Aurelia Butler

Below is a list of some of the actions taken by governments aimed at offering relief to hard-hit consumers and companies:AMERICAS:* The United States will help millions of indebted former students by cancelling $10,000 of their outstanding student loans. The move follows the $430 billion “Inflation Reduction Act” unveiled earlier this month, which includes cuts to prescription drug prices and tax credits to encourage energy efficiency.* Brazil’s oil giant Petrobras in mid-August announced a nearly 5% cut on gasoline prices, its third cut in less than a month. The government in July cut fuel taxes and raised social welfare payments.* Chile in July announced a $1.2 billion aid plan including labour subsidies and one-time payments of $120 for 7.5 million of its 19 million residents.EUROPE:* Denmark in late August capped annual rent increases at 4% for the next two years. The move follows earlier relief measures, including a 3.1 billion Danish crown ($418.34 million)package announced in June.* Germany will introduce a gas price levy on consumers from Oct. 1. In July, Berlin agreed a 15-billion euro ($15.05 billion) state bailout of Uniper, the country’s largest importer of Russian gas. It had also cut fuel taxes and slashed public transport costs, but these measures are set to expire from September.* France’s parliament on Aug. 3 adopted a 20 billion euro relief bill, lifting pensions and some welfare payments, while also allowing companies to pay higher bonuses tax free. In late August, the government said it did not rule out a windfall tax on companies.* Italy on Aug. 4 approved about 17 billion euros in aid. The legislation aims to cut electricity and gas bills and adds to about 35 billion euros budgeted since January to soften the impact of soaring energy costs. * Poland approved a new package, which includes subsidies for heating plants whose price increases will not exceed 40%, and a 13.7 billion zloty ($2.91 billion) cash transfer for municipalities to help residents with soaring energy bills. The country had also in July introduced a relief scheme for holders of local currency mortgages.ASIA:* Japan’s average minimum wage is set for a record 3.3% increase for the year ending March 2023. The government is also due to refrain from raising the price of imported wheat it sells to retailers, as part of a planned broader relief package. The steps follow a $103 billion bill passed in April.* Indonesia will reallocate 24.17 trillion rupiah ($1.63 billion)of its fuel subsidy budget towards welfare spending, including cash handouts to 20.65 million households. The government will also instruct regional administrations to subsidise transport fares.* India in May imposed restrictions on exports of food items including wheat and sugar, which account for nearly 40% of the consumer price index, and cut taxes on imports of edible oil.AFRICA AND MIDDLE EAST:* South Africa in late July announced a cut in the pump prices of fuels.* Saudi Arabia and the United Arab Emirates in early July raised their social welfare spending. The UAE doubled financial support to low-income Emirati families, while Saudi Arabia’s King Salman ordered the allocation of 20 billion riyals ($5.33 billion).* Turkey in early July increased its minimum wage by about 30%, adding to the 50% rise seen at the end of last year.($1 = 14,840.0000 rupiah)($1 = 7.4103 Danish crowns)($1 = 4.7145 zlotys)($1 = 3.7552 riyals)($1 = 0.9965 euros) More

MOSCOW (Reuters) – Russia should increase the rouble’s share in international settlements and gradually move towards stopping using currencies of designated ‘unfriendly’ countries that imposed sanctions on Russia, Prime Minister Mikhail Mishustin said on Tuesday.Mishustin also said that Moscow deems digital assets to be an alternative to foreign currencies in cross-border transactions. More

The IMF agreed to extend the programme by a year and increase the total funding by 720 million special drawing rights, or about $940 million at the current exchange rate.The funds will be a lifeline to the South Asian country now also suffering from devastating floods that have already killed more than 1,100 people and inflicted at least $10 billion of damage according to the country’s planning minister.In a statement, IMF Deputy Managing Director Antoinette Sayeh said adhering to scheduled increases in fuel levies and energy tariffs was “essential” with Pakistan’s economy being “buffeted by adverse external conditions”. These include “spillovers from the war in Ukraine, and domestic challenges, including from accommodative policies that resulted in uneven and unbalanced growth,” Sayeh noted.The floods were not mentioned in the fund’s statement. Pakistan’s Prime Minister Shehbaz Sharif said on Twitter (NYSE:TWTR) that the formal resumption of IMF support though was “a major step forward in our efforts to put Pakistan’s economy back on track”.Confirmation of the widely-expected assistance gave Pakistan’s government bonds a small lift on Tuesday. They have fallen heavily this year as the economic woes have left it with a wide current account deficit and critically low foreign exchange reserves. The IMF estimated those reserves would only cover key imports for little over two months. The economy is also wracked by soaring inflation and political upheaval after former prime minister Imran Khan was ousted in April.Pakistan must hold elections by the second half of next year, but Khan, who negotiated the latest IMF programme in 2019 and now faces terrorism charges for comments he made about the police, is calling for them to be held immediately.”Steadfast implementation of corrective policies and reforms remains essential to regain macroeconomic stability,” the IMF’s Sayeh said. MATERIAL RISKAfter announcing the Fund’s approval on Twitter, Pakistan’s Finance Minister Miftah Ismail said the government’s efforts to get the programme back on track via painful corrective economic measures had saved the country from default.Pakistan has had dozens of IMF programmes since the 1980s. The latest one was initially supposed to provide $6 billion over 36 months, but had been stalled by this year’s political turbulence and struggles to meet key programme targets. Tellimer economist Patrick Curran said there was material risk that the IMF’s current account forecast would prove overly optimistic and that Pakistan might not be able to bring in as much external financing from Gulf countries as it would like.”Any slippage from programme targets could land Pakistan back in hot water in light of its massive external funding needs, requiring renewed Pakistan rupee depreciation and support from bilateral partners to avoid a BOP crisis,” Curran said.The torrential flooding in three of Pakistan’s four provinces also threatens to worsen the situation, he added. Monday’s IMF statement also saw it approve Pakistan’s request for waivers related to the country’s failure to meet some of its targets. “The authorities have taken important measures to address Pakistan’s worsened fiscal and external positions,” the IMF said. More

UK consumers increased their credit card borrowing at the fastest annual rate in 17 years last month, according to figures published on Tuesday, in a sign of the intensifying cost of living crisis. Data from the Bank of England showed that the annual rate of credit card borrowing was 13 per cent higher in July than a year before. The jump, the biggest since October 2005, comes as wages fail to keep pace with inflation, which has already hit 10 per cent, with some investment banks suggesting it could roughly double by the turn of the year.The figures are a sign that households are struggling with the soaring cost of living, even before households are hit with an 80 per cent increase in energy bills. This will take effect from October 1, and could leave many people with the choice of cutting spending or borrowing more. The data also showed individuals took on a net additional £1.4bn in consumer credit in July, down from £1.8bn in June, but above the 12-month pre-pandemic average to February 2020 of £1bn. The additional borrowing was split equally between credit cards and other borrowings, such as car financing. Thomas Pugh, economist at the consultancy RSM UK, said the BoE data “suggests that consumers are already battening down the hatches against what will almost certainly be an exceptionally tough winter”.A rise in borrowing is usually associated with discretionary spending by consumers on non-essential goods and services. But with inflation running at the quickest pace in 40 years, real wages falling and consumer confidence at the lowest level since records began in the 1970s, several economists said that it was a sign of households borrowing more to maintain living standards.Paul Dales, chief UK economist at the consultancy Capital Economics, said: “Some of the increase in consumer credit in July may be because some households are already turning to borrowing to make ends meet.” But he added that the figures suggested that consumer spending was “not collapsing”. Separate figures also released on Tuesday by the debt charity StepChange showed the proportion of new clients citing the cost of living crisis as their reason for debt rose 2 percentage points between June and July to 20 per cent. The proportion of those seeking debt advice because they were behind on their gas bills and electricity bills also increased to 26 per cent and 30 per cent respectively. More than two-thirds had credit card debts. BoE figures also revealed that households were saving less than before the pandemic. The combined net flow into both deposits and National Savings and Investments accounts in July was £4.6bn, below the average monthly net flow of £5.5bn during the 12-month pre-pandemic period to February 2020.“The July money and credit data show that households continue to reduce their monthly savings, in an attempt to maintain their current level of real consumption amid surging inflation,” said Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, a consultancy. UK inflation is expected to accelerate because of the surge in gas prices following Russia’s invasion of Ukraine. Citigroup, the bank, has forecast this month that inflation will rise to 18.6 per cent in January, while Goldman Sachs suggested it could reach 22 per cent.Capital Economics’ Dales said that, with the consumer price index rising, “more households will probably need to borrow more to tide them over” and that “the outlook for consumer credit is weak”. More

A long-term strategy is needed to lift borrowing costs from levels that are currently too low, though it wouldn’t make sense for the ECB to adjust rates all in one go, Lane told Spanish state-run broadcaster TVE on Tuesday.  The comments are similar to remarks he made Monday and reaffirm his apparent push back against calls by some officials for a 75 basis-point hike at next week’s policy meeting. The ECB is facing the twin challenges of record inflation alongside the growing likelihood of a recession in the 19-nation euro zone.Lane said the ECB’s staff predicts lower demand in the second half 2022 as the economy slows — which should curb inflation pressures, despite elevated energy costs. While output may shrink for “some” weeks, Europe is much better-positioned to face a slowdown than it was in 2008, with lower indebtedness and a healthy financial system, he said. (Updates with Lane comments throughout.)©2022 Bloomberg L.P. More