Aurelia Butler

Finance Minister Joerg Kukies and his budget department have communicated with all ministries and government bodies, detailing that the interim government will manage the country’s finances based on the 2025 draft budget until a new administration formulates its own fiscal strategy.The temporary budget will restrict spending to obligations that are legally mandated and essential for the nation’s operations. This includes disbursing funds for unemployment and child benefits, student grants, and ongoing or planned construction projects. In case of emergencies, parliament retains the authority to sanction additional expenditures.The requirement for a provisional budget arose after the coalition parties failed to reach a consensus on the 2025 budget in November. Subsequently, Chancellor Scholz relieved Christian Lindner, a member of the Free Democrats, from his role as finance minister. On Monday, lawmakers are expected to endorse a motion to dissolve parliament, which will facilitate the early elections.The interim budget is set to stay in effect throughout the coalition discussions and until the incoming government establishes its budget for the year 2025. Finance ministry officials anticipate that the new government will likely finalize its budget in the latter half of the next year.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

BERLIN (Reuters) – Chancellor Olaf Scholz asked Germany’s parliament on Monday to declare it has no confidence in him, taking the first formal step towards securing an early national election following his government’s collapse.The neoliberal Free Democrats’ departure from Scholz’s three-way coalition over their refusal to take on more debt has left Scholz’s Social Democrats and the Greens governing without a parliamentary majority just when Germany faces its deepest economic crisis in a generation.Addressing parliament, Scholz framed the snap election as an opportunity for voters to set a new course for Germany, casting it as a choice between a future of higher investment and one of cuts that he said the conservatives were promising.Scholz, who served as finance minister for four years in a previous coalition with the conservatives before becoming head of a new government in 2021, accused other parties of wanting to block the investments Germany needed.”Shortsightedness might save money in the short term, but the mortage on our future is unaffordable,” he told lawmakers.Scholz remains as caretaker leader until a new government can be formed after the planned Feb. 23 election, and already the campaign is turning to arguments over which urgent measures he should pass with opposition backing before then.Rules drawn up to prevent the series of short-lived and unstable governments that played an important role in helping the Nazis rise to power in the 1930s means that the path to new elections is long and largely controlled by the chancellor.After Scholz loses the vote, he can request a dissolution of parliament from President Frank-Walter Steinmeier, who has already endorsed his timetable.Scholz has outlined a list of urgent measures that could pass with opposition support before the election, including 11 billion euros ($11.55 billion) of tax cuts and an increase in child benefits already agreed on by former coalition partners.Measures to tackle fiscal drag – the tendency of inflation to shift taxpayers into higher tax brackets – and high energy prices look less certain.ARGUMENTS”We’re only going to discuss proposals that must urgently be dealt with,” said senior conservative legislator Thorsten Frei. The conservatives, far ahead in the polls under their leader Friedrich Merz, have hinted they could back measures to better protect the Constitutional Court from the machinations of a future populist or anti-democratic government and to extend a popular subsidised transport ticket.”Important decisions need to be made that are being blocked by the opposition,” SPD co-chair Saskia Esken told the Augsburger Allgemeine newspaper. “We’re still waiting on energy price cuts. Friedrich Merz should move on this.” The outcome of Monday’s vote is not entirely certain. Scholz’s SPD is likely to signal it still has confidence in the chancellor, while opposition conservatives and the Free Democrats are expected not to.The far-right Alternative for Germany, with whom all other parties refuse to work, could surprise legislators by voting that they do have confidence in Scholz.If both the SPD and the Greens also back Scholz, that would leave him in the awkward position of remaining in office with the support of a party that he rejects as anti-democratic. In that case, most observers expect he would resign, which itself would trigger an election.To prevent that scenario, many legislators expect the Greens to abstain.($1 = 0.9522 euros) More

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KARACHI (Reuters) – Pakistan’s central bank cut its key policy rate by 200 basis points to 13% on Monday, it said in a statement, its fifth straight reduction since June as the country keeps up efforts to revive a sluggish economy with inflation easing.Pakistan’s latest move makes this year’s cuts the most aggressive among emerging market central banks in the current easing cycle, barring outliers such as Argentina.”Overall, the Committee assessed that its approach of measured policy rate cuts is keeping inflationary and external account pressures in check, while supporting economic growth on a sustainable basis,” the bank’s monetary policy committee said in a statement announcing its decision.The bank noted that it expected inflation to average “substantially below” its earlier forecast range of 11.5% to 13.5% in 2025. It added that the inflation outlook was susceptible to risks, including measures to meet government revenue shortfalls as well as food inflation and increased global commodity prices. “Inflation may remain volatile in the near term before stabilizing in the target range,” the bank said. The South Asian country is navigating a challenging economic recovery path and has been buttressed by a $7 billion facility from the International Monetary Fund (IMF) in September.The bank noted that “considerable efforts and additional measures” would be required for Pakistan to meet its annual revenue target, a key focus of the IMF agreement.All 12 analysts surveyed by Reuters had expected a 200 bps cut, after inflation fell sharply, slowing to 4.9% in November, largely due to a high base a year earlier, coming in below the government’s forecast and significantly lower than a multi-decade high of around 40% in May last year.Monday’s move follows cuts of 150 bps in June, 100 in July, 200 in September, and a record cut of 250 bps in November, that have taken the rate down from an all-time high of 22%, set in June 2023 and left unchanged for a year. It takes the total cuts to 900 bps since June. More

This unexpected downgrade follows the credit rating agency’s decision to change France’s outlook to negative during the last official review on October 25.The revision is not anticipated to significantly affect the markets. In fact, it might have a modestly positive impact on France’s shorter and medium-term bonds. The stable outlook attached to the new Aa3 rating suggests that Moody’s does not foresee a further downgrade in the upcoming 12 months, which could reassure investors who have been concerned about France’s creditworthiness.Despite this downgrade, French government bond risk premiums have stayed high in recent weeks, contrasting with the tightening premiums of most other Eurozone countries. Yield comparisons indicate that French short-term bond yields are roughly equivalent to those of Spain, which holds a Baa1/A rating. For bonds with maturities between 5 to 10 years, French yields are comparable to those of Greek bonds, rated at Ba1/BBB-.The outlook for France as an issuer remains deteriorating, with expectations set for further downgrades. It is projected that either Standard & Poor’s, currently rating France at AA- with a stable outlook, or Fitch, rating it at AA- with a negative outlook, will be the first to lower France’s rating to A+ within the next year. Bond valuations appear to reflect this anticipated trajectory, with 1 to 4-year French bonds offering value when compared to peers with similar ratings. However, long-dated French bonds are advised against, as they are expected to be more affected by negative political and economic developments.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More