Aurelia Butler

The South American country’s price index, which rose 2.9% in February, is showing a slower increase since President Nicolas Maduro’s government began easing foreign exchange controls to allow a wider circulation of hard currency, leading to more stable prices.The accumulated increase of prices in the last 12 months reached 284.4% at the end of March, while inflation in the first quarter was 11.4%, according to Reuters calculations based on official data, showing rising prices are still among the main problems affecting many families in the country.Venezuela experienced hyperinflation until last year. Minimum wage in the country is the equivalent of $30 per month.Inflation was pushed up in March by higher prices of communication and education services, according to the data.The inflation’s deceleration trend could be reversed following the implementation this month of a tax to operations in hard currency, a move by Maduro to boost the government’s income. Venezuela’s Finance Observatory this week reported problems to implement the tax by stores and companies, adding that the measure is creating ground for higher prices. More

WASHINGTON (Reuters) – As the world’s wealthy democratic powers roll out new sanctions against Russia in response to horrifying images of executed Ukrainians in the city of Bucha, it has become clear that the easiest options are now exhausted and stark differences have emerged among allies over next steps. The European Union proposed a first stab at curbing Russia’s energy sector in response to its invasion of Ukraine launched in February, banning imports of Russian coal. But EU countries remain divided even over this move, much less restricting imports of Russian oil and gas that are more important to their economies. The United States and Group of Seven allies announced new sanctions on Russia’s largest lender, Sberbank, more state-owned enterprises and more Russian government officials and their family members, cutting them out of the U.S. dollar-based financial system.The United States also has banned Americans from new investment in Russia and barred Moscow from paying sovereign debt holders with money in U.S. banks. Although Russia’s heavily restricted rouble rallied to a six-week high on Wednesday, U.S. Treasury officials say the sanctions are starting to turn Russia back into an austere, 1980s Soviet-style closed economy, But the U.S. sanctions contain carve-outs allowing Russia to continue collecting revenue from energy exports, which can help fuel its Ukraine invasion. U.S. Treasury Secretary Janet Yellen told U.S. lawmakers on Wednesday that stronger curbs on Russian energy are not yet possible for European allies dependent on Russian oil and gas. Russia supplies around 40% of the European Union’s natural gas consumption, which the International Energy Agency values at more than $400 million per day. The EU gets a third of its oil imports from Russia, about $700 million per day. “We are at the point where we have to take some pain,” said Benn Steil, international economics director for the Council on Foreign Relations think tank in New York. “The initial batches of sanctions were crafted as much to not hurt us in the West as much as they were to hurt Russia.” (Graphic: Russia’s biggest oil customer: China by far – https://graphics.reuters.com/UKRAINE-CRISIS/SANCTIONS/dwpkrldklvm/chart.png) The divisions in Europe have become more apparent this week. After Lithuania announced on Saturday it would stop importing Russian gas for domestic consumption, Austrian Finance Minister Magnus Brunner voiced opposition to sanctions on Russian oil and gas, telling reporters in Luxembourg that these would hurt Austria more than Russia.NEXT STEPSLack of unity on curbing energy imports means that options are limited to increase pressure further, but the investment ban announced on Wednesday could push more multinational firms to leave Russia, said Daniel Tannebaum, a former compliance officer at the Treasury’s Office of Foreign Assets Control.”You could outright start banning trade in more industries,” a move that would cut Russians off from more types of Western products such as pharmaceuticals, similar to a luxury goods ban imposed in the early days of the war, said Tannebaum, who leads consulting firm Oliver Wyman’s anti-financial crime practice.The United States has been pushing European allies to inflict more pain on Russia while trying to make sure that the alliance against President Vladimir Putin does not fray, a balance that only gets tougher. “You’ve kind of hit the ceiling – on both sides of the Atlantic – for what can be done easily and what can be done in short order,” said Clayton Allen, U.S. director at the Eurasia Group political risk consultancy, referring to the sanctions.To move to a tougher round of sanctions, U.S. officials will need to provide some assurances to European countries that energy markets and supplies can be stabilized to avoid severe economic hardship, Allen said. An economically weakened EU helps no one, Allen added. “If Western Europe is plunged into a recession, that’s going to drastically limit the amount of support – both moral and material – that they can provide to Ukraine,” Allen said.U.S. Secretary of State Antony Blinken is expected to press the case for more actions in Brussels this week at NATO and G7 meetings of foreign ministers. U.S. Deputy Treasury Secretary Wally Adeyemo held similar meetings last week in London, Brussels, Paris and Berlin.There also are still loopholes to close, including continued sales by German and French companies into Russia, and the ongoing hunt for luxury yachts and other assets parked by Russian oligarchs, according to one European diplomat involved in sanctions talks. More

LONDON (Reuters) – More than one in five bankers earning at least 125,000 pounds ($164,000) a year in Britain have benefited from non-domiciled tax status, as have many high-paid workers in other sectors, a study showed on Thursday.Non-dom status – which exempts more than 75,000 mostly foreign nationals in Britain from tax on overseas income – has raised questions about the fairness of the tax system, as it overwhelmingly benefits the very rich.The research from the University of Warwick and the London School of Economics showed that just 0.3% of British taxpayers earning under 100,000 pounds in 2018 had claimed non-dom status at some point in the past 20 years. By contrast, 27% of taxpayers earning 1-2 million pounds had done so.Two in five top earners in the oil industry, one in four car industry executives and one in six top-earning sports and film stars also benefited from the status.”The biggest shock might be to bankers and others working in City jobs, when they realise how many of their colleagues are benefiting from a tax regime they don’t have access to,” said Arun Advani, an assistant economics professor at the University of Warwick.Non-dom status is only available to British residents who claim that their ‘domicile’ – the centre of their personal and financial interests – is outside the United Kingdom.The top three nationalities for non-doms in 2018 were the United States, India and France, and 93% were born outside the United Kingdom. Non-doms were most likely to live in central London and around 80% of them reported their main source of income was from employment or a pension, while 20% lived off investment income or other overseas earnings.”A significant minority of non-doms do appear to be the ‘rentier rich’,” the report said.The research is based on anonymised individual tax data from 1997 to 2018 provided by Britain’s revenue office.($1 = 0.7642 pounds) More

TOKYO (Reuters) -The International Monetary Fund (IMF) cut Japan’s economic growth forecast on Thursday and urged policymakers to consider preparing a contingency plan in case the Ukraine crisis derails a fragile recovery.While rising commodity costs could push up inflation, the Bank of Japan (BOJ) must maintain ultra-easy policy for a prolonged period to sustainably hit its 2% inflation target, the IMF said in a staff report after its Article 4 policy consultation with Japan.”Escalation of the Ukraine conflict poses significant downside risks to the Japanese economy,” the IMF said, pointing to the potential hit to trade and noting that rising commodity prices could stifle domestic demand.”In view of elevated uncertainty including from the pandemic and the conflict in Ukraine, the authorities could consider preparing a contingency plan that is readily implementable” in case its economy faces a severe shock, it said.The IMF said it now expects Japan’s economy to grow 2.4% this year, lower than a projection for 3.3% expansion made in January, due to an expected contraction in the first quarter and the spillover effects of the Ukraine war.Domestic demand will likely slow from surging commodity prices, while geo-political tensions and a sharper-than-expected slowdown in China’s growth were risks to exports, it said.On prices, the IMF said Japan will likely see inflation momentum pick up on higher commodity prices, and an expected rebound in consumption as coronavirus infection cases fall.”A prolonged period of monetary policy accommodation will be required,” however, as headline consumer inflation is expected to stay at 1.0% this year, it said.The IMF repeated its recommendation for the BOJ to make its policy more sustainable, such as by steepening the yield curve by targeting a shorter maturity than the current 10-year yield.The BOJ said it saw no need to adjust its current framework and “expressed concern” over the IMF’s recommendation to shorten the yield curve target, according to the staff report.Under a policy dubbed yield curve control (YCC), the BOJ guides short-term interest rates at -0.1% and the 10-year government bond yield around 0%. The 10-year yield cap has been criticised by some analysts for flattening the yield curve and crushing the margin of financial institutions.The IMF released the final version of its Article 4 staff report, signed off by its executive board, after issuing a preliminary finding in January. More

MILAN (Reuters) -Atlantia found itself at the centre of a potential bidding war on Wednesday between Spanish tycoon Florentino Perez and the Benettons, the Italian infrastructure group’s main investor.Perez’s construction company ACS said it was interested in buying Atlantia’s motorway concessions business, teaming up with two investment funds.But Italy’s Benetton family, investment fund Blackstone (NYSE:BX) and other long-time investors such as Italian banking foundation CRT were studying a counter-move to buy the whole infrastructure company and shield it from the attack led by the Spanish billionaire, three sources with knowledge of the matter said.Atlantia has just finalised a deal to sell its controlling stake in Italian motorway unit Autostrade per l’Italia and will pocket 8 billion euros by end-June from a consortium led by Italy’s state lender CDP.”The Benettons are united to shield the group and may decide to delist it to protect the cash due to arrive from Autostrade deal,” one of the sources said. In a statement after the market close, ACS said it has an exclusive agreement with two investment funds, GIP and Brookfield, for the potential acquisition of a majority stake in the motorway concession business of the Italian infrastructure company.”No decision has been taken to date”, ACS said in the statement where it did not clarify if it has discussed the eventual offer with Atlantia’s board or main shareholders, the Benetton family.”Atlantia is and will remain a strategic long-term asset for Benetton Holding Edizione”, a source close to the Benetton family told Reuters. Earlier on Wednesday, shares in Atlantia surged almost 9% after a Bloomberg News report that Spanish tycoon Perez was weighing an offer for the Italian roads and airports group.Any bid for Atlantia, which has a market capitalisation of more than 15 billion euros ($16.4 billion), would need the backing of Edizione, the holding company of the Benetton family, which recently increased its stake in the group to 33%. Atlantia was not immediately available for comment.Alessandro Benetton was appointed chairman of Edizione this year, tightening the family’s grip on its investments, including at Atlantia. Edizione said at the time it deemed its investment in Atlantia strategic.EXISTING TIESPerez, the president of Real Madrid soccer club, and the Benettons are already linked through their joint ownership of Spanish highway operator Abertis.Perez’s ACS, which itself has a market capitalisation of 7.2 billion euros, has been Atlantia’s partner in Abertis since the two groups’ joint acquisition of the company in 2017.As well as motorways, Atlantia also operates airports in Rome and southern France and is investing in technology to help regulate traffic flows.Through ACS, Perez previously pursued a bid for Atlantia’s Italian motorway unit Autostrade per l’Italia but did not manage to secure the backing of the Italian government to go ahead with a binding offer. Atlantia eventually sold the unit, the focal point of a dispute with the government following a deadly collapse of a bridge in 2018, to Italian state lender CDP and allies. Following the divestment, Atlantia kept highway assets in Spain, France and Latin America. ($1 = 0.9168 euros) More