Aurelia Butler

In a statement about the 2024 budget bill sent to Congress, the ministry said the new fiscal rules “will enable the re-composition and execution of priority public policies for the country,” as well as government functioning.The much-awaited framework, presented by the government of President Luiz Inacio Lula da Silva in late March, is expected to be sent to Congress next week. It has alleviated concerns over uncontrolled growth of public debt under the administration, resulting in a boost in local markets and strengthening of the real currency against the U.S. dollar.As it awaits congressional approval, the government has crafted a budget proposal that adheres to the still-effective spending cap, which has limited expenditure growth to the previous year’s inflation since 2017 but has been breached multiple times.Lula’s new rules combine a more lenient expenditure cap with primary budget targets with flexible bands. In line with this approach, the budget bill has defined that the primary budget balance target may vary by 28.8 billion reais up or down next year.($1 = 4.9096 reais) More

WASHINGTON (Reuters) -International Monetary Fund chief Kristalina Georgieva said on Friday that debtors and creditors made “tangible progress” on debt restructuring issues this week, but urged countries facing mounting debt problems to seek help earlier in the process.A new sovereign debt roundtable was helping to accelerate work on debt restructurings, Georgieva told a news conference during the IMF and World Bank spring meetings in Washington. She said participants had reached a common understanding this week of the role multilateral development banks could play, by providing positive net flows to countries in need.But countries nearing debt distress and their creditors should move forward on reprofiling debt levels before a full restructuring was needed, she said.”I very much hope that we will take, proactively, steps to prevent the need (for) restructuring by reprofiling debt early, by providing financial support to countries so they can step up economic activities … and avoid a more massive debt restructuring process,” Georgieva said.”We have to be, of course, prepared, should global conditions worsen. Imagine a further tightening of financial conditions, that increases the burden on these countries,” she added. “Please, let’s act before the situation becomes dire.”Georgieva said the IMF would continue to work closely with the 20 African countries with heavy debt burdens to avoid getting to the point where restructurings were needed.Spanish Economy Minister Nadia Calvino, who chairs the International Monetary and Financial Committee (IMFC), the IMF’s steering committee, said the week’s meetings had been “particularly productive” on the debt front.Debt roundtable participants – creditor and borrowing countries, as well as private-sector participants and international financial institutions – will reconvene in mid-May for a workshop to discuss how different creditors are treated in a restructuring case.That has been a big concern for China, the world’s largest sovereign creditor, which has been unwilling to accept losses on loans unless private-sector creditors and multilateral development banks shoulder their share of the burden. More

(Reuters) – The Federal Reserve’s Board of Governors on Friday said it has approved UBS Group AG (SIX:UBSG)’s acquisition of the U.S. subsidiaries of Credit Suisse, clearing another major hurdle for the completion of the Swiss-brokered rescue deal.     UBS has committed to give the U.S. central bank an implementation plan for combining its U.S. business and operations with those of Credit Suisse within three months of consummating the deal, the Fed’s Board said in a statement. The plan will include more stringent requirements including liquidity standards for the bank, due to the increased size of the institution, the statement said.    The U.S. central bank is required to conduct a review of bank mergers when a bank with more than $250 billion of total assets purchases any voting shares of a company with assets of $10 billion or more. UBS had requested the Fed’s approval of the merger March 22, the Fed said.     After years of scandal and losses, 167-year-old Credit Suisse came to the brink of collapse before Zurich-based rival UBS rode to the rescue with a merger engineered and bankrolled by the Swiss authorities last month. UBS agreed to buy Credit Suisse for 3 billion Swiss francs ($3.3 billion), a fraction of its earlier market value.The Swiss authorities and UBS Group AG have been racing to close the takeover of Credit Suisse Group AG within as little as a month, in an effort to retain the lender’s clients and employees, Reuters previously reported.UBS secured a temporary approval from European Union antitrust regulators earlier this month but still needs to seek clearance under EU merger rules. The Bank of England has approved the takeover in the United Kingdom, people familiar with the process told Reuters.     UBS has said it expects the deal to create a business with more than $5 trillion in total invested assets.     Under the takeover deal, holders of Credit Suisse AT1 bonds will get nothing, while shareholders, who usually rank below bondholders in compensation terms, will receive $3.23 billion.The Fed subjects firms with more than $700 billion in assets, or more than $75 billion in cross-jurisdictional activities, to heightened supervision, including annual company-run stress tests and increased liquidity standards. More

WASHINGTON (Reuters) -The International Monetary Fund’s steering committee on Friday said it would accelerate its discussions on quota reforms at the global lender with an eye to making “considerable progress” by its next meeting in October.Spanish Economy Minister Nadia Calvino, who chairs the International Monetary and Financial Committee (IMFC), said members were committed to revisiting the adequacy of the IMF’s quotas for shareholders and completing a review by Dec. 15.”In this context, we support at least maintaining” the IMF’s current lending resources, Calvino said in a summary of the committee’s work. “We also welcome the fourth progress report to the Board of Governors and will accelerate our discussions to achieve considerable progress by the time of our next meeting toward the conclusion of the review as part of a package approach.” The IMF currently has about $1 trillion to lend.U.S. Treasury Secretary Janet Yellen on Friday said the Fund has adequate resources to deal with global financing challenges but needs to follow through with “fair and simple” shareholding reforms that reflect the economic size of its member countries.In a statement to the IMFC, Yellen also said she wanted the World Bank to implement further reforms to scale up lending for climate and other global needs on a rolling basis ahead of the IMF and World Bank’s annual meetings in October in Marrakech, Morocco. “With regard to IMF resources, I continue to believe that overall resources remain adequate,” Yellen said. “At the same time, the IMF needs to follow through on its commitment to a new quota formula that is both fair and simple and primarily reflects the economic size of its member countries.”She said the IMF needed to remain a quota-based institution so that it has a “consistent, predictable level of resources” that keeps it at the center of the global financial safety net.The IMF in 2019 delayed a long-awaited review of its quota funding structure until December 2023 amid past U.S. opposition to changes that would give a bigger voice to China and other fast-growing emerging market countries.The last changes to the IMF’s shareholding structure were made in 2010. The United States, which holds an effective veto over major IMF structural decisions, is the largest shareholder, with 16.5% of the Fund’s voting power, followed by Japan at 6.14%, China at 6.08% and Germany at 5.31%.CHINA REPRESENTATIONPeople’s Bank of China Governor Yi Gang’s IMFC statement said the quota reform was needed “to fundamentally enhance the Fund’s legitimacy, effectiveness and representativeness.”He called for a “pragmatic approach” to complete the review by December to increase IMF resources and to “strengthen the voice and representation of dynamic emerging market and developing economies.”Saudi Arabian finance minister Mohammed Al-Jadaan took a different view: “We welcome the growing consensus thus far toward keeping the current quota formula unchanged in the spirit of pragmatism.”Yellen said that despite difficult global economic conditions, she was optimistic about the steps that policymakers have taken to overcome challenges including pandemic recovery, spillovers from Russia’s war in Ukraine and the battle against inflation. She also said the U.S. economy remained sound. “The U.S. banking system is far more resilient and has a stronger foundation than before the Global Financial Crisis, and we will continue to take steps so that our financial system remains strong,” Yellen said, adding that she was working with the IMF, the Financial Stability Board and other counterparts to monitor financial stability disruptions and prevent spillovers. More

Federal Reserve data released on Friday showed deposits at all commercial banks rose to $17.43 trillion in the week ended April 5, on a non-seasonally adjusted basis, from $17.35 trillion a week earlier. The increase was about evenly shared between the largest 25 banks and the small and mid-sized banks. That left deposits at the largest banks above the levels prior to the collapse of Silicon Valley Bank and Signature Bank (OTC:SBNY), but at small banks still short of their previous levels. Small banks were particularly hard hit by deposit outflows after the back-to-back failures, with some depositors shifting cash to larger institutions on worries that accounts with balances exceeding the $250,000 federal insurance limit might be at risk.Coming after more than a year of sharp interest rate increases by the Fed aiming at slowing the economy and cooling inflation, last month’s banking turmoil appeared likely to set up for even tighter credit conditions than what was already being delivered by the Fed’s rate hikes. A drop in deposits can leave banks with diminished capacity for loans, though as yet the Fed’s data did not show much impact. Loans and leases at all banks ticked down to $12.06 trillion from $12.07 trillion a week earlier, the data showed. More