Aurelia Butler

NEW YORK (Reuters) – The International Monetary Fund (IMF) executive board approved changes to Argentina’s reserves accumulation target set in their $44 billion program, as the agriculture powerhouse faces a severe drought seen pummeling both exports and economic growth.Easing the reserves accumulation target was part of the fourth review under the country’s $44 billion program, with Argentina looking to soften expectations on its economic performance.The IMF board “approved modifications to the reserve accumulation targets to partially accommodate the impact of the severe drought,” the fund said in a statement, without detailing the new targets.The change in the targeted reserves lowers the bar for the South American economy to pass future IMF reviews. The current review, based on targets through December, was “met with some margin,” according to the fund. But weighing on further forex accumulation, Argentina’s central bank sold in March the largest monthly amount of dollars since October 2019 as it struggles to prop up the local peso currency.The argentine peso, on a crawling peg to the dollar, is down 15% this year versus the U.S. currency.On Friday, JPMorgan (NYSE:JPM) had further downgraded its view on Argentina’s economic growth this year with its estimate for a 2.3% GDP contraction, citing the even harsher effects of a recent, less-intense drought.”The most recent revisions suggest more of a plunge in agricultural production than that suffered in 2018,” said the JPMorgan note.Argentina is the world’s top exporter of soy oil and meal and the No. 3 for corn, exports of which are the main source of its foreign currency income.A government official said on Thursday the country would roll out a preferential exchange rate for farmers to encourage exports of key cash crop soy and other products starting next month.The IMF review included “waivers of non-observance associated with the introduction of policy measures that gave rise to new exchange restrictions and multiple currency practices.” More

“I believe that the points that need to be clarified will be clarified, I see great goodwill on the part of the (Italian) government,” Commissioner Paolo Gentiloni told the Ambrosetti business conference in northern Italy.Gentiloni, himself a former Italian prime minister, said he believed there was room for Italy to renegotiate parts of the plan, noting changes had already been approved for Germany, Finland and Luxembourg.The European Commission has frozen an overdue 19-billion-euro tranche of post-pandemic funds. Italy has until the end of April to persuade Brussels to release the funds, a government source has told Reuters.Italy is the single-largest beneficiary of the EU post-COVID Recovery Fund, and meeting the goals agreed with Brussels is one of the main challenges for Prime Minister Giorgia Meloni’s rightist government that took office in October.Rome has so far secured almost 67 billion euros of the roughly 200 billion it is due to receive through 2026, dependent on it achieving Brussels’ policy prescriptions.To gain some flexibility, Italy’s EU Affairs Minister Raffaele Fitto has said the government is in talks with Brussels to replace some projects from its original recovery plan, which it now realises it cannot complete by a 2026 deadline.These would be replaced with less ambitious programmes that can be completed on time, while the original ones could be financed from separate European Union funds that can be spent until 2029. More

ISLAMABAD (Reuters) – Consumer price inflation in Pakistan jumped to a record 35.37% in March from a year earlier, the statistics bureau said on Saturday, as at least 16 people were killed in stampedes for food aid.The March inflation number eclipsed February’s 31.5%, the bureau said, as food, beverage and transport prices surged up to 50% year-on-year.Thousands of people have gathered at flour distribution centres set up across the country, some as part of a government-backed programme to ease the impact of inflation.At least 16 people, including five women and three children, have been killed in stampedes at such centres in recent days, police and officials have said. Thousands of bags of flour have also been looted from trucks and distribution points, according to official records.A spokesman at the statistics bureau said the inflation number was the highest ever year-on-year increase recorded by the bureau since monthly records began in the 1970s.”This is the highest ever inflation recorded in the data we have,” he said. The consumer price index was up 3.72% in March from the previous month, the bureau said.Higher prices of food, cooking oil and electricity pushed up the index, it said.Annual food inflation in March was at 47.1% and 50.2% for urban and rural areas respectively, the bureau said. Core inflation, which strips out food and energy, stood at 18.6% in urban areas and 23.1% in rural areas.The South Asian nation has been in economic turmoil for months with an acute balance of payments crisis while talks with the IMF to secure $1.1 billion funding as part of $6.5 billion bailout agreed in 2019 have not yet yielded fruit.Pakistan’s foreign exchange reserves have fallen to cover barely four weeks of imports. A monthly economic outlook report issued by the finance ministry on Friday projected inflation would remain elevated.The report cited market frictions caused by relative demand and supply gaps of essential items, exchange rate depreciation, and the recent upward adjustment in fuel prices as reasons behind higher inflation expectations. More

Rising borrowing costs exacerbated by recent turmoil in the banking sector have sidelined some buyers in the US new car market, putting pressure on manufacturers to discount vehicles. Cars have become increasingly unaffordable after shortages over the past two years forced consumers to pay at or above sticker prices. The Federal Reserve’s efforts to curb inflation have now driven the average interest rate on a new car or truck loan to 8.95 per cent, up from 5.66 per cent a year ago, according to Cox Automotive, which provides services to car dealers. This month’s failures of Silicon Valley Bank and other US banks have also prompted other lenders to tighten access to credit in a new car market where more than eight in 10 buyers finance their purchases.The turmoil has made banks “acutely aware of the risk that they are potentially dealing with and essentially are trying to insure that they are getting a risk-adjusted return”, said Jonathan Smoke, chief economist at Cox Automotive. The financial squeeze on consumers is bringing discounts back to dealer lots. Discounts, which can take the form of leasing deals, special financing rates or cash rebates, averaged about $1,474 per vehicle in February or 3 per cent of the average transaction price. While well below historical levels of 10 per cent, it was the highest level in a year. “The first domino to fall is really the dealer mark-ups we saw over the past two years,” said Fitch Ratings analyst Stephen Brown. “We’re already seeing a lot of that start to go away.”Prices for new cars and trucks remain historically high. In February the average transaction price — how much a buyer paid, including any discounts — was up 5 per cent compared to a year earlier, to $48,763. But the price had slipped 1 per cent from January, according to Cox Automotive. Elevated car prices have combined with higher interest rates to push up borrowing costs. For a six-year loan on a $45,000 vehicle, Barclays analyst Dan Levy calculated the average monthly car payment had risen from $702 to $748 between the fourth quarters of 2021 and 2022.Costs have pushed some riskier subprime borrowers out of the market. They represent just 5 per cent of the market for new cars and trucks this year, according to Cox Automotive data, down from 14 per cent in 2019.Kristy Elliott has seen the impact of rising borrowing costs at Sunshine Chevrolet, a dealership she runs in Asheville, North Carolina. Customers are more “skittish” about larger payments, including ones who were unconcerned last year “because the rates kept increasing on a pretty quick clip”. “It’s not that they can’t afford a car, but no one likes to pay interest,” Elliott said. In February, two lenders that served customers of Sunshine Chevrolet abruptly stopped offering loans without giving a reason, Elliott said, forcing the dealership to scramble to continue offering favourable terms. It has relied on GM Financial, the captive arm of the carmaker, to provide customers with rates like 4.99 per cent on a used vehicle.“They actually stepped up and offered some very competitive rates,” she said. “They sent us an email a couple weeks ago right when SVB failed, just stating that they are financially very healthy, . . . that we don’t have to worry about losing them as a partner.” Yet plenty of buyers financing new cars and trucks will pay far more. Ally Financial, a market leader in automotive finance, estimated that car loans originated in the fourth quarter of 2023 will yield 9.6 per cent, compared with 7.4 per cent a year before. The bank expects bad debt to rise to 2.2 per cent of average loans outstanding by the fourth quarter, compared to a historical norm of 1.6 per cent.Analysts say that carmakers need to manufacture more of their inexpensive models to sustain strong sales. When parts shortages capped how many vehicles they could produce, carmakers focused on making the most expensive versions of their priciest cars and trucks and had no reason to discount their products. General Motors said the company continued to see strong demand for its products and has “been able to grow our US market share with strong pricing”. Ford has predicted that average transaction prices will decline by 5 per cent by the end of the year. John Lawler, Ford’s chief financial officer, told a conference last month that “there’s room to move on dealer margins”, and he sees discounts ticking up in the second half of the year.While carmakers right now were gunning to sell as many vehicles as possible at elevated prices, the pricing environment was poised to worsen for them, said Tyson Jominy, JD Power’s vice-president of data and analytics.“Gravity will win,” he said. “Eventually prices will come down. The fact that they’re going sideways in the first quarter, it just means it will be later, and potentially the fall greater.” More