IMF: As economy recovers, exit strategies are key
Reuters
Reporting by Lesley Wroughton; Editing by Andrea Ricci
Failure to define stimulus exit strategies could undermine the slow global recovery currently under way, senior International Monetary Fund economists said Wednesday, also warning that the surge in public debt will need to be reined in.
In a series of articles published in Finance and Development magazine, the economists argue that failing to properly plan strategies to remove stimulus could destabilize expectations and weaken the effects of the fiscal and monetary policies put in place over the past two years of the crisis.
IMF chief economist Olivier Blanchard said major advanced economies could probably not afford to provide fiscal stimulus for very much longer without structural adjustments, although he emphasized it was too early in the recovery to withdraw the stimulus.
To prolong the stimulus, he said countries will need to tackle entitlement programs with more vigor, whether rising outlays are driven by healthcare or support for an aging population.
The economists said the unprecedented fiscal and monetary response to the crisis was necessary to tackle the financial upheaval but the result was a massive surge in public debt.
IMF figures show that the ratio of debt to gross domestic product is expected to rise to 115 percent in advanced economies in 2014 from 75 percent in 2007.
Debt ratios will be close to, or exceed, 90 percent by 2014 in all seven major industrial countries except Canada, IMF data shows.
The economists said the bulk of the debt increase stems from fiscal stimulus and will require an unprecedented fiscal adjustment over the next few decades.
"Failure to address the trend of rising debt could lead to concerns that the debt will ultimately be 'inflated away' or that default is inevitable," said Carlo Cottarelli, director of the IMF's Fiscal Affairs Department, and Jose Vinals, director of the IMF's Monetary and Capital Markets Department.
"Interest rates would then rise, making the fiscal problem worse and potentially killing the recovery," they added.
A study by the IMF's Fiscal Affairs Department suggests that advanced countries with higher debt would have to maintain an average primary surplus of 4.5 percent beginning in 2014 to reduce the debt to 60 percent of gross domestic product by 2030.
The economists said the fiscal adjustment would have to go beyond pensions and health care, to revenues and expenditures, including broadening of tax bases and tax structures.
In planning stimulus exit strategies, Cottarelli and Vinals said central banks will have to look at unwinding or limiting the unconventional crisis-related practices, restructuring balance sheets and preparing to tighten monetary policy.
While it was still too soon to tighten monetary and fiscal policy, it wasn't too soon for governments to anchor expectations by defining and communication their strategies and proposed measures to ensure fiscal solvency, they added.
Labels: Economy, Exit Strategy, IMF
Rich Nations FAll Short on Bank Recovery Spending
Bob Davis for WSJ
Wealthy industrialized nations have provided less than half of the support they pledged to prop up their financial sectors, according to new data from the International Monetary Fund.
The so-called advanced economies of the Group of 20 have made capital injections of $425 billion in banks and other financial institutions, 42.3% of the amount announced, the IMF said. The countries' treasuries have also spent $333 billion to purchase assets and make loans to financial institutions -- just 18.4% of the amount announced over the past year or so as they sought to address the effects of the global financial crisis.
The IMF said the relatively limited spending suggested the financial crisis hasn't turned out to be as dire as once anticipated. "This outcome appears to reflect a variety of factors including the precautionary nature of initial announcements, indications of increasing stability and improved bank liquidity," said an IMF report.
The IMF warned that the rate of spending could reflect "lags in implementation." If that were to occur, debt levels would rise even more steeply than they have thus far. The G-20 includes industrialized and large developing nations. Among the industrialized nations are Canada, Australia, France, Italy, Germany, Japan, Britain and the U.S.
The new data came as part of a report warning again that debt levels in industrialized nations are rapidly increasing and that governments need to make clear how they will ultimately reduce the debt to more-sustainable levels. Otherwise, the IMF warned, interest rates could rise, undermining the effect of government stimulus spending and weakening an anticipated recovery.
By 2014, debt levels in industrialized G-20 nations are expected to climb to about 119.7% of gross domestic product from 78.8% in 2007, the IMF said. That 40.9-percentage point increase, the steepest since World War II, is the result of stimulus spending aimed at fighting the recession, and increasing payouts for pensions and health care for aging populations. The IMF generally views a 65% debt level as more appropriate for industrialized nations.
The IMF warned that it was too early for nations to start eliminating stimulus spending, and that a new round may be required in 2010.
It urged nations to lay out specific steps to show how they will handle debt in the longer term, to avoid spooking markets. It cited deficit-reduction commitments announced by Germany, Japan and the U.S., but said they weren't sufficient.
"The risk is that if the public starts to worry about medium-term sustainability and an inevitable rise in interest rates, that that will undercut the effectiveness of the stimulus," an IMF official said. "So it's critical that countries now begin to develop and enunciate medium-term and longer-term plans for dealing with the rise in debt."
Labels: IMF, Stimulus Spending
G20: Actions Better than Words
The G20 has always been just a star-studded cast strutting their stuff, telling the world that everything is within control. With each show, they take money from the IMF again and again. Big words, so what G20?
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The just-concluded Group of 20 (G20) summit in London has won oceans of applauds from the world as it is believed to have harvested positive and practical results by formulating effective measures to heal the ailing world economy.
Participants are believed to have made due contributions to the success of the summit, by jointly working out a package of agreements and commitments, including a 1.1-trillion-U.S.-dollar global rescue deal, and taking a landmark move of tighter financial regulation.
Although the commitments are indeed encouraging, it is more important to fulfill them through solid actions.
Just as UN Secretary-General Ban Ki-moon said after the summit, "these commitments made by G20 leaders must be translated into concrete action."
Chinese President Hu Jintao on Thursday called on the international community to make concerted efforts to ride out the crisis when he addressed the summit. "The only right choice is for all of us to work together and deal with it," he said.
China, the largest developing country, has spared no efforts to implement its proposed measures and played a conducive role in the world in building up confidence, maintaining stability as well as pushing for an economic revival at an early date.
At the summit, China also announced it would contribute 40 billion dollars to the International Monetary Fund, highlighting its role as a responsible member of the United Nations.
The United States, the world's leading economy, also pledged to turn words into actions.
U.S. President Barack Obama said Thursday that while the United States is a world power, it is prepared to listen and learn as well as lead.
He said he will ask Congress in the next few days to provide an immediate 448 million U.S. dollars to help the poorest countries.
Nonetheless, the "Buy American" measures in the newly adopted stimulus package by the Obama administration, which bar the use offoreign iron, steel and manufactured goods in public works projects, have aroused concerns among other countries about the U.S. protectionist moves.
Similarly, French President Nicolas Sarkozy once said publicly that it was unjustifiable that French car brands made abroad, for instance in the Czech Republic, should be sold in France. His remarks had rung alarm bells in Europe for a tendency of protectionism.
At the summit, the G20 leaders reaffirmed their commitment to resist protectionism and push for an ambitious conclusion of the Doha Round global trade talks.
Looking back, they committed themselves to free trade at the Washington summit last year, but not all of them have kept their words.
This time, they said in a joint statement that "by acting together to fulfill these pledges we will bring the world economy out of recession and prevent a crisis like this from recurring in the future."
If the world's major economies, in particular the G20 member states, put their promises into practice, confidence will be restored that the political leadership is capable of meeting difficulties and challenges, and pulling the world economy out of mire.
It is not picky to demand to see tangible actions and deeds, even though the world media and the public save no words to hail the G20 summit. Instead, we should remain sober and critical.
The G-20 leaders announced Thursday they agreed to meet again by year's end to check on the progress and effectiveness of the measures. We need to wait and see.
Labels: China, France, G20, IMF, USA
Upcoming Philadelphia World Bank/IMF Consulta
Calling all Philadelphia area anarchists, anti-authoritarians, anti-capitalists and anyone concerned about the IMF and World Bank.
Come to the
Wooden Shoe Saturday March 7th 5-7pm for an education about the World Bank and International Monetary Fund (IMF) and why we should protest them. The IMF and World Bank are planning to meet April 24-26th in Washington DC. There are already protests planned with the aim of disrupting those meetings. There will be someone here from Global Justice Action, the DC group organizing the logistics of the protest in April. After a presentation, there will be a discussion about what we, as Philadelphia-area residents can do to help with the larger strategy and what we hope to gain by doing so. Let's make this the start of something new and beautiful.
Wooden Shoe Books508 s. 5th Street
Philadelphia PA 19147
Wooden Shoe BooksEmail:
sabot@woodenshoebooks.com215-413-0999
Labels: Anarchists, Anti, Anti-Authoritarians, Anti-Capitalists, Debt, Democratic Alternative, Human Alternative, IMF, Philadelphia, World Bank
Good Bank Bad Bank
Bad bank sparks optimism in US equities.
Last night's decision by the US Federal Reserve's Federal Open Markets Committee to leave interest rates unchanged at virtually zero was a no-brainer. How can it do otherwise when the deepening financial and economic situation forced its back against the wall last December when it effectively cashed in all its chips and took the fed funds rate to nil.
All the Fed could do now is proceed with what it stated in the accompanying statement -- that is, to continue expanding its balance sheet. ‘The Committee also is prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets.' And hope for the best. ‘The Committee anticipates that a gradual recovery in economic activity will begin later this year.' But even this statement has to be qualified with, '…but the downside risks to that outlook are significant.'
Indeed they are. At the same time the Fed announced its decision and its statement, the International Monetary Fund (IMF) released its latest projections. The IMF slashed its global economic growth projection down to 0.5 per cent this year - the weakest rate since the second world war - from its previous estimate of 2.2 per cent. It expects growth to rebound to 3 per cent in 2010.
Also, the IMF now expects global bank losses to reach US$2.2 trillion due to toxic assets. This exceeds the previous estimate of US$1.4 trillion stated in October and just US$600-800 billion before that. Is this latest projection now set in stone? Or will it be revised even higher in three months time, and higher still in six months? Remember that many of the assets have no market value as buyers have long vanished.
This is perhaps why US equities took as positive rumours that President Barack Obama's latest stimulus package could include the creation of a bad bank - an ‘Aggregator Bank' -- that will buy and stock illiquid and toxic assets of financial institutions. This plan is expected to be announced next week.
If the rumours are true, the Obama administration maybe hoping that this bad bank will succeed the same way that the Resolution and Trust Corporation (RTC) -- established in 1989 to dispose of bad assets of failed US savings and loans institutions - did in resuscitating trust and confidence in US financial institutions.
The concept is good. Take away all the bad assets from banks and financial institutions and they will be healthy enough to resume lending. Credit will again start flowing and grease the wheels of recovery.
But this maybe better said than done. After all the RTC of 1989 bought assets from institutions that were already dead. They no longer have any bargaining power as to the RTC's price offer.
Under the current environment, it is not that the financial institutions have any bargaining power either. But they are still alive, albeit barely. The disappearance of buy/sell transactions in toxic assets means that no one knows exactly what the market value of these assets are - or whether they are still worth something.
Herein lies the rub. If the bad bank bids too low for these assets, investors and shareholders of these still-operating institutions may dump their holdings and thereby, ultimately expanding the liquidity problem of these financial companies. Should the bad bank pay too high a price for toxic assets, it pays too high a price. It risks holding them in its vault for a very long time or it may have to write them off eventually -- wasting taxpayers' money in the process.
But surely the geniuses on Capitol Hill would have a Plan B for the bad bank to work. And for equity markets, at least for today, it may be enough to see their government working stridently towards a solution.
Labels: IMF, Obama, US Federal Reserve
All talk and no action at G20 meeting
As expected. The party's gotten bigger with no real solution.
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THE weekend meeting of the Group of 20 (G20) did not yield any dramatic announcements or proposals to overcome the financial crisis. The verdict on the outcome was mixed. The outgoing Bush administration saw progress, others said the leaders avoided the thornier issues, yet others opined that the G20 reshaped global politics, while the London- based Economist declared that it was "not a bad weekend's work". But if anyone expected the leaders to come out with concrete initiatives for a quick fix to the global economic woes, they would have been seriously disappointed.
The nations, accounting for 85 per cent of global economy, produced no real road map or major details on solving the meltdown.
The G20, however, laid the blame for the problems that started with the subprime mortgage crisis in the United States last August on "policy makers, regulators and supervisors in some advanced countries (who) did not adequately appreciate and address the risk building up in financial markets".
The contagion has spread. The US is in recession as is the euro zone. In Asia, Singapore and Japan are in recession, technical or otherwise.
Much of the wealth created over decades, including in developing countries, has been destroyed by the meltdown, while major institutions and household names have been brought to their knees.
To be sure, no one expected the lame-duck US President George W. Bush, who chaired the meeting, to produce a sliver bullet to solve the problems that are rapidly spreading around the world.
It would be asking too much of the G20 leaders to resolve the financial problems in one day. Undoubtedly, they came to the table with their own expectations.
In the end, they issued a bland statement.
Many of the measures they outlined are being worked on or have been implemented by individual countries to tackle the crisis at home. What is needed is a global, coordinated approach to solving the crisis.
The leaders promised a "broader policy response" and to strive for a deal on the stalled Doha Round of trade talks by the end of the year. They also pledged not to raise any barriers to trade and investment.
But this is nothing new. The previous pledges on the stalled Doha Development Round have not been fulfilled and with the current meltdown in the global economy, trade takes a back seat to rescuing companies, bailing out banks and ensuring that sovereign nations do not go under.
The markets, fund managers, analysts and indeed the poorest of the poor were hoping for an immediate and powerful signal that would throw some light on the way forward out of the dark tunnel. There were no new measures or regulatory breakthroughs. But what they got was a promise of more meetings.
The leaders set out a work schedule for their finance ministers: a review of global accounting standards, colleges of supervisors for major global banks, new standards for credit rating agencies and ways to limit bankers' pay by tying it to companies' risk profiles.
The ministers are to complete their job by the end of March for another meeting of the leaders in April.
By then, Barack Obama will be the president of the US and the Czech Republic will hold the rotating European Union presidency, taking over from Nicolas Sarkozy of France.
The difference of this meeting is that for the first time some emerging and developing economies as well as some oil producers got a seat at the table.
The rapidly-declining state of the US and European economies and victors of World War 2 find themselves in a weakened economic and financial position.
British Prime Minister Gordon Brown had lobbied Saudi Arabia and China to provide financial assistance to the Bretton Woods institutions.
The number of countries, including developed nations such as Iceland, going with bowl in hand to the multilateral institutions is putting greater pressure on the limited finances of the World Bank and the International Monetary Fund (IMF).
Indeed, the developed nations and their institutions are no longer the lenders of first and last resort.
They, in fact, are the borrowers and the lenders are the emerging economies and their sovereign wealth funds. There has been a clear shift away from dependence on Wall Street's financial supremacy and from the theories and remedies advocated by the World Bank and IMF.
The economic power has shifted from the Group of 7 (G7) most industrialised nations to a much larger and more diversified group of countries, including Asian nations.
According to Indian Finance Minister Palaniappan Chidambaram: "The G7 has recognised belatedly that they alone don't have the solutions to all the problems.
"The G20 has come to stay as the single most important forum to address the financial and economic issues of the world. The G20 is a much better forum than the G7."
He described the Washington summit as "a good beginning", adding: "The emerging economies are happy."
The shift in economic and financial power cannot be ignored as leaders seek solutions to the crisis and develop a new financial architecture.
The developing countries may have been given a seat at the table but their long-term role in the global economy and in decision-making must be considered.
For a start, the G20 agreed to a seat for emerging market economies on the Financial Stability Forum, the group of financial regulators and central bankers charged with the technicalities of financial supervision, whose membership has been based on that of the G7.
In the medium term, developing countries will be offered more seats at the IMF and World Bank.
Even so, it must be remembered that talk of reforming the IMF has gone on for years without much headway being made. The devil is in the details.
In the end, many saw the meeting more of talk than action.
"This is plain-vanilla stuff they could have agreed on without holding a meeting," said Simon Johnson, an economist at the Massachusetts Institute of Technology and a former chief economist of the IMF. "What's new, except that this is the G20 instead of the G7?"
Labels: Emerging Economies, G20, G7, IMF, World Bank
Banks, Firms, Now Countries Falter
We can always be sure that when the US sinks, they drag the whole world down with them.
What would Obama do?
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Source:
The ScotsmanMORE countries may be forced to seek unprecedented help from the International Monetary Fund, experts warned last night, after another day of turmoil on world markets.
Hungary has followed Iceland and Ukraine in securing funding from the IMF to prevent complete financial meltdown. Pakistan and Belarus are in talks with the IMF, while glaring holes in a number of other countries' economies have led to predictions that more begging bowls may soon come out.
Experts told The Scotsman countries such as Ireland, which has guaranteed all its bank deposits, could find themselves in need of international help.
Government bail-outs of financial institutions have become almost commonplace – and now countries themselves are having to be saved.
The latest IMF guarantees came on a day of extreme volatility on world stock markets, with billions wiped off shares in leading firms and the pound sinking to a five-year low against the dollar.
In a bid to soothe the chaos, the G7 nations issued a statement pledging co-operation in the crisis. Britain, Canada, France, Germany, Italy, Japan and the United States reaffirmed their "shared interest in a strong and stable international financial system".
At the same time, they voiced concern about "excessive volatility" in the value of the Japanese yen, which on Friday hit a 13-year high against the dollar.
The yo-yoing world currencies make trading sluggish, as it is impossible to ascertain how much deals are worth.
"There's lots of volatility, not just in the equity market, but in the interest rate and currency markets too," Neil Parker, market strategist at Royal Bank of Scotland, said. "We're going to get further big swings as the markets watch for what the authorities are going to do."
On Friday, the IMF bailed out Iceland – whose swift collapse has devastated UK pension funds and investments – to the tune of £1.34 billion. Yesterday, however, Geir Haarde, its prime minister, said Iceland needed double that again.
He spoke as the fund agreed to lend to Hungary and Ukraine.
It is to offer a £10.4 billion loan to Ukraine and has agreed an as-yet undisclosed package with Hungary. David Hauner, an analyst at Bank of America, said it would probably receive about $12.5 billion (£8 billion).
Eastern Europe has suffered greatly from the global financial crisis as foreign investors who were once bullish about the region's prospects of strong economic growth and deeper integration into the European Union have dumped their assets.
In particular, there is concern that countries such as Ukraine and EU members Hungary, Romania, Bulgaria and the Baltic states may not be able to handle their large foreign debt burdens. Standard & Poor's rating agency yesterday reduced Romania's sovereign rating to junk status.
Neil Shearing, an economist at Capital Economics, said "the most vulnerable countries in the region have yet to be hit by the crisis". He added: "Accordingly, it seems that the IMF's work has only just begun."
Professor Gabriel Talmain, director of the Centre for Economic and Financial Studies at Glasgow University, said: "Countries have taken a very big gamble when they started to guarantee the banks. If the Irish government was to be called on to honour all the guarantees that it has put up for its banks, God knows what will happen. They would be the next (to seek an IMF loan]."
The Washington-based institution has said it can provide up to £128 billion in loans to countries facing financial difficulties.
Prof Talmain said European countries were not in the habit of going to the IMF for cash and warned the fund's members would probably have to cover for loans that could not be paid back.
Meanwhile, investors endured a rollercoaster ride yesterday, as London's leading share index pulled back from five-year lows. The FTSE 100 Index plunged to its lowest point since March 2003 at one point, falling 5 per cent as a sell-off in Asian markets spooked jittery traders. Japan's Nikkei index fell 6.4 per cent to reach its lowest close since 1982, while Hong Kong's Hang Seng closed 13 per cent down.
But a better-than-expected start on Wall Street and a broad hint from the head of the European Central Bank of more interest rate cuts next week helped the top-flight claw back most of the losses.
Among the shares hit in London were those of the leading banks, which have been swinging wildly for weeks. RBS, which is preparing for a big government cash injection, fell 5.92 per cent to only 57.2p a share. And HSBC, which had been flying high above other institutions, tumbled 4.74 per cent to £6.63.
Meanwhile, HBOS and Lloyds TSB were both up marginally, while Barclays dropped slightly.
Brown's famous 'golden rule' becomes early victim of Britain's slide into recessionALISTAIR Darling, the Chancellor, is expected to consign the government's main economic rules to history tomorrow, as a result of having to borrow vast sums to keep the country afloat during the recession.
He is expected to use a set-piece speech to indicate that the "golden rule" – imposed by Gordon Brown in 1997 to win New Labour credibility in the City – has been abandoned.
The rule prevents the Treasury from using public borrowing to fund current spending, such as wages or tax cuts, over the economic cycle. It permits borrowing only for investment in major capital projects, such as schools and hospitals.
But with UK borrowing already at £37.6 billion for the first half of this financial year, experts believe the final sum will be £64 billion – compared with Mr Darling's target of £43 billion.
Mr Brown yesterday said he was prepared to allow borrowing to rise as it was the "responsible" thing to do.
The second rule he introduced as Chancellor, the sustainable investment rule, has also been broken. This requires national debt to be kept below 40 per cent of the value of the economy over the economic cycle, but the Office for National Statistics said last week it was already at 43.4 per cent.
Mr Brown, in a speech in London, departed from a prepared script that said a "temporary increase in borrowing is the right thing to do to support the economy at this time". Instead, it was only when he was answering questions from the audience, that he mentioned "borrowing" – saying that amounts would come down when the economy picked up and tax revenues increased.
Meanwhile, incapacity benefit was scrapped for new claimants under a drive to get a million more people into work by 2015. People now face a 13-week check – including a 75-minute interview – to assess what tasks they can carry out. Only those with the severest conditions will receive benefits.
Q&A
What is the International Monetary Fund?It is an organisation of 185 member countries that was established to promote monetary co-operation, foster economic growth and high levels of employment, and provide temporary financial assistance to countries.
Does it have infinite funds?It doesn't really have much of its own resources – it has to borrow.
How does it lend money?It has to get the approval of its board, which is made up of representatives from its 185 member states.
Where does it get the cash from?It goes to the wholesale money markets, like any individual government or institution.
Are there any risks to its member states?With these large sums it is now lending – potentially. Professor Gabriel Talmain, director of the centre for economic and financial studies at Glasgow University, said: "If it starts to borrow really large amounts of money, there would be the question of how much the other member countries behind the IMF will pay as a last resort."
He said the current loans were "staggering" and there was only a finite amount of funds available.
What is the advantage of going to the IMF for funds?It's a collective institution, so one government is not relying directly on another. Such a situation would be undesirable for two reasons – it could allow for political pressure to be exerted and it would not provide as much funding.
Why are countries going to the IMF now?Eastern Europe has run into trouble because investors believe it may not be able to cope with the foreign debt it has amassed.
What about Pakistan?The rupee has fallen drastically against the dollar. The country is struggling to combat inflation, which is heading towards 30 per cent, and a collapsing currency. Its central bank, meanwhile, holds barely enough foreign currency to cover five weeks of imports.
Are the loans free from conditions?Certainly not. The conditions can be quite stringent and, for the Eastern European states, they may signal the start of a new era of austerity. But it is Pakistan for which they are a real sticking point, with local analysts accusing the United States of using the IMF as a tool in its war against terror.
Labels: Crisis, G7, IMF, Loan
IMF and G-7 Say: No More Lehmans
If the financial giants cannot take care of businesses at home, what makes them think that they are capable of giving aid at an international level?
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Now the great confidence game begins. In high-powered forums that accompanied the G-7 and International Monetary Fund in Washington this past weekend, Western financial leaders sought to assure panicky bankers and money managers in no uncertain terms that all of the measures needed to halt a worldwide meltdown are in motion.
While short on the details many market analysts had hoped for, the broad brushstrokes of forceful, coordinated action by Western governments were unveiled: No more Lehman Brothers-like failures of major financial institutions will be allowed. All bank deposits will be guaranteed. The banking systems of the G-7 nations will be flooded with almost unlimited liquidity. And if all that fails, any other tool—regardless of how economically unorthodox—will be used if needed. The British government's widely anticipated move to take majority control of the Royal Bank of Scotland Group and HBOS is expected to be the first of many such actions across Europe. Fifteen European Union countries that use the euro as currency met in Paris this weekend. They pledged to provide guarantees of new bank debt through 2009, authorize the purchase of preferred shares to invest in problematic banks, and provide recapitalization funds where needed.
The message of Banque de France Deputy Governor Jean-Piere Landau at an Oct. 12 breakfast meeting at Washington's elegant Willard Intercontinental Hotel was typical. "I think the conditions for stability are met," Landau declared. "It is very difficult to see why there will be no stabilization." At a nearby hotel, Richard Fisher, president of Dallas Federal Reserve, told a crowd of international bankers that U.S. authorities "can and will restore order in the credit markets" and "will continue to pursue every avenue and every option." At a press conference at the International Monetary Fund's headquarters, IMF Managing Director Dominique Strauss-Kahn said: "I believe we have an adequate response to the crisis, and the market will reflect it."
Spillover WorldwideWhen the markets open on Monday morning, it will be clear whether these verbal assurances and whatever specific measures the U.S. and individual European nations announce will be enough to ease the credit freeze and halt the stock sell-off. But even if the markets breathe a sigh of relief, the question is, how long will the calm last?
Even assuming that actions by the U.S. and Euroland are enough to get the credit markets moving again, attention is likely to shift to fathoming what lies ahead. The economic picture is dark, not only in the U.S. and Europe but also in key emerging markets that not long ago were regarded as bright spots. "As the markets move away from financial fears, they will start looking at what the spillovers will be to the real economy," says Deutsche Bank Group (DB) Chief Economist Norbert Walter.
In business forums and cocktail parties, financiers gathered in Washington mulled long-term implications that few had thought possible not long ago. What makes this financial crisis so different from many of the others faced in the past three decades is that it did not originate with peripheral emerging markets. It struck the core of global capitalism. And unlike previous U.S. recessions, this crisis cannot be fixed with changes in monetary and fiscal policy. It will require years of financial workouts and restructuring. The fallout, therefore, is likely to radiate out across the globe in countless unforeseen ways.
Long, Slow RecoveryOne point of consensus is that the U.S. is heading into a very deep recession, perhaps the worst in the post-World War II era. The Institute of International Finance, which just months ago predicted the U.S. would not go into recession, now sees a contraction of at least 2% for several quarters and the jobless rate hitting 7%. And that estimate is based on the premise that the Treasury and Fed rescue efforts will work.
Don't expect the U.S. economy to roar back once recovery begins, either. Fully rebuilding the U.S. credit system and confidence will take time. JP Morgan Chase (JPM) chief economist Bruce Kasman warned that it is far too early to gauge the long-term impact on U.S. consumer behavior. In Japan, consumers held onto their cash for years, which helped delay recovery for a decade.
And don't expect emerging markets to be able to pull the global economy through. Despite falling exports, China's economy is expected to remain robust, thanks to $1.8 trillion in foreign reserves and strong domestic demand. But elsewhere a collapse in demand in the U.S. and Europe will dramatically change the dynamics even in many nations that a few months ago appeared to be in solid shape due to strong trade surpluses and foreign reserves. Emerging markets are going to be hit hard by a triple whammy: plunging manufacturing exports to the U.S., falling commodity prices, and outflows of dollars.
Plunging OilLet's start with foreign capital flows: Even though most developing-nation governments have dramatically slashed their dependence on foreign loans, their corporate sectors have been borrowing heavily abroad to finance everything from real estate developments to factories. In the past two months, Russia's foreign reserves have dropped by $40 billion because of capital flight. And several Persian Gulf states have had to tap into their huge sovereign wealth funds to prop up stocks and real estate projects funded by foreign capital. The IIF projects that inflows of foreign private capital to emerging markets, which hit a record $898 billion in 2007, will drop by at least $270 billion by the end of this year and contract further in 2009.
In addition, nations that depend heavily on oil and other commodities could soon be in for more trouble than they anticipated. Oil prices, for example, have already plunged from a peak of $145 a barrel this summer to near $70. That's still in the financial comfort zone of Russia, Venezuela, Iran, and other non-Mideast oil producers. But at the IIF conference, University of Calgary management professor David Mitchell, a leading authority on oil, laid out a scenario in which a sharp contraction in global demand could push crude all the way back down to $25 a barrel—a crisis level for all but Saudi Arabia and a few other Gulf nations.
The debt crash certainly will lead to a rethinking of America's financial system. But the seismic aftershocks will require revision of all assumptions about the global economy.
Labels: Economy, G7, Global, IMF, Lehman Brothers
The IMF's Dwindling Fortunes
One doesn't need to have a keen eye to observe that when US the big brother is going into recession, the world is dragged down with it. Yet in the 1997 Asian Financial Crisis, it was the Asians who were in trouble that bailed themselves out of it. Shame on you, Big Brother.
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By Mark Weisbrot
Los Angeles Times
'The IMF is back," declared the International Monetary Fund's managing director, Dominique Strauss-Kahn, at its annual spring meeting earlier this month in Washington. And not a moment too soon either. To hear the organization's economists tell it (as they mingled in five-star hotels, long black limos and posh restaurants with bankers, businessmen and finance ministers from around the globe), they've arrived on the scene just in time to help solve the world's financial crisis.
But despite the bravado, the reality is that today's IMF is not what it once was. These days, the world's most famous deficit police force is running a whopping small-country-size $400-million annual deficit of its own and is being forced into some of the same kinds of "structural adjustments" it used to impose on indebted Third World nations. In just the last four years, the IMF's total loan portfolio has shrunk from $105 billion to less than $10 billion; over half of the current portfolio consists of loans to Turkey and Pakistan. To cut costs, the agency is
reducing staff and closing offices.
The IMF's loss of influence is probably the most important change in the international financial system in more than half a century. Until just a few years ago, the IMF -- originally created at the Bretton Woods conference on international economic cooperation in 1944 -- was one of the most powerful financial institutions in the world and the major avenue of influence for the United States in developing countries.
This wasn't so much a result of the money that it lent -- the World Bank loans much more -- but because of its position at the top of a hierarchy of official creditors. Until a few years ago, a developing-country government that did not meet IMF conditions risked being economically strangled. The World Bank, regional banks such as the Inter-American Development Bank, rich lender governments and sometimes even the private sector would withhold lending until the government reached agreement with the IMF.
At the top of this powerful creditors cartel sat the U.S. Treasury Department, which holds a formal veto over many of the IMF's decisions and is an informal power within the organization that marginalizes even the other rich countries. Developing countries -- the ones that have historically borne the brunt of IMF decisions -- have little or no effective voice in the decision-making of the organization, where the majority of votes of the 185 member nations are assigned to the rich members.
But the IMF lost credibility after presiding over a series of economic disasters. Latin America, for example, suffered its worst long-term growth failure in modern history under the IMF's tutelage since 1980.
The IMF's "shock therapy" program in Russia vastly underestimated the time it would take to transition from a planned to a capitalist economy in the early '90s. The result was a lot of shock and no therapy, and tens of millions were pushed into poverty as the economy collapsed.
The Asian financial crisis in the late 1990s was a tipping point. The IMF and the U.S. Treasury helped cause the crisis by pushing for the removal of important regulations on foreign capital flows. Then they made it worse with their policy recommendations, prompting economist Jeffrey Sachs -- now head of Columbia University's Earth Institute -- to say that "the IMF has become the Typhoid Mary of emerging markets, spreading recessions in country after country."
Some of these mistakes were because of incompetence; others were driven by ideological or special interests. But the result was that developing countries began voting with their feet, piling up international reserves so that they would never have to borrow again from the IMF cartel.
The IMF-supervised Argentine disaster from 1998 to 2002, which pushed the majority of Argentines below the official poverty line in a country that was previously one of the richest in the region, further sullied the fund's reputation. Argentina then defied the IMF, refused its conditions, got no international help and rapidly transformed itself into the fastest-growing economy in the hemisphere. This too was noticed.
The collapse of the IMF creditors cartel has been a huge blow to U.S. influence. It was most pronounced in Latin America, where most of a region that used to be referred to as the United States' "backyard" is now governed by states that are more independent of Washington than Europe is.
The problem is that poorer developing countries, especially in Africa, remain dependent on foreign aid from the IMF (and the World Bank and other sources) to fund their basic budget and import needs. This can be harmful to their development and their people. In recent years, the IMF -- insisting that such measures are necessary to hold down inflation -- has imposed conditions that limit their public spending and, according to the fund's own internal evaluation, have prevented these countries from spending aid money on urgent needs, such as healthcare and education.
These countries need to join the rest of the developing world in breaking free of the IMF's policy conditions. The U.S. Congress may consider legislation that would pressure the IMF to use some of its huge gold reserves for debt cancellation and to limit the IMF's control over policy in poor countries. These would be important steps forward for the world's poor.
Mark Weisbrot is co-director of the Center for Economic and Policy Research in Washington. (
www.cepr.net).
Labels: Asian Financial Crisis, IMF, International Monetary Fund
IMF: The Times They Are A-Changin'
By Robert Weissman
Have things changed at the International Monetary Fund? Or is the world just witnessing yet another in a long series of global economic double standards?
IMF Managing Director Dominique Strauss-Kahn says that the "need for public intervention" to address the global financial crisis "is becoming more evident." Strauss-Kahn has urged for a global fiscal stimulus, writing that, "Timely and targeted fiscal stimulus can add to aggregate demand in a way that supports private consumption during a critical phase." The IMF has announced its support for the fiscal stimulus plan in the United States -- a country with significant budget deficits and massive foreign debt.
The support for government intervention runs directly counter to the IMF's longstanding support for strait-jacketing governments in poor countries, by demanding "structural adjustment" -- a series of market fundamentalist, corporate-friendly policies, including hyper-restrictive macro-economic policies.
So far, there is little evidence that the IMF is changing the way it operates in developing countries. But maybe the times are changing, whether the IMF likes it or not.
The IMF gets its power from a gatekeeper role in international finance and donor circles. International lenders and government aid donors commonly limit their lending and aid donations to countries in the IMF's good graces. The logic is that the IMF is competent to determine that the recipient countries are pursuing sensible economic policies, and
therefore equipped to manage loans or aid.
The IMF has capitalized on its gatekeeper role to demand countries pursue a cookie cutter, market fundamentalist agenda of blind deregulation, sell-offs of public assets to corporations (privatization), opening up economies to foreign investors, tariff cuts, and government spending cuts.There is overwhelming evidence of the failure of the IMF's policy agenda. Mass privatization has led to enormous concentrations of wealth and encouraged corruption. Deregulation has contributed to financial crises, including those that foreshadowed the current global crisis centered in the United States.
The overall economic model had impoverished tens of millions and left developing countries poorer. And government budget ceilings and inflation targets have prevented countries from expanded desperately needed investments in healthcare and education. Indeed, the IMF's own Independent Evaluation Office has found that the Fund requires poor countries not meeting Fund inflation targets to divert most new donor aid. Instead of spending additional donor money on healthcare, for example, countries must use it to build up foreign reserves or pay down domestic debt.
Although the Fund has promised that it would reform the way it imposes conditions on poor countries, a new report from Eurodad, the European Network on Debt and Development, finds that, over the last six years, IMF conditions have not changed in number or kind.
One thing has changed, however. Impressed by the IMF's repeated failures, middle-income countries have paid back their loans to the Fund, and are not taking out any news ones.
This in turn has two consequences.
For now, at least, the IMF has lost its hold over most middle-income countries -- but it maintains its iron grip on the world's poorest countries. And, the Fund is experiencing a financial crunch of its own. It had depended on the interest payments from middle-income countries to support its budget.
Developing countries are not shedding tears over the IMF's financial distress. “At long last, the IMF is experiencing first hand serious budget cuts,” says Cheikh Tidiane Dieye of Environment and Development in Africa (ENDA), based in Senegal. “The poetic justice of this is palpable. In Senegal, the IMF has mandated budget cuts for years. As a result, we have been unable to invest in health care, education and other essential services. If the IMF’s loss of financial power is accompanied by a loss in political power, this could be good news for all Africans.”
The IMF's governing body has just approved a proposal that would involve cutting its staff by about 20 percent and selling some of its gold stock to create a trust fund that would fund administrative operations in the future.
The gold cannot be sold without U.S. approval, however, and the U.S. representative to the Fund cannot support gold sales without Congressional authorization.
Health, development and labor organizations in the United States are mobilizing so that Congress approves gold sales only after achieving fundamental changes in IMF policy. Last week, 80 U.S. organizations -- including Action Aid International USA, the AFL-CIO, Africa Action, the Bank Information Center, Essential Action (which I direct), 50 Years is Enough, Global AIDS Alliance, Health GAP, Jubilee USA Network, the ONE Campaign, Oxfam America, RESULTS USA, Service Employees International Union (SEIU), and the Student Global AIDS Campaign -- urged Congress not to approve gold sales until first achieving real change at the Fund.
The letter says the Congress should require the IMF to: rescind the use of overly restrictive deficit-reduction and inflation-reduction targets; exempt expanded health and education spending in developing countries from IMF-imposed budget ceilings; permit developing countries to spend foreign aid for its intended purposes; delink debt cancellation from harmful economic policy conditions; and disclose crucial documents currently kept secret.
If the gold sales deal is approved, the IMF will become self-financing,and the U.S. Congress will lose much of its power to demand changes in how the IMF operates. So the present opportunity will not soon present itself again. There is no certainty about when the gold sales authorization will come before Congress, but it now seems as though it
may be delayed until 2009.
Perhaps the IMF under the leadership of Strauss-Kahn, who took the helm of the institution only last September, is ready to re-evaluate its market fundamentalist, corporate-friendly policy prescriptions for poor countries. A statement issued by the Fund last week said that African countries did not need to raise interest rates in response to inflation
driven by higher prices of food and fuel, and that some subsidies might be permissible in some circumstances. This is perhaps a baby step forward.
But if the IMF is not ready on its own to jettison its long-standing policy demands for poor countries, it may soon find that it has no choice. Representative Barney Frank, D-Massachusetts, chairs the House Financial Services Committee, which must approve the gold sales proposal prior to the full House of Representatives considering the issue. At the
20th anniversary celebration of the Bank Information Center last week, he strongly denounced structural adjustment, stated as a matter of fact that gold sales will only be authorized if additional IMF gold is sold to cancel poor country debt, and made clear that he intends to obtain policy changes from the IMF as a condition of permitting gold sales.
Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor,
and director of Essential Action .
Labels: IMF
IMF: Subprime Crisis May Cost Trillion Dollars
IMF, the organization which bails "countries in trouble" is in trouble itself. When IMF is ailing, would the countries be further neglected?
"
quis custodiet ipsos custodes?"
$$$$$$$$$$$$$$$$$$
The International Monetary Fund on Tuesday predicted that losses stemming from the US subprime mortgage crisis could cost the global economy nearly $1 trillon.
In its biannual Global Financial Stability report, the IMF projected that falling US housing prices and rising delinquencies on the residential mortgage market could lead to $565 billion in losses. Combined with figures representing other categories of loans and securities issued in relation to commercial real estate, the consumer credit market, and corporations, losses could increase to about $945 billion.
The IMF flagged the US as the epicenter of the problem.
According to Forbes.com, the crisis is spreading beyond the US subprime market -- namely to the prime residential and commercial real estate markets, consumer credit, and the low- to high-grade corporate credit markets.
"U.S. troubles are affecting other nations' financial institutions that have the same overly benign global financial conditions and weaknesses in risk management systems and prudential supervision," the financial news site said, quoting the IMF report.
The IMF specifically warned that any industrialized country with inflated real estate prices remains at risk while "emerging market countries have been broadly resilient, so far."
Labels: IMF
IMF Admits 'weak' US is Close to Recession
The International Monetary Fund released a most belated and obvious statement citing the already taking place recession. How can we trust the IMF to lift countries out of poverty?
$$$$$$$$$$$$$$$$$$$$$$$$$$
The International Monetary Fund (IMF) today added to the growing chorus of concern the US is heading for a full-blown slowdown, stating that the world's largest economy "remains very weak, certainly close to a possible recession."
A leaked draft copy of the IMF's world economic outlook, the agency confirmed US growth would reach 1.5 per cent over 2008.
The forecast, which could still be changed before the report is released in April 9, is in contrast to the Organization for Economic Cooperation and Development (OECD) US gross domestic product (GDP) would grow by 0.1 percent in the first three months of this year, and then slow to zero expansion in the second quarter.
Earlier this week, the IMF said the Federal Reserve’s emergency measures to calm turmoil in the credit market, including a three-quarters of a percentage point cut in interest rates, were “appropriate”.
The IMF's outlook report is expected to confirm global growth at 4.2 per cent in 2008, slightly above the IMF’s last forecast in January of 4.1 per cent but well below its 2007 forcecast of 4.9 per cent.
ANSA, an Italian News Agency, states that the IMF study backs the European Central Bank's (ECB) hardline stance in not cutting interest rates.
It said: “The ECB is rightly holding interest rates stable for now,” adding that the ECB “should be ready to respond in a flexible manner if downward risks to growth and inflation growth intensify.”
IMF First Deputy Managing Director, John Lipsky, has said in recent weeks that growth in the US is sluggish but it is not in recession.
US Treasury Secretary, Henry Paulson, this week described the country’s economy as being in“sharp decline." This is the closest he has come to conceding an election-year recession.
Technorati Tags: IMF, Recession, America and US.
Labels: America, IMF, Recession, US
Slow down in US affects Southeast Asia Most
Southeast Asia will face stiffer export competition from China and likely bear the brunt of any impact in Asia from a major economic slowdown in the United States, an IMF official said Tuesday.
A recession in the United States, anticipated by some economists as a result of a current housing slump and related credit crunch, will obviously lead to a cutback in exports by Asia's rapidly-growing economies, led by China.
Based on a "rough rule of thumb," for about a one percentage point decline in US economic growth, there could be a "half to a full percent decline in Asian growth, depending upon what the effects are beyond the United States," said Steven Dunaway, deputy director of the International Monetary Fund's Asia and Pacific department.
"There will be much more of an impact in Southeast Asia," which faces direct competition from China in terms of a number of export products, he said.
"Those (Southeast Asian) countries will all face a much tougher time with the slowdown in the United States and probably some extra competition from China," he said at a forum on the Chinese economy at the Woodrow Wilson International Center for Scholars in Washington.
Dunaway said Asia's exporting nations were "going to be competing for a piece of a smaller pie" if US imports shrunk. He raised the possibility of China slashing prices to remain competitive.
"If the Chinese themselves face a more difficult environment, there will be some tendency probably at least to hold prices if not cut prices," he said.
This would "affect profit margins and put some additional competitive pressure on Southeast Asian firms as well as firms in other countries competing with Chinese companies," he said.
Labor-intensive manufacturing already appears to have given a competitive edge to China in trade and investments at the expense of export-driven Southeast Asian countries such as Thailand, Indonesia, Vietnam, and the Philippines, economists say.
But rapid Chinese economic growth in recent years has also resulted in increased imports of raw materials and intermediate inputs from Southeast Asia, helping propel growth in the region, they say.
Amid the competition for exports to the United States, China and Southeast Asia are also opening up their economies to each other through a free trade agreement covering a total of nearly two billion people.
IMF head Dominique Strauss-Kahn warned in Paris Monday that the global economic situation in the wake of a US slowdown was "serious" and could impact the world's emerging economies.
"Fortunately emerging nations continue to have fairly strong growth and to drive growth worldwide. But it is not impossible that even in emerging nations it could have a certain effect, that growth could be weaker than expected."
Dunaway said any decline in growth in Asian economies as a result of a US slowdown would depend on policy responses.
"Most of the countries are in positions where they can ease monetary policy, they can ease fiscal policy, so they can offset some of the decline coming out of the US," he said.
There is one school of thought that a US slowdown would provide a much needed breather for China, which was stepping up efforts to cool inflation to prevent the world's fastest growing major economy from overheating.
"There may also be some impact with respect to FDI (foreign direct investment) that might slow (in China)," Dunaway said.
But Beijing would probably raise government spending, particularly on infrastructure investment, to keep the economy chugging along at a growth rate of nine to 10 percent, he added.
Technorati Tags: IMF, US and SouthEastAsia.
Labels: IMF, South East Asia, US
New IMF Head: Dominique Strauss-Kahn
Seeking to restore its relevance and legitimacy, France's Dominique Strauss-Kahn took over Thursday as the head of the International Monetary Fund.
A former finance minister, he has pledged to make change at the 185-nation lending organization the core of his strategy "without delay," including reallocating votes so big developing countries have a larger say and improving finances so the IMF does not operate in the red.
Founded 63 years ago to promote global economic stability, the IMF put together multibillion dollar rescue packages for countries in financial crises while prescribing belt-tightening economic policies.
While it still lends to poor countries in Africa, many countries have access to the billions of dollars sloshing through international capital markets and no longer need the IMF. As a result, the IMF no longer earns interest on its loans has to overhaul its own finances.
Strauss-Kahn, a self described free-market Socialist known as DSK for his initials, said he wants to continue the mission of his predecessor, Spain's Rodrigo de Rato, to make the IMF more representative. De Rato led the organization through its annual meeting Oct. 21-22 and stepped down Wednesday for personal reasons two years before his term ends.
In interviews before assuming control, he suggested that to ensure a fairer representation within the institution of fast-growing economies, such as Brazil, India and China, that Europe, Russia and some other nations give up some of their power.
He added that this would not come at the expense of the United States, the largest shareholder in the IMF with veto power over its decisions.
Voting shares are based on a complex formula that takes account of a country's economic weight. Various proposals to change this have been advanced and Strauss-Kahn, facing a deadline in 2008 to find a solution, will preside over the bargaining.
"There is no doubt that the IMF needs serious institutional changes," said Jeremy Hobbs, executive director of Oxfam International, the aid agency and frequent critic of the IMF and other international financial institutions. "Nowadays the Netherlands has more votes than 23 African nations grouped together."
During the IMF annual meetings, Strauss-Kahn's push for reform got a boost from Italian Economy Minister Tommaso Padoa-Schioppa, the new head of the IMF's policy-making committee. He proposed that "since the EU has one money, it should consolidate" its representation. France and Germany, the two biggest economies in the euro zone each with its own seat on the 24-member IMF board are likely to resist.
The policy committee has urged the board to cut costs and shed staff in the next six months. Strauss-Kahn said has said he will submit proposals to make the IMF "more efficient and less costly.
"Finding new sources of income is an issue for the IMF as out lending activity is decreasing, which reduces our income," he said. But he said he opposes dipping into the IMF's substantial gold reserves, worth about $77 billion (€53 billion), for cash.
The IMF is facing a deficit approaching $100 million (€69 million), its first in decades. It has $17 billion (€11.8 billion) in outstanding loans, down from $97 billion (€67 billion) at the end of 2004.
Technorati Tags: IMF, Debt and Dominique StraussKahn.
Labels: Debt Relief, Dominique Strauss-Kahn, IMF
Venezuela says NO to IMF and WB
The
best May Day present ever
!@#$!@#$!#$!@$!@#!@#$!@#$!@#$!@#$!@#$
VENEZUELAN President Hugo Chavez has announced Venezuela will quit the World Bank and the International Monetary Fund.
The practical impact of the move is unclear. But withdrawing from the world's two premier financial institutions, which have been associated since World War II with US economic policies, would send a powerful political statement.
It also might embolden activists throughout the world who are opposed to privatisation and fiscal austerity, two courses that the institutions often require of economically troubled nations.
It was unclear how much money the World Bank and the IMF would have to hand over to Caracas.
Venezuela's share of the IMF is worth $US3.9 billion, though it wasn't known whether the IMF would be expected to pay Venezuela that much when its membership is terminated.
In a defiant speech yesterday, Mr Chavez demanded that the World Bank pay oil-rich Venezuela its contributions. "Now it is they that owe us," he said.
There was no reaction from either organisation today, but the US State Department said Mr Chavez was only digging a deeper hole for his people.
"Look, you can't take the shovel out of the man's hand," said spokesman Sean McCormack. "He just keeps on digging. So, and sadly, it's the Venezuelan people who are victimized by this."
The World Bank and the IMF were established near the end of World War II to help rebuild war damage.
The World Bank helps countries finance development projects, while the IMF tries to ensure orderly world trade by regulating exchange rates and providing assistance to countries unable to pay their debts.
Traditionally, the World Bank is led by an American, and the IMF head is a European.
In recent years, both organisations have refrained from criticising Mr Chavez's economic policies, including re-nationalisations of the oil and telecommunications industry, in hopes of quietly persuading his government to stick with more market-friendly policies.
The latest World Economic Outlook, the IMF's assessment of the world economy, barely mentioned Venezuela when it was issued a month ago.
No IMF mission has visited Venezuela since 2004, though Anoop Singh, the IMF's top Latin American official, told reporters last month that the IMF hoped to send a mission to Caracas to discuss inflation control later this year.
Nations rarely walk away from the IMF or the World Bank. One of the last to do so was Cuba, in 1964.
Liliana Rojas-Suarez, a former IMF official now with the Washington-based Center for Global Development think tank, said Chavez's move is consistent with his vision of creating a system independent of US influence.
"This is definitely political and consistent with Chavez's strategy," she said, pointing out that Mr Chavez is founding a new Bank for the South, which would play a role similar to the World Bank but under Latin American control.
Venezuela has bought more than $US3 billion in Argentine bonds, allowing Argentina to pay off the IMF.
Mr Chavez also has pledged money to Ecuador so that the Andean nation can reduce its debt to both institutions.
Last month, Venezuela finished paying off its debts, and the IMF closed its office in Caracas last year.
Technorati Tags: Venezuela, IMF and WB.
Labels: IMF, Venezuela, World Bank
Illegitimate Debt in D.C. and the Democratic Republic of the Congo
This Saturday, on the occasion of the IMF / World Bank Spring Meetings, join us for a evening of film and discussion!
When: April 14th, 5:00-7:00pm
Where: GWU Campus, Elliot School of International Affairs
1957 E Street NW, Lidner Family Commons Suite 602
Who: *Jean-Louis Peta Ikambana*
American Friends Service Committee
* Charles Lowery*
Center for Responsible Lending
Film: * Congo's Tin Miners*
*What are the origins of the debt regimes in Washington, DC and the Democratic Republic of the Congo?
* How is the debt crisis in Congo linked to the crisis of predatory lending in low-income communities and communities of color in the U.S?
*What are the economic and political consequences of debt and how has debt played a role in systematic impoverishment?
*Who are the players and who has the power?
*How are the communities affected fighting back?
Sponsors: Friends of the Congo, Mobilization for Global Justice, Africa Action, 50 Years Is Enough, Washington Peace Center, TransAfrica Forum, Jubilee USA, Coalition of Pluralists and Congolese Patriots.
Technorati Tags: IllegitimateDebt, IMF, WorldBank and SpringMeeting.
Labels: Illegitimate Debt, IMF, SpringMeeting, World Bank
Iran Urges IMF to Probe U.S. Bank Sanction
Iran has reportedly asked the International Monetary Fund (IMF) to determine whether U.S. sanctions against its Bank Saderat violate IMF rules on foreign exchange restrictions. According to Bahrain-based Gulf Daily News, IMF staff and Iranian finance officials discussed the effects of the U.S. action against Bank Saderat during annual economic consultations last November.
IMF documents published on Thursday reportedly detailed the talks, in which Iranian authorities expressed concern that the bank had been unable to issue letters of credit in dollars since the U.S. sanctions took effect.
The bank officials said the measure was also affecting the bank's available deposits.
The Iranian officials complained that several other banks in Europe and Asia with activities in the United States had cut off Saderat from operating in other currencies.
"The [Iranian] authorities have sent a note requesting fund management to ascertain whether the measure adopted by the U.S. Treasury constitutes an exchange restriction subject to fund approval," the IMF said.
Washington has been intensifying its campaign to mount economic pressures on Iran. Last month, the U.S. targeted Iranian state-owned Bank Sepah, which has branches in London, Paris, Rome and Frankfurt.
Technorati Tags: IMF, US and Iran.
Labels: IMF, Iran, US
