Aurelia Butler

Jihad Azour, director of the International Monetary Fund’s Middle East and Central Asia department, said the banking sector strains came on top of tighter monetary policies that raised rates and reduced accessibility to finance.Azour said there was an increasing gulf between countries that had good credit and were able to access the markets, including Morocco, Jordan and oil exporters, and others who were struggling.”We are worried because the matrix of risks keeps growing: high interest rates, volatility in oil prices, geopolitical tensions, and it’s the third year in the row where you have double-digit inflation,” he said.Stability in the financial sector was not the primary concern, he said, trumped for now by worries about high debt levels, the risk of social unrest and the ability to maintain tight policies because of pressures on the social front.”We see vulnerabilities going up again, and this is why countries are encouraged to do more structural reforms, to inch up their growth by at least one or two percent,” he said. “And they have a window of opportunity with governments now willing to do more, and not to put money in the central bank coffers.”The IMF on Thursday forecast that GDP growth in the Middle East and North Africa region will slow to 3.1% in 2023, from 5.3% a year ago. More

WASHINGTON (Reuters) -U.S. Treasury Secretary Janet Yellen said banks are likely to become more cautious and may tighten lending further in the wake of recent bank failures, possibly negating the need for further Federal Reserve interest rate hikes.Yellen said in a “Fareed Zakaria GPS” interview that policy actions to stem the systemic threat caused by last month’s failures of Silicon Valley Bank and Signature Bank (OTC:SBNY) had caused deposit outflows to stabilize, “and things have been calm,” according to a CNN transcript released on Saturday.”Banks are likely to become somewhat more cautious in this environment,” Yellen said in the interview, which is scheduled to air on Sunday. “We already saw some tightening of lending standards in the banking system prior to that episode, and there may be some more to come.”She said that would lead to a restriction in credit in the economy that “could be a substitute for further interest rate hikes that the Fed needs to make.”But Yellen said she was not yet seeing anything “dramatic enough or significant enough” in this area to alter her economic outlook.”So, I think the outlook remains one for moderate growth and (a) continued strong labor market with inflation coming down,” she said.Yellen is far from the only finance official expecting some retrenchment in bank credit as a result of the financial sector upheaval in the last month. Some Fed officials have said the U.S. central bank should adopt a more cautious footing as they expect banks to restrict lending in the months ahead.Weekly bank balance sheet data published by the Fed has yet to show a material deterioration in bank lending, while also showing that deposit outflows have stabilized in the last two weeks after an initial flood of withdrawals around the time of the SVB and Signature failures in mid-March.Yellen was asked, in the wake of concerns about the safety of deposits, whether it would be wise to develop a central bank digital currency that would allow U.S. consumers to have accounts directly with the Fed.    “There are important pros … and there are some cons with such a decision, so it’s one that needs to be seriously analyzed, but it could be something that is in Americans’ future,” Yellen said. DOLLAR DOMINANCEYellen also told CNN that U.S.-led sanctions and export controls on Russia were depriving it of materials for its war in Ukraine and the $60-a-barrel price cap on Russian oil imposed by Western countries was turning Moscow’s expected budget surpluses into deficits.The sanctions and export controls have forced Russia to resort to Iran and North Korea for military equipment and supplies and the U.S. was taking steps to curb sanctions evasion, Yellen said.”But we think his (President Vladimir Putin’s) military is really short of the equipment they need to wage war,” she added.Asked whether sanctions could erode the dollar’s role as the world’s reserve currency, Yellen acknowledged potential risks.”So, there is a risk when we use financial sanctions that are linked to the role of the dollar, that over time it could undermine the hegemony of the dollar, as you said. But this is an extremely important tool we try to use judiciously,” Yellen said, adding that sanctions are most effective when used with the support of allies.The sanctions create a desire on the part of China, Russia and Iran to find an alternative to the dollar, but this is “not easy” to achieve due to its unique properties of being backed by the safest and most liquid assets in the world – U.S. Treasuries. “Dollars are widely used. We have very deep capital markets and rule of law that are essential in a currency that is going to be used globally for transactions,” Yellen said. “And we haven’t seen any other country that has the basic infrastructure – institutional infrastructure – that would enable its currency to serve the world like this.” More

“All alternatives are on the table. Work will be done on the program,” said a source familiar with the IMF program and discussions between Argentina and the IMF. The source did not wish to be identified due to the sensitive nature of the talks and declined to provide further details.The IMF already cut the level of foreign currency reserves the country needs at the end of this year by $1.8 billion. The IMF cited the drought’s impact on soybean and corn, Argentina’s main export products, and some analysts expect more easing will be needed.IMF Deputy Managing Director Gita Gopinath said on Saturday she held a “good meeting” with Argentina’s Economy Minister Sergio Massa to discuss the program.”We talked about the impact of the worst drought in Argentine history and we committed to continue working closely together to strengthen the program under this difficult scenario,” Gopinath said on Twitter.Some analysts say that the economic targets baked into the program look overly optimistic, especially in light of Argentina’s deteriorating macroeconomic outlook.    The IMF projects annual inflation for 2023 at 60% compared to analysts’ forecasts of more than 100%.    In March, retail prices increased by 7.7%, above analyst expectations, as Argentina’s annual inflation rate soared to 104.3%. More

WASHINGTON (Reuters) – The Bank of Japan may have scope to tweak its bond yield target this year on growing prospects the country will see a durable rise in wages, a senior International Monetary Fund official said on Saturday.Ranil Salgado, the IMF’s Japan mission chief, said the outcome of this year’s “shunto” annual wage talks between big firms and unions have so far been stronger than expected, a sign the country’s wage dynamics may be changing.The caveat is whether smaller firms would follow suit in raising wages, and whether companies will keep increasing pay next year and beyond, he added.”Our view is, unless there is a global shock … even next year’s shunto negotiations should be pretty good,” Salgado told Reuters in an interview on Saturday.Salgado said the BOJ must keep monetary policy ultra-loose as sustainable achievement of 2% inflation is not yet in sight.Once the BOJ has confidence that Japan will see inflation and wage growth durably accelerate, it can tweak its long-term interest rate target, he said.Under its yield curve control (YCC) policy, the BOJ guides short-term interest rates at the -0.1% level and the 10-year bond yield around zero with an implicit cap of 0.5%.As long as the short-term rates remain zero or slightly negative, the BOJ can keep monetary policy accommodative even if it tweaks the yield target, Salgado said.”Our personal view is, yes,” he said, when asked whether conditions could fall in place for the BOJ to tweak the 10-year yield target this year. “We are advising (the BOJ) pretty much already to be thinking about it.”With inflation exceeding the BOJ’s target and the cost of prolonged easing increasing, markets are rife with speculation the BOJ will tweak YCC this year under its new governor, Kazuo Ueda.Ueda has said the BOJ must maintain ultra-loose policy, including YCC, for now as inflation is likely to fall back below its 2% target as import prices begin to fall. More

WASHINGTON (Reuters) – A new international economic support package of $115 billion gives Ukraine more confidence that it can prevail in battling Russia’s invasion, amid growing recognition that the war could continue for longer than expected, Ukrainian Finance Minister Serhiy Marchenko said on Saturday.Marchenko said Group of Seven (G7) finance ministers assured him during this week’s International Monetary Fund and World Bank meetings in Washington that they will support Ukraine for as long as needed, a shift from last year, when there was more pressure for Ukraine to agree to end the war.He said the fresh pledge of economic support – unlocked by a new four-year, $15.6 billion IMF loan – was “tremendously” important for Ukraine, now in a second year of war after Russia’s invasion on Feb. 24, 2022.”It helps us tremendously because it provides certainty that the IMF, together with G7 nations and supporters of Ukraine, will step in with money to cover our needs for four years,” he said. “Compared with the last spring meetings, I’m feeling more confident that we can prevail in this war.””Financial support is very necessary, as well as military support,” he said, acknowledging growing acceptance that the military conflict could drag on.”We should be ready that this war will last longer than we expected,” he said, noting that G7 partners were no longer pushing Ukraine to accept an end to war – as they had last year – but were now signaling their support for a longer conflict.Marchenko underscored Ukraine’s appreciation for U.S. economic and military support – some $50 billion since the start of the war – and said he was confident the U.S. Congress would maintain bipartisan support for Ukraine, despite calls by some Republicans to scale back funding.He also underscored the urgency to begin some reconstruction, including energy infrastructure, roads, schools and housing, and that Ukraine needed to expand its capacity to absorb funding. He said one key step would be development of war insurance, something already underway with the World Bank’s Multilateral Investment Guarantee Agency (MIGA), to reassure global companies to participate in rebuilding the country – an undertaking estimated to cost at least $411 billion.On over $20 billion of debt owed to overseas bondholders, the minister said that he is not yet in talks on whether to extend a two-year debt moratorium agreed in August.    “It is necessary to protect the reliability of the markets for future reconstruction,” he said. “We will have time to find a solution.”Marchenko said there was also growing openness among donor countries to explore using Russia’s frozen assets to pay for Ukraine’s reconstruction than even six months ago. “Our partners are thinking about the possibility of using Russian assets as a necessary tool to support Ukraine. They don’t want to wait until the war ends, they want to find a solution faster,” he said.Marchenko said U.S. Treasury officials had told him the United States had a low amount of Russian assets, but the issue was of greater concern in Japan, Switzerland and EU countries. He said G7 officials had told him they were broadly supportive of finding a way to utilize Russian assets, but still needed to find a legal solution to “a very complicated question.” U.S. Treasury Secretary Janet Yellen on Saturday cautioned in an interview with CNN there were legal constraints on using frozen Russian assets to pay for damage to Ukraine. Marchenko also said there were intense discussions about financial stability during the week’s meetings after the collapse of two U.S. banks and one Swiss bank last month, but he saw no signs of spillover on the Ukrainian banking sector. More

The pole was the Italian’s first of the season, and 12th of his career, after starting the previous two races in Portugal and Argentina on the front row and taking a double victory in the opening round.The factory team rider’s best lap of two minutes 01.892 seconds, at an average speed of 162.8 kph, secured pole for Saturday’s later sprint and Sunday’s race at the Circuit of the Americas.It was the first time a rider had lapped the circuit inside two minutes and two seconds.LCR Honda’s Alex Rins, second but 0.161 off the pole pace, and VR46 Ducati’s Luca Marini completed the front row.Gresini Ducati rider Alex Marquez, VR46 Ducati’s championship leader Marco Bezzecchi and Aprilia’s Alex Espergaro filled the second row.Marquez’s brother Marc, a six-times world champion in the top category, is not racing in Texas this weekend after being injured in the opening race in Portimao. More

It was a second successive month of decline after the economy began to contract in January following 22 months of growth, hurt by nationwide anti-government protests. Peru’s finance ministry, though, said growth should return soon.Economic activity in February was hit by “continuity of social conflicts, which resulted in work stoppages, road blockades, market closures, among other issues, which occurred in some areas of the country,” INEI said in a statement. Analysts interviewed by Reuters forecast a 0.90% decline in the GDP.Economic activity in the world’s no. 2 copper producer was dented by a decline in several sectors, including construction, telecommunications, as well as finance and insurance.Peru’s finance ministry said in a statement on Saturday that it expects “the economy to register positive rates again as of March, in line with the behavior of the leading indicators of economic activity”, helped by a decline in social unrest. More

WASHINGTON (Reuters) – Africa is struggling with the triple shock of rising debt burdens, an ongoing food crisis and climate change fallout and needs more help from international institutions and wealthy nations to cope, African finance ministers said on Saturday.Developing African economies were only beginning to recover from the COVID-19 pandemic when Russia’s invasion of Ukraine provoked capital market turmoil and an inflation acceleration that sent food prices soaring.The continent, meanwhile, was already struggling with extreme weather events, including drought, flooding and cyclones, aggravated by climate change. “African countries are really victims. They really aren’t responsible for these devastating effects (of climate change),” Comoros Finance Minister Mze Abdou Mohamed Chanfiou said in a news conference alongside two of his African counterparts during the International Monetary Fund (IMF) and World Bank spring meetings in Washington. The trio were speaking on behalf of the continent’s finance ministers. “Even if the IMF, the World Bank and our regional institutions have put in place emergency funds, these funds don’t really seem sufficient to respond to this.”The IMF created the Resilience and Sustainability Trust (RST) last year to help channel excess IMF Special Drawing Rights reserves from wealthier countries to poor and vulnerable middle-income nations. The trust aims to provide long-term concessional financing for needs such as climate change adaptation and the transition to cleaner energy sources.Rwanda, Barbados, Costa Rica, Bangladesh and Jamaica have already reached agreements for loan programs from the facility, and 44 others have expressed interest.The three African finance ministers urged wealthy countries to step forward to honor their pledges to fund the trust. IMF Managing Director Kristalina Georgieva said on Friday that the IMF had already received $40 billion in pledges for the RST. She added that more pledges had been received on Friday, “meaning that there is a very good likelihood that we can build it even further in terms of financial strength.”The African finance ministers, meanwhile, called for a G20-backed framework aimed at helping countries restructure burdensome debt to go further. Two African countries – Zambia and Ghana – have already defaulted on their sovereign debt since the start of the pandemic. But while they’ve signed onto the initiative, it has so far failed to provide relief.While Africa needs more support to deal with food shortages and high food prices caused by weather phenomena and the war in Ukraine, the ministers said African governments also had their role play.Sierra Leone Finance Minister Sheku A.F. Bangura, speaking in the same news conference on Saturday, said Africa must leverage its agricultural sector to boost domestic production and reduce its vulnerability to import disruptions.”The crisis we have is a permanent one,” he said. “We need a much stronger and consolidated approach.” More