years. Last year the Chinese regime published the first ever official white paper elaborating the basis of its policy toward Africa.

‘This year, ahead of his 12-day, eight-nation tour of Africa — the third such journey since he took office in 2003 — Chinese President Hu Jintao announced a three-year, $3 billion program in preferential loans and expanded aid for Africa. These funds come on top of the $3 billion in loans and $2 billion in export credits that Hu announced in October 2006 at the opening of the historic Beijing summit of the Forum on China-Africa Cooperation (FOCAC), which brought nearly 50 African heads of state and ministers to the Chinese capital.

‘Intentionally or not, many analysts expect that Africa — especially the states along its oil-rich western coastline — will increasingly becoming a theatre for strategic competition between the United States and its only real near-peer competitor on the global stage, China, as both countries seek to expand their influence and secure access to resources.’

Notably, in late October Nkunda’s well-armed troops surrounded Goma in North Kivu and demanded that Congo President Joseph Kabila negotiate with him. Among Nkunda’s demands was that Kabila cancel a $9 billion joint Congo-China venture in which China gets rights to the vast copper and cobalt resources of the region in exchange for providing $6 billion worth of road construction, two hydroelectric dams, hospitals, schools and railway links to southern Africa, to Katanga and to the Congo Atlantic port at Matadi. The other $3 billion is to be invested by China in development of new mining areas.

Curiously, US and most European media neglect to report that small detail. It seems AFRICOM is off to a strong start as the opposition to China in Africa. The litmus will be who President Obama selects as his Africa person and whether he tries to weaken Congo President Joseph Kabila in favor of backing Nkunda’s death squads, naturally in the name of ‘restoring democracy.’

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘INFOWARS’

Posted in BANKING SYSTEM - USA, BANKING SYSTEMS, BARACK HUSSEIN OBAMA -(DEC. 2008/JAN. 2009), CHINA, CIVIL WAR - CONGO, COMMODITIES MARKET, CONGO, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FOREIGN POLICIES - USA, IMF, INDUSTRIAL PRODUCTION - USA, INDUSTRIES - USA, INTERNATIONAL RELATIONS, MACROECONOMY, METALS, METALS INDUSTRY, MINING INDUSTRIES, PETROL, RECESSION, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE MEDIA (US AND FOREIGN), THE UNITED NATIONS, USA | 1 Comment »

NOW IS THE TIME FOR POLITICS – MORE GOVERNMENT IS THE SOLUTION, NOT THE PROBLEM, AND KEY TO SOLVING WORLD POVERTY (Brasil)

Posted by Gilmour Poincaree on December 9, 2008

DECEMBER 2008 – FEBRUARY 2009

by Luis Inácio Lula da Silva

PUBLISHED BY ‘NEWSWEEK’ (USA) – SPECIAL EDITION – ISSUES 2009

The world today is experiencing turbulence unlike anything we’ve seen in decades. The U.S. credit crisis has contaminated the international economy, and financial systems have been shaken to the core, undermining economic doctrines once treated as absolute truths.

As I told the UN. General Assembly in September, now is the time for politics, for governments to use public control and oversight to halt the economic anarchy. I welcome the actions that other countries have taken. But it will be some time before their initiatives kick in. That means more steps are needed in the meantime to safeguard the world’s most vulnerable: workers whose jobs and purchasing power are on the line, simple folk trying to save for the future, the poor who depend on the state.

The abuses and errors coming to light daily are all evidence that our existing system of international economic governance has broken down. To develop a better one, the world’s major developing countries should be called on to join the debate. We have plenty to contribute. Take Brazil. We are ready to do our part, and our economy is better prepared than most to confront the crisis. We have said no to macroeconomic adventurism. Inflation is under control and we are growing steadily. We have plenty of foreign reserves and owe nothing to the International Monetary Fund. This gives us the tools and the peace of mind to withstand the turbulence the crisis will bring.

Brazil is also better prepared to deal with the social and economic dislocation that may ensue. Consider: since I took office in 2003, more than 10 million Brazilians have joined the workforce. Some 20 million have risen out of absolute poverty. Our internal market is expanding, giving us an important economic cushion. Above all, we are redistributing income and reducing social inequality. These advances have nothing to do with luck or a favorable environment. They are the result of hard work by the Brazilian people and their government.

Weaving a broad social safety net is a central part of this endeavor. Our income-transfer program now distributes benefits to 11 million poor families nationwide, on the condition that mothers get prenatal care and parents keep their children in school and vaccinated. Our success shows that individual governments can and must play a vital role in reducing poverty and inequality. And our example in health care and education is already being made available to other countries in Latin America, Africa and Asia facing similar challenges.

That said, no state will escape this crisis on its own. Coordinated actions are needed. Yet they will succeed only if international decision making is redesigned in accordance with new realities; the institutions set up after World War II reflect a balance of power that’s long been superseded. This challenge actually goes far beyond the immediate financial storm. Other threats loom, such as hunger and poverty, the rising price and scarcity of food, the energy crisis and climate change. World commerce remains distorted, and the best means of addressing that—die Doha round of trade talks — could collapse.

Still, none of these obstacles is insurmountable. We all know the solutions, and we have the tools and the resources to succeed. Too often what we lack is political will. Many people today are comparing our current situation with the Great Depression. But we should take those parallels further and should summon the spirit of solidarity that helped create the New Deal, harnessing it to forge a new global pact to roll back poverty and extreme inequality. Contrary to what so many believe, globalization has only increased the economic and social responsibilities of governments. We must renew our commitment to strong multilateralism and we must make that multilateralism more democratic, in order to build agreements that reflect the legitimate interests of all nations. This means, among other things, enlarging the U.N. Security Council and revamping the IMF to provide effective financial support to countries in need.

The United States-by virtue of its size and its economic prowess—is and will continue to be a key player in the global search for common solutions. Washington has played such a decisive role since the end of World War II. Given the challenges and opportunities facing us today, we in the developing world hope that we can once again count on the American people to come to the defense of multilateralism, equality and justice. This is not the time for protectionism, but for progressive action born of generosity and solidarity that will forge collective answers to 21st-century challenges.

Luis Inácio Lula Da Silva is the President of Brazil.

PUBLISHED BY ‘NEWSWEEK’ (USA)

Posted in 'DOHA TALKS', A PRESIDÊNCIA, AFRICA, ASIA, BANKING SYSTEM - USA, BANKING SYSTEMS, BRASIL, CENTRAL BANKS, CIDADANIA, COMBATE À DESIGUALDADE E À EXCLUSÃO - BRASIL, COMMERCE, ECONOMIA - BRASIL, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, EXPANSÃO ECONÔMICA, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FLUXO DE CAPITAIS, FOREIGN POLICIES, FOREIGN POLICIES - USA, G20, HISTORY, HOUSING CRISIS - USA, IMF, INDÚSTRIA DA CONSTRUÇÃO CIVIL, INFRAESTRUTURA - BRASIL, INSTITUIÇÕES DE FOMENTO NACIONAL, INTERNATIONAL, INTERNATIONAL RELATIONS, LATIN AMERICA, LUIS INÁCIO LULA DA SILVA, MACROECONOMY, O MERCADO DE TRABALHO - BRASIL, O PODER EXECUTIVO FEDERAL, OS TRABALHADORES, POLÍTICA EXTERNA - BRASIL, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, RELAÇÕES DIPLOMÁTICAS - BRASIL, RELAÇÕES INTERNACIONAIS - BRASIL, SOUTH AMERICA, STOCK MARKETS, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE WORK MARKET, THE WORKERS, USA | Leave a Comment »

CLOSED-DOOR SESSIONS IN ISLAMABAD ON 16TH, 17TH – World experts to discuss 5-year plan to boost tax collection

Posted by Gilmour Poincaree on December 5, 2008

Friday, December 05, 2008

by Ikram Hoti

PUBLISHED BY ‘THE NEWS’ (Pakistan)

ISLAMABAD: International experts are converging on Islamabad to hold “closed-door” sessions on December 16-17 to devise a five-year plan of taxation in the post-IMF-agreement era to boost tax collection in Pakistan without burdening the poor majority who are already suffering history’s worst stagflation.

The sessions are to be aimed at dealing with Pakistan’s national taxation and introduce sub-national taxation for the first time. Details of this version for Pakistan will be chalked out at the sessions of experts. It is IMF condition to improve collection but Pakistan has remained hesitant and needed international help not only in a foreign exchange injection but also in expert assistance that could plan the rescue without causing much stir, inflation and poverty enhancement.

The World Bank and the DFID are the main sponsors of the Dec 16-17 workshop and the media would not be informed about the conduct of, and decisions, at the workshop but The News has been able to acquire some details.

In the first place, the format for the sessions is “closed door’ so that there can be uninhibited discussion of the “issue and concerns of the main stakeholders.”

International experts will include Professor Martinez-Vasquez, Michael Keen, Christopher Waerzeggars and Carlos Silvani, along with the staff of a number of international agencies including the IMF, WB, WHO and DFID.

A “blueprint” for taxation and reforms will be prepared with a clear plan to increase the collection of taxes from 10 per cent (one of the lowest in the world) of GDP to 14-15 per cent.

A new mechanism would be proposed for this purpose to tax areas where the subsistence economy of the poor does not undergo additional cost. This would be simultaneous with another mechanism that would ensure plugging all slippages by installing an online connectivity between the Customs, Income Tax and Sales Tax Departments.

This connectivity would ensure information input to the three sides from taxable business generated in the country and through imports and exports. Efforts already made administratively and technically in this connection would be examined and the Pakistani bosses would be asked to explain why feet were dragged on this previously IMF-sponsored (1995) mechanism and it could not made operational.

They will also be asked to explain as to why the gap between the businesses generated and the taxes collected on them remained unattended and nothing significant was ever done conclusively to asses the gap and to minimise it. That would be a sensitive issue, as it would relate not only to the corruption and dereliction on the part of the tax machinery but also to politicians, the bureaucratic channels in the civil and military apparatus.

A key element in this regard would be the establishment of a tax system that “does not penalise investment and production incentives or discriminate against the poor, and, at the same time, provides adequate revenues in an orderly manner yet under a tight timeframe of 4-5 years.”

It is projected to achieve economic stability while keeping in view the revenue-incentive objectives. This tax reform strategy would need to be closely dovetailed with the administration reforms. A complete reassessment of the Pakistani tax system has already been conducted for this purpose.

The proposals for reform would be offered by Michael Keen of the IMF (Reforming the Income Tax and GST); Kasper Richter of the World Bank.

(Summary of the Bank’s Project Proposals); Ms Ayda and Mr Petit of the WHO (Excise System); Professor Martinez-Vasquez of Georgia State (Tax Policy Options); Carlos Silvani, head of the WB Review Mission (FBR Reforms Review and the Way Forward); Professors Roy Bahl and Sally Wallace (Sub-national Taxation).

“The purpose of the brainstorming sessions is to achieve the objective of a significant enhancement in Pakistan’s domestic resource mobilization as part of its stabilisation and reform strategy.”

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE NEWS’ (Pakistan)

Posted in BANKING SYSTEMS, CENTRAL BANKS, COMMERCE, DEPRESSION, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, IMF, INDUSTRIAL PRODUCTION, INDUSTRIES, INFLATION, INTERNATIONAL, PAKISTAN, REGULATIONS AND BUSINESS TRANSPARENCY, STAGFLATION, STOCK MARKETS, TAX EVADING, THE FLOW OF INVESTMENTS | Leave a Comment »

IMF BARS KSE FROM USING PUBLIC MONEY TO BAIL OUT STOCK MARKET (Pakistan)

Posted by Gilmour Poincaree on December 5, 2008

Thursday, December 04, 2008

by Salman Siddiqui

PUBLISHED BY ‘THE NEWS’ (Pakistan)

KARACHI: The International Monetary Fund (IMF) has barred Karachi Stock Exchange (KSE) from using public money to bailout a cash-starved stocks market, which has crashed by about 41 per cent since mid of April this year.

Earlier, IMF – which had virtually bailed out country by approving a $7.6 billion loan to it – had conditioned KSE not to lift floor without making consultation with it. And in a crucial development now, the Institution has restricted equity market authorities for not using public funds.

The Institution, however, left the decision of lifting floor fixed at KSE on its Board discretion, as when and how the floor should be removed ‘without’ availing market support fund worth Rs20 billion, KSE-MD Adnan Afridi briefed it at an emergent members’ meeting, which was called here on a short notice on Wednesday.

This development came up just after two days from KSE-MD briefed market members on Monday regarding the current status of market support fund and floor removal issue.

In that Monday meeting, MD had officially announced the receive of Rs12.5 billion in account of market support fund (called NIT-State Enterprises Fund) and added that the size of Fund would enlarge to Rs14.5 billion with an additional support of Rs2 billion from National Bank of Pakistan.

NBP was one of participants in NIT-Fund and had already pooled Rs5 billion in Rs20 billion in the Fund.

“IMF argued against the use of public funds to support the market,” told one of meeting participants who added that money, which was supposed to be used for bailing out market was of EOBI, State Life, National Investment Trust and National Bank, which are public institutions, and IMF was against of it, he added.

“Given the weak external position, it is important that the removal of the current floor on stock prices take place only after the macroeconomic situation has stabilized and investor confidence has improved. In addition, the authorities should avoid using public funds to support stock prices,” according to IMF website.

Experts are of the view that floor might be removed immediately after Eid-ul-Azha celebration, which is falling on Dec 9.

A very crucial meeting of Board of Directors of KSE was in progress at the time of filing this report.

Members’ proposal: In an immediate response to the IMF condition that market will not be bailed out by using public money, the members of the Exchange have proposed market authorities to hand over holdings on leverage counter i.e. Continuous Funding System (CFS) to the Fund financers and unfreeze market anytime.

At current there is worth Rs11 billion holdings placed in CFS market.

Members are of the view that the financers will have to bear no loss in case they own holding in CFS instead of asking for recovering their funds stuck-up in CFS market, as CFS financers had already received cash or collateral worth 25 per cent of total holding of Rs11 billion on CFS counter.

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Posted in BANKING SYSTEMS, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, IMF, INTERNATIONAL, PAKISTAN, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, STOCK MARKETS, THE FLOW OF INVESTMENTS | Leave a Comment »

ECONOMIC STIMULUS PLANS SPRING UP AROUND WORLD

Posted by Gilmour Poincaree on December 3, 2008

Published Tuesday, December 2, 2008

THE WASHINGTON POST

PUBLISHED BY ‘THE OMAHA WORLD-HERALD’ (USA)

WASHINGTON — In a bid to jump-start the beleaguered global economy, countries around the world are introducing massive public spending programs aimed at creating millions of jobs, boosting the use of green energy and modernizing infrastructure in a way that could transform urban and rural landscapes.

The viability of some of the plans remains unclear. But observers say the number of countries moving in tandem underscores the perceived severity of the coming global recession and the view that governments must at least temporarily pick up the slack as the hard-hit private sector sheds jobs and cuts spending.

It is time “to invest massively in infrastructure, in research, in innovation, in education, in training people, because it is now or never,” French President Nicolas Sarkozy said in a recent public address.

World leaders are pursuing various strategies to tame the economic crisis, including moves to unclog credit markets, strengthen financial institutions and ease monetary policy. But fiscal stimulus packages, in particular, have emerged as a favorite tool of policymakers.

Worldwide, economists say, the increase in public spending, if executed wisely, could add as much as 1 percent or 2 percent to global growth next year, perhaps easing recessions in the United States, Europe and Japan while cushioning the slowdown in the developing world, which until recently had seen red-hot growth.

Yet if the promise of combating a global recession with public funds is big, so too, experts say, is the danger that billions worth of taxpayers dollars could be spent in vain.

Analysts point out that the pitfalls of growth-by-spending were exposed by Japan, which launched a huge infrastructure program in the 1990s. To spur expansion after stock market and real estate crashes, the Tokyo government spent billions on new public works projects.

Those projects not only failed to prevent a decadelong economic slump but also produced a herd of white elephants that included new, but little-used, airports and ports, as well as a $250 million bridge to Kourijima Island. Population: 361.

“There is a huge danger of bridges to nowhere, and as Japan showed us, that is no way to get out of a recession,” said Grant Aldonas, a former high-level Bush administration trade official and a senior fellow at the Center for Strategic and International Studies.

While China and Japan enjoy a surplus of reserves, spending increases will drive the United States, Britain and many other European countries deeper into debt. The cost of raising cash on world markets by some rich nations, such as Ireland, has surged as investors grow increasingly skeptical of their fiscal health, limiting their options to spend more now.

“In normal times, we would be telling countries, ‘Please reduce your debt,'” said Olivier Blanchard, chief economist at the International Monetary Fund, which has taken the unusual step of calling on nations to raise public spending by 2 percent of gross domestic product to combat a global recession. “But these are not normal times.”

A snapshot of how governments plan to increase spending is emerging. Those plans include not only the building of more bridges and roads but also the introduction of measures to put more cash into the hands of strapped consumers.

In the United States, the Federal Reserve and Treasury Department have moved to boost consumer spending and lower home mortgage rates, committing as much as $800 billion to make it easier for Americans to borrow money for cars, tuition and homes.

The British said they would slash the national sales tax from to 15 percent from 17.5 percent. The Germans are set to offer temporary tax incentives to consumers buying cars or renovating homes. The Japanese are giving out cash rebates to taxpayers.

Some of the projects being proposed are pre-existing infrastructure plans that are being accelerated. Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics, estimates that only about half the “new projects” in Beijing’s $586 billion package amount to previously unplanned spending. “But that is still a great deal of money,” Lardy said.

A number of countries are gearing up for projects that offer long-term benefits, both economic and environmental.

In a move that may offer a guide to helping the ailing Big Three automakers in Detroit, the French are in the early stages of plans to assist their hard-hit auto industry by awarding government grants to boost research into hybrid and battery-power technology.

In comments last week, president-elect Barack Obama suggested that an expansion of wind and solar power generation would be part of his stimulus plans. Obama also cited a plan being circulated by environmental groups that would offer government loans to help schools update their heating and cooling systems, creating quick construction jobs and stimulating demand for building materials.

“I think the fervor in which (the Obama team) is seeking suggestions right now tells me that this kind of spending is something they are very serious about,” said Carl Pope, executive director the Sierra Club.

Some countries in Europe, such as Germany, appear more concerned about overspending. That is at odds with the leadership in France, where Sarkozy has seen the crisis as an opportunity to boost the role of government.

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Posted in BANKING SYSTEM - USA, BANKING SYSTEMS, BARACK HUSSEIN OBAMA -(DEC. 2008/JAN. 2009), BIOFUELS, CENTRAL BANKS, CHINA, COMMERCE, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, ENERGY, ENERGY INDUSTRIES, EUROPE, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FRANCE, GERMANY, HOUSING CRISIS - USA, IMF, INDUSTRIAL PRODUCTION, INDUSTRIAL PRODUCTION - USA, INDUSTRIES, INTERNATIONAL, JAPAN, MACROECONOMY, MARITIME, NATIONAL WORK FORCES, RAILWAY TRANSPORT, RECESSION, ROAD TRANSPORT, SOLAR, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, THE WORK MARKET, THE WORKERS, UNITED KINGDOM, USA | Leave a Comment »

ALL STAKEHOLDERS BEING INVOLVED IN PLANNING: TARIN (Pakistan)

Posted by Gilmour Poincaree on December 3, 2008

December 03, 2008 Wednesday Zilhaj 4, 1429

PUBLISHED BY ‘DAWN’ (Pakistan)

By Our Staff Reporter

KARACHI, Dec Finance Adviser Shaukat Tarin 2: Finance Adviser Shaukat Tarin said on Tuesday that the government was operating on a modern concept of associating all stakeholders in planning and implementation and also a periodic review of how the plans were being implemented.

“Modern management concepts are being introduced in government,” the adviser said while inaugurating the 11th Management Association of Pakistan (MAP) Convention 2008 here.

He said the government faced a challenge of unprecedented nature and was almost in an “act or die” situation when it was voted into power.

“The government accepted the challenge and acted to overcome the crisis,” he informed the audience while recalling that the fiscal deficit at one time last fiscal year had touched almost 10 per cent level.

It ended at 7.5 per cent fiscal deficit and 8.4 per cent current account deficit.

He added that when the government took over, the world had come under impact of an unprecedented global financial crisis and Pakistan’s access to international finance market was also blocked.

The government took tough decisions of cutting down heavily on energy subsidies to contain expenditure budget and narrow down budgetary imbalance and reduce dependence on State Bank of Pakistan borrowing.

“The rupee-dollar parity had gone up from Rs62 to Rs84 and foreign exchange reserves had dropped down to a level where these were sufficient for hardly few weeks import when I took over as adviser,” he recalled.

“We went to International Monetary Fund with our home-grown strategy to stabilise the economy in the short- and long-term,” he said.

Mr Tarin raised a question before his audience as to why Pakistan confronts an economic crisis after every decade.

His own answer to this question was to prepare a long-term plan with consultation of stakeholders and then a periodical review.

It is in context of this concept, he said, the Planning Commission is being given a new shape by brining all stakeholders — intellectuals, all relevant government agencies and private sector — at one table to prepare a strategy.

He said the nine-point agenda on which the government was working was a consensus strategy. It would be reviewed quarterly by a body headed by the prime minister.

The nine-point agenda takes care of budgetary and current account imbalance, raising tax-to-GDP ratio to 15 per cent in next five years, provision of safety nets for the poor that include direct government intervention in the form of Benazir Income Support Programme, protecting budgetary allocations for education and health, promotion of productive sector agriculture and industry.

He said the trade and industry were fragmented and needed consolidation which was being taken up.

He blamed all previous governments of ignoring agriculture which has brought down its productive capacity.

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Posted in AGRICULTURE, BANKING SYSTEMS, CENTRAL BANKS, CURRENCIES, DOLLAR (USA), ECONOMIC CONJUNCTURE, ECONOMY, FARMING SUBSIDIES, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, IMF, INDUSTRIAL PRODUCTION, INDUSTRIAL SUBSIDIES, INDUSTRIES, INTERNATIONAL, PAKISTAN, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, STOCK MARKETS, THE FLOW OF INVESTMENTS | Leave a Comment »

ARAB ECONOMIES TO GROW DESPITE SETBACKS

Posted by Gilmour Poincaree on December 2, 2008

December 1, 2008 at 9:10 AM EST

OXFORD ANALYTICA – Exclusive – PUBLISHED BY ‘THE GLOBE AND MAIL’ (Canada)

SUBJECT: The impact of the world economic downturn on Arab economies.

SIGNIFICANCE: In contrast to the severity of the downturn in other parts of the world, the Arab world appears likely to experience relatively moderate losses. However, certain countries may be particularly vulnerable.

ANALYSIS: The IMF’s latest downward revisions of growth rate projections for 2009 place Arab countries in third place at 5.3 per cent after China and India at 8.5 per cent and 6.5 per cent respectively, although World Bank figures are somewhat less optimistic. Positive growth prospects reflect two key factors:

Macroeconomic fundamentals are positive, in particular the prospects for sustained investment growth, which will be driven by accumulated oil revenues and continuing oil incomes.

Regional capital markets, which have been hit by the crisis, are among the smallest and least significant in emerging markets.

Investment. Buoyant investment activity is now and will continue to be supported by oil income and wealth: The current account surplus of oil economies is expected to double to some $132-billion (U.S.) in 2008 against $77-billion in 2007.

Arab sovereign wealth funds possess at least $1.53-trillion in assets, with considerably more in reserves and accumulated private wealth.

Despite the slashing of oil revenues due to the present fall in oil prices, accumulated assets are likely to make up the difference from a regional standpoint – although particular countries may suffer.

Intra-Arab foreign direct investment has been rising steadily, from $8.8-billion between 1985-1995, to nearly $17-billion between 1995-2002, to $77-billion between 2002-07, with $14-billion in 2007 alone: FDI accounts for 12 per cent of regional capital formation compared to 7.8 per cent in developing countries as a whole.

GCC investors are now investing around 25 per cent of their oil wealth in the region compared to 15 per cent in 2003.

In oil, gas and energy, $520-billion worth of projects are planned for 2009-2013, down from a projected $650-billion before the crisis; even if only $400-billion worth are financed, $8-billion to $10-billion a month of investment will take place.

The crisis in Europe and the United States will strengthen the need for geographic diversification, and will confirm intra-Arab investments as a key category in Arab portfolios.

Investors will likely diversify away from real estate and tourism into other sectors such as food, transport, and medical diagnostics.

There have been official promises to maintain intra-Arab capital and investment flows, although the use of resources in domestic bailouts may limit the fulfilment of such commitments.

Market losses. The four largest markets – Dubai, Egypt, Kuwait, and Saudi Arabia – have lost up to half of their value, mirroring heavy losses elsewhere. Another four markets – Abu Dhabi, Bahrain, Qatar, and Oman – registered relatively moderate losses of 20-40 per cent. All had fallen from historical highs in summer, 2008.

There are a number of channels of contagion from global financial markets:

Exits by non-Arab investors have most seriously affected the more open Arab stock markets, namely those of Egypt and the United Arab Emirates.

Exposure to the US prime and sub-prime markets has affected players in Kuwait, Qatar and the UAE.

A more significant channel is heightened fear and uncertainty about the unfolding global recession; the region’s markets, whose trends have been dominated by excitement and herd behaviour, joined the global panic.

Negative sentiment overwhelmed the effects of positive fundamentals, including the strong results of many listed corporations for the first half of 2008.

Mitigated impact. Yet there are good reasons to believe that the falls in Arab markets will be less enduring, and have less negative broader impact, than in markets elsewhere:

The fall in OECD financial markets is the most severe in decades; in contrast, wild swings in the region are common.

Arab stock markets are highly volatile, narrow and illiquid; only a small proportion of total capitalization is traded.

The dominance of financial institutions in market indices made their fall in the present crisis inevitable; financials constitute 56 per cent of the S&P’s Pan Arab index, compared to 16 per cent in the Latin America index and 36 per cent for Africa.

Remarkably, the four smallest markets – Beirut, Jordan, Morocco, and Tunis – retained gains, indicating that intra-Arab investments have constituted a successful portfolio diversification strategy.

Arab markets are still constructing operational and regulatory structures. Gaping holes remain in corporate governance rules and practices, and the culture of retail investors is still underdeveloped. In 2007-2008 a series of investigations targeted insider dealings and share manipulation. Fines were handed to listed firms, brokers, and investment companies in Jordan, Egypt, UAE, Saudi Arabia, and Oman. However, the relative unsophistication of markets and their lesser significance in the broader economies has shielded Arab countries from the worst effects of the financial crisis.

Slowdown. The downside risks are not to be underestimated in a deep and complex world crisis: Oil revenues will be dented by declining world demand, forcing oil-rich countries to engage in belt-tightening and possibly threatening FDI flows to other Arab countries.

The cost of finance, in terms of spreads, has already risen to all-time highs, and all types of capital raised are below 2007 levels.

Falls in exports will cause losses across the region; many once-booming industries such as petrochemicals and fertilizers are now faced with sliding markets.

Falls in tourism will hit players such as Morocco, Egypt, and Dubai; falls in remittances will hit North African countries.

Dubai’s fall is likely to be the sharpest, linked as it is to the bursting of an enormous real estate bubble; mortgage lending had quintupled in the last five years, and government debt is high at around $70-billion.

Egypt, which is poor and heavily indebted, is likely to be hit hard by declines in the stock market, oil and gas income, and Suez revenues; even a moderate downturn is likely to feed growing public discontent.

CONCLUSION: Losses on Arab stock markets have wiped out abnormally high returns, but not the prospects of solid positive returns. The region is finally drawing on what has long underpinned East Asian and European growth: domestic and intra-regional investment. Supported by ample reserves and SWF resources, this strength should help the region to weather a world recession. Growth prospects are therefore dented, but remain positive.

From the Oxford Analytica Daily Brief

Copyright 2008 – Oxford Analytica Ltd. All rights reserved.

Founded in 1975, Oxford Analytica’s 1,000+ analysts provide international organizations with monitoring, research and consultancy services that explore the strategic implications of policy, economic, financial, industry, trade and security developments around the world.

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Posted in BANKING SYSTEMS, CENTRAL BANKS, CHINA, COMMERCE, COMMODITIES MARKET, ECONOMIC CONJUNCTURE, ECONOMY, ECONOMY - USA, EGYPT, ENERGY, EUROPE, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FOREIGN POLICIES, IMF, INDIA, INDUSTRIAL PRODUCTION, INDUSTRIES, INTERNATIONAL, INTERNATIONAL RELATIONS, ISLAMIC BANKS, ISLAMIC DEVELOPMENT BANK, LYBIA, MACROECONOMY, MOROCCO, NATURAL GAS, OPEC, PETROL, REGULATIONS AND BUSINESS TRANSPARENCY, STOCK MARKETS, THE ARABIAN PENINSULA, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, USA, WORLD BANK | Leave a Comment »

IMF TERMS PACKAGE A STRONG SIGNAL TO DONORS: $3BN TO BE RELEASED INITIALLY, $13BN NEEDED FOR ‘STABILISATION’ (Pakistan)

Posted by Gilmour Poincaree on November 26, 2008

November 26, 2008 Wednesday Ziqa’ad 27, 1429

by Anwar Iqbal

WASHINGTON, Nov 25: The executive board of the International Monetary Fund has approved a $7.6 billion loan for Pakistan under a programme that also requires Islamabad to reduce its fiscal deficit to 3.3 per cent of the GDP and bring down inflation to six per cent.

“By providing large financial support to Pakistan, the IMF is sending a strong signal to the donor community about the country’s improved macroeconomic prospects,” said IMF Deputy Managing Director Takatoshi Kato. The programme was approved at a board meeting at the IMF headquarters in Washington on Monday.

“The programme aims to restore the confidence of domestic and foreign investors with a tightening of fiscal and monetary policies, while maintaining social stability through targeted spending,” the IMF said.

Hours after the approval, IMF’s mission chief to Pakistan, Juan Carlos Di Tata, told a news briefing on Tuesday that most of the adjustments for reducing fiscal deficit would come from eliminating fuel and electricity subsidies and from eliminating exemptions on income and agriculture taxes.

The government has already withdrawn fuel subsidies, while its efforts to increase electricity rates caused widespread protests this summer. Any measure that leads to an increase in fuel prices or electricity rates is bound to cause more violent reactions and may further reduce the already depleting popularity of the current government.

But the IMF assured the people of Pakistan that “expenditure on the social safety net will be increased to protect the poor through both cash transfers and targeted electricity subsidies”.

While many in Pakistan questioned the government’s wisdom in going to the IMF, the Fund’s mission chief for the country warned that Pakistan was not out of the woods yet. He said the country needed as much as $13 billion during the current financial year to stabilise its economy.

Mr Di Tata spelled out some of the conditions attached to the loan, but said the IMF had not asked Pakistan to reduce defence spending because it was for the government to determine how it wanted to bring down its expenditure.

He said that out of the $7.6 billion pledged on Monday, Pakistan would get a total of $4.7 billion during the current fiscal year. The rest will be disbursed after quarterly reviews during the next 23 months.

“The regular monitoring of the economy … will show how the macroeconomic objectives set by the government are being met and whether they need to be adjusted in the light of changing circumstances,” the IMF said.

Besides the IMF, the World Bank and the Islamic Development Bank will also give $3.8 billion to Pakistan during the current fiscal year, while $4.5 billion will come from the Friends of Pakistan club and other donors.

Earlier, the IMF issued a statement saying that Pakistan would get immediate access to $3.1 billion from the $7.6 billion pledged and this amount may be deposited into Pakistan’s account at the US Federal Reserve in New York as early as Thursday.

The IMF expects Pakistan’s economic growth to slow to 3.4 per cent in the current fiscal year from 5.8 per cent the previous year. It is forecast to recover to five per cent next fiscal year.

The Fund expects the country’s budget deficit to be reduced to 4.2 per cent of gross domestic product in the current fiscal year and 3.3 per cent the following year — from 7.4 per cent at the end of June.

“The reduction will be achieved primarily by phasing out energy subsidies, better-prioritising development spending and implementing tax policy and tax administration reforms,” Mr Kato said.

The State Bank of Pakistan, which recently conducted a two-percentage point hike in the discount rate, is expected to bring down inflation and shore up reserves, the IMF said. The central bank is also expected to stop financing the government.

The programme includes measures to improve monetary management and enhance the SBP’s bank resolution capacity, and avoid the use of public resources to support the stock market.

Mr Di Tata noted that the reduction in expenditures would create room to increase spending on the social safety net.

The fiscal programme for 2008-09 envisaged an increase in spending on the social safety net of 0.6 percentage points of GDP to 0.9 per cent of GDP, the IMF said.

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Posted in BANKING SYSTEMS, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, ENVIRONMENT, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, GASOLINE, IMF, INTERNATIONAL, ISLAMIC DEVELOPMENT BANK, MACROECONOMY, MILITARY CONTRACTS, NATIONAL WORK FORCES, PAKISTAN, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, THE ARMS INDUSTRY, THE FLOW OF INVESTMENTS, WORLD BANK | 1 Comment »

ABOUT $4BN IMF LOAN LIKELY (Pakistan)

Posted by Gilmour Poincaree on November 24, 2008

November 23, 2008

By Anwar Iqbal

WASHINGTON, Nov 23: The executive board of the International Monetary Fund will consider a $7.6 billion rescue package for Pakistan on Monday to help the country avoid an economic collapse.

The board is likely to approve the package the same day as there seems to be a consensus in Washington that it’s in everybody’s interest to move rapidly to prevent an economic implosion in Pakistan.

If the rescue package is approved by Monday afternoon, the necessary documents allowing the transfer of money to Pakistan can be signed the same day.

Pakistan is likely to get between $3.5 billion and $4 billion initially while the rest will be distributed in six equal instalments.

After the approval the money will be transferred to the State Bank of Pakistan’s account in the US Federal Reserve in New York. The disbursement takes 48 to 72 hours, which means that Pakistan will have the money by Thursday.

This expected rapid disbursement enjoys the support of the US administration which wants to help Pakistan arrest the current economic deterioration as soon as possible.

But Pakistan experts in the US administration, as well as the World Bank and the IMF, also want Islamabad to make structural adjustments to set their economy in the right direction.

In a joint article for Washington’s Middle East Institute, former US ambassador to Islamabad Wendy Chamberlin and a former IMF economist Zubair Iqbal argued that “a rescue plan could have the advantage of presenting an opportunity to force countries like Pakistan to come to grips with entrenched structural distortions in its economy”.

The two authors also argued that countries like Pakistan could not count on the cash from wealthy oil producers in the Gulf for a bailout. Instead, they urged “a more organised approach” to aiding “distressed economies”.

The authors proposed establishing a trust fund made up of multilateral and regional lending agencies, selected GCC countries, and the G-7 to pool resources and facilitate their effective use by vulnerable counties under the IMF/World bank guidance.

The two authors and other experts are also urging Pakistan to reduce expenditure and increase revenue if it wants to have a stable economy. But they also acknowledge that it may be difficult for a political government to reduce expenditure as such steps are unpopular and may cause political repercussions.

So they want Pakistan to increase revenue. “It is particularly difficult to reduce expenditure when the economy is slowing, the private sector is upset and the government has just increased interest rate,” said one such expert.

“So it is essential to increase revenue.”

And when such experts talk about the need to increase revenue, they emphasise the need to introduce agriculture income tax which, they argue, will also raise domestic savings.

They reject Pakistan’s claim that they have introduced agriculture income tax. The experts argue that the taxes introduced in the name of agriculture income tax six or seven years ago were simply the land revenues which are being collected since the British days.

“When we talk about agriculture income tax, we mean agriculture income tax and not an old medicine with a new package,” said an expert.

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Posted in ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, IMF, INTERNATIONAL, PAKISTAN | Leave a Comment »

MANTEGA DESCARTA QUE BRASIL POSSA USAR RECURSOS DO FMI – Linhas de crédito representam apenas uma garantia adicional, diz ministro

Posted by Gilmour Poincaree on November 20, 2008

20/11/2008 – 19h30min

O ministro da Fazenda, Guido Mantega, negou nesta quinta-feira que o governo pretenda usar as linhas de crédito do Fundo Monetário Internacional (FMI) e do Federal Reserve (Fed), banco central americano, para ajudar a economia do país. Segundo ele, esses recursos representam apenas uma garantia adicional para o Brasil em momentos de crise, mas não existe necessidade de utilizar esse dinheiro.

Mantega ressaltou que esses recursos servem para prevenir ataques de especuladores à economia brasileira.

— Não há intenção de sacar esses recursos. Só se houver necessidade, mas acredito que isso não ocorrerá. (Esse reforço) é mais aquela coisa que diz: “Não venha fazer especulação porque temos bala na agulha” — declarou.

Atualmente, o Brasil possui US$ 30 bilhões de uma linha especial do FMI destinada a socorrer países afetados pela crise internacional. Além disso, o Banco Central (BC) firmou, no final de outubro, acordo com o Federal Reserve para uma linha de swap cambial (troca de rendimentos) de dólares por reais de outros US$ 30 bilhões, que estará disponível até 30 de abril do próximo ano.

Mantega descartou a possibilidade de que recursos internacionais sejam usados para elevar os recursos do Banco Nacional de Desenvolvimento Econômico e Social (BNDES) no próximo ano. Segundo o ministro, os aportes ao banco estão sendo feitos com recursos do Tesouro Nacional.

Neste ano, segundo o ministro, o BNDES obteve R$ 50 bilhões extras para financiar investimentos. Os recursos vieram de títulos do Tesouro repassados à instituição financeira, que os vendeu ao mercado e de Certificados de Depósito Interbancários (CDI) emitidos pelo banco. O ministro reafirmou que o Conselho Monetário Nacional (CMN) deve emitir resolução para autorizar o Banco Central a repassar recursos dos compulsórios dos bancos ao BNDES, mas revisou os valores. Anteriormente, ele tinha anunciado que o BNDES receberia R$ 7,5 bilhões do dinheiro que os bancos são obrigados a recolher ao BC, mas agora disse que esse valor deve ficar em torno de R$ 6 bilhões.

AGÊNCIA BRASIL

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Posted in BANCO CENTRAL - BRASIL, BNDES, BRASIL, ECONOMIA - BRASIL, FLUXO DE CAPITAIS, IMF, INTERNATIONAL, MINISTÉRIO DA FAZENDA, O PODER EXECUTIVO FEDERAL | Leave a Comment »

BRASIL É UM DOS PAÍSES QUE TERÁ VOZ ATIVA NA ECONOMIA MUNDIAL

Posted by Gilmour Poincaree on November 19, 2008

17 de Novembro de 2008

As soluções para a crise financeira internacional devem ser encontradas com a ajuda dos países em ANDREW JACKSON AND MAO ZEDONGdesenvolvimento e não mais apenas pelas sete nações mais ricas do mundo – como era antes da reunião do último final de semana em Washington, na qual participaram 20 lideranças de países que somam mais de 85% do PIB mundial. Segundo o presidente da República, Luiz Inácio Lula da Silva, uma das decisões consensuais tomadas pelos líderes é a necessidade da participação não apenas dos países mais ricos do mundo, mas dos emergentes, dos países em vias de desenvolvimento, que têm uma grande população. “Já não é mais o G-8. Agora é o G-20”, afirmou Lula no programa de rádio Café com o Presidente, realizado nesta segunda-feira (17).

Segundo o presidente da República, há uma grande afinidade de posições e compromisso de todos os governantes do G-20, em torno das medidas para resolver a crise financeira internacional. A primeira delas é restabelecer a liquidez e restaurar a confiança no mercado financeiro, pois fica muito difícil a economia funcionar sem crédito. “No Brasil, já adotamos medidas nesse sentido. Faz 30 dias que estamos adotando medidas para permitir a irrigação do sistema financeiro e garantir que se tenha crédito para que o consumo continue acontecendo, para que as empresas continuem produzindo, o comércio vendendo e o povo comprando. É isso que vai ativar a economia”, avalia o presidente.

Anti-recessão – A segunda medida aprovada pelos líderes foi a adoção de políticas anti-recessivas para evitar uma grande desaceleração do crescimento econômico mundial, especialmente uma queda abrupta e significativa do crescimento, que já está acontecendo em alguns países europeus. O terceiro ponto importante, segundo o presidente, é a regulação do sistema financeiro de modo a conter a especulação descolada da economia real e do mundo do trabalho. “O sistema financeiro tem que ajudar o setor produtivo para que ele gere os empregos necessários, para que o comércio cresça, para que o consumo cresça e para que a sociedade viva uma vida digna e decente”, explicou o presidente. Para ele, a falta de controle de alguns países foi a causa da crise financeira. “As medidas que tomamos, por unanimidade, são extremamente importantes para que a gente possa controlar o sistema financeiro e evitar que eles continuem a prática do cassino”, disse Lula.

Um dos resultados mais importantes da reunião, segundo o presidente, foi o clima de cooperação internacional. “Finalmente, todos os países se colocaram de acordo que nós precisamos tomar decisões coletivas para evitar que uma tomada de posição em um país possa prejudicar outro”. Como parte desta política de cooperação, está a retomada da Rodada de Doha, para desenvolver o comércio mundial.

Na opinião do presidente da República, a reunião de Washington foi um marco na história do século XXI. “Participei da reunião mais importante entre líderes de países, de tantas que eu já fiz”, contou o presidente. Segundo ele, o encontro foi marcado pelo consenso de que o grupo de 20 países deve trabalhar junto. “Na hora de tomar as grandes decisões, o G-20 se transformou num fórum importante. Daí a minha crença de que estamos no caminho certo para debelar essa crise e para evitar outras crises”, afirmou.

FMI – O ministro Guido Mantega disse durante a reunião de ministros da Fazenda, que essa crise é o momento de aperfeiçoar e democratizar as instituições financeiras internacionais, como o Banco Mundial e o Fundo Monetário Internacional. Para o ministro, as Metas do Milênio, que têm por objetivo a redução da desigualdade, devem ser o centro das políticas econômicas. “Não podemos nos esquecer dos enormes desafios da humanidade, como a pobreza, a fome e as mudanças climáticas”, disse o ministro.

Editado pela Secretaria de Comunicação Social da Presidência da República
Nº 728 – Brasília

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RUPEE GAINS ON HOPES OF DOLLARS’ INFLOW (India)

Posted by Gilmour Poincaree on November 18, 2008

November 18, 2008 Tuesday Ziqa’ad 19, 1429

By Our Staff Reporter

KARACHI, Nov 17: Rising hopes for inflow of foreign exchange changed the exchange market A FIFTY RUPEES BILLsentiments and reduced speculations which strengthened the rupee significantly against the dollar on Monday.

The Saturday’s announcement on $7.6 billion IMF loan package for Pakistan supported the factors resisting the free fall of rupee and the local currency gained 35 to 40 paisas in the inter-bank market.

The dollar was traded at as low as Rs79.80 while it was at Rs80.20/25 on Saturday. This was a big slide of dollar which gained over 24 per cent since January 2008.

If the IMF board approves the agreement which is yet to be signed, Pakistan could get $4 billion in one year and that would fill the balance of payments gap.

The advisor to prime minister on finance had stated recently that the IMF loan would help Pakistan fill gaps (imbalances) of two years.

It was also announced that friends of Pakistan were ready to support, but they want endorsement of the IMF.

“The government’s announcement and IMF’s response largely impacted the market which cautiously moved in favour of rupee,” said Atif Ahmed, a currency dealer in the inter-bank market.

The currency dealers were cautious to predict about further recede of dollars against rupee, but said that the rupee may get more strength once dollars practically reach Pakistan and build the reserves.

“The speculative and panic elements will find it difficult to get place once reserves reach up to $12 billion and more,” said Atif.

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WORLD ECONOMIES

Posted by Gilmour Poincaree on November 18, 2008

November 17, 2008 Monday Ziqa’ad 18, 1429

Gulf States

Oil-dependent Arab states will be hurt as the global economy slides into recession, but a huge windfall WORLD ECONOMIESaccumulated over the past few years from oil sales will help them minimise the impact. Undoubtedly, the Gulf economies will be affected, but the impact will be much less than in the industrial world. The main impact will be a drop in demand for oil, and consequently revenues.

The six-nation Gulf Cooperation Council (GCC), grouping Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE), is estimated to have sold oil worth around $3 trillion over the past six years.

The GCC governments had foreign assets of $1.8 trillion at the end of last year. This is expected to top $2 trillion by the end of 2008. Despite the sharp drop in oil prices, GCC states will end up this year with a good surplus. However, projects still in the pipeline are likely to be affected by delays.

The region’s stock markets have been severely affected by the global crisis, plunging 20 per cent, or close to $200 billion in value. The impact of the global financial meltdown on Gulf economies could spread much wider and deeper. Financing for Gulf mega-projects will become scarce and its cost higher. The region’s markets for large-scale project finance and real estate will be particularly affected by this credit crunch.

Some Gulf projects are already facing finance problems. The main impact will be on the real estate sector, mainly in the UAE and Qatar because they have been growing at a fast pace. Petrochemicals and other industries will remain safe, but petrochemicals and aluminum exports, the main Gulf products other than oil, will also be affected. The estimated $2.5 trillion value of foreign investments held by Gulf governments and the private sector is also expected to be reduced by a slump in asset prices worldwide. Some economists say Gulf investments may have already lost hundreds of billions of dollars of their book value.

Finance ministers and central bankers from Gulf on the other hand expect their economies to continue to grow despite the global financial crisis and a sharp drop in oil prices. The officials underscored the “strength and solvency” of the financial sector and stressed that the region can weather any impact from the global financial crisis. They have voiced satisfaction over measures taken to deal with any impact from the world economic crisis and expressed readiness to take any additional measures.

Although the region is not much dependent on the international economy, Middle Eastern agriculture and manufacturing, the main providers of job opportunities, have still become less competitive because of the increasing pressure to export goods to the global markets at lower prices. At the same time, inflation is running above 10 per cent in much of the region due to rising commodity prices. Inflation is also being driven upward because the currencies of many of the Gulf countries are pegged to the US dollar.

A prolonged slowdown in the international economy will also cause remittances, job creation, tourism and foreign aid to decline and unemployment to increase, particularly among the youth. The economic downturn will also slow the flow of educated Arab workers into jobs in the oil sector. Before the global financial crisis, the region benefited whether oil prices were high or low, since the region has both oil producers and consumers. But Middle East producers and consumers are now likely to suffer from either higher or lower oil prices as the financial crisis spreads because of the sustained drop in foreign investment coming into the region.

The 2009 GDP forecast for GCC as a region has been revised from 6.2 per cent to 4.5 per cent in 2009 due to the weakening global backdrop and lower oil prices. In Saudi Arabia, the world’s largest oil producer, oil output is likely to decrease in 2009, pulling down GDP growth to 4 per cent. Inflation will continue to rise in 2008 to 9.8 per cent and start coming down in 2009 to 9 per cent. In the UAE, the GCC’s most diversified and open economy, credit crunch and global downturn will hit open economy and growth will slow down in 2009 to 4.5 per cent. Inflation is likely to increase this year to 11.8 per cent before coming down next year to 10.5 per cent.

Qatar, with both its oil and non-oil sectors growing at double-digit speed, will remain one of the fastest-growing markets in 2008 with 14.5 per cent real GDP growth. However, supply bottlenecks and deeply negative policy rates will push inflation higher in 2008 to 15.6 per cent. Qatar’s investment driven, capital-intensive growth will face headwinds in 2009.

In Oman, with declining oil output, the economy is being propelled by services and gas-based industries in 2008 with expected GDP growth of 6.8 per cent. Despite a $15 billion investment plan for the oil and gas sectors, the outlook is less than rosy with high recovery costs and limited reserves. Inflation at 12 per cent is pushed up by food and rent prices, along with negative real interest rates that boost bank lending.

The Kuwaiti macro story continues to be driven by oil. The lack of political determination for diversification has caused Kuwait to lag most of its GCC neighbors so far with GDP growth forecast of 5.6 percent in 2008. Inflation as elsewhere continues to climb to 9.7 percent in 2008. In Bahrain, the non-oil sector remains the main driver of the resource-poor economy. With limited petrodollars, the budget surplus should stay modest at 7 percent of GDP by regional standards, while inflation should continue to rise in 2008 to 5.5 percent, the region’s lowest.

Asian economies

Most Asian economies are in a better position to weather the global financial storm due to significant foreign reserves, and painful lessons gleaned from the 1997 crisis. Growth in the Emerging Asia region is projected to moderate to 7.7 per cent in 2008 and 7 per cent in 2009, from 9.25 per cent last year, according to the World Economic Outlook report released by the International Monetary Fund.

Asia’s projected positive but slower growth will be propelled by the regional twin engines of China and India. Both countries are expected to experience lower demand on weaker exports but should continue to be supported by strong private consumption.

Growth in China eased to 10.5 per cent (year-on-year) in the first half of 2008, 2.5 per cent slower than the same period last year, partly due to slackening exports. However, activity continued to be supported by steady investment growth and accelerating consumption. India is not immune from the global liquidity crunch. India is likely to register GDP growth of 7.9 per cent in 2008, which may slip to 6.9 per cent in 2009, compared to 9.3 per cent last year. Indian growth in the second quarter slipped to 7.9 per cent, having risen by 8.8 per cent in the preceding quarter, on the back of weakening investment while private consumption and export growth have held up well.

IMF projects that the ongoing financial turmoil will have minimal impact on India, which is still largely a closed economy. The relatively high 7 per cent growth forecast reflects India’s strong internal growth dynamics from rapid productive growth and from its process of integration into the global economy that is still continuing. Emerging Asia can anticipate more weakness ahead in response to slowing demand from advanced economies and growing strains in regional financial markets.

The two biggest newly industrialised economies, South Korea and Taiwan, will see growth moderate, with South Korea’s economy expanding 4.1 per cent this year and 3.5 per cent in 2009. Taiwan will see 3.8 per cent growth in 2008 and 2.5 per cent next year. In the newly industrialized Asian economies (NIEs) and the Association of Southeast Asian Nations (ASEAN) economies, activity has also been decelerating. Domestic demand has softened, as rising food and fuel prices have started to weigh on consumption, while declining profit margins and weakening demand have prompted firms to scale back their investment plans.

Asia’s financial system is little affected by the US sub-prime mortgage problems that have triggered a global crisis. The impact on the financial sector in Asia is limited. Still, Asia’s economic growth will lose steam because of the slowdown in the US and Europe, which are main export markets for Asia.

The Asian Development Bank’s projection that overall growth rate in Asia would be 1.5-2.0 percentage points slower this year, but that is not necessarily a problem, as many Asian economies have “overheated.”

According to ADB’s latest outlook, Asia overall will continue to post robust growth, while slashing growth projections for the global economy and predicting that the United States would continue losing traction. But the growth among emerging Asian economies is forecast to moderate to 7.7 per cent in 2008 and 7.1 per cent in 2009, from 9.3 per cent in 2007. Weakening external demand is likely to weigh on exports, but, in some cases, the impact may be mitigated by still-loose macroeconomic policies and currency depreciation.

The Director General of the United Nation’s Conference on Trade and Development has warned the global downturn will continue into 2009. Economists at the UN’s Economic and Social Commission for Asia and the Pacific (UNESCAP) says Asia’s export sector, a key driver of most economies, will be hit by a downturn in the European and US economies. But a downturn will be eased somewhat by the strength in domestic consumption in Asia, with most governments holding substantial foreign exchange reserves.

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HAY QUE ROMPER CON EL MODELO NEOLIBERAL Y EL SISTEMA CAPITALISTA – Sentenció Evo Morales al intervenir ante Naciones Unidas

Posted by Gilmour Poincaree on November 18, 2008

17/11/2008

NACIONES UNIDAS, 17 de noviembre. – El presidente boliviano, Evo Morales, planteó este lunes romper EVO MORALES AT THE UNcon el neoliberalismo y el sistema capitalista, además de reformular las normas de la Organización Mundial del Comercio (OMC) para salir de la crisis financiera mundial, informó ABI.

“Para salir de la crisis hay que romper con el modelo neoliberal y el sistema capitalista”, afirmó el mandatario ante el pleno de la Asamblea General de las Naciones Unidas.

En Bolivia, dijo, se ha comenzado a cambiar la política neoliberal dignificando al Estado y resolviendo los problemas sociales, lo que ha permitido sobrellevar los efectos de la crisis financiera global.

“El comercio injusto implementado por algunos organismos internacionales no es la solución para mi país”, señaló Morales, quien apuntó, además, que para salir de la crisis financiera hay que cambiar las reglas de la Organización Mundial del Comercio (OMC).

El sistema financiero mundial debe ser reestructurado por los 192 países que forman las Naciones Unidas y no solo por los 20 más desarrollados, declaró en referencia a la Cumbre del G-20 celebrada hace poco en Washington.

De igual forma, se debe reestructurar el Banco Mundial (BM) y el Fondo Monetario Internacional (FMI), señaló Evo.

Criticó que en menos de 15 días los países que integran el G-20 hubieran otorgado 30 veces más dinero a los bancos del Wall Street que a los recursos que se destinan para conseguir los Objetivos del Milenio, entre ellos acabar con la pobreza.

Según EFE, durante su intervención, el Jefe de Estado también agradeció a la comunidad internacional el apoyo a su gestión en la crisis política que vivió Bolivia recientemente.

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BLIND LEADING THE ONE-EYED

Posted by Gilmour Poincaree on November 17, 2008

Nov 18, 2008

by Chan Akya

My worst fears about the weekend gathering in Washington of world leaders to discuss the financial THE PARABLE OF THE BLIND - painting by Bruegelcrisis were realized overnight when the statement after their meeting was released. It contained a host of generic fluff and very little mention of the specific actions required to tackle the gargantuan economic problems of today.

The statement accompanying the meeting, held under the Group of 20 (G-20) banner, could have been put together by a bunch of first-year economics students. It probably was, but that’s not what worries me about the initiative. In the opening part of the statement, the following section seemed positive: “Our work will be guided by a shared belief that market principles, open trade and investment regimes, and effectively regulated financial markets foster the dynamism, innovation, and entrepreneurship that are essential for economic growth, employment, and poverty reduction.”

After paying lip service to the idea of free market principles in the introduction, every aspect of the statement from then on relates to market, fiscal and monetary intervention on an epic scale by the assembled bureaucrats. In the next section on “root causes of the current crisis” is the following gem:

Major underlying factors to the current situation were, among others, inconsistent and insufficiently coordinated macroeconomic policies, inadequate structural reforms, which led to unsustainable global macroeconomic outcomes. These developments, together, contributed to excesses and ultimately resulted in severe market disruption.

Right there you have the prevailing notion that government intervention is what will help the global THE PARABLE OF THE BLIND - by the Greenwich Workshopeconomic system recover; indeed it was the absence of dialogue between these super-smart folks that led us to the current swamp. In related news, pigs were seen flying over Washington all day, but I digress.

Discussing “Actions taken and to be taken”, the statement goes on to say the following, laying the grounds for justifying pretty much any action by any government anywhere in the world but more importantly also bringing in the widely discredited multilateral agencies such as the International Monetary Fund (IMF) back into the global picture: “As immediate steps to achieve these objectives, as well as to address longer-term challenges, we will:

– Continue our vigorous efforts and take whatever further actions are necessary to stabilize the financial system.

– Recognize the importance of monetary policy support, as deemed appropriate to domestic conditions.

– Use fiscal measures to stimulate domestic demand to rapid effect, as appropriate, while maintaining a policy framework conducive to fiscal sustainability.

– Help emerging and developing economies gain access to finance in current difficult financial conditions, including through liquidity facilities and program support. We stress the International Monetary Fund’s important role in crisis response, welcome its new short-term liquidity facility, and urge the ongoing review of its instruments and facilities to ensure flexibility.

– Encourage the World Bank and other multilateral development banks (MDBs) to use their full capacity THE PARABLE OF THE BLIND - A Belgian stampin support of their development agenda, and we welcome the recent introduction of new facilities by the World Bank in the areas of infrastructure and trade finance.

– Ensure that the IMF, World Bank and other MDBs have sufficient resources to continue playing their role in overcoming the crisis.”

Right here we have the makings of a return to the world economic order of yore, namely for the governments of the Group of Seven (G-7) leading industrialized nations to continue their spendthrift ways banking on the savings of emerging countries, while the latter remain happy in their role as supplicants to the global economy rather than assuming a leading role as is warranted by current fundamentals.

The return of international finance’s Terrible Twins is further proof of a hankering for the orthodoxy of export-oriented emerging economies securing access to financing as arranged by these shoddy bankers. It is amazing to me that countries like South Korea, Brazil and India signed up to this nonsense despite the very real structural problems created by these very programs in the recent past for these countries by the IMF.

Against these ideas there is an alternative of emerging countries floating their currencies and relying on internal consumption, which would predicate increased capital inflows for emerging countries at the cost of increasing capital costs for G-7 members. This option was apparently never even brought up in the meeting.

Secondly, the idea that emerging countries face multiple tariff barriers that keep millions in poverty was also not sufficiently discussed in the Washington meeting. To wit, Europe’s Common Agricultural Policy (CAP) is singularly responsible for the poverty, starvation and malnutrition of millions of people in Africa and Latin America, yet there was not a mention of this unfair trade barrier in the Washington meeting. Instead, the idea of circling back to the status quo in one form or another appears to have taken precedence.

Reforming financial markets

Something must have gone wrong in Washington because the next section of the statement relating THE PARABLE OF THE BLIND - by Shannon Larrattto financial system reforms actually makes sense in places. I am guessing this was simply an oversight by the assembled officials; actual implementation will probably fail to follow any of the principles laid down. Paragraph 9, which details the common principles of reform, has the following five guiding headlines:

1. Strengthening transparency and accountability.

2. Enhancing sound regulation.

3. Promoting integrity in financial markets.

4. Reinforcing international cooperation.

5. Reforming international financial institutions.

I am really happy to note in this section that European attempts to reduce disclosure on financial assets by banks have come to naught. The 2009 leadership of Brazil, the United Kingdom and Korea to implement a series of recommendations will coordinate the G-20 Finance Ministers Group. Personally, I found that trio an odd choice, with only Brazil having a functioning financial system not overwhelmed by near-term liabilities. Then again, finding countries with relatively unstressed financial systems is a fairly difficult matter and perhaps the assembled leaders wanted to have people with sufficient experience of pain – for example the UK – participating in the recovery plans. That seems fine overall. The specific areas of recommendations being laid out are as under:

“Mitigating against pro-cyclicality in regulatory policy.

Reviewing and aligning global accounting standards, particularly for complex securities in times of stress.

Strengthening the resilience and transparency of credit derivatives markets and reducing their systemic risks, including by improving the infrastructure of over-the-counter markets.

Reviewing compensation practices as they relate to incentives for risk taking and innovation.

Reviewing the mandates, governance, and resource requirements of the IFIs [international financial institutions].

Defining the scope of systemically important institutions and determining their appropriate regulation or oversight.”

The next section on Open Global Economy isn’t worth reading, containing as it does platitudes about the World Trade Organization, the Doha round and so on without any substantive discussion on handling current conflicts on tariff barriers and capital flows.

The rest of the document deals with specific recommendations relating to the implementation of the five principles of reform as laid out previously. Of these, the move towards accounting standardization will help resolve a number of capital flow constraints, regulatory arbitrage and other egregious misuses of fiduciary principles in the financial markets.

Another welcome initiative in the financial market section is the reform of the over-the-counter market for credit default swaps (CDS), which will almost surely move to an exchange-traded or electronic trading format in the next few months. The need for this market is paramount more now than ever before, and I am happy that the G-20 has understood the rationale for a continued broadening of this market, rather than a reversal or even a shutdown as was suggested by a number of government officials in the US and Europe of late.

Missed opportunity

Overall, the G-20 meeting strikes me a missed opportunity for discussing a broadening of the world’s economic engine by inculcating stronger measures towards consumption in emerging countries and moving them away from the IMF-orthodoxy of remaining suppliers of cheap goods to developed countries.

Failures in the financial system need to be addressed, but the root cause of a misallocation of capital ONE-EYED ILLYfrom high-growth areas to lower-growth areas, that is from savers in countries like China, Brazil and India to the overextended consumers and pensioners of the US and Europe, was not discussed let alone addressed.

The coming wave of Keynesian spending across the world will only intensify this misallocation of capital as emerging countries continue to hold nearly worthless pieces of government debt issued by G-7 countries in return for vacuous promises of continued economic growth.

Then again, perhaps it is not the G-7 countries that are to blame for suggesting ways of keeping themselves economically relevant; such moves after all reflect their self-preservation instinct. What galls me is that leaders of countries such as Brazil, China and India bought into this malarkey.

(Copyright 2008 Asia Times Online (Holdings) Ltd. All rights reserved.

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EL PARTO DE LOS MONTES – La reunión de Washington

Posted by Gilmour Poincaree on November 17, 2008

Noviembre 16 de 2008 – 4 y 12 p.m.

Fidel Castro Ruz

Bush se mostraba feliz con tener a Lula a su diestra en la cena del viernes. A Hu Jintao, al que respeta por el enorme mercado de su país, la capacidad de producir bienes de consumo a bajo precio y el caudal de sus reservas en dólares y bonos de Estados Unidos, lo sentó a su izquierda.

Medvédev, a quien ofende con la amenaza de ubicar los radares y la cohetería estratégica nuclear no lejos de Moscú, fue ubicado en un asiento distante del anfitrión de la Casa Blanca.

El rey de Arabia Saudita, un país que producirá en un futuro próximo 15 millones de toneladas de petróleo ligero a precios altamente competitivos, quedó también a su izquierda, al lado de Hu.

Su más fiel aliado en Europa, Gordon Brown, Primer Ministro del Reino Unido, no aparecía cerca de él en las imágenes.

Nicolás Sarkozy, descontento con la arquitectura actual del orden financiero, quedó distante de él, con el rostro amargado.

Al Presidente del Gobierno español, José Luis Rodríguez Zapatero, víctima del resentimiento personal de Bush y asistente al cónclave de Washington, ni siquiera lo vi en las imágenes televisadas de la cena.

De esa forma fueron ubicados los asistentes al banquete.

Cualquiera hubiera pensado que al día siguiente se produciría el debate de fondo sobre el peliagudo tema.

Temprano en la mañana del sábado, las agencias informaban sobre el programa que tendría lugar en el National Building Museum de Washington. Cada segundo estaba programado. Se analizarían la actual crisis y las medidas a tomar. Se iniciaría a las 11 y 30 hora local. Primero, sesión gráfica: “fotos de familia”, como las llamó Bush; veinte minutos después, la primera plenaria, seguida de una segunda a la mitad del día. Todo rigurosamente programado, hasta los nobles servicios sanitarios.

Los discursos y análisis durarían aproximadamente tres horas y 30 minutos. A las 3 y 25, hora local, almuerzo. De inmediato, a las 5 y 5, declaración final. Una hora después, a las 6 y 5, Bush marcharía a descansar, cenar y dormir plácidamente en Camp David.

El día transcurría, para los que seguían el evento, con la impaciencia por conocer cómo en tan breve tiempo se abordarían los problemas del planeta y de la especie humana. Estaba anunciada una declaración final.

El hecho real es que la declaración final de la Cumbre se elaboró por asesores económicos preseleccionados, bastante afines al pensamiento neoliberal, mientras Bush en sus pronunciamientos pre y pos cumbre reclamaba más poder y más dinero para el Fondo Monetario Internacional, el Banco Mundial y otras instituciones mundiales que están bajo riguroso control de Estados Unidos y sus más cercanos aliados. Ese país había decidido inyectar 700 mil millones de dólares para salvar a sus bancos y empresas transnacionales. Europa ofrecía una cifra igual o mayor. Japón, su más firme pilar en Asia, ha prometido una contribución de 100 mil millones de dólares. Esperan de la República Popular China, que desarrolla crecientes y convenientes vínculos comerciales con los países de América Latina, otra contribución de 100 mil millones procedentes de sus reservas.

¿De dónde saldrían tantos dólares, euros y libras esterlinas como no fuera endeudando seriamente a las nuevas generaciones? ¿Cómo se puede construir el edificio de la economía mundial sobre billetes de papel, que es en lo inmediato lo que realmente se pone en circulación, cuando el país que los emite sufre un enorme déficit fiscal? ¿Valdría la pena tanto viaje por aire hacia un punto del planeta llamado Washington para reunirse con un Presidente al que le quedan sólo 60 días de gobierno, y suscribir un documento que ya estaba diseñado de antemano para ser aprobado en el Washington Museum? ¿Tendría razón la prensa radial, televisiva y escrita de Estados Unidos al no concederle atención especial a ese viejo rejuego imperialista en la cacareada reunión?

Lo increíble es la propia declaración final, aprobada por consenso de los participantes en el cónclave. Es obvio que constituye una aceptación plena de las exigencias de Bush, antes y durante la cumbre. A varios de los países participantes no les quedaba otra alternativa que aprobarla; en su lucha desesperada por el desarrollo, no deseaban aislarse de los más ricos y poderosos, así como de sus instituciones financieras, que constituyen mayoría en el seno del Grupo G-20.

Bush habló con verdadera euforia, usando palabras demagógicas, leyó frases que retratan la declaración final:

“La primera decisión que tuve que tomar —dijo— fue quiénes venían a la reunión. Decidí que teníamos que tener a las naciones del Grupo de los 20, en lugar de solamente el Grupo de los Ocho o el Grupo de los Trece.

“Pero una vez que se toma la decisión de tener al Grupo de los 20, la pregunta fundamental es con cuántas naciones de seis diferentes continentes, que representan a diferentes etapas de desarrollo económico, es posible alcanzar acuerdos que sean sustanciales, y me complace informarles que la respuesta a esa pregunta es que lo logramos.”

“Estados Unidos ha tomado algunas medidas extraordinarias. Ustedes, que han seguido mi carrera, saben, yo soy un partidario del libre mercado, y si uno no toma medidas decisivas, es posible que nuestro país se suma en una depresión más terrible que la Gran Depresión.”

“Recién empezamos a trabajar con el fondo de 700 mil millones de dólares que está comenzando a liberar dinero a los bancos.”

“De manera que todos entendemos la necesidad de promover políticas económicas a favor del crecimiento.”

“La transparencia es muy importante para que los inversionistas y los reguladores puedan saber exactamente qué está pasando.”

El texto del resto de lo que dijo Bush es por el estilo.

La declaración final de la Cumbre, que requiere por su extensión media hora para leerlo en público, se define a sí misma en un grupo de párrafos seleccionados:

“Nosotros, los líderes del Grupo de los 20, hemos celebrado una reunión inicial en Washington el 15 de noviembre entre serios desafíos para la economía y los mercados financieros mundiales¼ ”

“¼ debemos poner las bases para una reforma que nos ayude a asegurarnos de que una crisis global como esta no volverá a ocurrir. Nuestro trabajo debe estar guiado por los principios del mercado, el régimen de libre comercio e inversión¼ ”

“¼ los actores del mercado buscaron rentabilidades más altas sin una evaluación adecuada de los riesgos y fracasaron¼ ”

“Las autoridades, reguladores y supervisores de algunos países desarrollados no apreciaron ni advirtieron adecuadamente de los riesgos que se creaban en los mercados financieros¼ ”

“¼ las políticas macroeconómicas insuficientes e inconsistentemente coordinadas, e inadecuadas reformas estructurales, condujeron a un insostenible resultado macroeconómico global.”

“Muchas economías emergentes, que han ayudado a sostener la economía mundial, cada vez más sufren el impacto del frenazo mundial.”

“Subrayamos el importante papel del FMI en la respuesta a la crisis, saludamos el nuevo mecanismo de liquidez a corto plazo y urgimos a la continua revisión de sus instrumentos para asegurar la flexibilidad.

“Animaremos al Banco Mundial y a otros bancos multilaterales de desarrollo a usar su plena capacidad en apoyo de su agenda de ayuda¼ ”

“Nos aseguraremos de que el FMI, el Banco Mundial y los otros bancos multilaterales de desarrollo tengan los recursos suficientes para continuar desempeñando su papel en la resolución de la crisis.”

“Ejercitaremos una fuerte vigilancia sobre las agencias de crédito, con el desarrollo de un código de conducta internacional.”

“Nos comprometemos a proteger la integridad de los mercados financieros del mundo, reforzando la protección del inversor y el consumidor.”

“Estamos comprometidos a avanzar en la reforma de las instituciones de Bretton Woods, de forma que puedan reflejar los cambios en la economía mundial para incrementar su legitimidad y efectividad.”

“Nos reuniremos de nuevo el 30 de abril de 2009 para revisar la puesta en marcha de los principios y decisiones tomadas hoy.”

“Admitimos que estas reformas sólo tendrán éxito si se basan en un compromiso con los principios del libre mercado, incluyendo el imperio de la ley, respeto a la propiedad privada, inversión y comercio libre, mercados competitivos y eficientes y sistemas financieros regulados efectivamente.”

“Nos abstendremos de imponer barreras a la inversión y al comercio de bienes y servicios.”

“Somos conscientes del impacto de la actual crisis en los países en desarrollo, particularmente en los más vulnerables.

“Mientras avanzamos, estamos seguros de que mediante la colaboración, la cooperación y el multilateralismo superaremos los desafíos que tenemos ante nosotros y lograremos restablecer la estabilidad y la prosperidad en la economía mundial.”

Lenguaje tecnocrático, inaccesible para las masas.

Pleitesía al imperio, que no recibe crítica alguna a sus métodos abusivos.

Loas al FMI, Banco Mundial y las organizaciones multilaterales de créditos, engendradores de deudas, gastos burocráticos fabulosos e inversiones encaminadas al suministro de materias primas a las grandes transnacionales, que son además responsables de la crisis.

Así por el estilo, hasta el último párrafo. Es aburrida, plagada de lugares comunes. No dice absolutamente nada. Fue suscrita por Bush, campeón del neoliberalismo, responsable de matanzas y guerras genocidas, que ha invertido en sus aventuras sangrientas todo el dinero que habría sido suficiente para cambiar la faz económica del mundo.

En el documento no se dice una palabra de lo absurdo de la política de convertir los alimentos en combustible que propugna Estados Unidos, del intercambio desigual de que somos víctimas los pueblos del Tercer Mundo, ni sobre la estéril carrera armamentista, la producción y comercio de armas, la ruptura del equilibrio ecológico, y las gravísimas amenazas a la paz que ponen al mundo al borde del exterminio.

Sólo una frasecita perdida en el largo documento menciona la necesidad de “afrontar el cambio climático”, cuatro palabras.

Por la declaración se verá cómo los países presentes en el cónclave demandan reunirse de nuevo en abril de 2009, en el Reino Unido, Japón o cualquier otro país que cuente con los requisitos adecuados —nadie sabe cuál—, para analizar la situación de las finanzas mundiales, con el sueño de que las crisis cíclicas nunca vuelvan a repetirse con sus dramáticas consecuencias.

Ahora les corresponderá a los teóricos de izquierda y de derecha opinar fría o acaloradamente sobre el documento.

Desde mi punto de vista, no fueron rozados ni con el pétalo de una flor los privilegios del imperio. Si se dispone de la paciencia necesaria para leerlo desde el principio hasta el final, podrá apreciarse cómo se trata simplemente de una apelación piadosa a la ética del país más poderoso del planeta, tecnológica y militarmente, en la época de la globalización de la economía, como quienes ruegan al lobo que no se devore a la Caperucita Roja.

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Posted in AGRICULTURE, BANKING SYSTEM - USA, BANKING SYSTEMS, CENTRAL BANKS, COMMERCE, CUBA, ECONOMIC CONJUNCTURE, ECONOMY, EUROPEAN CENTRAL BANK, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, G20, IMF, INDUSTRIAL PRODUCTION - USA, INTERNATIONAL, RECESSION, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS, THE LAST DAYS OF GEORGE WALKER BUSH - 2008/Jan. 2009, TRADE DEFICIT - USA, USA, WORLD BANK | Leave a Comment »

ASO WANTS BANKS TO COME CLEAN ON NON-PERFORMING LOANS (Japan)

Posted by Gilmour Poincaree on November 17, 2008

Published: November 15, 2008, 23:41

AP

Washington: Japanese Prime Minister Taro Aso believes world leaders gathering this weekend to Newly elected Liberal Democratic Party President Taro Aso speaks during a press conference at the party headquarters in Tokyo, Japanconfront global economic turmoil can learn valuable lessons from Japan’s efforts to recover from its own financial crisis in the 1990s, a spokesman said.

During that decade, the world’s second-largest economy was strongly criticised for doing too little to improve its banking sector’s health after a stock and real estate bubble burst.

Aso’s message at the summit is that banks must quickly and fully disclose their non-performing loans and remove them from their balancesheets, spokesman Kazuo Kodama told reporters on Friday.

Soul-searching

Leaders have “no luxury to engage in blame games”, Kodama said, but they should engage in “candid soul-searching on why this happened”. Aso, who planned meetings with the leaders of Brazil, Britain, Indonesia, Australia and the European Union, came to this weekend’s gathering of 20 of the world’s biggest developed and developing economies after announcing that Japan was ready to lend up to $100 billion (Dh367.8 billion) to the International Monetary Fund (IMF) to support nations reeling from the global financial crisis.

Kodama said Aso hopes China and countries in the Middle East also will contribute.

He said the IMF and World Bank’s governance structures should be reviewed to reflect better the world economic structure’s changing nature.

Japan has almost $1 trillion in foreign currency reserves, and officials in Tokyo have repeatedly said Japan was ready to provide the IMF with money for rescue packages. The Washington-based IMF has dipped into its reserves to provide emergency loans to Iceland, Hungary and Ukraine worth more than $30 billion.

Financial recovery efforts in Japan have contributed to an environment of more profitable lending; many banks have merged to face global competition, after years of writing off mountains of non-performing loans that piled up after the bubble burst in the early 1990s.

Kodama, in outlining Aso’s position on the economic crisis, said that providing public funds for banks also would help resolve the problem of non-performing loans. He said: “The world should also be making efforts to support the dollar-based currency system, on which the current international economic and financial systems rely.”

Meanwhile, the finance ministers of China, South Korea and Japan also met on Friday evening and agreed that their countries “should play a pivotal role in maintaining economic and financial stability in the region,” according to a joint statement.

They recognised the need to boost financial cooperation and agreed to explore an “increase in the size of bilateral currency swap arrangements” among the countries.

Top finance officials from the countries will hold a financial stability workshop in Tokyo on November 26.

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Posted in BANKING SYSTEMS, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, G20, IMF, INTERNATIONAL, INTERNATIONAL RELATIONS, JAPAN, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS | Leave a Comment »

LOS LÍDERES MUNDIALES ACUERDAN MAYOR TRANSPARENCIA Y REGULACIÓN FINANCIERA – Proponen crear un organismo que controle los grandes bancos y reforzar el papel del Fondo Monetario y el Banco Mundial

Posted by Gilmour Poincaree on November 16, 2008

16.11.2008

por Mercedes Gallego – Corresponsal, Washington

La reforma de los mercados financieros y mayor transparencia y regulación de los mismos son algunos Oxfam campaigners prepare to welcome world leaders to Washington DCde los acuerdos genéricos alcanzados ayer por los líderes del G20 además de España, Holanda y la República Checa -añadidas bajo la bandera de la Unión Europea- en una cumbre celebrada en Washington que pretende conjurar la crisis financiera que azota al mundo desde hace un año y que amenaza con transformarse en una debacle económica a escala planetaria. Entre las medidas concretas decididas está la creación de un ‘colegio de supervisores’ que controlará los principales bancos del mundo y cuya lista deberá estar elaborada antes del final de marzo.

«Estamos decididos a mejorar nuestra cooperación y trabajar juntos para restaurar el crecimiento global y lograr las reformas que necesita el sistema financiero del mundo». Así comienza la declaración final suscrita ayer por los líderes de los países que generan el 90% del PIB mundial, en una ardiente defensa del capitalismo y el libre mercado, cuyos cimientos se han tambaleado con la crisis crediticia.

Lo conseguido ayer ha sobrepasado las esperanzas de algunos especialistas, que no confiaban en compromisos importantes ante el vacío de poder estadounidense. En cualquier caso, el texto supone El presidente George Bush, en el centro, con Zapatero a su espalda, en el momento en que los dirigentes mundiales abandonan el estrado tras la foto de familia antes de la cumbre - REUTERSuna victoria personal para Bush, que ha logrado que el mundo rinda pleitesía a un sistema en crisis. La declaración advierte de que un sobreproteccionismo por exceso de regulación pondría en peligro al sistema que tan ardientemente defienden como el generador de la riqueza y la prosperidad mundial. «Subrayamos la importancia crítica de rechazar el proteccionismo y no volvernos hacia adentro en tiempos de incertidumbre financiera», dice el texto.

Estímulos fiscales

Los líderes analizan en el documento las raíces de la crisis, se congratulan por las medidas adoptadas de forma global para atajarla y se comprometen a favorecer el dinamismo económico, la creación de empleo, el crecimiento, la innovación y la reducción de la pobreza. Algo que pretenden lograr con estímulos fiscales a escala nacional, que España se ha comprometido a apoyar, además de reforzar el papel del Fondo Monetario Internacional y el Banco Mundial como instrumentos de rescate para los países en crisis.

El documento aboga porque todas esas medidas se pongan en marcha antes de que acabe el próximo mes de marzo de 2009, con el fin de que puedan ser evaluadas en una próxima cumbre, a celebrar antes del 30 de abril, en un lugar todavía sin determinar, y a la que ya asistirá el nuevo presidente de Estados Unidos, Barack Obama.

La declaración atribuye a cada país la responsabilidad de fortalecer la regulación. Entre los objetivos de esa nueva política estarán la vigilancia de los fondos de alto riego (hedge funds) y de las firmas de calificación de riesgo, propuestas defendidas por los representantes europeos.

Principios básicos

La nueva era abierta ayer en el sistema financiero internacional, según el texto final de la cumbre, debe descansar sobre cinco principios: mayor transparencia contable, mejora de la regulación, promoción de la integración de los mercados, refuerzo de la cooperación global y reforma de las instituciones financieras.

También se apuesta por promover la integridad ética de los mercados financieros y proteger a los consumidores, evitando los conflictos de intereses y previniendo la manipulación ilegal, las actividades fraudulentas y los abusos.

En la declaración final, los mandatarios alzan la voz en contra del proteccionismo comercial, e instan a una conclusión de la Ronda de Doha, de la Organización Mundial de Comercio (OMC).

En Londres

Nicolas Sarkozy propuso que la próxima cumbre del G20 se celebre en Londres, con motivo de la presidencia de turno de Gran Bretaña de este grupo.

Ahora, «el G20 es visto como el organismo relevante» para hacer frente a los problemas que surgen a raíz de la crisis financiera, dijo el mandatario francés en el encuentro con la prensa, al que acudió acompañado del presidente de la Comisión Europea, Jose Manuel Durao Barroso.

El G20 está integrado por la Unión Europea (UE), el Grupo de los Siete (EE UU, Canadá, Japón, Alemania, Reino Unido, Italia y Francia) y Corea del Sur, Argentina, Australia, Brasil, China, India, Indonesia, México, Arabia Saudí, Sudáfrica, Turquía y Rusia.

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Posted in BANKING SYSTEMS, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, G20, IMF, INTERNATIONAL, INTERNATIONAL RELATIONS, REGULATIONS AND BUSINESS TRANSPARENCY, WORLD BANK | Leave a Comment »

CHINA SAYS IT MIGHT WORK WITH IMF ON GLOBAL CRISIS

Posted by Gilmour Poincaree on November 15, 2008

Published: Nov 14, 2008 12:31 AM – Modified: Nov 14, 2008 04:52 AM

by Joe McDonald – AP Business Writer

BEIJING – China said Friday it could work with the International Monetary Fund to help countries hurt by the global financial crisis, suggesting it might heed appeals to contribute to a bailout fund.

As President Hu Jintao prepared for a Washington meeting of leaders to discuss a response to the crisis, Vice Finance Minister Yi Gang sounded constructive, saying China was prepared to work with other countries. But at the same time, Yi reiterated that the most important step Beijing can take will be to keep its own economy stable.

“We are positively taking part in rescue actions for this international financial crisis,” Yi said at a news conference. “There are many ways to do this. We can do it bilaterally, such as currency swaps. And we can do it multilaterally, such as taking part in activities on the platform of the IMF.”

Hu is expected to come under pressure at the weekend meeting to use China’s $2 trillion in reserves to help expand an IMF stability fund. Beijing has yet to respond directly to such suggestions but says Hu will press Western leaders to give developing countries a bigger role in such global financial institutions, a measure that analysts say might be a condition for a Chinese contribution.

Japanese Prime Minister Taro Aso said Friday that Japan is ready to lend up to $100 billion to the IMF to support nations reeling from the global financial crisis. The IMF has dipped into its reserves fund to provide emergency loans to Iceland, Hungary and Ukraine worth more than $30 billion.

Yi repeated Beijing’s insistence that keeping its economy growing will be an important contribution to global stability. China announced a nearly $600 billion package on Sunday to boost economic growth through higher spending on construction and social programs.

“We have worked to stabilize the growth of China’s economy. We believe this will be our biggest contribution to the international response to the financial crisis,” Yi said.

Also Friday, another official said weakness in China’s economy is worsening and the government faces a severe challenge as it tries to avert a sharp downturn.

“The downturn trend in our economy is more obvious, especially since September. We hope a rapid downturn in growth will not occur,” Mu Hong, a deputy chairman of the nation’s main planning agency, said at the news conference with Yi.

Mu expressed confidence the stimulus package would help the country weather the global downturn. But he said, “This international financial crisis is a new challenge for us. It is a severe challenge.”

Beijing is moving quickly to launch the package and will distribute most of a planned 100 billion yuan ($15 billion) in additional government spending within the next two weeks, Mu said. He said the money will be spent on housing, rural development, highways, public health and environmental protection.

The government says the total stimulus – which also calls for higher investment by state companies – will be worth 4 trillion yuan ($586 billion) over the next two years.

China’s economic growth fell to 9 percent in the latest quarter after a stunning 11.9 percent expansion last year. Exporters say foreign customers are canceling orders, which has led to layoffs and factory closures.

Mu blamed the weakness on the global downturn. But data released Friday showed domestic investment – a key force driving China’s rapid expansion – is also cooling as companies cut back or put off spending on real estate, factories and other assets.

Investment in assets grew by 27.2 percent in the first 10 months of this year over the same period of 2007, the National Bureau of Statistics reported. That was down from the 27.6 percent growth reported for the first nine months of the year. Such investment is estimated to account for one-third of China’s economic growth.

“China’s pace of economic growth will reflect the extent to which accelerated infrastructure spending will be able to offset a slowdown in the property and manufacturing sectors,” said a report by Jing Ulrich, JP Morgan Chase & Co.’s chairwoman for China equities.

“Further fiscal and monetary easing may be called for as growth moderates,” Ulrich said.

© Copyright 2008, The News & Observer Publishing Company

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Posted in ASIA, BANKING SYSTEMS, CENTRAL BANKS, CHINA, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, G20, IMF, INDUSTRIAL PRODUCTION, INTERNATIONAL, JAPAN, STOCK MARKETS, THE FLOW OF INVESTMENTS | Leave a Comment »

RUSSIA’S ANTI-CRISIS BILL TOPS $222BN

Posted by Gilmour Poincaree on November 14, 2008

13/11/2008

The world’s leading countries have spent (or allocated) a whopping $9.2 trillion on anti-crisis measures, with the UK in the lead, having already spent 37 percent of its GDP for the purpose. For Russia, the crisis has so far cost $222 billion, or 13.9 percent of its GDP. The estimates are provided by FBK Company, based on a number of public resources like press releases by governments, central banks and the International Monetary Fund, RBC Daily has reported.

In choosing an anti-crisis strategy, western governments pay particular attention to the mechanisms of guarantees and insurance, according to the FBK report. In Germany, for instance, state guarantees for corporate debts total EUR 400 billion. Russia, on the other hand, has adopted a completely different approach, focusing on direct cash allocations instead of guarantees.

The government’s anti-crisis plan, which was approved earlier this month, provides for some guarantees, but only in regard to companies carrying out state orders. Meanwhile, the mechanism of government guarantees is set out by law, including the budget law. “Thus, state guarantees could have been used as the main anti-crisis tool, but this has not happened,” noted Igor Nikolayev, chief strategic analyst at FBK, who co-authored the report.

What Russian and foreign anti-crisis efforts have in common is that financial regulators are not accepting responsibility for the crisis. It is very difficult to bring them to account, believes Elena Sharipova, at Renaissance Capital. “What claims can be made against Finance Minister Alexei Kudrin or Central Bank Chairman Sergei Ignatyev? They had reasons to save for a rainy day,” she added.

U.S. law, however, envisages responsibility for poor management, the report says. Under the RARP program, for example, top managers who brought their companies to such a poor condition will lose all their bonuses. In Germany, the shareholders in cash-strapped banks go without dividends, too.

In Russia, however, managers and owners are simply not held responsible. Yet, businesses should assume their fair share of responsibility for what is happening, FBK’s experts argue. “This is an obvious thing abroad, but not in Russia. We continue to rescue people in Brioni suits,” the report says.

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Posted in BANKING SYSTEMS, CENTRAL BANKS, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, GERMANY, IMF, INTERNATIONAL, REGULATIONS AND BUSINESS TRANSPARENCY, RUSSIA, UNITED KINGDOM | Leave a Comment »

INDIA CAN WEATHER CRISIS AND RETURN TO DECENT GROWTH: FM

Posted by Gilmour Poincaree on November 14, 2008

14 Nov 2008, 0846 hrs IST, PTI

On Board PM’s Special Aircraft: Finance Minister P Chidambaram on Friday said the current global economic downturn will impact India to some extent on growth, exports and currency inflows but expressed confidence that the country will still return a “decent growth”.

“We can’t measure the impact. We have said we will be indirectly impacted. There will be impact to some extent on our growth, our exports and it will also impact the currency flows, which it has already.

“But we are confident that given the underlying strengths of Indian economy we can weather the crisis and still return a decent growth in 2008-09. Even the IMF last week’s assessment places India’s growth rate in current fiscal at 7.8 per cent. We will still return a decent growth rate. We will suffer an indirect impact,” he told reporters accompanying Prime Minister Manmohan Singh on his special flight to Washington where he will attend a summit of world leaders tomorrow on the current global economic and financial crisis.

Asked whether with the international trend of interest rates moving towards zero per cent, the Indian rates were still high, he said this was a question the RBI Governor has to answer. “I think he has given his answer on October 6, October 24 and October 31. He will respond as the situation develops. I can’t give an answer to it.”

To a question whether there were plans to reduce the Cash Reserve Ratio of banks, he said once again this was a question to RBI Governor could answer.

About India’s credit growth rate, Chidambaram said he was not not targeting any growth of credit. It was growing at 29 per cent today. If it was non-inflationary growth then there was no worry about the credit growth rate. “That is what Dr Bimal Jalan said in an interview two days ago. We have to juxtapose the rate of credit growth with inflation. If the growth is non-inflationary then we can accept the current credit growth. But it depends upon its impact on inflation. The Governor will have to take a call on that.”

To a question about the British press saying India’s GDP growth rate will be less than projected, he said estimates vary between 7 and 7.8 per cent. IMF is 7.8 per cent and RBI is 7.5 to 8 per cent. The Prime Minister’s Economic Advisory Council is 7 to 7.5 per cent.

“We will still have a very decent growth rate. What do I have to tell the British. I think it will still be higher than their growth rate,” he said.

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Posted in ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS - USA - 2008/2009, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, IMF, INDIA, INTERNATIONAL, THE FLOW OF INVESTMENTS | Leave a Comment »

JAPAN PM UNVEILS ANTI-CRISIS STEPS AHEAD OF SUMMIT

Posted by Gilmour Poincaree on November 14, 2008

14 Nov 2008, 09:43 hrs IST

REUTERS

WASHINGTON: Japan proposed a raft of steps on Thursday to help overcome the global financial crisis and avoid a future meltdown, including offering to boost the IMF’s firepower and calling for tougher supervision of credit rating agencies.

In a position paper released ahead of a leaders’ summit of the Group of 20 industrialised and emerging nations in Washington, Prime Minister Taro Aso said Tokyo would continue to support the dollar-based currency system despite market concerns about its outlook as U.S. economic power declines.

Japan, which holds the world’s second-largest foreign reserves at $980 billion, would be ready to lend up to $100 billion to the International Monetary Fund (IMF) to assist emerging economies if the Washington-based lender finds itself with insufficient funds, he said.

Behind the prime minister’s comments is a view in Tokyo that Japan had to learn its lesson the hard way from its prolonged response to tackling its own financial crisis in the 1990s.

He said other nations should also consider clarifying management responsibility when injecting public funds into banks, and adopt fair valuation and early disclosure of non-performing loans.

“At present, capital flows have become so global that they can occur instantaneously to take advantage of any differences that may exist among the regulations of various countries,” he said. “Concerted action to help converge each country’s various policy efforts to prevent a recurrence of the financial crisis is now an unavoidable challenge.”

On the role of the IMF, he somewhat distanced himself from some European views that the Washington-based lender should be entrusted with primary responsibility over financial regulation.

Instead, he said the Financial Stability Forum (FSF) should be given a clear status above standard-setting international organisations such as the Basel Committee, adding that the forum’s work with the IMF should be reinforced.

He said more emerging nations should belong to the FSF, whose members include international bodies and the Group of Seven nations plus Australia, Hong Kong, the Netherlands, Singapore and Switzerland.

In a proposal that may not sit well with the U.S. free-market focus, he said there should be discussions on providing legal authority to government officials over rules on credit rating agencies. He also called for fostering local credit rating agencies, such as in Asia, and to further develop a regional scheme to help provide dollar funding as in Asia’s web of currency swap agreements called the Chiang Mai Initiative. But he stressed that “open regionalism complements globalism in a positive sense.”

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Posted in ASIA, BANKING SYSTEMS, CENTRAL BANKS, CURRENCIES, DOLLAR (USA), ECONOMIC CONJUNCTURE, ECONOMY, EUROPE, FINANCIAL CRISIS 2008/2009, FINANCIAL MARKETS, FINANCIAL STABILITY FORUM (FSF), IMF, INTERNATIONAL, JAPAN, REGULATIONS AND BUSINESS TRANSPARENCY, THE FLOW OF INVESTMENTS, USA | Leave a Comment »

G20 DEFENDE NOVA REGULAÇÃO DO SISTEMA FINANCEIRO INTERNACIONAL

Posted by Gilmour Poincaree on November 12, 2008

10 de Novembro de 2008

Os países do G20 concluíram que é preciso fortalecer o Fundo Monetário Internacional (FMI), o Banco G20Mundial e o Fórum de Estabilidade Financeira (FSF) e que não há necessidade de se criar uma nova instituição para estabelecer políticas a serem adotadas pelo sistema financeiro internacional. “A posição do G20 é de que a crise exige uma mudança de postura destes organismos, com a criação de novos mecanismos de regulação financeira e uma maior coordenação”, disse o ministro da Fazenda, Guido Mantega, neste domingo (9), após presidir a reunião plenária do G20, em São Paulo. Para Mantega, o G20 é um forte candidato a coordenar ações contra a crise, devido a importância que os emergentes adquiriram nos últimos dez anos.

O ministro relacionou outros pontos de consenso entre os integrantes do G20. Segundo ele, todos concordaram que, diferentemente da crise asiática ocorrida nos anos 90, a atual, iniciada nos países avançados, “colocou todas as nações no mesmo barco” e agora há necessidade de uma ação coordenada para enfrentar a turbulência financeira global. Ele reafirmou que o aumento do poder decisório dos emergentes está ancorado no fato de que estes países são responsáveis por 75% do crescimento da economia mundial. “Por isso, o G20 deve ter um papel mais destacado e ser transformado numa instituição mais relevante”.

Ajuda – Outros pontos de consenso foram de que os países devem adotar políticas anti-cíclicas fiscais e monetárias para combater a crise financeira e que os países avançados precisam ajudar os emergentes que perderam liquidez devido à saída de fluxo de capitais.

No que se refere às políticas monetárias, os bancos centrais manifestaram preocupação com a inflação e defenderam que as medidas de combate à crise não devem ameaçar o equilíbrio monetário dos emergentes. Conforme o ministro Guido Mantega, de outro lado, o G20 discutiu os perigos da deflação provocada com as fugas de capitais. “Embora seja um movimento passageiro, houve desvalorização das moedas e a tendência e de deflação, acompanhada da diminuição dos níveis de atividade”.

Mantega não detalhou as propostas que serão levadas à cúpula do G20, com a presença de chefes de Estado, que ocorrerá no próximo dia 15 em Washington. Ele explicou que a reunião do final de semana foi de caráter político e ao longo da semana uma equipe técnica irá preparar uma agenda de ações. “As equipes vão trabalhar na elaboração de um cronograma de execução destes procedimentos.”

Reuniões regulares – O ministro informou ainda que os ministros de finanças e presidentes dos bancos centrais discutiram como fortalecer o G20 transformando-o numa instância de Chefes de Governos, liderados por presidentes. Os participantes defenderam ainda que o G20 deve fazer reuniões regulares e não mais se limitar a encontros antes das reuniões de abril e outubro do FMI e do Banco Mundial, além de promover mais reuniões extraordinárias.

Os emergentes decidiram também criar uma sala de situação virtual para acompanhar os acontecimentos econômicos e influir nas decisões. A sala será coordenada por um grupo especial do G20 a ser formando para esta finalidade. No âmbito da regulação financeira, os emergentes vão sugerir na cúpula de Washington o aumento da fiscalização das ações das instituições de hedge funds (fundos de proteção contra riscos de variações nas taxas de juros e de câmbio).

Abertura – Ao abrir a reunião plenária dos ministros da Fazenda do G-20, o presidente, Luiz Inácio Lula da Silva, reiterou a proposta de fortalecimento dos países emergentes: “Precisamos aumentar a participação dos países em desenvolvimento nos mecanismos decisórios da economia mundial”. O presidente também falou sobre a necessidade de medidas mais efetivas para diminuir os impactos da crise financeira internacional. “Os países desenvolvidos e instituições como o Fundo Monetário Internacional devem adotar medidas para restaurar a liquidez nos mercados internacionais”.

Editado pela Secretaria de Comunicação Social da Presidência da República
Nº 725 – Brasília

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Posted in A PRESIDÊNCIA, BRASIL, ECONOMIA - BRASIL, ECONOMIC CONJUNCTURE, FINANCIAL MARKETS, FLUXO DE CAPITAIS, G20, IMF, INTERNATIONAL, MINISTÉRIO DA FAZENDA, O PODER EXECUTIVO FEDERAL, REGULATIONS AND BUSINESS TRANSPARENCY, RELAÇÕES INTERNACIONAIS - BRASIL, WORLD BANK | Leave a Comment »

G-20 QUER QUE PAÍSES REFORCEM CAIXA DO FMI SE FOR PRECISO (Brasil)

Posted by Gilmour Poincaree on November 10, 2008

Publicação: 09/11/2008 18:10 – Atualização: 09/11/2008 18:11

Agência Estado

O G-20, grupo das 20 maiores economias do mundo, divulgou um comunicado com as conclusões do encontro de dois dias, realizado neste fim da semana, na capital paulista. No documento de cinco páginas, os países do grupo defendem a necessidade de reforma das instituições criadas em Bretton Woods e, pela primeira vez, citam a possibilidade de injeção de mais recursos em instituições como o Fundo Monetário Internacional (FMI) e o Banco Mundial.

No texto, os países afirmam que é necessário atentar para o uso adequado dos recursos dessas instituições, e observam que é preciso estar preparado para aumentar a capacidade de funding das mesmas quando necessário. O comunicado afirma, nesse contexto, ser bem-vindo o uso de recursos do FMI para promover a ajuda emergencial às nações necessitadas, como também a criação de novos mecanismos para ampliar a liquidez no curto prazo. O documento também cita o reconhecimento do G-20 de que o Financial Stability Forum deve ser estendido para ter a participação dos países emergentes.

O comunicado também observa que a queda dos preços das commodities internacionais tem diminuído a pressão inflacionária em especial nos países desenvolvidos. Isso, segundo o texto, permite que alguns bancos centrais adotem uma política monetária mais expansiva. Por outro lado, a depreciação cambial tem gerado pressões que podem ser mais persistentes nos países emergentes. Nesse caso, o documento comenta a necessidade de que as autoridades monetárias destas nações permaneçam cuidadosas com a questão.

O documento do G-20 está em linha com as propostas que serão apresentadas pelo governo brasileiro na reunião dos chefes de Estado dos mesmos países no próximo dia 15 de novembro, em Washington, bem como com os discursos do presidente Luiz Inácio Lula da Silva e do ministro da Fazenda, Guido Mantega, feitos durante o encontro do G-20.

Os representantes das 20 maiores economias também afirmam no comunicado estarem determinados a adotar todos os passos necessários para que haja um crescimento não inflacionário, mantendo a estabilidade e a sustentabilidade de acordo com as necessidades e instrumentos disponíveis nos respectivos países, incluindo política fiscal e monetária. “Reconhecemos a necessidade de apoiar os esforços das economias emergentes, em especial ajudá-las a encontrar recursos adicionais para o seu desenvolvimento”, dizem os países do G-20 no comunicado. Eles aproveitaram para convocar todos os países a resistirem a adotar medidas protecionistas, e reiteraram o apoio à conclusão das negociações na rodada Doha

No documento, foi salientado que um dos aspectos mais deletérios da crise atual é o congelamento do crédito privado e do mercado de equity, e a tendência da volta do fluxo de capital para o local onde a crise foi originada. “Exploramos caminhos para restabelecer o acesso dos países emergentes e em desenvolvimento ao crédito e ao fluxo de caixa”, diz o texto. O documento ressalta que as políticas fiscais têm sido um instrumento importante para minimizar a atual crise financeira

Os países do G-20 consideraram ser essencial que os recentes ganhos na redução da pobreza e da desigualdade social não sejam afetados pela crise financeira e pelo desaquecimento da economia global. Eles reconheceram que muitos países podem ser afetados pela volatilidade dos preços das commodities e pela mudança no sentimento dos investidores. Por isso, concordam com a importância da manutenção de fluxos oficiais para esses países.

Ao mesmo tempo, ressaltam a necessidade de que todos os bancos de desenvolvimento trabalhem para sustentar os investimentos de infra-estrutura para o desenvolvimento dos países pobres. Para os membros do G-20, o desafio-chave é resolver a crise financeira de maneira durável e mitigar os impactos na atividade econômica global através de medidas compreensivas, coordenadas e oportunas. “As medidas devem ser desenhadas não apenas para restaurar o crescimento e a estabilidade financeira, mas também para minimizar os impactos sociais negativos, particularmente nos países emergentes e nas nações mais pobres.

Para o G-20, a conjuntura adversa na economia mundial foi provocada, em grande parte, pelo “excesso de risco e falhas nas práticas de gestão de risco nos mercados financeiros, por políticas macroeconômicas inconsistentes, que causaram desequilíbrios domésticos e externos, assim como deficiências na regulação e supervisão dos sistemas financeiros em alguns países avançados”. No comunicado, as nações reforçaram a disposição de tomar as medidas necessárias para reduzir a volatilidade do mercado financeiro global e restaurar o funcionamento do mercado de crédito nos países emergentes e avançados

A preocupação em normalizar o funcionamento dos mercados financeiros decorre da repercussão que a atual crise internacional tem na economia real. Segundo o G-20, alguns países avançados, onde a crise teve origem, já dão sinais de recessão ou já enfrentam retração na atividade econômica. Paralelamente, o comunicado do grupo também informa que já há sinais de crescimento mais lento nas economias emergentes, que hoje possuem um peso importante na expansão da economia global. “Nós reconhecemos que a falta pronunciada de confiança conduziu a um severo confinamento do crédito, o que afetou o consumo, os investimentos e o emprego”, afirmaram as nações do G-20 no documento

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FARMERS ASSAIL IMF TERMS FOR LOAN (Pakistan)

Posted by Gilmour Poincaree on November 3, 2008

November 03, 2008 – Monday

Bureau Report

HYDERABAD, Nov 2: The Sindh Abadgar Board has rejected the government proposal for obtaining $5 billion loan from the International Monetary Fund and cautioned that if the government does not change its decision it would be tantamount to signing the death warrant of the national economy.

The board leaders said at a meeting held on Saturday under its chairman Abdul Majeed Nizamani that the IMF always targeted agriculture sector and the fund was more likely to impose condition to end subsidy for agriculture sector.

The meeting pointed out that the IMF loan would be extremely dangerous for the national economy and political stability of the country and demanded that the president and prime minister bring the matter before the National Assembly.

The meeting advised the government to make efforts to obtain $1.5 billion from China by mortgaging shares of government corporations and $800 million reimbursement from the United States under the coalition support fund for war on terror.

The meeting warned that if the government fell into the IMF trap and withdrew subsidy on agriculture, it would have to spend more money on importing food items.

The meeting resolved to make the “Grow More Wheat” campaign a success and demanded that the government make all the purchasing centres for wheat functional in Umerkot, Mirpurkhas, Badin and other areas where wheat was harvested earlier.

The meeting said that keeping in view 35 per cent shortage of water in the system, Irsa should be asked to ensure supply of 11.7 million acre foot water of Sindh’s share.

The meeting stressed the need for safeguarding wheat from the smugglers and disclosing the names of “30 respectable people” involved in the grain’s smuggling as disclosed by the prime minister himself on the floor of the assembly.

The meeting said that sugarcane growers were switching over to other crops largely due to government’s helplessness before PSMA over the past 10 years, which was very dangerous for sugar industry. The sugar mills must start crushing season according to government notification, the meeting demanded.

SCA: The Sindh Chamber of Agriculture warned on Sunday that delay in start of crushing season would seriously affect wheat cultivation and lead to wheat crisis in the coming months.

The senior vice-president of the chamber, Mir Murad Ali Khan Talpur, said at the chamber’s meeting that the government had fixed price of cotton at Rs1,900 per maund but the growers were being forced to sell their produce at Rs400 to Rs500 per maund.

The chamber’s general secretary, Akhund Ghulam Mohammad Siddiqui, complained that open blackmarketing of urea fertiliser had inflicted huge losses on the growers.

Sain Bux Rind said that Pasco’s failure to establish purchase centres for rice had created an opportunity for the rice traders to fleece growers. The government had fixed purchase of Irri-6 at Rs900 per maund but the growers were forced to sell their produce at Rs500 per maund, he said.

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Posted in AGRICULTURE, ASIA, COMMERCE, COMMODITIES MARKET, CRIMINAL ACTIVITIES, ECONOMIC CONJUNCTURE, ECONOMY, FINANCIAL CRISIS 2008/2009, GRAINS, IMF, INDUSTRIAL SUBSIDIES, INTERNATIONAL, PAKISTAN, RICE, SMUGGLING, SUGAR, WHEAT | Leave a Comment »

IMF LOAN AVERTED POSSIBLE BANKRUPTCY AND SOCIAL CRISIS – PM (Hungary)

Posted by Gilmour Poincaree on November 3, 2008

Budapest, November 1, 2008 – (MTI)

Without the IMF standby loan granted earlier this week, the financial crisis in Hungary could have led to bankruptcy and social crisis, Prime Minister Ferenc Gyurcsany told the Sunday newspaper Vasarnapi Hirek, which made the interview available to MTI on Saturday evening.

The PM was disputing a statement by opposition Fidesz party chief that accessing the line of credit from the International Monetary Fund was “shameful”.

In a worst-case scenario, the forint, Hungary’s currency could have continued sinking to 350/400 to the euro, triggering 20 to 30 percent inflation, he said.

It had dropped from 238/240 to the euro to 280/285 at the time the loan was announced, and firmed to 255/260 in the aftermath.

The other part of the problem, he said, was that Hungary was already having a hard time finding buyers for government securities. If it failed to sell them, all its foreign loans would have had to be paid off within three to six months, leaving the country without the money to pay government employees such as teachers and doctors, or to pay pensions, the PM continued.

“That would have been shameful,” Gyurcsany said.

What we were facing could have evolved into bankruptcy, said the PM, adding that two-thirds of the problem was caused by the international crisis and one-third by domestic shortcomings. As far as the domestic portion is concerned, the government is partly, but not wholly responsible. One concern is that residents have not saved any money since 2000/2001, leading to excessive spending and borrowing. Residents and businesses have done the lion’s share of their borrowing in foreign currencies, he added, which means an enormous foreign debt. In addition, there has been such – opposition initiated – resistance to reforms in the past two years that Hungary was extremely vulnerable, the PM suggested.

British Prime Minister Gordon Brown, German Chancellor Angela Merkel and French President Nicolas Sarkozy had all played key roles in securing the IMF loan for Hungary, Gyurcsany told Vasarnapi Hirek.

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JAPANESE GOV’T READIES MONEY FOR NEW IMF BAILOUT FACILITY

Posted by Gilmour Poincaree on November 2, 2008

Sunday, November 2, 2008

TOKYO (AP) – Japan is ready to provide some of its ample cash for any International Monetary Fund bailouts for struggling nations to help stabilize the growing global financial crisis, the finance minister said.

Japan will make that offer along with proposals about accounting standards and other regulatory adjustments needed to fix the growing economic woes at a world summit in Washington Nov. 15, Finance Minister Shoichi Nakagawa told reporters.

Nakagawa did not say the acceptance of its proposals would be needed to get any of the money but he said Japan expects to play a greater international leadership role on the international stage.

He said the IMF has about $ 210-billion funds but that may not be enough.

“Japan is ready if that prove insufficient,” he said, adding that Japan has $ 1 trillion in possible funding from its foreign currency reserves. “We see lending to the IMF basically as risk-free.”

He did not give specifics of what Japan’s proposals may be, stressing that Prime Minister Taro Aso was still hammering out details.

Britain and Germany support the creation of an International Monetary Fund facility to help smaller economies withstand the global financial crisis, Prime Minister Gordon Brown said on Thursday.

“We discussed how we must prevent contagion over the next few days to middle-income countries including in eastern Europe,” Brown told reporters after talks with German Chancellor Angela Merkel.

“It’s vital that the International Monetary Fund plays a central role in supporting these economies. We both agreed to support a new facility for the IMF which would draw on additional resources of countries with substantial reserves.”

IMF chief Dominique Strauss-Kahn told French daily Le Monde he would propose a new regulatory strategy at a meeting next month of the Group of 20 nations.

He said he would suggest a new type of loan to relieve short-term liquidity problems in some economies, and an increase in IMF resources which he said were insufficient to meet requirements over the medium

Nakagawa reiterated his earlier remarks and the views of other Japanese politicians that Japan wishes to exercise political leadership in offering its money and experience in wresting itself out of its bad debt woes of the 1990s.

He said Europe and the U.S. have historical experience with the Great Depression, but Japan has more recent experience and is in a better position to share its expertise.

“We were able to get ourselves out of our problems without help from any other nation,” he said at the Japan Press Center.

Earlier this week British Prime Minister Gordon Brown and German Chancellor Angela Merkel said the International Monetary Fund needs more money to bail out struggling countries.

Brown has called on countries such as China and the oil-rich Persian Gulf states to fund the bulk of an increase in the International Monetary Fund’s bailout pot. The IMF is giving Hungary, Iceland and Ukraine loans and is in discussions with Belarus.

The International Monetary Fund said Wednesday it is creating a new program to get money quickly to developing countries with strong economies that are facing cash crunches in the global financial crisis.

Nakagawa said countries need to respond quickly and work together to get out of the financial problems that started with the U.S. subprime mortgage crisis and is now spreading around the world.

“Japan is taking leadership,” he said.

He said Japan was also doing its part domestically with stimulus spending packages and regulatory changes to prevent a further plunge on the Tokyo stock market.

Merkel said joint action was needed to tackle the crisis.

“I believe the cooperation of the recent weeks has shown we are on the right path,” she said. “We must make risks (in financial markets) manageable.”

Brown said this week that the IMF needed more money to deal with the fallout from the global financial crisis and called on China and the Gulf states to play their part.

Asked about Brown’s call, China’s Foreign Ministry spokeswoman responded vaguely on Thursday but kept the door open to a bigger Chinese role in international rescue efforts.

Brown’s spokesman said he welcomed the positive responses from Germany and China to the proposal “and the indication that they (China) have given that they would be prepared to consider contributing to any such fund”.

Brown has said the issue of giving the IMF more resources will be on the agenda when he visits the Gulf this weekend.

Brown said he and Merkel were “in total agreement” about what needed to be done at a Nov. 15 global summit in Washington to discuss how to reform the global financial system.

“We need to have a transparency that has not existed in every area of the banking system,” he said.

Brown voiced confidence that the leaders would agree in Washington on the need for reforms to global supervision and cross-border cooperation as well as on the need to reopen talks on a new global trade agreement.

Merkel made no mention of a German economic stimulus programme widely trailed in national media, which a senior legislator in her ruling coalition said would be worth 20-25 billion euros ($ 26 billion-$ 32 billion).

Brown defended the decision he made back in 1997 to make the Bank of England independent.

“It’s absolutely the right idea. It’s stability and an anchor for our financial and economic system,” he said.

“The Bank of England has brought down interest rates twice recently. They continue to look at what they can do for the future, but I think we’ve got to understand that the way to deal with this global problem … is by a comprehensive set of measures,” he said, referring to interest rate cuts, tax cuts and British efforts to help homeowners and small businesses.

“I think you’ll see us, in the next few days, in a position to do more to help people face what is a global problem,” he said.

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IPEA: CRISE PÕE EM XEQUE PADRÃO DE AVANÇO DO SÉCULO 20 (Brasil)

Posted by Gilmour Poincaree on October 31, 2008

31/10/2008

O presidente do Instituto de Pesquisa Econômica Aplicada (Ipea), Marcio Pochmann, disse, nesta quinta-feira (30), que é difícil avaliar se o pior da crise financeira internacional já passou porque a situação indica ser de longa duração. “Está em xeque o padrão de crescimento do século 20, que aliás é fortemente degradante do meio ambiente”, afirmou o presidente da instituição, que é uma fundação pública vinculada ao Núcleo de Assuntos Estratégicos da Presidência da República.

Pochmann destacou ser necessária a reconstrução da regulação do sistema financeiro internacional. “As ações até agora são contra os efeitos da crise, e não sobre as causas da crise”, disse. Para ele, as causas estão ligadas à descrença na moeda de curso internacional, o dólar, e à necessidade de refundação das regras e das instituições do sistema financeiro internacional.

Segundo Pochmann, instituições multilaterais como o Fundo Monetário Internacional (FMI) e o Banco Mundial ficaram à margem do enfrentamento da crise e as decisões estão sendo tomadas pelos bancos centrais dos países. Ele declarou que os derivativos no mundo são mais de US$ 600 trilhões, enquanto o orçamento do FMI é de US$ 400 bilhões. “É uma desproporção enorme”, disse. Pochmann considera necessário ter autoridades multilaterais renovadas, com capacidade de intervenção. “Isso significa acordo entre países.” Com a eleição nos Estados Unidos este ano, ele avalia que decisões sobre o que considera as causas da crise devem ser tomadas no médio prazo e a partir do ano que vem.

Brasil

O presidente do Ipea disse também que “não é irreal imaginar uma expansão ao redor de 4%” para o Produto Interno Bruto (PIB) brasileiro em 2009. Ele explicou que, por um efeito estatístico, se este ano o PIB crescer 5%, o PIB do ano que vem terá aumento entre 2,8% e 3%, “a não ser que haja recessão, o que a gente não espera”.

Pochmann afirmou ainda que no seu modo de ver “seria interessante” a redução ou uma parada com viés de baixa da taxa básica de juros, a Selic, que foi mantida ontem sem viés pelo Banco Central em 13,75% ao ano. Ele comentou que “dentro da visão ortodoxa do Banco Central, é interessante destacar que estancaram a subida dos juros”.

Para Pochmann, a desaceleração da atividade econômica em função da crise internacional faz com que haja uma tendência de queda no “núcleo duro” da inflação. Ele comentou ainda que há uma convergência de queda nas taxas de juros no mundo devido à crise e que a taxa brasileira é das mais altas. As declarações foram feitas em entrevista coletiva ao chegar para a 4ª Jornada de Estudos de Regulação, no Ipea.

Fonte: Agência Estado

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IMF OFFICIALS CONCLUDE FIRST ROUND OF TALKS TO BAIL OUT PAKISTAN

Posted by Gilmour Poincaree on October 31, 2008

Islamabad, October 30, SPA

The International Monetary Fund (IMF) on Thursday concluded the first round of technical talks in Dubai with Pakistani officials about creating a system to save the south Asian nation from economic collapse, officials said according to dpa. Pakistan’s government is facing a tightening balance of payments. Its financing gap stands at around 7 billion dollars for the current fiscal year, which ends June 30, 2009.

“There are one or two points on which both sides could not evolve consensus,” said a senior official, who was part of the returning Pakistani delegation on Thursday. The official, who refused to be named, said to dpa that the IMF was insisting on raising discount rates by 3 to 4 per cent above the existing 13 per cent, in order to curtail inflation, which currently stands at over 30 per cent.

SPA

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INTERVIEW: “ALBANIA HAS PASSED A SUCCESSFUL TRANSITION”

Posted by Gilmour Poincaree on October 31, 2008

October 29, 2008

Filed Under Economy, General News, Invest-Inform

INTERVIEW: “ALBANIA HAS PASSED A SUCCESSFUL TRANSITION”

Interview

Tirana, Oct. 29, 2008 (AENews) – IMF permanent representative in Tirana Ann-Margaret Westin commented in an interview for AENews the 17 year-long agreement with Albania. The last agreement will expire in the January of the next year.

AENews – How do you evaluate the 17 years long cooperation of the IMF with Albania?

Westin – After some 16 years of IMF programs and even more years of transition, Albania now has macroeconomic stability firmly entrenched. Growth has been stable and high, with per capita income more than doubling in the last decade, and inflation has been well contained, reflecting prudent fiscal and monetary policies. This is an achievement of the Albanian authorities, the current government as well as previous governments, and we are happy to have been partners of this successful transition.

Macroeconomic stability has also been retained under the current program, which happens to coincide with my tenure here and with the current government’s mandate. The overall public debt burden has continued to decline, from 58 percent of GDP in 2005 to a currently projected 52 percent this year; and inflation has been contained within the Bank of Albania’s 2–4 percent target range, despite external shocks in food and fuel prices.

The relationship with the Albanian authorities remains excellent and we have an open and productive dialogue. Although there can be differences of opinion, we have managed to agree on key policies and all reviews so far under the current program have been concluded on time.

AENews – Do you think that the Albanian politics has reached the necessary maturity to maintain macroeconomic stability without the need of IMF monitoring?

Westin – There are various reasons why countries might chose to have an IMF arrangement. There is the access to Fund financing. Apart from the financing, some countries have chosen to have a Fund program to maintain the close policy dialogue and to signal to the rest of the world that policies are on track. This signaling effect might be particularly important for international observers and investors when official statistics are still not up to international standards or in an election year.

If the Albanian authorities are interested, the IMF would be ready to discuss a new arrangement. This program could focus on maintaining macroeconomic stability, but could contain less conditionality on structural reforms and possibly access to IMF financing. It could take the form of a regular or precautionary Stand-By Arrangement (SBA).

Irrespective of whether Albania has a program with the Fund or not, prudent macroeconomic policies will need to be maintained to lay the foundation for continued poverty reduction and sustained high economic growth. The Albanian authorities, both this government and previous governments, have a very good track record as to maintaining macroeconomic stability. However, with the expiry of the IMF arrangement, they will need some other type of fiscal rule to anchor policies, such as an expenditure, deficit, or debt ceiling. This will be all the more important as Albania plans to access global financial markets.

Lastly just to note that Albania will continue to have access to technical assistance and undertake annual Article IV Consultations after the conclusion of the program, as is the case with all IMF member countries. The Article IV Consultation is at the heart of our surveillance activities, where we provide an assessment of economic and financial developments, and advise on risks to stability and growth and if policy adjustments are warranted.

AENews – There is one theory that says that the IMF leaves a country generally before a crisis. Is there a real risk for crisis in Albania in the next 3 years?

Westin – Definitively not. The current three-year IMF arrangement with Albania, which is supported by a combined Poverty Reduction and Growth Facility (PRGF) and Extended Fund Facility (EFF), was approved in January 2006 and is set to expire according to schedule in January 2009, under the assumption that its sixth and final review will be concluded on time. The current arrangement is the sixth program that Albania has had with the IMF. Since its inception, it was expected that this would be Albania’s last PRGF arrangement, an IMF lending facility designed for low-income countries.

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Posted in ALBANIA, ECONOMIC CONJUNCTURE, ECONOMY, EUROPE, IMF, INTERNATIONAL, MACROECONOMY | Leave a Comment »

TOUGH IMF CONDITIONS DIFFICULT TO ACCEPT: ASIF (Pakistan)

Posted by Gilmour Poincaree on October 29, 2008

October 29, 2008

by our Staff Reporter

ISLAMABAD, Oct 28: President Asif Ali Zardari said on Tuesday the government could ‘ill-afford’ President Asif Ali Zardari - PakistanInternational Monetary Fund’s financial assistance with tough conditions.

“Time is running out and there is an urgent need for the ‘Friends of Pakistan’ to extend a helping hand,” he told Adviser to the British Prime Minister Simon McDonald who had called on him at the President’s House.

Mr Zardari, however, made it clear that Pakistan was not looking for aid, but needed friends’ help to enhance trade and economic and investment opportunities.

According to a Foreign Office news release, the discussion focussed on Friends of Democratic Pakistan Initiative, measures and options being considered by the government to address the economic difficulties, Doha Process, situation in the border region, Afghanistan and bilateral cooperation. The president highlighted the government strategy to handle economic issues, socio-economic initiatives to settle tribal areas, including the Benazir Card for every household, and negotiations with the IMF.

He stressed that the war on terror, which had its roots in other regional events, had now become Pakistan’s war and the country and its people were paying a heavy price that needed to be acknowledged by the international community.

Mr Zardari quantified how one incident of terrorism impacted the already turbulent economy. He stressed the need to identify the forces that were funding militants in this expensive war. He was not convinced that drug money could be the only source of funding.

The president informed the British official about the state of relations with Afghanistan and termed recent exchanges and developments such as mini-jirga a manifestation of growing understanding and forward movement in relations.

Mr McDonald conveyed greetings from Prime Minister Gordon Brown and said that he fondly recalled the president’s visit to the UK in September when they had a fruitful and candid exchange.

The British adviser was highly appreciative of the unanimous resolution adopted by parliament on government’s policy for tackling terrorism.

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PUBLISHED BY ‘DAWN’ (Pakistan)

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