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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The EU intends to delay strict policing of imports from areas prone to deforestation after several governments in Asia, Africa and Latin America complained that the rules would be burdensome, unfair and scare off investors. Brussels will put off classification of countries into low, standard or high risk, which was due to be implemented by December, instead designating every country as standard risk to give them more time to adapt to the anti-deforestation regulation, three EU officials told the Financial Times. “We will simply not classify which means everywhere will be medium risk — we need more time to get the system in place,” said one official. “We have had a lot of complaints from partners. [The delay] means no country will have an advantage over another.”The law, part of the EU’s flagship Green Deal, was passed last year and aims to reduce EU consumers’ role in cutting down woodland by barring imports including coffee, cocoa, palm oil and rubber that have been grown in deforested areas from being sold in the bloc.But the regulation prompted ire from several developing nations that accused the EU of forcing its green standards on to others. Major palm oil producing countries including Indonesia and Malaysia raised “multiple concerns” over the rules in a letter to the European Commission in September.“The legislation disregards local circumstances and capabilities, national legislation and certification mechanisms of developing producer countries, [as well as] their efforts to fight deforestation and multilateral commitments, including the principle of common but differentiated responsibilities,” it said.Companies said they could pull out of “high-risk” areas because the burden of proving their products did not come from deforested land was too high, while several have started to favour supply deals with bigger producers that can afford to deploy sophisticated geolocation technology.The law, which is a crucial part of Brussels’ plans to reach net zero emissions in the bloc by 2050, requires that importers provide geolocation data to prove their goods have not been sourced from areas affected by deforestation. It was originally conceived as operating through a traffic light system that would classify countries as having a high, medium or low risk of deforestation. The system will use metrics such as the rate of land degradation and the expansion of agricultural activity as well as evidence from indigenous communities and NGOs.The level of checks on imports will depend on the area of origin’s classification, with EU customs authorities tasked with checking 3 per cent of goods from medium-risk nations and 9 per cent from high-risk countries.Products covered by the legislation include cattle, soyabeans and wood. Unchecked, EU demand for these imports would contribute about 248,000 hectares a year of deforestation by 2030, according to commission research.In a further effort to placate developing countries, officials confirmed that Brussels would take a regional rather than a national approach, so the plains of southern Brazil would eventually be classified as lower risk than the Amazon region, where vast tracts of rainforest have been cleared. Brazil is a leading exporter of soyabeans and other agricultural commodities. One EU official said slowing the classification process would not involve any legislative changes but was a “signal that we’re not planning to rush it”.Developing countries are particularly incensed that the law was passed in June last year without clear guidance on how to comply. They highlighted issues such as the risk that hundreds of thousands of tonnes of coffee and cocoa beans could be destroyed. Malaysia’s trade minister Zafrul Aziz said his country and others needed time and assistance to put in place control systems. “You need time because it is costly to meet those standards, all those transparency or disclosure requirements,” he told the FT, adding that it would be “no issue” for big companies but many “smallholders” would struggle to comply.He added that Kuala Lumpur was collaborating with Brussels on how to implement the law. The commission declined to comment. Climate CapitalWhere climate change meets business, markets and politics. Explore the FT’s coverage here.Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here More

WASHINGTON (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva is interested in a second five-year term heading up the global lender and is poised to secure sufficient support among member countries, sources familiar with the plans said.Georgieva’s term ends on Sept. 30. The Bulgarian economist last week won the backing of French Finance Minister Bruno Le Maire, who told reporters during the Group of 20 finance meetings in Sao Paulo that Georgieva had done a “great job” leading the institution and that France would support her for a second term.Le Maire’s support was critical, given that European countries traditionally nominate a candidate to lead the IMF, although all European Union members must agree. The final decision is made by the institution’s board of directors.Georgieva last week told Reuters that she was focused on the job at hand and not on whether to seek a new term. At a press briefing on Thursday, IMF spokesperson Julie Kozack referred questions about a second term to Georgieva herself.Bloomberg first reported that Georgieva was interested in a second term with likely sufficient support. Georgieva is the second woman to head the IMF and the first person from an emerging market economy.Keeping Georgieva on for a second term would help answer longstanding concerns raised by emerging market and developing countries over the U.S.-European duopoly at the two global financial institutions, the IMF and World Bank.A self-described “eternal optimist,” Georgieva has weathered huge shocks to the global economy ranging from the COVID-19 pandemic outbreak just months after she took office to the February 2022 Russian invasion of Ukraine. She is focused on bolstering prospects for medium-term growth, which is lagging historical levels, managing ongoing sovereign debt challenges, and guiding the IMF through a complicated quota revamp.WEATHERING CRITICISMGeorgieva drew criticism inside and outside the IMF early on for her push to include climate change as a factor in surveillance reports on member countries’ economies and her great interest in emerging market and developing economies.She’s been instrumental in securing large loans for Ukraine, helping to catalyze additional funds to help its economy weather the strains of the two-year war against Russia’s invasion, overseen a revamp of Argentina’s massive loan program, and worked steadily to help China embrace sovereign debt restructurings.Georgieva also survived a big personal challenge in 2021 when the IMF’s executive board expressed its full confidence in her after reviewing allegations that while working at the World Bank, where she was CEO prior to taking the top job at the IMF, she pressured staff to alter data to favor China.Sources familiar with the IMF’s process on naming a head said the selection would be settled quickly once Europe unites around a candidate. While Georgieva’s term won’t end for months, some people familiar with the matter said it makes sense to make decisions before the April 15-20 Spring Meetings of the IMF and the World Bank so that the leadership issue does not overshadow the already full agenda for the meetings. More

SINGAPORE (Reuters) – The dollar headed for its sharpest weekly drop of the year on Friday as Federal Reserve Chair Jerome Powell sounded more confident about cutting interest rates in coming months, while the yen gained on mounting speculation of a rate rise in Japan.Traders were on edge and early Asia moves small while waiting for U.S. employment data later in the day that could confirm or confound market expectations for a U.S. cut by June.Powell said the Fed was “not far” from the confidence it needed to cut rates. Overnight the European Central Bank left its benchmark rate steady at 4% and laid groundwork for a cut in June. The euro rose, however, because the Fed funds rate is at 5.25-5.5% and investors see the United States as having more room to cut. The common currency hit an almost two-month high of $1.0954 in the Asia session – putting it back in the middle of a range it has kept for a year. It is up 1% on the dollar for the week.The yen is up 1.6% on the week, its strongest percentage rise since December as policymakers have noted signs of positive wage-price cycle sustaining inflation – setting the stage for Japan’s first interest rate increase in 17 years.The yen was above its 50-day moving average and at its strongest in a month at 147.54 in early Asia trade on Friday.”There has been a pull forward of rate hike expectations for Japan,” HSBC analysts said in a note to clients. “Considering that short yen speculative positions are now at extreme levels, then the yen can probably avoid a ‘buy the rumour, sell the fact’ situation when the BOJ does hike, and dollar/yen can still fall further.”The dollar’s weakness this week also set the Australian and New Zealand dollars 1.5% and 1.2% higher on the week respectively. Sterling is up 1.3% this week to a 2024-high of $1.2820.The Aussie is at its highest since mid January at $0.6629 and the kiwi at a week high of $0.6183.Cleveland Fed President Loretta Mester added to cut expectations after saying on CNBC that a couple more inflation reports could give confidence on inflation. They will have two before May and three by the June Fed meeting.”The dollar now looks more vulnerable into Friday’s (non-farm payrolls data),” said Westpac strategist Imre Speizer. “Unless the U.S. employment report can pull a large dollar supportive rabbit from the hat, dollar weakness could continue next week.”Economists expect the U.S. added a solid 200,000 jobs after January’s blowout 353,000. More

WASHINGTON (Reuters) -As the U.S. Congress struggles to pass legislation to fund the government through the fiscal year that began in October, House Republicans on Thursday sought to jump the gun on Democratic President Joe Biden by unveiling a plan for the next year.The plan aims to balance the federal budget within a decade, cutting $14 trillion in federal spending in such areas as green energy subsides and student loan forgiveness while reducing taxes. It was approved in committee hours before Biden was to give the State of the Union Address and days before he was to unveil his own budget proposal on Monday.”House Republicans have been long sounding the alarm on the fiscal challenges facing our nation and this budget plan takes steps to put the nation on the track to fiscal sanity,” House Speaker Mike Johnson said in a statement after the House Budget Committee adopted the blueprint in a 19-15 party line vote.The White House bashed the plan.”The day President Biden delivers his State of the Union address – where he’ll discuss how he’s fighting to lower costs for middle class families and make the wealthy pay their fair share – congressional Republicans released a budget that sells out those hardworking Americans to rich special interests,” a White House spokesperson said.Johnson has struggled to pass legislation with his narrow House Republican majority and the Democratic-led Senate has repeatedly rejected demands of hardline Republicans. The House had to suspend its normal rules on Wednesday to pass a stopgap funding bill to avert a government shutdown, with substantial Democratic support.Budget committee chairman Jodey Arrington said the budget plan would reduce the federal debt, which stands at over $34 trillion, create a $44 billion budget surplus in fiscal 2034 and stir economic growth by lowering taxes. Democrats poured scorn on the blueprint, warning that it would punish American families and pointing to Biden’s budget, which is due to be released on Monday, as the true path to sanity. “Today, we saw just how backward and extreme House Republicans’ vision for the future really is,” said Representative Brendan Boyle, the panel’s top Democrat.The new Republican 2025 budget contains the same $1.6 trillion in base discretionary spending laid out in the Fiscal Responsibility Act, which Biden agreed to last year with former House Speaker Kevin McCarthy. Spending for fiscal 2024 totals $1.66 trillion. The budget postpones severe spending cuts until fiscal 2026, after the November election that will determine control of the White House and Congress. Committee documents show 2026 basic discretionary spending falling by more than $100 billion to $1.5 trillion. Arrington said the budget would cut just over $14 trillion in spending over the next decade. It would eliminate programs long targeted by Republicans: Biden’s student loan bailout, green energy subsidies and expanded funding for the Internal Revenue Service. More

TOKYO (Reuters) – Japanese Finance Minister Shunichi Suzuki said on Friday that the government would stick to its aim of balancing the primary budget by the fiscal year end in March 2026 and it’s too early to refer to other measures as additional fiscal targets.Japan will strive to continue efforts to restore its tattered public finances so as to achieve the budget balancing while trying to bring down debt-to-GDP ratio in a stable manner, Suzuki told reporters after a cabinet meeting. More