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Pakistan discusses economic recovery plans with WB, IMF

WASHINGTON: Senior managers of the Pakistani economy engaged with the officials of the World Bank and the International Monetary Fund (IMF) in Washington this week, exchanging views on plans for an economic recovery. The group included Dr Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance and Revenue and Dr Reza Baqir, Governor State Bank of Pakistan. A government ... Read More »

‘We have completed all the tasks given by IMF’: Raza Baqir

The governor of State Bank of Pakistan Raza Baqir, in a press conference held today, said he was pleased to play a role in the overall process of reaching an agreement with the IMF, as he had a prior experience of working with the fund. He informed that IMF will be holding a board meeting on July 3, 2019, following ... Read More »

IMF downgrades global growth outlook, places responsibility on US-China trade tensions

The IMF has cut its global economic forecast for 2018 and 2019, citing above all rising import tariffs between the US and China. A fall in trade volumes and manufacturing orders could hit Germany particularly hard. The International Monetary Fund (IMF) on Tuesday downgraded its outlook for the world economy, warning that the imposition of import tariffs between the US and China were taking its toll on global trade. The IMF's World Economic Outlook report, unveiled on the eve of its upcoming summit in Bali, Indonesia, estimated that global growth in 2018 would reach 3.7 percent, the same as the previous year but lower than the 3.9 percent it had forecast earlier this year. It also slashed its outlook this year for 19 countries, including several eurozone member states and emerging markets. Growth in both the United States and China were expected to slow next year as a result of the trade dispute triggered by US President Donald Trump. China was set to grow by 6.2 in 2019, down from the 6.4 percent projected last July. Both figures would mark the slowest rate of Chinese expansion since 1990, when its growth rate was slashed in the aftermath of the violent suppression of pro-democracy protests. The IMF warned that China's growth even risked declining by a full percentage point by next year in the event of a "worse-case" scenario, involving further tariffs coupled with a collapse in confidence by businesses and markets. Beijing policymakers were navigating a "difficult trade-off between growth and stability," the IMF said in a statement. US growth this year remained steady at 2.9 percent but is set to slow in 2019 as the effect of Trump's sweeping tax cuts wear off and the trade dispute with China begins to set in. "The forecast does not incorporate the impact of further tariffs on Chinese and other imports threatened by the United States, but not yet implemented, due to uncertainty about their exact magnitude, timing, and potential retaliatory response," according to the IMF. Trade tariffs and Brexit put eurozone at risk Global trade tensions would also have a bearing on the eurozone's 2018 growth forecast, which was cut to 2 percent from 2.2 percent previously. A drop in manufacturing orders and trade volumes would hit Germany particularly hard, the IMF report warned. German growth was revised down to 1.9 percent in both 2018 and 2019 due to a slowdown in exports and industrial production. The possible failure of Brexit negotiations also dampened the eurozone's growth outlook. The UK economy, meanwhile, is expected to grow 1.4 percent this year and 1.5 percent in 2019 — falling behind almost all of Europe, with the exception of heavily-indebted Italy. UK growth has been drastically cut in the aftermath of the Brexit vote; uncertainties surrounding the country's divorce from the EU have stymied investment and seen part of its key financial sector relocate to the continent. Fed policy dampening developing markets' growth While tax cuts and increased spending have seen an immediate upswing in US growth, the IMF warned that the country could face an unwelcome "inflation surprise," which would prompt the Federal Reserve, America's central bank, to hike rates at a faster-than-expected pace. Read more: Federal Reserve issues trade conflict warning The Fed's rate hikes have already piled pressure on emerging market economies, increasing the risk of capital outflows as investors seek higher returns. IMF chief economist Maurice Obstfeld said in a statement that, although emerging markets had not yet seen a generalized pullback of capital, "there is no denying that the susceptibility to large global shocks has risen." Any major economic shock in developing nations would also come to bear on leading economies, including the US. "Any sharp reversal for emerging markets would pose a significant threat to advanced economies," said Obstfeld.

The IMF has cut its global economic forecast for 2018 and 2019, citing above all rising import tariffs between the US and China. A fall in trade volumes and manufacturing orders could hit Germany particularly hard. The International Monetary Fund (IMF) on Tuesday downgraded its outlook for the world economy, warning that the imposition of import tariffs between the US ... Read More »

Blast at IMF Paris offices when letter opened

A 'homemade' letter bomb has exploded in the Paris offices of the International Monetary Fund, injuring a secretary. IMF chief Christine Lagarde has described the incident as a "cowardly act." An IMF Paris employee on Thursday suffered burns to her hands and face while opening a letter that exploded, one day after a Greek anarchist group claimed responsibility for a failed letter bomb in Berlin. Staff were evacuated from the complex as a "precaution," said a police source quoted by Associated Press. Armed police and soldiers converged on the area, in a chic district of western Paris. Paris police chief Michel Cadot said the device was homemade, like a "big firecracker." Police had searched all four floors of the building, Cadot added. Lagarde: 'Cowardly act' Visiting Germany, IMF head Christine Lagarde described the incident as a "cowardly act of violence." The explosion "caused injuries to one of our staff," Lagarde said. French President Francois Hollande said authorities would do all they could to find those responsible. Source unclear It is unclear who sent the letter to the IMF offices in western Paris, near the Arc de Triomphe. The World Bank has offices in the same compound. The IMF has its headquarters in Washington.

A ‘homemade’ letter bomb has exploded in the Paris offices of the International Monetary Fund, injuring a secretary. IMF chief Christine Lagarde has described the incident as a “cowardly act.” An IMF Paris employee on Thursday suffered burns to her hands and face while opening a letter that exploded, one day after a Greek anarchist group claimed responsibility for a ... Read More »

IMF approves billion-dollar aid package for Ukraine

The International Monetary Fund (IMF) has agreed to resume its bailout for war-ravaged Ukraine. The announcement comes the same day a new ceasefire was announced in the eastern part of the country. Ukrainian President Petro Poroshenko expressed approval on Thursday over the IMF's decision to continue a long-stalled aid program meant to help the Eastern European country's economic recovery. The IMF will disburse an additional $1 billion (889.3 million euros) to Kyiv, the fund's first aid package for the country since the $17.5 billion program was held up in August 2015. The latest decision brings the total amount of aid disbursed to Ukraine by the IMF to $7.62 billion. "The positive decision by the IMF is evidence that the world recognizes that reforms are happening in Ukraine, that real and positive changes are happening in Ukraine, and that the country is moving in the right direction," Poroshenko said in a statement. In February, IMF Managing Director Christine Lagarde had called on Kyiv to launch anti-corruption and economic reforms before the organization would resume giving aid. The fund's recent decision to continue the program was made in spite of failure by Kyiv to meet some of those goals, the Executive Board said. New ceasefire announced The decision came the same day Poroshenko said that government troops would adhere to a fresh truce with pro-Russian rebels fighting in the eastern part of the country. The ceasefire, which will come into effect on Thursday and last for a full week, follows another peace deal reached in 2015 that has been repeatedly violated. "We are happy and pleased that President Poroshenko has agreed to maintain a cessation of hostilities," said German Foreign Minister Frank-Walter Steinmeier following the announcement. Tensions ramped up in Ukraine after an uprising in 2014 that led to the ouster of Moscow-backed President Viktor Yanukovych. Following the Russian annexation of Crimea in 2015, all-out war broke out between soldiers loyal to the Kyiv government and pro-Russia rebels. The conflict has battered the country's economy, with GDP contracting 9.9 percent in 2015.

The International Monetary Fund (IMF) has agreed to resume its bailout for war-ravaged Ukraine. The announcement comes the same day a new ceasefire was announced in the eastern part of the country. Ukrainian President Petro Poroshenko expressed approval on Thursday over the IMF’s decision to continue a long-stalled aid program meant to help the Eastern European country’s economic recovery. The ... Read More »

OSCE judges Belarusian election less harshly, but still not free or fair

The OSCE has said having two dissident candidates in parliament doesn't change the overall shortcomings of the election. Media coverage is not free and fair - and ballot boxes were left unguarded. Two opposition candidates have won mandates in Belarus' 110-seat parliament - becoming the first government opponents to join the legislature since 2008. Anna Kanapatskaya of the opposition United Civil Party and Alena Anisim of the Belarusian Language Society each won a seat in Sunday's nationwide vote, according to the country's election commission. "The victory by Anna Kanapatskaya is symbolic, it shows that when the vote count is honest, the opposition can win," said United Civil Party leader Anatoly Lebedko, a prominent opposition figure who was jailed for several months after challenging President Alexander Lukashenko for the country's top job in the 2010 election. Still, the opposition fielded some 200 candidates in Sunday's polls, meaning just 1 percent made it into parliament. Critics insist that despite the tiny headway they made, a vote held under Lukashenko's repressive regime could never be fair. "We won't change our view of this campaign. There are no free elections in Belarus," Lebedko said. International monitors from the Organization for Security and Cooperation in Europe (OSCE) were less scathing than usual in their election assessment. Still, they cited "systematic shortcomings" in the election campaign, including restrictions on political rights and unfair media coverage. "It remains clear that Belarus still has some way to go to fulfill its democratic commitments," Kent Harstedt, head of the OSCE observer mission, said in a statement. Europe's last dictator The vote itself went smoothly in terms of being nonviolent and without intimidation, however, ballot boxes were left unguarded during the five days of early voting - creating ample opportunity for ballot stuffing. Lukashenko, a man once dubbed "Europe's last dictator," is now eager to curry a limited amount of favor with the West in order to get help for his country's ailing economy. In particular he is seeking a $3 billion loan from the International Monetary Fund. With that in mind, he released all political prisoners ahead of the election. The future of the bank loan remains uncertain but earlier in the year the European Union lifted most economic sanctions imposed in 2011 in response to Lukashenko's brutal crackdown on dissidents. In 2015 Lukashenko won by a landslide re-elected victory for a fifth term - he has ruled the country virtually unchallenged since 1994. "We've done everything so that there aren't complaints from the Western side," Lukashenko told journalists after casting his vote in the capital, Minsk. "We accommodated their requests." Opposition leader Yuras Gubarevich ran unsuccessfully for a parliamentary seat. He cautioned the West against being taken in by cosmetic changes. "Authorities have built a democratic facade for the West," he said, "without changing the essence of the system, which still aims to get a rubber-stamp parliament."

The OSCE has said having two dissident candidates in parliament doesn’t change the overall shortcomings of the election. Media coverage is not free and fair – and ballot boxes were left unguarded. Two opposition candidates have won mandates in Belarus’ 110-seat parliament – becoming the first government opponents to join the legislature since 2008. Anna Kanapatskaya of the opposition United ... Read More »

German Finance Minister urges Greece to ‘do more’

Finance ministers of France and Germany have voiced hope that Athens would soon reach a new bailout deal with its international lenders. Both also urged the IMF to continue its involvement with the debt issue. Creditors are hoping to reach an agreement with Greece "relatively quickly," German Finance Minister Wolfgang Schäuble said at the sidelines of an International Monetary Fund (IMF) meeting in Washington on Saturday. Greece needs to cut another 5.4 billion euros ($6.1 billion) in spending in order to comply with the creditors' terms and conditions and eventually unlock more of their funds. The government is reportedly planning more pension cuts and further tax hikes. Athens has announced it would pursue the required regulations before the end of the month. Earlier this week IMF officials stated that Greece's plans might not be enough to meet the stated goals. To date, the IMF has refused to help fund the latest bailout plan, demanding deeper reforms and an EU agreement to ease Greece's debt burden. 'Edge of the cliff' Speaking in Washington on Saturday, Germany's Schäuble said that Athens and its lenders could reach a deal after EU finance ministers meet in Amsterdam next weekend. At the same time, the minister urged the indebted state to continue implementing reforms. "Everybody knows that the maneuvering space for the Greek government is limited," he said. "But all say at the same time Greece must do more and can do more." His French counterpart Michel Sapin also said that the Amsterdam meeting could bring about a breakthrough. "It is crucial to resolve the Greek issue now or we will always be on the edge of a cliff," he told reporters. Berlin and Paris want IMF involved Sapin urged IMF to help fund the latest debt relief plan for Greece. "If the IMF is no longer on board it would weigh negatively on resolving the problem," he said. Schäuble also called on IMF to stay involved, saying that the Washington-based lender brought essential technical expertise to the table. Greece signed up to a bailout worth up to 86 billion euros last year, marking its third international financial lifeline since 2010.

Finance ministers of France and Germany have voiced hope that Athens would soon reach a new bailout deal with its international lenders. Both also urged the IMF to continue its involvement with the debt issue. Creditors are hoping to reach an agreement with Greece “relatively quickly,” German Finance Minister Wolfgang Schäuble said at the sidelines of an International Monetary Fund ... Read More »

Tsipras marks year in office with vow to implement pension reform

Greek premier Alexis Tsipras has marked one year in office by telling supporters that his pension reform bill must go ahead. Rural waverers among his leftists are threatening to erode his coalition's three-seat majority. Greek Prime Minister Alexis Tsipras told 4,000 supporters in Athens on Sunday that he was determined to make a pitch for pension reform, despite opposition from farmers, the self-employed and small firm proprietor who will be hit by higher contributions. The reform "must go ahead, it's necessary," said Tsipras, who intends to put the bill to parliament early next month. Tspiras' remarks came on the eve of Monday's one-year anniversary of the election victory of his leftist Syriza party, a year marked by dramatic negotiations with Brussels over Greece's future in the eurozone and unprecedented arrivals of refugees, mainly from war-torn Syria, headed for Western Europe. Pension reform sought by bailout lenders The pension bill is designed to save 1.8 billion euros ($1.7 billion) this year, and is crucial for the first review of Greece's EU-led bailout by international lenders, who have also pressed for tax overhauls. Tsipras has vowed, however, not to trim pensions from current levels, saying they had "already been cut by 40 percent" by previous Greek governments under pressure from key lenders such as the EU and the International Monetary Fund (IMF). Farmers, who three years ago hailed Tsipras as an opposition politician, are now widely critical because their payments into Greece's insurance scheme could triple. "He lied, he imposed more taxes than all the others put together," Yiorgos Kostakiopoulos, a wheat and cotton grower, told Reuters on Saturday. "He was here with us, told us that he would fight with us for a dignified income for us and our children," said the father of three. Greece's Labor Ministry recently claimed that many farmers were under-declaring their incomes, leaving the state to top up their pensions by up to 90 percent. Already, as part of broader reforms, fuel subsidies have been slashed and taxes on fertilizer and animal feed increased. Political analyst George Sefertzis told AFP that Tsipras was now facing an uncertain negotiating outcome - exactly what happened to his conservative predecessor Antonis Samaras in his final six months of power in 2014. Dramatic year Tspiras's emerged as Syriza's stalwart in January 2015, vowing a debt revolution. Months of dramatic negotiations with Brussels were followed by re-election in September, again as head of a coalition with the nationalist Independent Greeks (ANEL) party, but minus radical Syriza dissenters. In those months, Greece was nearly evicted from the eurozone. The latest surveys show Greece's right-wing opposition resurging in voter support. Tsipras has 153 lawmakers in the 300-seat parliament, but Syriza waverers have threatened to erode that three-seat lead to press the views of small-scale farmers. Europe transformed: Tspiras On Sunday, Tspiras claimed that his government's struggle with Brussels had brought long-lasting change to the EU. "Europe is no longer the same," he said, referring to recent anti-austerity swings in electoral sentiment in Spain, Italy and Portugal. At the height of last year's highly public Greece-EU row, Tspiras argued that debt-swamped Greece would never recover if bailout lenders forced it to just make spending cuts and hike taxes, without investments. In July, Tsipras ousted his outspoken Finance Minister Yanis Varoufakis and signed another rescue package worth 86 billion euros coupled with spending cuts. On Friday, Standard and Poor's raised its credit rating for Greek debt by one notch - up to B- from CCC+, removing Greece from default vulnerability.

Greek premier Alexis Tsipras has marked one year in office by telling supporters that his pension reform bill must go ahead. Rural waverers among his leftists are threatening to erode his coalition’s three-seat majority. Greek Prime Minister Alexis Tsipras told 4,000 supporters in Athens on Sunday that he was determined to make a pitch for pension reform, despite opposition from ... Read More »

Sieren’s China: Yuan becomes an IMF reserve currency

The Chinese yuan, also known as the renminbi, has joined the IMF’s reserve-currency basket. This will add value to the currency but also brings obligations for Beijing, says DW’s Frank Sieren. It's been a done deal since the beginning of the week. The executive board of the International Monetary Fund (IMF) has decided to add the yuan in its currency basket. IMF Managing Director Christine Lagarde spoke of an “important milestone in the integration of the Chinese economy into the global financial system.” The Chinese currency becomes the fifth in the basket, alongside US dollar, the euro, the Japanese yen and British pound. Decision made despite many critics It was foreseeable that the IMF would make this decision, which nevertheless only comes into effect in October 2016. Beijing cannot rest on its laurels til then. It has to make progress on the financial reforms in China. It has done its homework, albeit much more slowly than had been hoped by the supporters of the yuan becoming a reserve currency. This is one reason why the list of skeptics is long. In the summer, when China's stock markets went on a downward roller coaster ride, the signs that the yuan would meet the IMF's strict criteria were still rather poor. The main objection then (as now) was that unlike other reserve currencies, the yuan is not freely traded on the world markets. Beijing decides on the rate of fluctuation and its critics say that this is kept high through artificial means. But in the summer, the Chinese central bank devalued the yuan within a few days by more than 3 percent compared to the US dollar. Moreover, for over a year, China's central bank has allowed the course to fluctuate up to 2 percent a day compared to the US dollar. The official justification for the measures is that Beijing wants to give the market greater leeway to balance the exchange rate. The five-year plan to be adopted in spring 2016 might perhaps allow the yuan to be traded completely freely. More and more yuan-based business The proportion of the yuan in global monetary transactions used to only amount to 2.8 percent, compared to 45 percent for the US dollar. The Chinese currency is catching up. For the past six years, Beijing has been trying to sign currency swap agreements with as many countries as possible. There are currently 40 such deals allowing countries to conduct their business in yuan rather than dollars. The yuan is also becoming increasingly visible on the world's stock exchanges. In London, Zurich and Frankfurt, there are yuan clearing hubs that help make the Chinese currency more easily convertible. Two weeks ago, a new Sino-German exchange was launched in Frankfurt. Investors can trade about 200 yuan products at the CEINEX. Now that the yuan has been admitted into the IMF currency basket, the era of the US dollar's exclusivity is coming to an end. About a trillion yuan (147 billion euros) could end up on the bond market as soon as the yuan is activated in the IMF's currency basket. The demand for the yuan could then rise to over 560 billion euros - although still only a fraction of the approximately 100 trillion dollar bond market worldwide. But, from Beijing's viewpoint, it has won a round and secured glory for its historic advance into the international world of currencies and exchanges. Frank Sieren has lived in Beijing for over 20 years.

The Chinese yuan, also known as the renminbi, has joined the IMF’s reserve-currency basket. This will add value to the currency but also brings obligations for Beijing, says DW’s Frank Sieren. It’s been a done deal since the beginning of the week. The executive board of the International Monetary Fund (IMF) has decided to add the yuan in its currency ... Read More »

IMF changing tack on Greece

Latin Americans and Asians are happy that they do not need the help of the International Monetary Fund (IMF). But, Europe can no longer function without it. What's behind the IMF's interest in Greece? With loans totaling approximately $25 billion, Greece is currently the International Monetary Fund's (IMF) most important customer. "The IMF has crossed the 'point of no return'," says Rolf J. Langhammer from the Kiel Institute for the World Economy in northern Germany. "Basically, it should have walked away at an earlier point in time. Now, it's too late." The economist from Kiel, who has advised international organizations like the World Bank, the EU and German ministries, understands well why many of the 188 members of the IMF are not enthusiastic about the fund's extraordinary attentiveness to Athens. Many developing countries feel that Greece is a rich European industrial country. "Many developing countries think, 'you have always been tough with us but you are always making exceptions for the rich Europeans,'" says Langhammer. They wonder why they should have to pay for a country in the euro zone. The professor feels there is a "great deal of logic" behind the question. Change of direction in Washington? It seems paradoxical: The term debt relief is a taboo in Latin America, Asia and Africa but that is exactly what Greece asked the IMF for. On August 14, the head of the IMF, Christine Lagarde, made the organization's position clear by saying, "It is crucial for Greece's debt sustainability that its European partners commit themselves to significant debt relief, which goes far beyond the measures taken so far." The IMF's concerns about the sustainability of Greek debt, however, actually reflect self-interest. "We know that from the Latin American debt crisis in the 1980s," recalls the economist Langhammer. "Then they argued that a haircut would increase the chances serving the interest payable on the remaining debt." Does the fund simply defend the interests of its members by investing their money well? "The IMF is shouting as loud as it can so that no one gets the idea that it could possibly take part in a haircut," says Jürgen Kaiser, the coordinator of Jubilee Germany, a German NGO that promotes fair and transparent bankruptcy rules. Christine Lagarde lacks explanations "Situations may arise in which other lenders may ask, 'why are you not around when it comes to debt relief?'" he explains. In the end, there are no rules that say that IMF is given priority ahead of other creditors. Debt expert Kaiser finds the matter of distributing the debt burden after a haircut "quite intriguing." If Greece were granted debt relief and the IMF were asked if it would partake in it, then Lagarde would have problems explaining, says Kaiser. The IMF had problems explaining what happened in 2002 as well. At that time, more and more emerging and developing nations distanced themselves from the organization. Sustained growth rates allowed them to form foreign exchange reserves and enabled them to pay off their debts. The IMF lost its customers and was forced to look around for new business opportunities. New fields of opportunities inadvertently opened up in 2009 during the world economic crisis. At that time, IMF chief Dominique Strauss-Kahn took a chance. "The IMF gained influence during the world economic crisis," recounts Kaiser. The IMF now has access to approximately 300 billion dollars. "Even if crises erupt elsewhere, the IMF's involvement in Greece would not prevent the IMF from awarding emergency loans elsewhere," he says. "There is no competition for funds." What are sustainable debts? Kaiser thinks a haircut for Greece is still possible, even though the IMF will be involved in the third bailout package. "They have bought themselves a little bit of time. Until the next deadline," he reckons. The programs that Athens must now implement are based on the same "illusory figures that have been forced on the country the past five years." The IMF and the ESM, the European Stability Mechanism, came closer when the controversy over the definition of debt sustainability broke out this week. Now, the debt amount itself is not decisive, but the servicing of debt, instead. Europe's lenders claim to have given Athens the best conditions possible to service its debt to the IMF, argues the ESM. Langhammer considers the changed approach long overdue. "The sky may fall in on Greece, but Greece will continue to exist as a state. A country is an infinite investment object," he says and adds, "Economically, it is complete nonsense to think that a country will pay back its debts. It is more important that a country is able to meet its interest payment obligations on a regular basis."

Latin Americans and Asians are happy that they do not need the help of the International Monetary Fund (IMF). But, Europe can no longer function without it. What’s behind the IMF’s interest in Greece? With loans totaling approximately $25 billion, Greece is currently the International Monetary Fund’s (IMF) most important customer. “The IMF has crossed the ‘point of no return’,” ... Read More »

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