Aurelia Butler

Johnson has threatened to impose harsh sanctions on Russia if it invades Ukraine, with Russian companies blocked from raising capital on financial markets, and the ownership of companies and properties revealed. “We have an issue with Russian money in the city,” Johnson told the BBC. “We’ve got to deal with that.” More

DUBAI (Reuters) – The United States and the United Arab Emirates are seeking an additional $4 billion of global investment in an initiative launched last year to make agriculture resilient to climate change and reduce its emissions, a U.S. official said on Sunday.The two countries launched the Agriculture Innovation Mission for Climate (AIM for Climate) at COP26 climate talks in November, aiming for $4 billion investment from governments and non-government innovation partners between 2021-2025. AIM now wants $8 billion in climate-smart investment commitments by the November COP27 climate talks in Egypt, U.S. Secretary of Agriculture Thomas Vilsack told Reuters ahead of AIM’s first ministerial meeting in Dubai on Monday. “We believe we actually need to set a higher goal. President Biden believes we should get $8 billion by COP27,” Vilsack said. The initiative is supported by 140 partners who have agreed to increase public and private investment in climate-smart agriculture research and practices. The initial $4 billion target comprised $1 billion each from the U.S. and UAE governments, $1.8 billion from other governments and $200 million from non-government partners. The U.S. Department of Agriculture recently said it would invest $1 billion in pilot projects for climate-smart commodities, promoting farming, ranching and forestry practices that cut emissions. Vilsack said that initiative could qualify as part of U.S. AIM for Climate targets. “There are a number of different ways those resources could be identified.” The U.S. farming industry is already battling the effects of climate change, including increased drought and flooding.The UAE, a Gulf oil producer that imports the majority of its food and desalinates seawater for potable water is investing heavily in agricultural and water technologies, and clean energy.The UAE hosts COP28 climate talks in 2023. “Agriculture and food systems offer immense opportunities for global climate action,” UAE Climate Change Minister Mariam al-Mheiri said in a statement. IBM (NYSE:IBM)’s pro-bono Sustainability Accelerator will become one of AIM’s partners and will start in India assisting smallholding farms to adopt climate-smart practices, Vilsack said. Washington will host an AIM for Climate summit in spring 2023. “We don’t have time to waste,” Vilsack said. More

How will geopolitical tensions affect markets? Investors started 2022 keenly focused on the trajectory of global monetary policy as inflation has surged across the world. While central banks are still a dominant theme in markets, traders must now also contend with deep uncertainty over how the situation on the Russia-Ukraine border will unfold.Economists can at least attempt to predict the outcome of central bank decisions by building models based on data, commentary from officials and historical precedent. But the outcome of the stand-off between Russia and the west is a type of so-called tail risk that could have major implications for the global economy, yet cannot be easily or accurately modelled.The sense of uncertainty has begun creeping into financial markets.Volatility in the US government bond market, the bedrock of the global financial system, is running at its highest level since the market ructions early in the coronavirus crisis two years ago, as traders parse through headlines on the Russia-Ukraine situation and try to interpret the US Federal Reserve’s next moves to rein in inflation.At the same time, equities markets have become more jittery, with the cost of buying protection against near-term swings on Wall Street rising higher.However, Jim Reid, strategist at Deutsche Bank, noted that US stock sell-offs triggered by geopolitical events tended to be “shortlived . . . with a duration of around three weeks to reach a bottom and another three weeks to recovery from their prior levels”. The median during these periods of geopolitical angst are 5.7 per cent, Reid said. Adam SamsonDid the easing of Covid restrictions boost European business activity in February?Falling Covid-19 infections and the easing of restrictions are expected to have boosted European activity in February, lifting the flash IHS purchasing managers’ indices for manufacturing and services.Economists polled by Reuters forecast that the UK PMI composite index, a measure of the health of the private sector, will rise to 55 in February, from 54.2 in the previous month, when it is published on Monday. Any reading above 50 indicates a majority of businesses reporting expansion.“We expect that there was a further recovery in the services PMI in February, as economic activity was boosted by the lifting in plan B restrictions and Covid-19 infection numbers eased,” said Ellie Henderson, economist at Investec.The UK manufacturing PMI index is expected to edge up in February following the easing of supply chain disruptions, while the services PMI is forecast to jump more than one point to 55.2 as workers returned to the office and to socialising. However, for both the manufacturing and services sectors, “concerns do remain with labour shortages limiting output and inflationary pressures threatening to squeeze household incomes”, said Henderson.Any stronger than expected PMI reading could support the view that the Bank of England will raise borrowing costs again at its March meeting, as it battles with the highest rate of inflation in 30 years.The pace of expansion is expected to be marginally weaker in the eurozone, reflecting a delayed hit from the Omicron coronavirus wave compared with the UK. However, economists forecast the eurozone composite PMI to rise to 52.7 in January, from 52.3 in the previous month, following an acceleration in activity in both France and Germany, driven by stronger growth in their services sectors. Valentina RomeiDid the Fed’s preferred inflation measure hold near its 38-year high last month?The rate of price increases in the US likely held near a 38-year high in January, based on the Federal Reserve’s preferred inflation measure, as central bank officials move closer to raising rates for the first time during the pandemic.The core personal consumption expenditures (PCE) price index, which strips out volatile food and energy prices, is forecast to match the previous month’s gain at 0.5 per cent, according to economists polled by Bloomberg. That would bring the index to a 5.2 per cent rise over the past 12 months, up slightly from the 4.9 per cent increase seen in December that marked the largest such gain since September 1983.The report from the Bureau of Economic Analysis on Friday is also expected to show a 0.6 per cent rebound in personal spending since December.Kathy Bostjancic, chief US financial economist for Oxford Economics, predicted the annual increase in PCE prices is on track to remain above 3 per cent in the fourth quarter, which policymakers would consider “unacceptably high” at year-end.The sharp rise in prices over the past year has heaped pressure on the Biden administration and the Fed to tame rampant inflation.James Bullard, the St Louis Fed president and a voting member of the central bank’s policy committee, recently said he would support raising the benchmark rate by a full percentage point by the start of July — suggesting at least one half-point rise, something the Fed has not done since 2000.Investors now place 52 per cent odds on the Fed pushing rates at least one point higher before the end of its June policy meeting, according to the CME’s FedWatch Tool. Matthew Rocco More

The response of rich countries and multilateral institutions to the pandemic’s financial impact on poor countries was inadequate and ignored the concerns of governments and the private sector, said Ghana’s finance minister.Ken Ofori-Atta argued that measures to provide debt relief during the pandemic, such as the debt service suspension initiative, did not take into account the views of developing countries or private sector lenders. He said the DSSI did not reduce the amount of debt owed, while participating countries did not ask for relief from the private sector for fear of losing access to commercial debt markets.“The west should hang its head in shame,” Ofori-Atta told the Financial Times in an interview. “There was a complete distance between the resources available and what was applied [beyond advanced economies] to a problem that was global.”To address the problem, he called for a rethink of the global financial architecture led by the World Bank, the IMF and other institutions set up during and after the second world war. “We need to seriously evaluate whether the rules laid down [then] are the most appropriate going forward,” he said.A downturn in economic output and tax revenue caused by the pandemic took a heavy toll on the public finances of many developing countries.Ghana is one of several countries causing concern over their ability to service their debts as the Federal Reserve prepares to begin raising US interest rates as soon as next month, increasing the cost of borrowing and adding to the strain on budgets of indebted countries. Bonds issued by Sri Lanka are trading at levels that suggest the country will default this year. Several other countries, including Ghana and El Salvador, could face debt repayment problems by 2024.This month, Moody’s downgraded Ghana’s credit rating to a level indicating a substantial risk of default, becoming the second of the three big rating agencies to do so and prompting forced selling of Ghana’s bonds by global asset managers. Ghana claimed the downgrade revealed an institutional bias against African economies.Ofori-Atta questioned the logic of the downgrade, given Accra’s efforts to cut spending and introduce new taxes, including a levy on digital financial transactions he hoped would be approved by parliament by early March.“Moody’s was in a hurry to downgrade us, which is very, very costly [for borrowing]. Why could they not wait six months to evaluate [the budgetary measures]?” he asked. Ghana issued a $3bn dollar-denominated eurobond last year but borrowing costs have since increased. Ofori-Atta said it was “good to take a breather [from issuing foreign debt] this year and let everybody settle down to understand that the changes we are making are structural”. Investors warn that Ghana will have to regain market access by next year in order to refinance outstanding bonds coming due from 2024.Kevin Daly, investment director at Aberdeen Standard Investments, said the country’s projected fiscal adjustment this year was “very optimistic” and that current high costs for Ghana to borrow reflected uncertainty on markets that its targets would be met.

“If they are shut out of markets for two years, the choices they will have to make will be very stark,” he said. “At that point they would have to go to the IMF as their external buffers will be eroded to such an extent that lack of market access becomes a concern about solvency.”Ofori-Atta said the digital transaction tax, known as the e-levy, was one of several measures designed to ensure that more Ghanaians paid taxes. He said just 2.4mn Ghanaians pay any tax at all, out of a potential 11mn-12mn. Ofori-Atta singled out the DSSI, set up by the G20 group of large economies at the start of the pandemic, as an example where poorer countries and private sector lenders were not sufficiently consulted. The initiative offered 73 poor countries the chance to postpone repayments on debts owned to official bilateral lenders — governments and other state entities. But the DSSI did not reduce the amount of debt owed, known as its net present value (NPV), so many countries, including Ghana, did not participate.“The thinking was correct, that in a liquidity crisis you need a moratorium, but it ended up being NPV neutral, which just kicks the can down the street,” said Ofori-Atta. More