Economy
Argentina government: IMF had wanted “100%” peso devaluation
© Reuters. FILE PHOTO: A one hundred Argentine peso bill sits on top of several one hundred U.S. dollar bills in this illustration picture taken October 17, 2022. REUTERS/Agustin Marcarian/Illustration/File Photo
By Lucila Sigal
BUENOS AIRES (Reuters) – Argentina’s government said on Thursday that major creditor the International Monetary Fund (IMF) had originally wanted a “100%” devaluation of the country’s embattled peso currency, before the two sides agreed to a correction of 18% made earlier this week.
The comments, made by a government spokeswoman after similar ones by Economy Minister Sergio Massa, underscore rising pressure on the peso, which was devalued and pegged at 350 per dollar on Monday, though trades nearer 800 in parallel markets.
The IMF did not immediately respond to a request for comment.
Amid talks to speed up payouts from the country’s $44 billion IMF program, there has been pressure to allow the official exchange rate to drop in the line with parallel rates, seen as a truer reflection of the currency’s value. That would really be a 50% devaluation, but mean the cost of dollars would double, or rise 100%.
“Finally, the agreement we reached, which will mean that next week we will have almost $8 billion in disbursements, closed near 20%,” Massa, also the ruling Peronist coalition’s presidential candidate, said late on Wednesday.
The IMF board is expected to meet next week to ratify the latest reviews of Argentina’s loan program, which would unlock disbursements the country badly needs to meet its obligations, with net foreign currency reserves seen in negative territory.
Inflation over 113% has stoked anger in the country amid a cost-of-living crisis, leading to a shock result in primary elections last week where a radical libertarian Javier Milei came in first place above the two mainstream political forces. General elections will be held in October.
On Thursday, presidential spokeswoman Gabriela Cerruti apologized to voters in a weekly press conference, after the Peronists came in third place in the primaries.
“There was a significant number of citizens who decided to express their anger, their frustration, their criticism, to express how they are having a bad time in their daily lives or how they see that the course of the country is wrong,” she said.
“We particularly apologize to them.”
Cerruti said the government would announce inflation-targeting price agreements on Thursday, offering tax benefits to firms that signed up, and in coming days a package of relief measures for informal workers, retirees and the poor.
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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