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    U.S. Raises New Concerns Over Chinese Lending Practices

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    A Treasury official will call for greater transparency over emergency currency “swap” loans to struggling countries by China’s central bank.The United States is raising new concerns about China’s practice of making emergency loans to debt-ridden countries, warning that a lack of transparency surrounding such financing can mask the fiscal predicaments facing fragile economies that have turned to China for help.A senior Treasury official, Brent Neiman, publicly aired concerns about the practice in a speech on Tuesday in which he urged the International Monetary Fund to push China for greater clarity about its lending terms. The Biden administration broached the issue directly with Chinese officials in Washington this year during a meeting of a recently created bilateral economic and financial working group.Chinese loans to countries already struggling to repay their debts are being made through China’s central bank using so-called swap agreements. These agreements allow countries to borrow Chinese renminbi and keep those funds in their central reserves while using the U.S. dollars that they hold to repay foreign debts.The financing is essentially a line of credit, in which a country swaps its own currency for renminbi and agrees to pay Beijing a high interest rate. The arrangement allows those countries to use their dollar reserves to finance trade or other government needs. They can also use the funds to pay debts owed to Chinese banks or to make purchases from China, creating even deeper ties to its economy.China has provided more than $200 billion in emergency financing in recent years. Chinese state media reported this year that the central bank had 31 currency swap agreements in force worth a combined $586 billion. Chinese currency loans tend to come with higher interest rates than those offered by the Federal Reserve or the I.M.F.Such currency loans do not always appear on the balance sheet of the borrowing nation, obscuring the extent of its liabilities. That lack of information can make it harder for other investors to know how deeply in debt a country is and has fueled criticism that the Chinese loans could leave the recipients worse off.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Saudi Arabia slashes growth forecasts, sees wider budget deficits

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    Saudi real GDP is expected to grow 0.8% this year, in a dramatic drop from a previous estimate of 4.4%, according to the latest pre-budget report published by the Ministry of Finance on Monday.
    Saudi authorities also expect that the budget will remain in deficit for the next several years, as the kingdom prioritizes spending to achieve the targets of the Vision 2030 economic diversification program.
    Saudi Arabia’s fiscal breakeven oil price has increased and may continue to rise, as oil prices are expected to stay subdued.

    Riyadh, Saudi Arabia.
    Xavierarnau | E+ | Getty Images

    Saudi Arabia cut its growth forecasts and raised its budget deficit estimates for the fiscal years 2024 to 2026, looking ahead to a period of higher spending and lower projected oil revenues.
    Real gross domestic product is now expected to grow 0.8% this year, a dramatic drop from a previous estimate of 4.4%, according to the latest pre-budget report published by the Ministry of Finance on Monday. The GDP growth projection for 2025 has also been cut from a previous estimate of 5.7% to 4.6%; while the outlook for 2026 has been trimmed from 5.1% to 3.5%.

    “The FY2025 budget highlights the Kingdom’s commitment to accelerate the regulatory and structural reforms, as well as the development of policies,” the pre-budget report read. “It also focuses on transformative spending to promote sustainable economic growth, improve social development, and enhance quality of life.”
    The latest report further emphasized the Saudi government’s plans to deploy sovereign and development funds “for capital investment while empowering both the private and non-profit sectors to foster growth and prosperity.”
    Saudi authorities also expect that the budget will remain in deficit for the next several years, as the kingdom prioritizes spending to achieve the targets of its Vision 2030 plan to modernize and diversify the heavily oil-dependent Saudi economy.
    The Finance Ministry projected a wider budget shortfall of about 2.9% of GDP for 2024, compared with a previous projection of 1.9% for the year. It predicted deficits of 2.3% and 2.9% in 2025 and 2026, respectively, also wider than previous estimates.

    Saudi Arabia’s fiscal breakeven oil price — what it needs a barrel of crude to cost in order to balance its government budget — has increased in recent months and years and may well rise higher along with spending increases.

    The IMF’s latest forecast released in April put that fiscal breakeven figure at $96.20 for 2024, marking a roughly 19% increase on the year before. The figure is also about 36% higher than the current price of a barrel of Brent crude, which was trading at around $70.70 as of Tuesday afternoon.
    Oil prices are expected to remain subdued at least in the medium-term amid slowing demand and increased supply globally.
    Saudi Arabia is hosting major international events that will require steep spending — like the World Cup 2034 and Expo 2030 — as well as building out multi-trillion dollar megaprojects like Neom, which is backed by the kingdom’s mammoth sovereign wealth fund, the Public Investment Fund.

    “Saudi Arabia’s GDP dances to the rhythm of oil, and with recent data from the Ministry of Finance, it’s clear that as oil gushes, so does the economy,” Tarik Solomon, chairman emeritus at the American Chamber of Commerce in Saudi Arabia, told CNBC. “But when the wells slow, so does the growth.”
    Saudi Arabia’s public debt has grown from around 3% of its GDP in the 2010s to roughly 28% today, according to the International Monetary Fund — a huge jump, but still low by international standards. Public debt in EU countries, for instance, averages 82%. In the U.S. in 2023, that figure was 123%.
    Its relatively low debt level and high credit rating makes it easier for Saudi Arabia to take on more debt as it needs to. The kingdom has also rolled out a series of reforms to boost and de-risk foreign investment and diversify revenue streams. While the country’s economy has contracted for the last consecutive four quarters, non-oil economic activity grew 4.4% in the second quarter year-on-year, up 3.4% in the previous quarter. More

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    Sheinbaum to be sworn in as first woman president in Mexican history

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    MEXICO CITY (Reuters) – Claudia Sheinbaum will make history on Tuesday when she is sworn in as Mexico’s first woman president, while inheriting challenges to quell violence from organized crime and reduce a hefty deficit in Latin America’s No. 2 economy. Sheinbaum, the 62-year-old scientist and former mayor of Mexico City, will be inaugurated at a ceremony in Mexico’s Congress for a six-year term lasting until 2030. Political watchers and analysts predict she will urgently look to calm investors since the passing of a controversial judicial reform pushed by outgoing President Andres Manuel Lopez Obrador. Markets will be looking to Sheinbaum for “a predictable and investment-friendly policy and regulatory framework,” said Alberto Ramos, head of Goldman Sachs Latin American economic research.”Disciplined management of the budget and of state-owned enterprises, progress on public security, and safe-guarding the integrity of key institutions will be key to preserving market sentiment and sovereign debt ratings,” Ramos said, emphasizing the importance of state energy firm Petroleos Mexicanos (Pemex).The November presidential elections in the United States, Mexico’s largest trading partner, could add to market volatility, especially if former President Donald Trump, who has vowed to increase tariffs on Mexican goods, wins. Sheinbaum’s government will also present its first budget before Nov. 15, which is expected to be highly scrutinized for clues on whether Sheinbaum will make good on commitments to reduce the fiscal deficit to 3.5% of gross domestic product from 5.9%, where it is predicted to close the year. CONTINUITY WITH CHANGE?Lopez Obrador, whose six-year term began in 2018, managed to double Mexico’s minimum wage, reduce poverty and unemployment, broaden the base of social programs and oversee a previous strengthening of the peso. Touting these successes boosted his popularity and helped usher Sheinbaum, his protégé, to a landslide victory in the June elections.Sheinbaum, however, who has promised “continuity with change,” will inherit the largest budget deficit since the 1980s and lagging economic growth. Experts have said Mexico’s economy will require a tax reform to increase revenues, though Sheinbaum has said publicly she does not plan a sweeping tax overhaul. Instead, she has said she will pursue other options, including improving the efficiency of tax collection at customs.Sheinbaum “will have to deliver an important fiscal consolidation if she wants to keep the positive view that markets have today towards her,” said Bernardo Keiserman, an economist at investment bank Bradesco BBI.”We believe the government is committed to an adjustment, but delivering one sizable enough is not going to be an easy feat. The economy is weaker and likely weakening further,” Keiserman said. Recently, the central bank cut its GDP growth forecast for this year to 1.5% from the previous 2.4% and lowered its estimate for 2025 to 1.2%. The incoming administration will also inherit a heavy financial burden from state-owned Pemex, one of the most indebted oil companies in the world.Nearshoring, the trend of companies moving production closer to their main market, has helped Mexico attract investment, but Sheinbaum will face a challenge to increase foreign direct investment while implementing the controversial judicial reform passed in the dying days of Lopez Obrador’s presidency. The judicial reform, under which judges will be elected by popular vote, has scared investors and drawn criticism from the U.S. ambassador to Mexico who said it threatened the rule of law. More

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    Factbox-Over 1.7 million US customers still without power from Hurricane Helene

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    Those outages were down from around 2.0 million on Monday afternoon as utilities continued to restore power. In total, the storm knocked out service to around 5.5 million customers.Helene’s winds, rain and storm surge killed over 100 people, according to a Reuters tally of state and local officials.The utility with the most outages was U.S. energy company Duke Energy (NYSE:DUK) in the Carolinas with about 395,000 customers still out in South Carolina and 266,000 out in North Carolina, according to PowerOutage.us.Duke said on Monday it had restored power to around 1.35 million customers in the Carolinas and expected to restore the majority of remaining outages by Friday night.Here are the major outages by state:State Outages South Carolina 624,000 Georgia 467,000 North Carolina 455,000 Florida 74,000 Virginia 67,000 West Virginia 18,000 Total Out 1,705,000 More

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    Port Strike Begins on East and Gulf Coasts

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    Members of the International Longshoremen’s Association walked out for the first time since 1977 in a standoff over wages, benefits and job security.For the first time in nearly 50 years, longshoremen on the East and Gulf Coasts went on strike Tuesday, a move that will cut off most trade through some of the busiest U.S. ports and could send a chill through the economy.Members of the International Longshoremen’s Association union, which represents roughly 45,000 workers, started setting up pickets after 11th-hour talks failed to avert a work stoppage.“Nothing’s going to move without us — nothing,” said Harold J. Daggett, the president of the union, addressing picketers outside a port terminal in Elizabeth, N.J., in a video posted early Tuesday to a union Facebook account.The United States Maritime Alliance, which represents port employers, declined to comment early Tuesday. The two sides were not able to agree on wage increases, and the use of new technology in the ports was a sticking point for the union.“We think they’re lowballing intentionally,” Leonard Riley, a longshoreman at the Port of Charleston in South Carolina, said on Tuesday. “We are going to be out until we have something to chew on.”Businesses now face a period of uncertainty. Trade experts say that a short strike would cause little lasting damage but that a weekslong stoppage could lead to shortages, higher prices and even layoffs.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    A New Fine-Dining Restaurant in London, Staffed by Ex-Homeless People

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    In London’s upmarket Primrose Hill, a Michelin-starred chef is employing people on the edge of homelessness as chefs, wait staff and cocktail makers.It’s been three weeks since the restaurant, Home Kitchen, opened its doors and Mimi Mohamed is pretty sure she knows the lemon tart recipe by heart. But just in case, a small notebook where she has carefully written out the ingredients is propped up at the back of the steel counter: 18 lemons; 420 grams of butter; 900 grams of sugar; 24 eggs.The recipe is from Adam Simmonds, a celebrated Michelin star-winning chef. Novices like Ms. Mohamed are not usually found in his kitchens, but this new, upscale dining venture is not usual. Almost every member of the 19-person team has been homeless.“The crew downstairs in the kitchen, they make so many mistakes, but that’s OK,” Mr. Simmonds said with a laugh. “We accept that and we learn from it.”He is sitting upstairs in the front dining room. A large window overlooks the main commercial street in Primrose Hill, a neighborhood in north London that oozes British charm.The idea was hatched four years ago by Alex Brown, director of Soup Kitchen London, where Mr. Simmonds took a turn cooking at the start of the pandemic. The most common question from those who lined up for food was “Do you know of any jobs?”Home Kitchen is aimed at breaking the cycle of homelessness and joblessness by training people for a career in the restaurant industry.Andrew Testa for The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More