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Posts Tagged ‘IMF’

IMF downgrades global growth outlook

In Uncategorized on November 5, 2010 at 10:54 am

IMF meets central bank chiefs in Shanghai

In Uncategorized on October 18, 2010 at 10:24 am

SHANGHAI (AFP) – International Monetary Fund and central bank officials from around the world met in China Monday to discuss ways to boost the global economic recovery, amid mounting fears of a damaging currency war.

The People’s Bank of China hosted the conference in the country’s financial hub Shanghai, bringing together central bank chiefs and other officials from Asia, Africa, Europe, and North and South America, the IMF said.

The Shanghai conference follows IMF and World Bank annual meetings earlier this month, where finance officials discussed how to strengthen the recovery from the worst recession since World War II and the global financial system.

Pedestrians pass in front of the Shanghai skyline. AFP

It also comes ahead of this week’s key Group of 20 meeting in South Korea, where currency reform is expected to dominate talks, amid fears that nations could adopt trade barriers to counter the rising prices of Asian exports.

“The conference is part of the ongoing international examination of the policy challenges posed by the global financial crisis,” the Washington-based IMF said in a statement.

PBOC chief Zhou Xiaochuan and IMF managing director Dominique Strauss-Kahn were co-chairing the meeting, the institution said.

The US Federal Reserve was represented by Kevin Warsh, a member of the central bank’s policy-setting Federal Open Market Committee.

Monday’s meetings had been planned for several months and Il-Houng Lee, the IMF’s resident representative in China, said all discussions would be carried out behind closed doors.

The talks were focused on macro-prudential policies — the big systemic picture of reducing the risk of too-big-to-fail institutions, Chinese central bank policy adviser Xia Bin told reporters outside the meeting room.

A news conference was scheduled for 6:00 pm (1000 GMT).

In the run-up to the G20 finance ministers’ meeting, which begins Friday in preparation for next month’s Seoul summit, South Korea has warned that frictions over the currency upheaval are growing and could lead to trade protectionism.

The United States, facing mid-term elections next month, has ratcheted up the pressure on China to allow the yuan to rise more rapidly, but Beijing insists its currency must not be used as a “scapegoat” for US economic woes.

When asked whether China feared a currency war, He Fan, an economist for the Chinese Academy of Social Science, a top government think tank, said he thought such a situation would be averted.

“Yes, we are concerned. But given historic lessons, a large-scale currency war is unlikely,” He said between attending meetings.

“But we are going to see continuing conflicts particularly in the East Asian region. Countries like Japan and South Korea have similar economic structures and both have limited room for monetary policy adjustment.”

Beijing should now tighten capital controls even further to prevent a flood of hot money — speculative funds — from coming into China on expectations that the yuan will appreciate, which would fan inflation, He said.

With Beijing keeping a tight grip on the yuan, many other Asian economies are suffering as their currencies soar against the dollar. Despite Europe’s debt woes, the euro has also surged.

In its statement, the 187-nation IMF added the meeting followed an IMF-sponsored gathering in South Korea of Asian policymakers and leaders in July, at which it “committed to forging a new relationship with the region.”

A year ago, the Group of 20 developed and developing nations tasked the IMF with stepping up its focus on global systemic stability.

Authorities agreed a broader approach was needed to spot weakness in the increasingly interconnected financial system, to complement the traditional micro-prudential regulations of bank-by-bank audit and supervision.

Asia-Pacific leaders will meet for a summit in Japan following the G20 gathering in Seoul next month.

Source: SGGP

IMF to boost lending resources: report

In Uncategorized on July 20, 2010 at 11:26 am

SEOUL, July 19, 2010 (AFP) – The International Monetary Fund is seeking to boost its lending resources from 750 to 1,000 billion dollars to better handle future financial crises, a report said Monday.

The Financial Times, citing IMF Managing Director Dominique Strauss-Kahn, said the bigger credit lines should be used to help prevent, rather than address, crises.

IMF Managing Director Dominique Strauss-Kahn (AFP file)

“Even when not in a time of crisis, a big fund, likely to intervene massively, is something that can help prevent crises,” IMF Managing Director Dominique Strauss-Kahn told the Financial Times.

“Just because the financing role decreases, doesn’t mean we don’t need to have huge firepower… a 1,000 billion dollar fund is a correct forecast,” he said.

The Financial Times said the IMF wants to agree financing deals in advance that will be specially tailored to individual countries, rather than respond to crises with conditional loan packages.

The aim would be to cool market nervousness over any nation facing an imminent liquidity crunch, the paper said.

Strauss-Kahn was in South Korea — which chairs the Group of 20 leading economies this year — last week to attend a conference.

South Korea’s presidential panel for the Group of 20 leading economies, confirmed it was cooperating with the IMF to work out a better safety net.

“So far the lending facilities of the IMF have been focused on crisis resolution more than crisis prevention,” Jie-Ae Sohn, spokesperson of Presidential Committee for the G20 Seoul Summit, told AFP.

“But South Korea, as this year’s president of the Group of 20 leading economies is discussing with the IMF packages that would compliment and upgrade crisis prevention mechanisms.”

The spokesperson, however, declined to elaborate on how much the IMF will increase its lending resources.

Source: SGGP

IMF chief rules out double-dip global recession

In Uncategorized on July 1, 2010 at 2:28 pm

WASHINGTON, June 29, 2010 (AFP) – IMF chief Dominique Strauss-Kahn on Tuesday ruled out the immediate prospect of a double-dip recession scuttling the fragile global economic recovery, despite various risks.

The “recovery will go on without a double dip,” the IMF managing director said to a question at a forum hosted by the Peterson Institute for International Economics in Washington.

Dominique Strauss-Kahn (L) shakes hands with the Ambassador from South Korea Han Duk-soo (R) during a reception for Asian Ambassadors at the IMF Headquarters June 30, 2010 in Washington, DC. AFP PHOTO

Global markets went into a tailspin Tuesday as sagging American consumer confidence, weak Chinese economic indicators and European financial problems renewed fears the global economic recovery may falter.

The United States and many other key economies plunged into the worst recession in decades following an American home mortage meltdown in 2007 which triggered a financial crisis sending shockwaves across the globe.

But Strauss-Kahn said “the IMF hasn’t changed its views” on sustained global growth from the recession.

“It’s (double-dip) not in the baseline for us… but there are high tail-risks,” he said, citing as examples the “fiscal situation” in some countries and problems created by large credit flows to relatively fast-growing Asian and other emerging nations

“There are many possible triggers for a double dip,” he said, adding “it will be ridiculous to say there are no risks at all.”

Strauss-Kahn believed the much faster-growing Asian economies could make up for any slack in economic expansion afflicting the United States or Europe, where a mounting fiscal crisis has threatened to slam the brakes on growth.

Source: SGGP

Greece will tame debt with reforms: IMF official

In Uncategorized on June 27, 2010 at 12:46 pm

Greece will overcome its huge debt crisis with its austerity plan, an IMF official said Sunday as a poll showed a majority of Greeks fear that unpopular pension reforms will be in vain.

A group of demonstrators gather in front of the Greek parliament on June 25 in Athens during a cabinet meeting to finalise changes in a controversial pension reform.

Poul Thomsen, the head of the International Monetary Fund mission dealing with Greece, told To Vima daily that Athens is making progress on its “ambitious” programme of cuts.

The cutbacks have caused labour turmoil and a series of protests across Greece, with a new general strike, the fifth since February, due to be held on Tuesday.

“Such an adjustment is not easy and often causes discontent,” Thomsen said. “This is understandable as people see things getting worse before they improve.”

But he added: “The effort has begun vigorously and I firmly believe that Greece will succeed.”

Thomsen also applauded the Greek government’s decision not to restructure its debt as this “which would entail a huge cost.”

After decades of unrestrained state spending, Greece faced bankruptcy this year with a national debt of nearly 300 billion euros (371 billion dollars).

It was rescued by a bailout loan from the European Union and the IMF for which it had to pledge a spate of deep spending cuts.

Among the measures is an overhaul of the pensions system which has eaten up vast amounts of state funds.

The government this week finalised reforms which progressively raise by 2015 the age of retirement for both men and women to 65 years for a full pension, equating the sexes for the first time.

It also increases the mandatory workforce period from 37 years to 40 years.

The new system will see an average reduction in pensions of seven percent and bonus retirement dues which pensioners used to receive for Christmas, Easter and summer vacations will be slashed.

Parliament is expected to begin debate on the reforms next week.

A poll in Proto Thema daily on Sunday showed that 64.8 percent of Greeks believe their sacrifices will not save the crumbling pensions system, which currently consumes 12 percent of national output.

The Alco poll also found that 51.1 percent of 800 respondents believe Prime Minister George Papandreou is “too submissive” towards Brussels.

Source: SGGP

IMF head laments ‘loss of momentum’ in financial reform

In Uncategorized on June 18, 2010 at 4:25 am

World leaders’ commitment to global reforms of the financial sector is flagging, IMF head Dominique Strauss-Kahn said on Thursday

 World leaders’ commitment to global reforms of the financial sector is flagging, IMF head Dominique Strauss-Kahn said on Thursday.

“I am sometimes a bit worried about the loss of momentum” in the reform of the financial sector, in face of the “huge” task ahead, Strauss-Kahn told a conference.

Previously, “leaders were very committed to do something in the financial sector but as the crisis vanished, most of them are more concerned by domestic questions,” the head of the International Monetary Fund said.

“It would be unfair to say that the momentum has disappeared … nevertheless I don’t see the pressure as big and strong as it was a few months ago,” Strauss-Kahn added.

Governments in the United States and Europe have been scrambling to revamp and adapt banking rules since the collapse of US investment bank Lehman Brothers in September 2008 sparked a global credit crunch.

The IMF however has said that more direct measures than those proposed so far are needed, such as levies tied to risk presented by individual banks or limits to the size of their business.

Strauss-Kahn also said he was concerned about the consistency in priorities in financial reform across borders, citing different approaches in the United States and Italy as examples.

“Having an inconsistent system in the biggest economies … is of course creating new cause for regulatory arbitrage and the trigger for the next crisis.

“The countries having experienced some problems in the financial sector, namely the US and the European countries, are really keen to do something,” he said.

However, those countries that have not had major problems in the financial sector, like Canada and some emerging economies, tend to say that major reforms are not needed, he added.

Source: SGGP

Greece draws first IMF loan for eurozone state

In Uncategorized on May 13, 2010 at 4:52 am

Greece on Wednesday drew 5.5 billion euros (6.9 billion dollars) from an emergency International Monetary Fund loan, becoming the first eurozone country to be forced to resort to the IMF for aid.

The money came as thousands of people marched through Athens in protest against the government’s deal for a giant bailout from the European Union and the IMF totalling 110 billion euros in return for harsh budget cuts.

“Greece has accessed the sum without any problems, everything was done in close cooperation with the IMF…. Everything is under control,” a top official from the finance ministry told AFP, speaking on condition of anonymity.

Faced with spiralling debts and a hammering on financial markets that threatened to engulf other European economies, Greece earlier this month was given the go-ahead to access the unprecedented financial rescue package.

People sit outside a store during a demonstration against government’s austerity measures in central Athens

Speaking at a cabinet meeting, Prime Minister George Papandreou said the bailout was “a great success for our country,” adding: “The majority of the public, the citizens, accept the measures even though they are unpleasant.”

Greek and Turkish officials have also suggested that the debt crisis could aid closer ties between the two historic rivals ahead of Turkish Prime Minister Recep Tayyip Erdogan‘s arrival in Greece on Friday for a two-day visit.

Greece’s EU-IMF aid sparked a collapse in confidence in weaker eurozone economies among investors and forced EU leaders to agree on Monday to make a bailout fund of nearly one trillion dollars available for crisis-hit countries.

Greece desperately needs the money as it has been effectively blocked from international debt markets by the forbiddingly high rates demanded by investors and it needs nine billion euros to meet debt repayments due next Wednesday.

A finance ministry official said the government is expecting another loan tranche of 14.5 billion euros from the European Union early next week.

The budget cuts have set off a wave of protests. Some of the rallies turned violent and three people died last week in an Athens bank that was set alight.

Greece’s two main trade unions, GSEE and Adedy, organised another rally in Athens on Wednesday that was attended by around 4,000 people, according to organisers. The police put the number of protesters at just over 1,000.

“Out with the EU and the IMF!” and “Uprising! Everyone in the Streets!” read placards held up by protesters at Wednesday’s rally. Another read: “Down with the Market Junta!” — a reference to Greece’s former military dictatorship.

The unions also on Wednesday called for a national strike on May 20, which will be the fourth such stoppage since February and the second this month.

“The IMF will not stop asking sacrifices from people of labour. Its recipes are catastrophic. The government should categorically reject them,” Yiannis Panagopoulos, chairman of the GSEE private sector union, said in a statement.

The economy meanwhile paused its downward slide with a contraction of 0.8 percent in the first quarter — the same level as in the last quarter of 2009, according to a preliminary estimate issued by the state statistics agency.

“The figures were quite good. They were better than expected,” said Constantinos Vergos, an analyst at Cyclos Securities in Athens, explaining this was partly due to reforms to curb Greece’s rampant underground market.

The contraction also eased slightly on a 12-month comparison to minus 2.3 percent from a downwardly revised minus 2.6 percent last quarter.

But worse results are expected, with the government forecasting that the economy will shrink by 4.0 percent over the year as a whole.

The Athens stock exchange closed 0.82 percent up on Wednesday after losing 2.47 percent on Tuesday in line with a global drop in equities.

Some economists have warned the austerity measures will plunge Greece into an even worse recession and stifle growth but many say the reforms being enacted — like the overhaul of the pension system — are long overdue.

Labour Minister Andreas Loverdos said earlier that the pension system faces “collapse” in 2015 if there is no reform and this week put forward a radical reform bill expected to face a stormy vote in parliament later this month.

Source: SGGP

IMF says European debt crisis a boon for emerging markets

In Uncategorized on April 21, 2010 at 8:33 am

Europe’s debt crisis is sending investors flocking to the emerging markets of Brazil, China and India, the IMF said Tuesday, as analysts asked if the crisis is changing the world economic order.

In a report on the state of the global economy, the International Monetary Fund said the debt crisis in Greece and other eurozone nations had caused investors to look to emerging nations for profit.

“The crisis has altered perceptions about risk and return in mature (markets) relative to emerging markets,” the IMF report said.

The global crisis has undoubtedly laid bare the fragile state of government finances in swathes of once-safe Europe, prompting austere spending cuts and questions about the future of the euro itself.

The so-called PIIGS of Portugal, Italy, Ireland, Greece and Spain, have seen their public debt soar, leaving jittery investors to worry about previously unthinkable government defaults.

Greece has been worst hit. As efforts by eurozone members to create a safety net have spluttered, investors have demanded greater risk premiums to lend Greece fresh cash, deepening the debt crisis further.

According to the IMF the impact of that crisis in confidence is now being felt in the choices of everyone from the smallest individual investors to multi-billion-dollar funds.

“The favorable performance of emerging market assets relative to mature market assets has prompted growing interest by global investors in raising their asset allocations to emerging markets and other advanced economies.

“Retail investors and hedge funds are adding to their emerging market portfolios in the near term,” the report said.

“Capital is flowing to Asia (excluding Japan) and Latin America, attracted by strong growth prospects, appreciating currencies, and rising asset prices, and pushed by low interest rates in major advanced economies, as risk appetite continues to recover,” the IMF said.

Interest in emerging markets is long-standing. But as investors look to ever more exotic “frontier markets” for high returns, investments in countries like Brazil, China and India have become the mainstream.

According to the IMF the trend has been spurred by the sale of emerging market stocks in bundles called exchange-traded funds, or ETFs, which spread risk over several countries and sectors.

The lure of emerging market investments is obvious according to the Vanguard Group, a US-based investment firm that runs emerging and developed market ETFs.

The firm said one widely-used emerging market index shows returns on investment averaging 15 percent in the five years to 2009. Investments in a similar US index gave returns of under one percent.

And in contrast to sclerotic growth rates in Europe and North America, some Asian countries, like China, are forecast to see double-digit growth.

Although Vanguard cautions that high growth rates should not be equated with bumper investment returns, emerging market investments are being transformed from an exotic backstop for more traditional investments, to an investment like any other.

“(With the) economic out-performance of emerging economies, some investors are reassessing the primary role of emerging markets in their global portfolio from one of diversifying their equity holdings to one of generating higher expected returns relative to developed markets.”

The shift is so great that in a report on Tuesday, ratings agency Standard & Poor’s asked if there might now be a “changing of the guard,” and whether emerging market countries might “surpass their high income counterparts in creditworthiness?”

S&P concluded there was no changing of the guard just yet, but that poising the question — unthinkable before the crisis — may be a sign of how much the world is changing.

Meanwhile the International Monetary Fund has proposed two new global taxes on banks and other financial institutions to cover the cost of future bailouts, the BBC reported.

The measures would see all institutions pay a bank levy as well as a further tax on profits and pay, which would aim to protect against future financial meltdown, said the broadcaster Tuesday, citing a leaked IMF report.


Source: SGGP

IMF chief plays down raising inflation targets

In Uncategorized on April 11, 2010 at 10:26 am

The head of the International Monetary Fund said Saturday it still believes in “low and stable inflation” despite a suggestion from its chief economist that targets could go higher.

At a conference in Cambridge, eastern England, Dominique Strauss-Kahn played down proposals made by Olivier Blanchard in February that inflation targets could be raised from about two percent to four percent to allow central banks to respond better to shocks.

“I think this is an interesting idea that merits serious discussion, but it is not the principal question for monetary policy and should not distract us from more important concerns,” he said.

“Let me also be clear: we remain an institution that believes that low and stable inflation delivers positive benefits for growth and macroeconomic stability.”

International Monetary Fund (IMF) chief Dominique Strauss-Kahn, pictured on April 4

Earlier this week, it was reported that Germany’s Bundesbank had sharply criticised a joint IMF-EU aid plan for stricken Greece, saying the IMF had become the “Inflation Maximising Fund”.

The EU-IMF scheme to bail Greece out has been highly contentious, mainly because of German ambivalence linked to its concerns over protecting the credibility and stability of the eurozone and monetary conditions in Germany.

Protesters briefly disrupted Strauss-Kahn’s speech at Cambridge university’s King’s College, which was hosting a conference organised by the Institute for New Economic Thinking, a body set up with a grant from financier George Soros.

Concealed above the stage in the main hall, the protesters unveiled a large banner behind Strauss-Kahn which read: “The IMF is part of the problem, not the solution”, and one of them cried: “Shut down the IMF.”

The banner was quickly removed and Strauss-Kahn brushed off the protest. Security staff, who said the protesters were young people and likely students, escorted them from the building.

Commenting on the global economic crisis, Strauss-Kahn said the world was on the path to recovery but it remained “sluggish and uneven” and the costs, such as high unemployment and public debt, “will take many years to overcome”.

Source: SGGP

ASEAN could grow 5.5 percent in 2010: IMF

In Uncategorized on April 8, 2010 at 11:46 am

NHA TRANG, Vietnam, April 8, 2010 (AFP) – Economic growth across the 10-member Southeast Asian bloc could reach 5.5 percent this year, the IMF said Thursday, outpacing the global average.

“We are expecting world growth to be around four percent this year. In the ASEAN region, we are expecting growth at 5.5 percent this year,” IMF deputy managing director Naoyuki Shinohara said on the sidelines of ministerial talks.

The Association of Southeast Asian Nations collectively grew by just 1.3 percent in 2009 as it was buffeted by the global financial crisis.

Flags of Southeast Asian Nations (ASEAN) are seen flying at Hanoi’s Noi Bai international airport where ASEAN leaders keep arriving to attend the 16th ASEAN Summit on April 8, 2010. AFP photo

The region groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

China, a key dialogue partner, is attending the finance ministers’ talks being held in the central city of Nha Trang while the group’s leaders are meeting in Hanoi from Thursday for a two-day summit.

But Shinohara said the ongoing controversy over China’s pegging of its currency had not been raised at the talks.

The United States is continuing to press for an appreciation of the Chinese yuan to stem the tide of cheap imports to its shores.

Source: SGGP