Economy

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The start of IRS transactions follows the recognition by the International Swaps and Derivatives Association of the benchmark – the overnight reference rate (ORR) – which the Bankers Association of the Philippines helped establish. IRS, a fixture of developed fixed-income markets, lets parties manage rate risk or bet on the direction of borrowing costs by exchanging fixed and floating interest rate streams.The ORR, to be based on the central bank’s daily reverse repurchase auctions, is expected to provide a better benchmark for pricing loans, now based on yields from thinly traded government securities.”We are excited for PESO IRS to go live to help boost transactions, create a benchmark yield curve, and deepen our capital markets,” central bank Governor Eli Remolona said in a statement. “A benchmark curve will help banks and other lenders price loans at various maturities.”Sixteen banks have committed to be market makers for the ORR-based IRS, ensuring pricing across maturities from one month to 10 years and enhancing interest rate transparency, the central bank said.Bangko Sentral ng Pilipinas also said it was working on adopting global master repurchase agreement contracts that will allow banks to access treasury bonds for repo transactions to boost the government securities repo market. More

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ISLAMABAD (Reuters) – Pakistan discussed its $7 billion bailout reform agenda with the International Monetary Fund during an unscheduled staff visit last week, Finance Minister Muhammad Aurangzeb said on Sunday, suggesting no new taxes are to be imposed. The talks in Islamabad came within six weeks of the IMF approving the bailout, an unusual move as it is rare for the fund to discuss reforms ahead of a review of the reform plan under the loan programme. A first review of Pakistan’s reforms is due in the first quarter of 2025.”We discussed reforms in taxation, energy sector, privatisation of loss-making state-owned enterprises (SOEs) and public finance,” Aurangzeb said in a recorded video statement broadcast by state-run television.After wrapping up the visit, the IMF had said it was encouraged by Islamabad’s reaffirmed commitment to the economic reforms under the Extended Fund Facility its board had approved in September to reduce vulnerabilities.The mission did not state the weaknesses, but sources in Pakistan’s finance ministry have said some major lapses prompted the IMF’s visit. Among these were a shortfall of nearly 190 billion rupees ($685 million) in revenue collection during the first quarter of the current fiscal year, the sources said.The period also saw an external financing gap of $2.5 billion, while Pakistan failed in the bid to sell its national airline.It had prompted fears that Pakistan might need to impose new taxes to bridge the shortfall.But Aurangzeb said the shortfall will be met only with enforcement to get people to pay their taxes, implying there would not be any new revenue measures.”We are going to be very firm on compliance and enforcement,” he said, adding that al the sectors will have to play their role in contributing towards the country’s economy. The IMF said both sides agreed on the need to continue prudent fiscal and monetary policies, and to mobilise revenue from untapped tax bases. Pakistan’s $350 billion economy has struggled for decades with boom-and-bust cycles, needing 23 IMF bailouts since 1958. More

(Reuters) – Most Gulf stock markets fell on Sunday after U.S economic data and comments from Federal Reserve officials pointed to a slower pace of interest-rate cuts.Investors increased bets on the Fed leaving interest rates unchanged at its December meeting and dialled back expectations for easing in 2025.The Fed’s decisions have a significant impact on monetary policy in the Gulf as most of the region’s currencies are pegged to the U.S. dollar.The Qatari benchmark index slipped 0.4%, with almost all of its constituents falling, led by the finance, communication and energy sectors.Qatar National Bank, the region’s largest lender, lost 1.4% and Qatar Navigation was down 1.1%.Saudi Arabia’s benchmark index snapped three sessions of losses, edging up 0.2% helped by gains in the IT, utilities, real estate, industry, healthcare and insurance sectors. Medgulf (TADAWUL:8030) rose 10% for its biggest daily gain in more than six months. The insurer said in a statement to the Saudi Exchange that it had received a circular from the Insurance Authority on a new mechanism for allocating reinsurance premiums to the local market.All bar two insurance stocks closed higher with Al Rajhi Company For Cooperative Insurance up 3.9%, and Saudi Reinsurance gaining 6.9%.Saudi Re said in a statement that the new mechanism would help increase Saudi reinsurance revenue by more then 5% from 2023.Outside the Gulf, Egypt’s blue-chip index reversed the previous session’s gain with a 0.7% fall, with most sectors in the red. Telecom (BCBA:TECO2m) Egypt lost 2.6% after it reported a 13% decrease in quarterly net profit on Thursday. However, Juhayna Food gained 3.7% after it posted around a 200% jump in third quarter net profit. SAUDI ARABIA rose 0.2% to 11,812 KUWAIT was up 0.2% to 7,849 QATAR lost 0.4% to 10,411 EGYPT dropped 0.7% to 31,252 BAHRAIN ended flat to 2,053 OMAN was down 0.4% to 4,626 More

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Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Donald Trump’s election as US president is already fraying international initiatives on climate change and taxation, as diplomats from the world’s richest nations struggle to maintain a shaky consensus on the eve of a G20 summit in Brazil.Argentina and its President Javier Milei, a close ally of Trump, threatened to block a joint communique set to be endorsed by G20 leaders at the Rio de Janeiro meeting that begins on Monday, because of objections related to taxation of the super-rich and gender equality, people briefed on the continuing negotiations told the Financial Times.Diplomats also worked through Saturday night in an attempt to find consensus on climate finance and geopolitical issues such as Russia’s war against Ukraine, the people said.Progress had been made on the main points in negotiations that went on until early on Sunday morning, according to a person briefed on the talks.The struggle to agree on how much developing nations should contribute to financial efforts to combat global warming mirrors negotiations at the COP29 climate summit taking place simultaneously in Baku.The threat of a Milei veto has heightened the concerns of many western diplomats who fear Trump’s election will embolden his conservative allies and spark an exodus of countries from ambitious agreements on issues such as global warming. Trump has vowed to pull the US out of the Paris climate accords.“[The Argentine government] wants to make the G20 in Brazil a test between old and new forces,” said one Brazilian official. “After a year of negotiations on taxation and consensus they are creating problems on things they accepted before, word by word.”US president-elect Donald Trump, left, greets Argentine leader Javier Milei in Florida More