Archive for the ‘IMF’ Category

Brazil, Russia want summit with India, China

November 26, 2008

Russia and Brazil agreed Wednesday to meet with India and China next year to create a new global financial architecture — a reflection of how economic power is shifting from the United States and Europe.

Brazil, Russia, India and China — emerging markets collectively known as the BRIC nations — “represent a powerful force,” President Luiz Inacio Lula da Silva said as he stood with Russian President Dmitry Medvedev, who agreed to host the 2009 summit.

Silva is pushing for big developing nations like Brazil to have a major role in drawing up new regulations for international finance and for a greater voice in the IMF and World Bank.

By SILVIA IZQUIERDO, Associated Press Writer

Medvedev said he and Silva discussed the creation of a “new financial architecture,” Russia’s ITAR-Tass news agency reported.

Silva and Medvedev did not say whether China and India have agreed to the summit, but finance minister of the four countries met on the sidelines of a G20 meeting in Sao Paulo that preceded their leaders’ summit in Washington this month.

The two leaders also discussed increasing cooperation in energy, agriculture and railways, signed a military technology cooperation accord and agreed to cooperate on a satellite program. Russia has a satellite navigation system, and Brazil launches its own rockets from a base in northeastern Brazil.

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At G-20, China Did Not Commit Bailout Funds Despite Huge Reserves

November 16, 2008

China got what it wanted in Washington’s financial summit — a promise of a bigger role for developing countries in global finance — but gave no sign Sunday whether it will respond by using any of its $1.9 trillion in reserves in a bailout fund.

By JOE McDONALD, AP Business Writer

China has been pushing for developing countries generally — and itself specifically — to have more influence at the International Monetary Fund and other global bodies. Analysts say that might be Beijing’s price to give in to foreign appeals to dip into its reserves and contribute money toward an IMF emergency loan fund for struggling countries.

The Washington summit was an “important and positive” step toward “the reform of the international financial structure,” foreign ministry spokesman Qin Gang said in a statement. It made no mention of possible bailout contributions, and a man who answered the phone at the ministry press office said he had no information.

Leaders from 21 nations, including China, and four international organizations attended the emergency two-day summit intended to address the financial crisis sweeping the globe.

Summit participants vowed Saturday at the conclusion of the two-day conference to cooperate more closely, keep a sharper eye out for potential problems and give bigger roles to fast-rising nations. But the leaders avoided many of the harder details leaving them to be worked out before their next summit, after President George W. Bush is gone and President-elect Barack Obama is in the White House.

China says it will cooperate with the IMF but Chinese officials say its most important role will be to preserve global growth by keeping its own economy healthy. Beijing announced a 4 trillion yuan ($586 billion) stimulus package last week, at a time of slowing economic growth and fears that falling exports could lead to layoffs and factory closures.

“China’s economic power is growing, so China could contribute and help ease the financial crisis,” said Wu Jinglian, a prominent economist and Cabinet adviser. “But the first priority is to keep our own economy growing. That will benefit every country in the world.”

A woman cooks while her husband playing computer games inside ...
A woman cooks while her husband playing computer games inside the prefabricated temporary housing in Yingxiu, Sichuan Province in China Nov. 8, 2008. Six months after the worst quake to hit China in three decades, the future remains uncertain for many survivors. Jobs are hard to come by, and government aid payments are about to end. Many people are still in temporary housing. China’s leaders have called reconstruction a priority. Last week, the government announced plans to pump $146 billion into the effort over the next three years. Some 120 billion yuan ($17.5 billion) will be spent on ensuring schools, hospitals and other public facilities are built to higher standards.(AP Photo/Andy Wong)

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Pakistan secures IMF loan of at least 7.6 billion dollars

November 15, 2008

Pakistan announced Saturday it will receive a loan of at least 7.6 billion dollars from the International Monetary Fund, the Fund’s first rescue in Asia since the global financial crisis began.

by Hasan Mansoor, AFP

Shaukat Tarin, top finance adviser to Pakistan’s premier, said the financial crisis had severely impacted the country’s foreign exchange reserves as he announced the package, aimed at staving off a balance of payments crisis.

“We have reached an agreement with the IMF with the help of our friends and other officials,” Tarin told a news conference, adding Pakistan would receive four billion dollars this year as part of the 23-month IMF deal.

Pakistan needs up to 4.5 billion dollars (3.5 billion euros) to deal with a balance of payments crisis that has raised the prospect of the violence-hit nation defaulting on its foreign debts.

State Bank of Pakistan Governor Shamshad Akhtar speaks during ...
State Bank of Pakistan Governor Shamshad Akhtar speaks during a news conference in Karachi, November 12, 2008. Pakistan hiked its key interest rate on Wednesday in a move to find favor with the International Monetary Fund as the government seeks billions of dollars in loans to fend off a balance of payments crisis.(Athar Hussain/Reuters)

“The impact of the financial crisis in the world and the difficulties we faced at home impacted gravely, particularly to our foreign exchange reserves which were 16.4 billion dollars in October 2007 and now are less than 7 billion dollars,” Tarin said.

He added that the interest rate on the IMF programme will be 3.51 to 4.51 percent and Pakistan will repay the loan over five years starting from 2011.

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At the Washington summit meeting, China holds the cards

November 14, 2008

It is not clear how much the leaders of developed and developing countries from around the world, gathered to discuss a fast-moving financial crisis with a soon-to-depart president of the United States, can hope to accomplish.

By Mark Landler and Stephen Castle
International Herald Tribune

But the summit meeting in Washington this weekend may clarify one thing: how fundamentally the crisis is reshaping the economic map, rendering obsolete the old club of Western powers that fashioned the financial pillars of the post-World War II era at a conference in Bretton Woods, New Hampshire, in 1944.

While President Nicolas Sarkozy of France proposed the meeting and President George W. Bush agreed to be host of an expanded conference of G-20 nations, the most sought-after country at the gathering some are calling Bretton Woods II is likely to be China.

With nearly $2 trillion in foreign exchange reserves and an economy that is still growing – even if more slowly than it was before the crisis erupted – China is one of the few participants with the financial power to aid countries in distress, either directly or by contributing to the coffers of the International Monetary Fund.

“We will actively participate in rescue activities for this international financial crisis,” Yi Gang, deputy governor of the Chinese central bank, told a news conference Friday in Beijing, according to Reuters. It was one of the clearest indications yet that China stood ready to help the IMF aid countries hit by the global credit crisis.

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China: Protecting domestic economy is top priority

November 11, 2008

China’s government indicated Tuesday it would resist pressure to contribute to a global bailout fund, saying that ensuring the country’s economic stability is the most important step it can take to tackle the financial crisis.

President Hu Jintao is due to attend next weekend’s summit in Washington of leaders from 20 major economies to discuss a response to the crisis. British Prime Minister Gordon Brown has called on China, which has nearly $2 trillion in reserves, and oil-rich Middle Eastern nations to fund the bulk of an increase in an IMF bailout fund.

Associated Press

“We should put our own house in order and we should stabilize our own financial market and maintain market order,” said a foreign ministry spokesman, Qin Gang. “I believe this is the most effective contribution China can make to tackling this financial crisis. It will help to maintain the sound and steady development of the world economy.”

Graphic charting China's consumer price index, which hit ... 
Graphic charting China’s consumer price index, which hit a 17th-month low of 4.0 percent in October(AFP/null)

China, the world’s fourth-largest economy, unveiled a 4 trillion yuan ($586 billion) stimulus package Sunday, which Premier Wen Jiabao said was its “biggest contribution to the world.”

The plan calls for higher spending through 2010 on airports, highways and other infrastructure, more aid to the poor and farmers and tax cuts for exporters.

Economic growth slowed to 9 percent in the last quarter, down from last year’s stunning 11.9 percent rate and the slowest growth in five years. Export orders have fallen sharply as global demand weakens, leading to layoffs and factory closures.

N.Y. Fed Chief Touted for Top Treasury Post; Obama To Meet With Econ Advisors

November 7, 2008

On an Obama economic brain trust studded with high-profile heavyweights, mTimothy F. Geithner, the low-key president of the Federal Reserve Bank of New York, has emerged as a top candidate to head the Treasury Department or another top policy post in the new administration.

New York Federal Reserve President Timothy Geithner testifies ... 
New York Federal Reserve President Timothy Geithner testifies at the U.S. House Financial Services Committee about financial market regulatory restructuring in Washington July 24, 2008.(Larry Downing/Reuters)

Mr. Geithner, 47, is two weeks younger than the president-elect but has served in top Treasury and Federal Reserve positions since the late 1980s. He joined Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Bernanke to oversee the Bush administration’s effort to contain the crises in the world’s credit and financial markets.

By David R. Sands
The Washington Times
Mr. Obama and Vice President-elect Joseph R. Biden Jr. will hold their first press conference since the election Friday in Chicago after a meeting with the transition economic advisory board. Mr. Geithner is not listed as a member of the transition team.

The New York Fed is considered the most influential of the regional Federal Reserve Banks. By virtue of his position, Mr. Geithner serves as vice chairman of the central bank’s Federal Open Market Committee, the key body guiding monetary policy.

Like Mr. Obama, Mr. Geithner is described by colleagues as even-tempered and wonkish at times, comfortable debating abstract financial concepts and not likely to break the bureaucratic crockery as an administrator.

With the economy declining, plunging financial confidence and a $700 billion Wall Street rescue program just getting under way, the Treasury secretary selection will be one of the most critical for the new president, and one of the most closely scrutinized.

Mr. Obama’s economic advisory team during the campaign contained an unusually large number of heavy hitters, including former Federal Reserve Chairman Paul A. Volcker, billionaire investor Warren Buffett, and two Clinton administration Treasury secretaries — Robert E. Rubin and Lawrence H. Summers.

Mr. Rubin, who had been rumored to receive a top post in the new administration, told Bloomberg News on Thursday that he was not interested in returning to government.

It was Mr. Summers who boosted Mr. Geithner’s career at several points after he joined the Treasury Department’s international affairs division as a civil servant in 1988. He became a top aide to Mr. Summers and was named Treasury undersecretary for international affairs in 1999, a post previously reserved for political appointees.

Mr. Geithner left the department in 2001 and spent time as a fellow at the Council on Foreign Relations and at the International Monetary Fund before joining the New York Fed….

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Obama To Meet With Economic Advisors Today

By NEDRA PICKLER, Associated Press Writer

President-elect Obama is seeking some economic advice from leaders of business, government and academia, making the struggling economy — the nation’s No. 1 concern — his first order of public business.

Obama and Vice President-elect Joe Biden were to meet Friday with 17 members of their transition economic advisory board. Members include former presidential Cabinet officials and executives from Xerox Corp., Time Warner Inc., Google Inc. and the Hyatt hotel company. Investor Warren Buffett was participating by telephone.

Obama also was holding his first news conference as president-elect after the meeting.

It was to be Obama’s first public appearance since Tuesday’s election, where exit polls showed that the economy was far and away the top issue for voters. He’s been using the time for private meetings with his transition team, receiving congratulatory phone calls from U.S. allies and intelligence briefings, and making decisions about who will help run his government.

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Pakistan hopes for Saudi aid amid financial crisis

November 3, 2008
ISLAMABAD, Pakistan (AP) — Pakistan is turning to Saudi Arabia for financial aid to ease an economic crisis that already has forced the militancy wracked South Asian nation to start talks with the International Monetary Fund.

Pakistani President Asif Ali Zardari arrives Tuesday in the oil-rich Arab nation to request a deferral on oil payments and other possible support, the Foreign Ministry said. Another potential topic: negotiating with the Taliban.

Nuclear-armed Pakistan needs billions in outside assistance to avoid defaulting on its international loans. The impoverished nation of 170 million people is hampered by high inflation, chronic power outages and a sinking currency, as well as a violent Islamist insurgency — all of which threaten to undermine the fledgling pro-U.S. government.

Analysts said Zardari’s visit could yield some temporary relief, but that he was unlikely to return with a package that would render moot politically unpopular IMF aid.

Pakistani President Asif Ali Zardari will visit Saudi Arabia ... 
Pakistani President Asif Ali Zardari, here seen in front of a portrait of his late wife, is visiting Saudi Arabia to seek a deferred payment on oil imports and garner support for a financial aid package.(AFP/File/Aamir Qureshi)

An IMF assistance package would likely come with painful requirements to cut government spending that could affect programs for the poor, making it a tough choice for the politicians.

Economist Muzammil Aslam predicted Zardari would ask for $3 billion in deferred oil payments from the Saudis, but warned that Pakistan should prepare for IMF assistance.

“If you miss the IMF now, you will need it again some months later, and that time you will have to accept more tough conditions,” he said.

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Pakistan talks with IMF on $10-$15 billion package: report

October 21, 2008

SINGAPORE (Reuters) – Pakistan is in informal discussions with the International Monetary Fund and other bodies over a $10-$15 billion package designed to stabilize its economy and avoid a balance of payments crisis, the Financial Times reported on Tuesday.

A little over half the total would come in the form of an IMF loan and the balance would be provided by the World Bank, the Asian Development Bank and bilateral donors, potentially including Saudi Arabia, the report said.

Pakistan is also seeking funds from China, it said.

The scale of support under consideration reflects international anxiety that Pakistan, considered a vital country in the “war on terror,” is at risk of being destabilized by the global financial crisis.

On Monday, a senior Pakistani government official said the country was considering an IMF loan that would disburse funds over the next two years to bolster investor confidence shaken in part by falling foreign currency reserves, the newspaper said.

“We are basically seeking help for around seven quarters including the one which began this month,” the Financial Times quoted the official as saying.

The Wall Street Journal quoted an official in Pakistan’s Finance Ministry as saying that the government was looking for $4 billion to avoid defaulting on its debt.

“We are hopeful that Pakistan will get approval soon, with the country receiving $1.5 billion in one go and the rest in five equal installments of $500 million,” the official said on Monday.

A senior IMF official told Reuters on Monday ahead of talks on Pakistan’s restructuring plan that the country’s seven-month-old civilian government should consider an emergency support package from the IMF.

He said Pakistan has not made a formal request to the IMF for emergency funds but that options were running out.

“Market borrowing is not an option, not in the current markets,” Mohsin Khan, director of the IMF’s Middle East and Central Asia department said in an interview.

Pakistan is rapidly losing foreign currency reserves. Analysts say Islamabad needs up to $3 billion to $4 billion urgently to stabilize the economy, although the total financing gap for the balance of payments was projected at around $7 billion for the fiscal year ending June 30, 2009.

Pakistan would be required to accept an IMF program….

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Pakistan, Seeking to Avoid Loan Default, Seeks IMF Help

October 20, 2008

By Khaleeq Ahmed

Oct. 20 (Bloomberg) — Pakistan may be forced to seek a loan from the International Monetary Fund to prevent the nation defaulting on its debt, according to a government official.

South Asia’s second-largest economy, which has seen its foreign reserves plunge more than 74 percent to about $4.3 billion in the past year, is also seeking financial support from the World Bank and the Asian Development Bank, said Shaukat Tarin, financial adviser to the prime minister. The country has $3 billion in debt-servicing costs in the coming year.

“They are going to have to bite the bullet and sign for the IMF,” said David Fernandez, the Singapore-based head of emerging markets research at JPMorgan Chase & Co. “It has to come now.”

Pakistan’s first civilian government since 1999 is facing economic turmoil after the rupee plunged to an all-time low, the current account deficit widened to a record, and inflation jumped to a 30-year high. The nation, which only came off its last IMF program in December 2004, may need as much as $4.5 billion in loans to tide over the crisis, Tarin said.

“If I don’t feel the comfort level with the multilateral agencies and our bilateral friends in three to four weeks, then I’ll have to write to the IMF,” Tarin said in an interview in Islamabad yesterday. A default is “out of the question.”

Unpopular Decision

Pakistan faces the politically unpopular decision to seek an IMF bailout after China rebuffed its neighbor’s request for cash, the New York Times reported Oct. 18. The U.S. and other nations are preoccupied with the financial crisis, and Saudi Arabia, a traditional ally, refused to offer oil concessions, the newspaper said.

The U.S. has helped Pakistan financially for its support in the global war against terrorism, providing $10 billion in funds and canceling more that $1 billion of loans. The Bush administration has urged the Pakistan government to do more to fight al-Qaeda and Taliban militants in its tribal areas, which the U.S. says the militants are using to regroup and attack the coalition forces in Afghanistan.

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Pakistan Says China is “All Talk;” Rebuffed, Pakistan May Be Forced to Seek I.M.F. Aid

October 18, 2008

By Jane Perlez
The New York Times
October 18, 2008

ISLAMABAD, Pakistan — President Asif Ali Zardari returned from China late Friday without a commitment for cash needed to shore up Pakistan’s crumbling economy, leaving him with the politically unpopular prospect of having to ask the International Monetary Fund for help.

Pakistan was seeking the aid from China, an important ally, as it faces the possibility of defaulting on its current account payments.

With the United States and other nations preoccupied by a financial crisis, and Saudi Arabia, another traditional ally, refusing to offer concessions on oil, China was seen as the last port of call before the I.M.F.

Pakistan President Asif Ali Zardari (L) meets with Chinese Premier ...
Above: Pakistan President Asif Ali Zardari (L) seems delighted as he meets with Chinese Premier Wen Jiabao in Beijing. China vowed Thursday to do what it could to help cash-strapped Pakistan avert financial disaster as Islamabad’s leader continued an official visit aimed at rustling up crucial Chinese investments.  But Zardari returned home to Pakistan only with smiles, a photo-op and promises from China: no cash.(AFP/POOL/Kyogoku Kotai)

Accepting a rescue package from the fund would be seen as humiliating for Mr. Zardari’s government, which took office this year.

An I.M.F.-backed plan would require Pakistan’s government to cut spending and raise taxes, among other measures, which could hurt the poor, officials said.

The Bush administration is concerned that Pakistan’s economic meltdown will provide an opportunity for Islamic militants to capitalize on rising poverty and frustration.

The Pakistanis have not been shy about exploiting the terrorist threat to try to win financial support, a senior official at the I.M.F. said.

But because of the dire global financial situation, and the reluctance of donor nations to provide money without strict economic reforms by Pakistan, the terrorist argument has not been fully persuasive, he said.

“A selling point to us even has been, if the economy really collapses this is going to mean civil strife, and strikes, and put the war on terror in jeopardy,” said the official, who declined to be identified because he was not authorized to speak to the news media.

“They are saying, ‘We are a strategic country, the world needs to come to our aid,’ ” he said.

Pakistani officials said they had received promises from the Chinese to help build two nuclear power plants, and pledges for business investment in the coming year.

But Pakistan had also hoped China would deposit $1.5 billion to $3 billion in its central bank, according to senior officials at the I.M.F. and Western donor countries.

The infusion of cash would have helped with payments for oil and food as currency reserves dwindle, officials said.

Shaukat Tareen, the new Pakistani financial adviser who accompanied Mr. Zardari to China, began to prepare the public for an I.M.F. program on Saturday, saying for the first time at a news conference that if Pakistan could not stabilize its economy within 30 days, it “can go to the I.M.F. as a backup.”

“We may have to go to Plan B,” he said.

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