Aurelia Butler

WASHINGTON (Reuters) – The World Bank is ready to do its part in rebuilding Ukraine after the devastation of Russia’s invasion, but international financial institutions cannot shoulder the sums involved alone and Western European countries will have to chip in, World Bank President David Malpass said on Tuesday.Malpass, speaking at the spring meetings of the International Monetary Fund and World Bank, noted that the World Bank had played a big role in rebuilding Europe’s steel industry after World War Two and could play a similar role in Ukraine.”But the size is daunting,” he said, citing a recent estimate that it would cost $411 billion to rebuild Ukraine’s economy, or 2.6 times its expected 2022 gross domestic product. The number, calculated by the World Bank, United Nations, European Commission and Ukraine, was up sharply from an estimate of $349 billion released last September.The World Bank’s total commitments in 2022 totaled $75 billion, a 50% increase from the average.The European Union had large funding sums that could be brought to bear, Malpass said.”The bank is prepared to play its role in the reconstruction, but I do need to set the expectations for the world that the amount to rebuild the electricity sector, the road sector, a railroad sector are way bigger relative to the size of the balance sheets of the international financial institutions,” he said.Ukrainian President Volodymyr Zelenskiy will call for continued support for the war-torn country in a virtual speech on Wednesday to top finance officials, joined by Prime Minister Denys Shmyhal and Finance Minister Serhiy Marchenko, who are attending the meetings in person.U.S. Treasury Secretary Janet Yellen on Tuesday repeated Washington’s commitment to support Ukraine for as long as needed. She said support from the United States and the European Union would take Ukraine through the end of the year, but if the war continued, Washington would have to work with partners to provide the support needed.She noted that a multi-donor platform has been set up to coordinate a longer-term plan for reconstruction. Washington has also allocated some money for immediate short-term reconstruction needs, including rebuilding its electricity grid. More

(Reuters) -Philadelphia Federal Reserve Bank President Patrick Harker on Tuesday said he feels the U.S. central bank may soon be done raising interest rates, a year into its most rapid monetary policy tightening since the 1980s.”Since the full impact of monetary policy actions can take as much as 18 months to work its way through the economy, we will continue to look closely at available data to determine what, if any, additional actions we may need to take,” Harker said in a speech at the Wharton Initiative on Financial Policy and Regulation.”But make no mistake: We are fully committed to bringing inflation back down to our 2% target.”Harker joined his fellow U.S. central bankers last month in voting for a quarter of a percentage point increase in the benchmark overnight interest rate, taking it to a range of 4.75% to 5.00%.The Fed signaled at the time that most policymakers expected one more increase before calling it quits on a rate-hike campaign that began in March 2022. In a question-and-answer session following his speech, Harker said he was among that majority. “I’m in the camp of getting up above 5 and then sitting there for a while,” he said.Recent inflation readings “show that disinflation is proceeding slowly – which is disappointing, to say the least,” Harker said. The Fed targets 2% inflation which, by its preferred measure, is still running at about 5%.Still, he said, “we’re already seeing promising signs” that the Fed’s rate hikes are working, particularly to bring down house prices. Chicago Fed President Austan Goolsbee earlier on Tuesday said he was focused on parsing the potential impact of tighter credit conditions on the economy in the run-up to the Fed’s May 2-3 meeting. More

(Reuters) – Group of Seven (G7) advanced economies will consider how best to help developing countries introduce central bank digital currencies (CBDC) consistent with appropriate international standards, Japan’s top currency diplomat Masato Kanda said on Tuesday.The move will be among key themes of G7 discussions that Japan chairs this year, as part of efforts to address challenges the global community face from fast-moving digital technology, he said.”We have to address risks from the development of CBDC by ensuring factors such as appropriate transparency and sound governance,” Kanda, vice finance minister for international affairs, told a seminar in Washington.”As a priority of this year, the G7 will consider how best to help developing countries introduce CBDC consistent with appropriate standards, including the G7 public policy principle for retail CBDC,” he said.Outside the G7, China has been leading the pack on issuing a digital currency. G7 central banks have set common standards toward issuing CBDCs as some proceed with experiments.Kanda said the rapid innovation of digital technology provides various benefits but also fresh challenges such as cyber-security, the spread of misinformation, social and political divides, and the risk of destabilising financial markets.The collapse of crypto exchange FTX last year “was a serious wake-up call” for policymakers to create regulation across borders, he said.”For crypto assets, there are a bit of diverging views among countries. But consensus is definitely that we need more regulation, particularly after the FTX shock,” Kanda said.Another priority of this year’s G7 talks will be to address debt vulnerabilities of some middle-income countries, said Kanda, who is among policymakers gathering in Washington for the spring International Monetary Fund (IMF) meetings this week.Kanda said it might be “a bit difficult” to see concrete results for countries like Zambia, Ghana and Ethiopia, when asked what the accomplishments for debt talks could be this week.”For Sri Lanka, hopefully we can have progress,” with a plan to launch a creditor’s committee on Thursday initiated by Japan, France and G20 chair India, Kanda said. More

WASHINGTON (Reuters) -China is expected to drop its demand for multilateral development banks to share losses alongside other creditors in sovereign debt restructurings for poor countries, breaking a major roadblock to debt relief, a source familiar with the plans said on Tuesday.The development is expected at a high-level sovereign debt roundtable on Wednesday on the sidelines of the World Bank and International Monetary Fund Spring meetings in Washington.The source said that Beijing would no longer insist that the World Bank and other multilateral lenders take “haircuts” on loans to poor countries, while the IMF and World Bank agreed to ensure that their debt sustainability analyses of countries undergoing debt restructurings would be made available to Chinese authorities earlier in the process.IMF Managing Director Kristalina Georgieva at an event during the meetings confirmed that the Fund had agreed to provide earlier debt sustainability information to creditors so they could better prepare for restructurings. She also said the World Bank was being asked to show how it could be a net positive provider of financing and concessional loans.The IMF, World Bank and the U.S. Treasury have argued to Beijing that such concessional loans to debt-distressed countries were the equivalent of taking principal losses on loans.”I’m so far optimistic. I hope to remain optimistic after tomorrow when we are meeting,” Georgieva told the Bretton Woods Committee event. She added that an April 3 deputies meeting for the sovereign debt roundtable went well.Georgieva’s comments echoed optimism earlier from U.S. Treasury Secretary Janet Yellen that China would agree on certain technical aspects of debt restructuring for poor countries.”I’ve been encouraged by China’s willingness to provide specific assurances with respect to Sri Lanka. I regard that as a positive sign,” Yellen told a news conference at the start of the International Monetary Fund and World Bank spring meetings. China would participate in the meeting on Wednesday on the sidelines of the gathering in Washington, Yellen said, adding that she would continue to press Beijing to help improve the Group of 20 Common Framework set up to provide debt relief for low-income countries.”I’m hopeful that we will actually get a bit of progress coming out of this first meeting of the sovereign debt roundtable on a set of technical issues that I think pertain to some important elements of debt restructuring,” Yellen said. “I feel encouraged that we have made a bit of progress and I hope to make more.”DEBT DISCUSSIONSThe IMF, World Bank and India, current president of the G20, are co-chairing the Global Sovereign Debt Roundtable with a goal of accelerating debt relief for countries in need. The co-chairs are expected to issue a statement after Wednesday’s meeting.A first limited gathering was held on the sidelines of the G20 finance leaders meeting in India in February, amid ongoing delays in finalizing debt treatment agreements for Zambia, Ghana and Ethiopia.U.S. officials and others blame the delays largely on foot-dragging by China, now the world’s largest bilateral creditor, and reluctance by private-sector creditors. More