Aurelia Butler

WASHINGTON (Reuters) – Angola’s central bank sees relative stability for the country’s kwanza currency this year, Governor Manuel Tiago Dias said on Saturday, cautioning that the bank’s inflation forecast could be raised due to changes in fuel price subsidies.Speaking in an interview with Reuters on the sidelines of the International Monetary Fund and World Bank spring meetings, Dias confirmed he expected consumer price inflation to stand at 19% by year-end, down from 20% in 2023 and from 26.09% in March.”These forecasts could be altered, especially if there are any changes to fuel price subsidies, and the impact of that would then be higher inflation than what we currently anticipate,” he said. Squeezed by surging debt costs and high pump prices, governments across Africa have been trying to scrap costly fuel benefits but this has proved unpopular and sparked protests in countries from Angola to Senegal and Nigeria in recent years.Oil-producing Angola spent 1.9 trillion kwanza ($2.3 billion) subsidising fuel in 2022, more than 40% of what the IMF estimated it spent on social programmes.After the kwanza fell about 40% against the dollar last year, the central bank governor has greater confidence that current market conditions would allow for stability.”Based on the information available at the moment, we will continue to have relative stability in the exchange rate,” he said, adding he had reiterated Angola’s commitment to a flexible exchange rate regime to both the IMF and investors during the spring meetings.Regarding the next monetary policy steps, Dias said he was keeping an eye on the evolution of the global economy – for which he sees no major changes amid the maintenance of global interest rates at relatively high levels – and domestic indicators.Persistent high oil prices would also sustain high export revenues in the second quarter, he said. “Looking to the next quarter, our perspective is that the currency supply in the foreign exchange market will remain around $600 million monthly,” he said. “If there is any specific government intervention, this supply level could increase, and naturally, the stability of the exchange rate could also contribute to a potential inflation slowdown.”The Bank of Angola’s next monetary policy meeting is scheduled for May, following a 100 basis-point rate increase in March, which brought its main interest rate to 19%.($1 = 832.8230 kwanzas) More

WASHINGTON (Reuters) -The Inter-American Development Bank on Saturday said leaders of 10 multilateral development banks committed to take action in five critical areas, including additional lending headroom totaling $300-400 billion over the next decade.The effort comes amid growing calls for these institutions to boost financing under favorable conditions to developing countries, which face greater challenges in climate transition and are more affected by the environment of higher global interest rates.”Together, we will be able to achieve more, with greater impact and on a larger scale,” said IDB President, Ilan Goldfajn.Following a retreat held in Washington at the IDB headquarters, on the sidelines of the International Monetary Fund and World Bank spring meetings, the MDBs said the agreed plan involves “joint steps to work more effectively as a system,” as reported by Reuters on Wednesday. The group includes institutions such as the World Bank Group, the New Development Bank, the Asian Infrastructure Investment Bank, the European Investment Bank, and the African Development Bank. The IDB said in a statement that the increased financing capacity will be supported by the offer of innovative financial instruments and by promoting the channeling of the IMF’s Special Drawing Rights (SDRs) through MDBs.The IDB also foresaw actions “providing more clarity on callable capital, which would help rating agencies better assess the value of callable capital.”The MDBs also committed to boosting action on climate change, envisioning the delivery of a common approach to measuring climate results on adaptation and mitigation, and reporting climate financing jointly.The other pillars of work agreed upon on Saturday include strengthening country-level collaboration and co-financing, catalyzing private-sector mobilization, and enhancing development effectiveness and impact. More

WASHINGTON (Reuters) -The United States needs to raise revenues to bring down high budget deficits even though they are helping to fuel global growth by stoking domestic U.S. demand, International Monetary Fund First Deputy Managing Director Gita Gopinath said on Saturday. Gopinath told a fiscal forum at the IMF and World Bank spring meetings that U.S. deficits are projected to rise for years with one of the world’s steepest curves for debt.”The high levels of deficits are also supporting growth and demand in the U.S. that have positive spillover to the rest of the world,” Gopinath said. “But along with that growth, you’re getting higher interest rates and a stronger dollar and the second two are creating more complications for the world.”The IMF’s fiscal monitor estimates that the U.S. deficit for 2024 will reach 6.67% of GDP, rising to 7.06% in 2025 – double the 3.5% in 2015. Gopinath said that the IMF’s annual “Article IV” review of U.S. economic policies in coming weeks will again recommend that the U.S. raise tax revenues and reform its costly Social Security and Medicare programs for older Americans to bring down deficits.The review will largely repeat its U.S. policy prescriptions from last year, when the U.S. Congress was in the throes of a standoff over raising the federal debt ceiling, which threatened a potential default that would have roiled global financial markets. Gopinath said the IMF would again recommend that the U.S. find a way to approve government funding without debt ceiling brinkmanship. “It is certainly a risk nobody needs to have to deal with,” Gopinath said. “This happens every year. There has to be a way to resolve this brinkmanship.”Asked about the prospects for a widespread debt crisis in developing countries, Gopinath said: “We don’t see a systemic debt crisis happening any time soon.”Although there are still a number of low-income countries that are facing debt distress, she said financial market conditions have improved somewhat, with some frontier market countries recently returning to markets to borrow. More

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Speaking to national broadcaster SRF, he said economic growth and productivity are too low and many countries are running too much debt and excessive deficits.One of the most pressing challenges is insufficient growth, Jordan told SRF. Another is the need for structural reforms to increase countries’ productivity and boost growth, he added.”In many countries the debt level is too high, deficits are too big,” Jordan said on the sidelines of the International Monetary Fund and World Bank spring meetings in Washington.”That cannot be sustainable and will have to be corrected in the future.”It is very important that at the same time monetary policy remains geared towards price stability, rather than monetary policy being needed to finance debt, otherwise it will not end well.” More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Mexico’s presidential frontrunner said US trade ties were “fundamental” as she vowed to encourage companies to shift operations to her country to reduce their supply chain links with China.Speaking to financial sector leaders, Claudia Sheinbaum struck a contrast with her combative mentor, leftist President Andrés Manuel López Obrador, by promising consensus-based policies if she wins the June vote.Sheinbaum, a former mayor of Mexico City who holds a double-digit lead in the polls, signalled the importance of the US trade relationship as concern has grown in Washington over increasing Chinese investment in Mexico.“The trade agreement [USMCA] represents enormous potential for the Mexican economy, not just what it represents today, but also . . . in the future with nearshoring,” she said in Acapulco, a coastal city ravaged by violence and still recovering from a record-breaking hurricane in October.Mexico last year became the top US trading partner as it benefited from companies wanting their supply chains closer to their customers. Its 2,000-mile border with the US, broad manufacturing sector and relative stability make it a top potential beneficiary of the trend.“We need to get into Mexico. That’s the mandate that a lot of infrastructure funds, private equities are looking at,” said Raúl Martínez Ostos, director of Barclays Mexico. “You’ve got the big CEOs of the biggest funds in the world coming.”The fervour is yet to transform the country’s stable but long-disappointing growth, though. Foreign direct investment is robust but below records as a percentage of gross domestic products. López Obrador’s six-year term is set to end with almost no GDP per capita growth.Opposition politicians and many economists say the government’s policies are to blame. Presidential candidate Xóchitl Gálvez, a self-made businesswoman turned politician, said López Obrador’s Morena party hated the middle classes and did not respect rule of law.“Six more years of Morena and nearshoring passes us by,” she said to a receptive audience, which broke out into applause multiple times during her speech. “Some people are satisfied with mediocrity, I’m not mediocre.”López Obrador, a deft political communicator with approval ratings of 55 per cent, has pressured, expropriated and criticised companies who clash with his priorities of large infrastructure projects and state-controlled energy.Mexico’s biggest companies have broadly prospered though, with the country’s banks reporting record profits thanks to strong consumer demand and high interest rates. López Obrador has weakened regulators and changed the rules in sectors such as transport and energy, but mostly left banking untouched.“You’ve treated me very well, with respect and I think it’s been mutual,” he said in Acapulco on Friday.Sheinbaum, 61, has run a disciplined campaign promising broad continuity of López Obrador’s project, while saying that decision-making would be based on data. She cautiously laid out a few areas of difference on Friday, such as reviewing the vast expansion of the military’s economic power and that she was open to a “consensus” fiscal reform if necessary.The next leader will inherit big economic challenges, including turning around state oil firm Pemex, restoring confidence with foreign investors in the energy sector and cracking down on organised crime.At the banking convention, some attendees said they were convinced Sheinbaum would be more pragmatic than the incumbent. Others were nervous about what six more years of Morena government would mean for Mexico’s checks and balances.“Claudia is very scripted,” one senior banker said. “We don’t really know who she is yet.” More