The International Monetary Fund says Greece has made “exceptional” progress in stabilizing its economy and remains on course to end its recession next year, despite missing targets for privatization and axing state jobs. …read more
Source: FULL ARTICLE at Fox World News
China has hit targets in virtually everything central planners have ever outlined. Plenty of naysayers cite China’s purported credit-debt bubble and its supposedly overbuilt infrastructure. Often, critics like “60 Minutes” cite China’s putative ghost cities, fully built urban areas where supposedly few to no residents live. I am not alarmed by China’s so-called ghost cities, much less Chinese overbuilding or vulnerability to a crash. The fact is, China’s urbanization goal requires that it build roughly 100 cities in the next decade, vastly greater than the scant, same five “ghost cities” belittled again and again over the last decade. Of the targets, Ordos has garnered the most publicity, probably due to its size and Mongolian desert location. But two documentary filmmakers, Adam Smith and Song Ting, offer a very different and compelling assessment. Ordos “sprang to life” on the heels of a major coal discovery. That led to massive building. Really, Ordos includes two cities, one already a vibrant metropolis of 2 million residents whose average income matches that in the U.S., the second as yet small, but as the film makers suggest, starting to catch fire. Whatever overbuilding China may have done, it was simply insufficient to create an economic crisis. The IMF authored the most comprehensive report to date on Chinese over investment. China’s debts, unlike those of the U.S. and most other countries, the IMF notes, are owed to China itself. Therefore, the risks of a full-blown Chinese economic crisis remain small. The misallocation of resources does create some economic strain. The IMF calculates that these translate into a subsidy from households to large state-owned enterprises, of roughly 4% of GDP. However, if that figure is accurate, or even somewhat higher, Chinese per capita income has nevertheless grown faster, over a much longer period of time, than in any country since the advent of capitalism. In the last 13 years, by contrast, real U.S. median incomes declined about 10%. Moreover, the IMF and Western analysts in general judge investment returns along a fairly short time horizon. China probably views returns on investment in its infrastructure, especially in energy, as heavily back-loaded. Chinese academic articles predict peak coal sometime in the next decade. Clearly, the world ought to start to prepare now, although gains will not be evident until coal supplies start to lag demand. To me, this provides yet another indication that China sits on firmer ground than many believe, and that fears of a Chinese real estate bubble in particular are way overblown. Here’s a number never cited in the U.S. press, real estate price changes relative to GDP. Broad-based measures of home or property prices in China, show that gains over several years pretty much match GDP growth. During the U.S. housing bubble, by contrast, home prices increased several times faster than annual growth in GDP. Similarly, in Japan, real estate prices during the late 1980s rose many times faster than GDP growth, while P/Es on the Nikkei in the same period often rose to triple-digit …read more
Source: FULL ARTICLE at Forbes Latest
Hungary is considering paying back early a bailout loan from the International Monetary Fund and also wants to close the organization’s office in Budapest.
National Bank of Hungary President Gyorgy Matolcsy said Monday in a letter addressed to IMF chief Christine Lagarde that while they “appreciate the valuable support” the Washington-based group gave the country, the stand-by credit program “is almost complete.” As such, it was no longer necessary for the IMF to keep an office in Hungary.
In 2008, during a Socialist-led government, Hungary received a rescue credit line of 20 billion euros ($25 billion at the time) from the IMF and other creditors. But Prime Minister Viktor Orban’s government chose not to renew the deal in 2010 to avoid closer IMF scrutiny of its economic policies.
Source: FULL ARTICLE at Fox World News
By Jens F. Laurson and George Pieler, Contributor
Led by China, the five “BRICS” states (Brazil, Russia, India, China, South Africa) plan to set up a development bank of their own. This is loosely characterized as an IMF and World Bank rival, which is to say an unholy combination of the two. Does this mean the fast-growing graduates of the Developing World are finally coming together as a potent force?
The International Monetary Fund says it has reached a provisional agreement on a $1.75 billion loan package for Tunisia that it says will strengthen the North African country’s economic stability and promote growth.
The IMF said in a statement Friday the agreement will also support Tunisian authorities’ reform program promoting private investment, job creation and social policies aimed at reducing economic and regional disparities.
The deal must still be approved by the IMF‘s executive board, which is expected to discuss the issue in May.
From: http://feeds.foxnews.com/~r/foxnews/world/~3/2-ZZ6ylg0dE/
Russia‘s economy is probably not, as Ksenia Yudaeva, Russia‘s representative to the Group of 20 nations told Bloomberg the other day, “already in recession,” but it’s economy is clearly decelerating: growth for 2012 as a whole was 3.4%, but in the 4th quarter of 2012 it was only around 2.1% and provisional estimates of growth in the 1st quarter of 2013 are only around 1.1%. The economic slowdown is so significant that it has already been reflected in the Economy ministry’s 2013 growth forecast, which was recently slashed from 3.6% to 2.4%. Before proceeding further it seems worth noting that the initial forecast of 3.6% wasn’t bizarrely optimistic or unrealistic: the IMF‘s 2013 projection for Russia was actually marginally higher at 3.7%, and other forecasts generally had Russia in the 3.5% range of unspectacular but reasonable growth.
The French government has lowered its growth projections and acknowledged that its won’t deficit fall as quickly as promised.
In a report Wednesday, the government says growth will be just 0.1 percent this year and 1.2 percent next. Those are down from the previous projections of 0.8 percent and 2 percent.
Even after the downgrades, the forecasts are above those expected by others. On Tuesday, the International Monetary Fund slashed its forecasts, predicting France will contract 0.1 percent this year and grow 0.9 percent next.
Since the government has said it won’t cut any more spending, lower growth means higher deficits: As a result, it won’t slash the deficit to 3 percent of annual gross domestic product until next year and won’t balance the budget during President Francois Hollande‘s term.
From: http://feeds.foxnews.com/~r/foxnews/world/~3/HWxxEMu5_Rg/
Filed under: Investing
The role of central banks in stimulus will be considered at International Monetary Fund (IMF) and G-20 gatherings. (Reuters)
Display ad revenue at Yahoo! (NASDAQ: YHOO) drops sharply. (Reuters)
News Corp. (NASDAQ: NWSA) will call its entertainment company 21st Century Fox. (Reuters)
Carl Icahn agrees to limit his stake in Dell Inc. (NASDAQ: DELL) but can join other bidders to make an offer for the company. (Reuters)
Procter & Gamble Co. (NYSE: PG) will lengthen the number of days after which it pays suppliers, which will allow it access to $2 billion in cash. (WSJ)
A new IMF report attacks the results of austerity taken on by financially troubled nations. (WSJ)
A reservations system glitch limits American Airlines bookings and causes a number of flights to be halted. (WSJ)
Boeing Co. (NYSE: BA) completes tests of batteries on its Dreamliner 787, but the FAA has not approved them. (WSJ)
Intel Corp.’s (NASDAQ: INTC) profits drop by 25% as PC sales tumble. (WSJ)
Investment manager John Paulson loses $1.5 billion in his bet on gold prices. (FT)
The drop in gold prices hits central bank asset values by $560 billion. (Bloomberg)
Filed under: 24/7 Wall St. Wire, Press Digest Tagged: BA, DELL, INTC, NWSA, PG, YHOO
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From: http://www.dailyfinance.com/2013/04/17/media-digest-4172013-reuters-wsj-ft-bloomberg/
By Agustino Fontevecchia, Forbes Staff
The global economy will continue to muddle through this year and next, as the IMF lowered its world output forecast for 2013 to 3.3%. The Eurozone’s recession is expected to drag on through this year, while Greece’s economy will contract for a sixth consecutive year under the crushing weight of austerity and lack of productivity. A slightly positive note is the emergence of a “three-speed recovery,” as the U.S. decouples from other ailing so-called advanced economies and grows on the back of the Bernanke Fed’s continued flooding of the market with easy money.
Cyprus‘ attorney general says parliament must vote on the 23 billion euro ($30 billion) bailout deal the country has agreed on with international creditors.
Petros Clerides confirmed to the Associated Press on Tuesday that the deal Cyprus reached with its euro partners and the International Monetary Fund must secure parliamentary approval to become valid.
In a written statement Tuesday, deputy government spokesman Victoras Papadopoulos said the government will act according to law.
Cypriot lawmakers have already approved many of the austerity measures that were mandated by the creditors — the European Commission, the European Central Bank and the IMF. They include cuts to government salaries, tax increases and an overhaul of the troubled banking sector.
The new vote will also cover extra measures that have been agreed upon since then.
From: http://feeds.foxnews.com/~r/foxnews/world/~3/mGaNtcZctAM/
A team from the International Monetary Fund has left Egypt without securing a broad backing from the country’s opposition for the government‘s economic plan.
The IMF mission was in Egypt for nearly two weeks of talks with government officials and the opposition around possible political consensus for a $4.8 billion loan request. Egypt is deeply polarized and this has further battered the economy.
Andreas Bauer, who headed the IMF group, said Tuesday the “mission made progress” on “possible financial support.”
The statement suggests a deal still hinges on the government‘s ability to reign in spending on energy subsidies and raise taxes.
Ahmed Kamel of the opposition Congress Party met with the IMF for two hours and says the deal must be done in a way that protects the poor.
From: http://feeds.foxnews.com/~r/foxnews/world/~3/zFhFhWmrrwE/
By Robert Lenzner, Forbes Staff My gold guru, Frank Giustra of Vancouver, Canada pushed me hard on gold from the summer of 2008 when it was selling at $900 an ounce– all the way up to $1900 an ounce in the summer of 2011– a hell of a run of accumulated gain of more than a double– while stocks floundered pretty badly. The gold story went like this; Ben Bernanke‘s policy of one QE after another– dramatically increasing the supply of greenbacks– was bound, sooner or later, to cause the dollar to face its own severe crisis of devaluation. Faith in the dollar was going to swoon badly– and then the late to the game investors would recognize that the only true protection against the denouement of paper currency was that precious metal gold. Giustra even believed that the panicky selling of dollars to escape its tarring and feathering would trigger a parabolic rise in the value of gold to some astronomically fantastic level– and then you were supposed to make your exit, selling to the crowd. Such noted hedge fund barons as George Soros and John Paulson signed onto this playbook to one degree or another. Family offices, public pension funds, fixed income advisors looking for an extra kick to their bond portfolios– and the many camp followers no matter how amateur trailed along, thinking to make a killing when gold shot through $200 an ounce to $5000 an ounce and tghen God knows where. Chinese banks, encouraged by the Communist government, allowed their banks to establish monthly gold accumulation plans as the way to stay ahead of whatever inflation hit the fastest growing economy in the world. Indian gold jewelry was hoarded while retail lenders offered credit to accumulators of silver, which was expected to move jointly with gold. Central banks in Asia and in Russia regularly purchased gold whenever the IMF scheduled auctions of its inventory. The tv networks were filled wit come-one advertisements to join the smart money. Then came the denouement in Europe, and pressure on the euro, while the Japanese economy languished and China appeared to be tightening up credit to avoid some kind of bubble. Gold retreated, advanced again, then retreated again– and seems stuck in a trading range between $1525 and $1650 an ounce. The dollar has not collapsed; rather it has gotten stronger as US treasuries are the safe haven of choice and are at record price levels as well as record low yields. Simultaneously, the shares of gold mining stocks have retreated due to the high cost of producing gold, political turmoil and strikes at major mines, and the need of governments like australia or Peru to seek high tax revenues from their mining giants. Desperately, the dreamers, the fantasists and the conspiracy end of civilization fanatics are looking for the new gold- Bitcoins, with staggering face values, or some new currency that will somehow have legs. It has been a great run. Even at $1550, the return since July, 2008 has been 67% over …read more
Source: FULL ARTICLE at Forbes Latest
The International Monetary Fund says debt-swamped Jamaica could receive up to $958 million in a four-year package.
The IMF says it will recommend this new program to its executive board, which should consider approving it at a meeting later this month.
In a Monday statement, the IMF says Jamaica has successfully met mandated prior actions. It says the success of a new deal depends on strengthening public finances, approving a set of reforms, and debt sustainability.
Overall, Jamaica‘s debt is over 140 percent of gross domestic product. Roughly 55 percent of government spending goes to paying it.
In February, Jamaica launched a debt-swap program to satisfy conditions to forge a new pact with the IMF and halt what the prime minister described as an economic crisis.
Source: FULL ARTICLE at Fox World News
By Rahim Kanani, Contributor Colombia, at one point in time, was more known for drug trafficking rather than its economic prowess, but that reputation is slowly changing as the nation continues to post strong economic growth numbers. The GDP data is even more impressive in light of the struggles the Western world has been experiencing. The nation recorded annual GDP growth of between 4-6% in the 2010 to 2012 time period, and the IMF projects Colombia to post another solid growth figure of 4.4% in 2013. Inflation, which South American countries have had an issue controlling in the past, has been tame as well, hovering in the 3% range since 2010 with 2.9% projected in 2013. …read more
Source: FULL ARTICLE at Forbes Latest
Egypt‘s central bank says foreign currency reserves stood at $13.4 billion last month.
That’s a less than 1 percent decline from February, but the nation’s reserves have fallen sharply from $36 billion since the popular uprising in 2011 that ousted Hosni Mubarak.
The Egyptian government currently is in talks with the International Monetary Fund to secure a $4.8 billion loan to bolster the country’s battered economy. Egypt‘s planning minister said Thursday that a final agreement with the IMF could be reached in the next two weeks.
Negotiations with the IMF have stalled several times since early 2012, largely over expected austerity measures in a highly polarized political atmosphere.
The Egyptian pound has lost more than 7 percent of its value to the dollar since late last year.
Source: FULL ARTICLE at Fox World News
Bank employees in Cyprus will walk off the job for two hours and march toward parliament to protest against looming job and benefit cuts being taken as part of an international bailout.
Hundreds of employees from across the country are expected to be bussed in for Thursday’s demonstration.
Bank workers’ union ETYK says employee pension funds aren’t fully protected from a grab on large deposits in Cyprus‘ two largest lenders, which was a condition of the country’s 10 billion euro ($12.83 billion) bailout.
The union also expressed fears of widespread layoffs as the rescue package that Cyprus agreed with its euro partners and the IMF demanded that the bloated banking sector, flush with billions in foreign deposits, shrink drastically.
Source: FULL ARTICLE at Fox World News
The International Monetary Fund has agreed to its part of the bailout for Cyprus, saying it will contribute 1 billion euros ($1.28 billion).
The European Union and the IMF this week finalized the details of the bailout, which was agreed on in principle last week. IMF head Christine Lagarde said in a statement issued Wednesday that the fund will provide about a tenth of the overall package of 10 billion euros ($12.8 billion)
EU finance chief Olli Rehn and Lagarde said in a separate, joint statement that “significant challenges lie ahead for Cyprus” as the government there sets in motion a multi-year program of reforms to rebuild its troubled banking sector and to implement deep spending cuts.
Cyprus hopes the first batch of rescue money will arrive next month.
A Central Bank official and a senior Finance Ministry technocrat says that Bank of Cyprus savers with over 100,000 euros could take losses of up to 60 percent.
The officials, who spoke on condition of anonymity because they’re not authorized to publicly discuss details of the issue, said Saturday that deposits over 100,000 at the country’s largest lender will lose 37.5 percent of their value after being converted into bank shares.
They said they could lose up to 22.5 percent more, depending on an assessment by officials who will determine the exact figure aimed at restoring the troubled bank back to health.
Cyprus agreed Monday to make depositors contribute to a financial rescue in order to secure 10 billion euros ($12.9 billion) in loans from the eurozone and the IMF.
A Central Bank official and a senior Finance Ministry technocrat says that Bank of Cyprus savers with over 100,000 euros could take losses of up to 60 percent.
The officials, who spoke on condition of anonymity because they’re not authorized to publicly discuss details of the issue, said Saturday that deposits over 100,000 at the country’s largest lender will lose 37.5 percent of their value after being converted into bank shares.
They said they could lose up to 22.5 percent more, depending on an assessment by officials who will determine the exact figure aimed at restoring the troubled bank back to health.
Cyprus agreed Monday to make depositors contribute to a financial rescue in order to secure 10 billion euros ($12.9 billion) in loans from the eurozone and the IMF.
By Sara Murphy, The Motley Fool
Filed under: Investing
The International Monetary Fund (IMF) released a report this week that urges governments, including the U.S. government, to reform their energy subsidies substantially. In its report “Energy Subsidy Reform: Lessons and Implications,” [link opens PDF] the IMF says that while subsidies are meant to protect consumers, they have significantly negative consequences that ultimately hurt those same consumers.
The report says that subsidies “distort resource allocation by encouraging excessive energy consumption, artificially promoting capital-intensive industries, reducing incentives for investment in renewable energy, and accelerating the depletion of natural resources.” The IMF highlights further negative effects, including aggravated financial inequality and depressed private investment.
The report identifies the U.S. among the top three subsidizers across the world, in absolute terms, at $502 billion. China ($279 billion) and Russia ($116 billion) round out the list. In advanced economies like that of the U.S., the report finds that “prices remain below the levels needed to fully capture the negative externalities of energy consumption on the environment, public health, and traffic congestion.”
Among its reform recommendations, the IMF urges governments to phase in energy price increases across energy products, and to implement institutional reforms that depoliticize energy pricing, such as automatic pricing mechanisms. The report is dated Jan. 28 but was released this week.
The article IMF Seeks End to Energy Subsidies originally appeared on Fool.com.
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