UK Chancellor Rishi Sunak has expressed his desire to cut taxes before the next election as he claimed that the nation’s economy was bouncing back more quickly than analysts had anticipated. Sunak argued it was important to drive down inflation first before cutting taxes, but added that he was a “low tax Conservative" and wanted to cut people’s taxes. Sunak’s comments come after the Institute for Fiscal Studies (IFS) claimed that one in five British workers would be paying the higher rate of income tax by 2027. The IFS also argued the tax burden is unlikely to return to 2020 levels for many years.
Jordan needs to hasten structural economic reforms to bolster growth beyond the current 2-3% average and to generate the jobs required to reduce unemployment, according to the International Monetary Fund (IMF), which added that high and increasing unemployment means 2.6% growth rate forecast for this year is insufficient to improve living standards. Some 22.9% of Jordanians are jobless, while the country has a population of almost 11 million and an annual population growth of about 2%. IMF official Ron Van Rooden said prudent monetary and fiscal policies have enabled Jordan to maintain macroeconomic stability.
Central banks globally have been accused of failing to spot the degree to which inflation rates would rise and stick, despite record monetary and fiscal support. Almost all rate-setters failed to foresee inflation rising and then overestimated the pace of decline. Advanced economies are experiencing the most vigorous and enduring outbreak of inflation in a generation. The Bank of England is currently holding a “Festival of Mistakes” to celebrate lessons learnt from financial disasters of the past, instead of what some suggest should be more recent errors. Central bankers failing to identify soaring inflation have not only left themselves risking financial instability due to being forced to raise rates faster than is usual but threatened the credibility of institutions that rely on trust to steer the economy toward sustainable growth.
The challenge by populist opposition leader Imran Khan to Pakistan’s army chief General Asim Munir risks sparking a confrontation between civilian politicians and the military, the like of which Pakistan has not seen since its return to democracy in 2008. Khan was released on bail last week on corruption charges which he claims were trumped up, and accused Munir of threatening “democracy, our constitution, fundamental rights.” Pakistanis are now expecting instability as Khan, who is expected to triumph in elections due by October, fights a barrage of court cases against allegations from corruption to terrorism.
Ghana's efforts to restructure its debt have been revealed as targeting $10.5bn of debt service relief from 2023 to 2026, with a view to achieving a return to a "moderate" risk of debt distress by 2028. The country has a $15bn financing gap in its balance of payments from 2023 to 2026, and had already completed a domestic debt exchange earlier this year. The International Monetary Fund board approved a $3bn, three-year rescue loan on Wednesday.
Pakistan's anti-corruption agency, the National Accountability Bureau, has called former prime minister Imran Khan for questioning into graft charges that led to his arrest on 9 May. It is unclear whether Khan, who denies the charges, will respond to the summons. Pakistan's worst-ever economic crisis has been worsened by the recent wave of political instability in the country following Khan's arrest on the charges. His wife, Bushra Bibi, was also granted bail until 23 May.
The International Monetary Fund (IMF) has granted a $3bn loan to Ghana following debt-restructuring agreements concluded between the country's creditors. Ghana owes around $4bn to lender nations including $1.5bn to China but its debt to commercial creditors is $14bn, featuring approximately $13bn owed to holders of its eurobonds. These liabilities are dwarfed by the $24bn in domestic debt, mainly owed to local banks and pension funds. The IMF's decision to progress with the bailout will be welcomed by countries trying to resolve debt difficulties whose challenges have been compounded by disagreement between western and Chinese creditors.
China's reluctance to forgive debt from economically unstable poor countries is driving them to the brink of collapse, and experts predict that unless China softens its stance on loan losses, more defaults and political upheavals may follow. While China denies that it is an unforgiving lender, AP's analysis of 12 countries most indebted to China — including Kenya, Pakistan, Laos and Zambia — suggests their foreign currency reserves are being drained to pay interest on loans, with some having just months before funds run out.
Ghana has signed a $3bn bailout programme with the International Monetary Fund following the country's most severe economic crisis in a generation, with goods' prices rising an average of 41% over the past year. While the loan is expected to address Ghana's balance of payments deficit, which concerns its failure to earn enough through exports, it is unlikely to solve the country's long-term economic problems or reduce poverty or increase salaries or job creation. The biggest challenge to implementing the IMF programme will be next year ahead of the polls, where governments have a history of excessive spending.
African countries are being disproportionately affected by what the IMF calls “the big funding squeeze”—the most intense global funding situation in decades. The slower global economy and tighter financing conditions have made obtaining external finance increasingly difficult for many African countries. Better-off economies can rely on their foreign-exchange reserves and deeper capital markets, putting most African countries “on the starting blocks, shut off from finance”. Since the Covid19 pandemic began and the Russian invasion of Ukraine, the cost of borrowing for African countries has significantly increased, making servicing debt and gaining access to new finance prohibitively expensive.
The issue of public debt on the African continent is complex; in some countries, debt levels are high but still viable, while in others, debt is becoming clearly unsustainable. However, the main issue at present is the current funding squeeze. Worryingly, if it persists, it could turn what is currently a liquidity issue into one of solvency, even for those countries with otherwise manageable debt levels. The IMF is assisting, having provided the region with more than $50bn to support essential spending and reforms since the pandemic began. The organisation is also calling on richer countries to do more and help support African countries with funding issues.
Without additional financial support, the outcomes for African economies struggling with liquidity problems may well be disastrous – economically, socially and geopolitically. Over the next decade, Africa will have more new workers than the rest of the world combined, powering the global economy. To facilitate this, it is critical to ensure that the resources required to provide the education and healthcare required to make these workers more productive are available. As such, it would be a significant failure of the international community not to help African countries reach their full potential.
Ecuador's conservative president, Guillermo Lasso, has dissolved the National Assembly, using an untested constitutional rule known as muerte cruzada ("mutual death") in response to a political crisis. The Assembly was set to impeach Lasso, who accused the Assembly of a "political project to destabilise the government, democracy and the state." Despite a flimsy case against him, Lasso has been unpopular for months, though the economy is buoyant with inflation at just 2.4% and the IMF recently offering access to cheap multilateral loans. Snap elections for president and parliament will follow within 97 days, allowing Lasso to rule by executive decree.
IMF: Ghana intends to agree debt rework MoU with official creditors before November
Reuters
23-05-18 15:59
Ghana has secured a $3bn, three-year rescue loan from the International Monetary Fund (IMF), which officials claim will help the African country to climb out of its “worst economic crisis in a generation”. Ghana’s Finance Minister Ken Ofori-Atta and IMF Mission Chief Stephane Roudet, have said the fund will be used “in managing our expenditure and increasing our revenue”. An agreement with official creditors is expected to be in place before the first IMF programme review, in November; this could trigger a payout of $600m.
John Dramani Mahama, a former Ghanaian President and member of the National Democratic Congress (NDC) party, has been endorsed by the party to lead it into the country's 2024 election, where he will seek his third attempt at the presidency. Commentators have declared that if NDC enters the election without being too fractious with itself, and with Mahama as their candidate, the 2024 contest could be tight. Mahama has pledged to put a standardised limit on borrowing and to cut down on the number of ministers and other government appointees.
Suriname has reached an initial agreement on the restructuring of its more than $600m debt with private creditors, following the revival of its $700m International Monetary Fund (IMF) programme. An agreement with the IMF on the second review of Suriname's loan programme means a $53m disbursement will become available once the fund's executive board provides approval. The original programme had been stagnant for more than a year due to missed fiscal targets. Suriname is also negotiating with creditors in China and India. The reviving of the IMF programme was a critical element in the restructuring of the country's debt.
South Africa’s foreign policy is in disarray and risks being pulled in different directions as the world order changes, according to analysis in the Financial Times. The paper questions whether officials know whether it has been exporting arms to Russia and argues the inconsistency of the ruling African National Congress stems in part from its nostalgia for the Soviet Union and from links between Russian oligarchs and the ANC. As non-western nations increase their global economic output, South Africa is poised at the intersection of external pressure from larger nations and internal debate over ideals and identity.
The caretaker deputy prime minister of Lebanon has called for Riad Salameh, Governor of the country's central bank, to resign. Salameh is widely blamed for the economic collapse that began in 2019, which has seen the Lebanese pound plummet in value and an estimated 75% of the population fall into poverty. Salameh has also had allegations of corruption levelled against him by a range of international jurisdictions. A French investigative judge recently issued an international arrest warrant for Salameh over corruption charges, which allege illicit enrichment and laundering of $330m.
Argentine President Alberto Fernandez has joined protesters in Buenos Aires to push back against the International Monetary Fund (IMF) amid brewing tensions with the lender. The South American producer, which has a rocky history with the IMF, has been hit by almost 109% inflation and dwindling dollar reserves. Argentina agreed to a $57bn programme with the Washington-based organisation in 2018 but the agreement failed and was replaced by a new $44bn deal last year. Buenos Aires wants faster payouts and easier economic targets and is calling for an investigation into the original deal after a new government auditor report found it had not passed through proper legislative channels.
US President Joe Biden and the Treasury Secretary Janet Yellen are warning that if Congress doesn't raise the debt ceiling, it could bring sobre economic harm. However, by refusing to meet and negotiate with congressional leaders to discuss it, the Biden administration is essentially bringing about the very crisis they claim they are trying to prevent. Biden's budget has discretionary spending grow at 2.3% per year over the next decade, which costs $2.7tn more. Meanwhile, United States federal outlays are predicted to rise to 29% of GDP by 2052. Concerns are being raised that runaway inflation is a natural consequence of the unchecked government spending.
Bangladesh is under increasing pressure to meet targets set in its loan agreement with the International Monetary Fund (IMF), with review dates rapidly approaching. The South Asian nation is believed to have already missed the minimum foreign reserve criteria for March, set by the IMF when it approved a $4.7bn loan in January. An IMF staff mission visited the country in late April to early May, but has been unable to confirm that June targets will be achieved.
Pakistani police are due to search the home of former prime minister Imran Khan in Lahore after accusing his supporters of attacking and vandalising government and military buildings, according to Amir Mir, the information minister of Punjab province. The raid could lead to further violence in the country, which is currently tackling political and economic instability. Khan has denied accusations that he has sheltered those involved in the unrest.
