Connect with us

Economy

Struggling countries poised to get G20 debt freeze extension By Reuters

Published

on


2/2
© Reuters. FILE PHOTO: Kenya Central Bank Governor Patrick Njoroge addresses a news conference at the Central Bank of Kenya headquarters in Nairobi

2/2

By Jan Strupczewski, Andrea Shalal and Elizabeth Howcroft

BRUSSELS/WASHINGTON/LONDON (Reuters) – The G20 group of major economies is ready to extend a multi-billion dollar debt freeze for the world’s poorest countries to help them survive the coronavirus pandemic, and will adopt a common approach to dealing with longer-term debt restructurings.

Finance ministers and central bankers from China, the United States and other G20 countries outlined their plans in a draft communique seen by Reuters on Tuesday, and are expected to finalize the wording when they meet online on Wednesday.

The G20 Debt Service Suspension Initiative (DSSI) approved in April has seen more than 40 of 73 eligible countries defer some $5 billion in debt payments, but that is far short of the nearly $12 billion in projected relief if all eligible countries were to participate.

The lack of participation of private creditors also remains a problem, as does the failure of China to fully participate with all its state-owned institutions, according to top economists.

World Bank Chief Economist Carmen Reinhart told an online forum held during the annual meetings of the International Monetary Fund and World Bank the situation facing heavily indebted countries was troubling, and said it was critical to “hope for the best and prepare for the worst.”

IMF Managing Director Kristalina Georgieva last week said that African states alone faced a financing gap of $345 billion through 2023 to deal with the pandemic and its economic impact.

Developing countries have pushed hard for an extension of the debt freeze, but say additional measures are needed to help those countries that are not eligible for the G20 initiative.

Angola’s Finance Minister Vera Daves said an extension of the DSSI would be “very useful.”

Speaking at an online forum organized by the IMF and World Bank, she added that Angola would have a conservative budget to try and keep its debt, expected to top 140% of annual GDP, under control.

At an Institute of International Finance (IIF) online panel, policymakers from Kenya and Costa Rica also expressed support for the scheme, and called for countries like China and Russia – not currently part of the Paris Club government debt relief architecture – to provide more help.

“The desire to rope in all creditors, and particularly China and Russia, I think it is great,” said Patrick Njoroge, Governor of the Central Bank of Kenya.

“China has never really been there and that has always been one of the weaknesses of the Paris Club.”

‘IMF HAS TO HELP’

The G20 draft communique underscores the need for private sector involvement and says all official bilateral creditors should implement the initiative fully and in a transparent manner.

Odile Renaud-Basso, who chairs the Paris Club of official creditors, told a panel during the IMF-World Bank meetings the initiative had provided critical short-term relief, and lauded China’s participation, but said further efforts were required.

“The question is what is next,” she said, adding that some countries that had unsustainable debt levels before the pandemic would likely need “deeper debt relief” that cut their overall debt level – a step that would require the involvement of China and other non-Paris Club members, as well as the private sector.

Costa Rica’s Central Bank President Rodrigo Cubero echoed those remarks, saying it was vital for non-Paris Club lenders to be part of the support and calling for more than just flexible credit lines from the IMF and other institutions.

A new World Bank study on Monday showed that among countries eligible for the G20 debt relief, external debt loads increased 9.5% in 2019 to $744 billion even before the pandemic.

With the coronavirus now savaging economies, the World Bank has warned that 150 million more people could be pushed into extreme poverty by the end of next year.

GRAPHIC: How much debt relief offered – https://fingfx.thomsonreuters.com/gfx/mkt/xklpyqjbwpg/Pasted%20image%201601420726673.png





Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Economy

Fed’s Bostic says significant portions of U.S. recovery are weak or nonexistent By Reuters

Published

on

By



(Reuters) – It will be a while before the U.S. economy is fully recovered and before the Federal Reserve will raise interest rates or remove the support it is providing financial markets, Atlanta Federal Reserve Bank President Raphael Bostic said on Monday.

“On balance, I am comfortable with our current policy stance,” Bostic said in remarks prepared for a virtual event organized for the Securities Industry and Financial Markets Association Annual Meeting. “As I have detailed today, though the U.S. economy continues to show clear signs of recovery, there remain significant portions where the recovery has been weak or nonexistent.”

The Fed moved quickly to support the economy in March by slashing rates to zero and launching emergency lending programs to support market functioning. Those programs will stay in place as long as needed, however, market participants should expect the central bank to sunset some of its emergency lending vehicles after the crisis has passed, Bostic said.

The economic crisis caused by the coronavirus pandemic caused the most pain for Black and Hispanic workers, who were disproportionately affected by job losses, Bostic said. Many of the jobs lost may not return, particularly in travel and food services, as companies adjust to lower demand or use technology to replace workers, he said.

Leaders in economics and finance need to openly acknowledge gender, racial and other disparities and support policies that can help close those gaps, he said. For the Fed, that includes supporting the labor market recovery to minimize the risks of long-term damage, Bostic said.

“Indeed, an unnecessarily slow labor market rebound could just drive historic wedges deeper, continuing to exacerbate the geographic, racial, gender, and income disparities in our economy,” Bostic said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

Continue Reading

Economy

Tolerating higher inflation ‘worth it’ to help achieve employment goals By Reuters

Published

on

By


8/8
© Reuters. Outbreak of coronavirus disease (COVID-19) in New York

2/8

(Reuters) – Black and Hispanic workers and others in low-wage jobs were just beginning to see their job situation improve before the pandemic hit, wiping out many of those gains, Philadelphia Federal Reserve Bank President Patrick Harker said on Monday.

The Fed’s new framework should help to address shortfalls in employment, helping affected workers find new opportunities, Harker said.

“No longer will we head off higher inflation by preemptively raising interest rates before we have achieved full employment,” Harker said in remarks prepared for a virtual event organized for the HOPE Global Forum. “Tolerating the risk of slightly higher inflation, in our view, is worth it if it helps us achieve our employment goals.”

Job placement programs can also help people without college degrees move into better-paying roles with more opportunity for growth, Harker said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

Continue Reading

Economy

Pandemic expected to push poorer Americans out of banking system: regulator By Reuters

Published

on

By


2/2
© Reuters. FILE PHOTO: Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort

2/2

By Pete Schroeder

WASHINGTON (Reuters) – Many poorer Americans will struggle to keep a foothold in the banking system due to economic fallout from the coronavirus pandemic after years of increasing access, a U.S. banking regulator said on Monday.

A new report from the Federal Deposit Insurance Corporation (FDIC) found that in 2019 just 5.4% of Americans lacked a checking or savings account, the lowest level recorded by the decade-old survey.

But the watchdog warned that economic havoc wrought by the pandemic could push many struggling Americans, who were already hovering at the fringes, out of the traditional banking system altogether.

“The COVID-19 pandemic is likely to contribute to a rise in the rate of unbanked households,” the FDIC said in its report, noting that banking access usually tracks the broader health of the economy.

The 2019 record low came after years of steady economic gains, and the previous high for unbanked households was in 2011, amid the previous recession. The most frequently cited reason for not having a bank account is insufficient funds to meet account minimums.

The regulator said it could not predict how many people would lose access to bank accounts or be otherwise financially harmed as a result of the pandemic, but flagged some concerning vulnerabilities: In 2019, 35.8% of households reported not saving for unexpected expenses or emergencies. Among unbanked populations, 74% were not able to build up emergency savings.

Complaints to the Consumer Financial Protection Bureau between March and July suggest many Americans are already being pushed to the edge of the financial system by the pandemic.

Between March and April, reports flagging problems such as impaired credit, foreclosure threats and aggressive debt collection tactics, jumped 50% on the year-ago period, according to an analysis by U.S. PIRG and the Frontier Group.

Furthermore, the FDIC found banking activities more commonly relied-upon by rural populations and people with volatile incomes, such as cash transactions and branch visits, had been hindered by lockdowns and vendors limiting the use of bills.

Having a bank account is a critical foothold to building wealth. Those without accounts pay significantly more for basic services, such as cashing checks and making payments – a problem far more likely to affect minority groups. Around 14% and 12% of Black and Hispanic households respectively were unbanked, compared with 3% for whites.

“Millions of Americans – and families of color in particular – remain outside the mainstream banking system and are missing the economic opportunities that come from having a bank account,” said Rob Nichols, CEO of the American Bankers Association, which on Monday launched an initiative to boost the provision of simple low-cost bank accounts.

The 2019 survey found, however, that rapid adoption of new technology is expanding access to financial services. Mobile banking more than doubled as the primary means of accessing a bank account from 2017, and 31% of households reported using a person-to-person payment service like PayPal or Venmo.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





Source link

Continue Reading

Trending

Copyright © 2017 Zox News Theme.