Exclusive: Sudan needs up to $5 billion in budget support to prevent collapse

© Reuters. Sudan's Finance Minister Ibrahim Elbadawi speaks during an interview with Reuters in Khartoum © Reuters. Sudan’s Finance Minister Ibrahim Elbadawi speaks during an interview with Reuters in Khartoum

By Khaled Abdelaziz, Ulf Laessing and Michael Georgy

KHARTOUM (Reuters) – Sudan needs up to $ 5 billion in budget support to avert economic collapse and launch reforms after the ouster of veteran ruler Omar al-Bashir, its finance minister told Reuters.

The country, in crisis since losing most of its oil wealth with South Sudan’s secession in 2011, has only enough foreign currency reserves to fund imports for a few weeks, said Ibrahim Elbadawi, part of a transitional government formed in August.

Sudan has had some support for fuel and wheat imports but about 65 percent of its 44 million people live in poverty and it needs up to $ 2 billion in development funding along with a hoped-for $ 2 billion from Arab development funds, he said.

Outlining reform plans in detail for the first time, Elbadawi said public salaries would need to be increased and a social support network established to prepare for the painful removal of fuel and food subsidies.

Months of demonstrations over price hikes for fuel and bread and cash shortages triggered the uprising against Bashir, who was toppled in April by the military. Protests have continued since, with people killed in clashes with security forces.

“We have started the process (of reforms),” Elbadawi said in an interview on Thursday. “The people of Sudan deserve to be seen in a radically different prism than the international community used to see Sudan, as a country ruled by a pariah state.”

“Now we have a revolution,” he said. Asked how much budget support was needed for 2020 he said: “Some estimates say between three to four billion (US dollars), maybe even five billion.”

The civilian government Elbadawi is part of has taken over for three years under a power-sharing deal with the military. It has drawn slightly more than half of $ 3 billion in support for imports of wheat and fuel offered by Saudi Arabia and United Arab Emirates in April, he said.

A “friends of Sudan” donor meeting is planned for December and the government had agreed with the United States it could start engaging with international institutions while still on a list of countries deemed sponsors of terrorism, Elbadawi said.

The designation, which dates from allegations in 1993 that Bashir’s Islamist government supported terrorism, makes it technically ineligible for debt relief and financing from the IMF and World Bank. Congress needs to approve a removal.

CURRENCY

The first experts from international institutions had arrived in Khartoum to help with reforms and a delegation of the International Monetary Fund (IMF) would come this month for Chapter IV discussions, Elbadawi said. There was no immediate comment from the IMF, World Bank or U.S. State Department.

Part of a roadmap agreed with the IMF and World Bank was that Sudan did not have to pay back $ 3 billion in arrears from international institutions.

“We don’t need to pay anything. What we need to … deliver really is policy,” he said. Sudan is one of the most indebted countries, owing $ 60 billion, which needs to be settled separately.

Sudan would start to increase its tax base and overhaul the civil sector, Elbadawi said. Salaries — eroded by double digit inflation rates — could be raised as much as 100 percent by April.

In the second half of next year a social support network would be set up to allow the lifting of subsidies by June or later. Some donor funding would be used to collect data to allow cash transfers for the needy.

Sudan also wanted to produce bread based on sorghum, a local cereal, to import less wheat. He said he hoped a spread between official and black market would be ended by June. But this week the local pound dropped to 80 for a dollar on the black market versus the official rate at 45.

He said the 2020 budget would have sustainable development targets for education, health care and social spending, suggesting Sudan might move away from the dominant military spending choking development.

Let’s block ads! (Why?)

Forex News

Malaysia optimistic of winning investor, ratings agencies’ confidence in budget plans

KUALA LUMPUR (Reuters) – Malaysia is “cautiously optimistic” it would win the confidence of investors and ratings agencies for its 2020 budget, its finance minister said on Saturday, as the government prioritized boosting growth over reducing the deficit in the short term.

Lim Guan Eng told reporters that given the global economic uncertainties, the country needed to “not only convince but reassure investors” that the Southeast Asian nation will be back on track for fiscal consolidation in 2021.

Malaysia’s government unveiled on Friday a smaller budget than expected for next year but flagged a wider budget deficit than earlier estimated, and said it would step in with stimulus measures should global demand worsen.

The government projected a fiscal deficit of 3.2% of gross domestic product (GDP), larger than an initial target of 3% but lower than this year’s 3.4%.

“So far the response by both the World Bank and even Moody’s have been positive so we are cautiously optimistic that we will be able to convince not just foreign investors and fund managers but also ratings agencies that this is necessary in order to ensure sustainable economic growth,” Lim said.

World Bank lead economist for Malaysia, Richard Record said in a note overnight that the budget was “a prudent balance between the competing needs for Malaysia to preserve fiscal sustainability, while also responding to the realities of a slowing economic environment”.

Record also said proposals to reform the country’s investment incentives framework was a step in the right direction.

Sovereign risk senior analyst at Moody’s Investors Service, Anushka Shah said in a note late Friday that Malaysia’s fiscal strength will continue to constrain its credit profile but the budget’s emphasis on backing higher-value added industries and on infrastructure development will support growth against a challenging global environment.

Esther Lai, head of sovereign ratings at RAM Ratings, a Malaysian ratings agency said the 3.2% deficit target was within expectations. “It is a pragmatic target as the government is striking a balance between supporting growth and keeping its promise for fiscal consolidation.”

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.

Let’s block ads! (Why?)

Economy News

Euro-Area Finance Chiefs Brace for Fresh Fight Over Budget

(Bloomberg) — Euro-area finance ministers will debate the final key elements of a small budget for their currency bloc, as the region seeks to cap two years of difficult negotiations over a tool that falls far short of the original sweeping vision of French President Emmanuel Macron.

The discussion on the budget, whose broad outlines were already agreed in June, will seek to bring to a conclusion difficult talks that pitted the fiscal restraint of the EU’s hawkish North against the South’s calls for spending to stimulate the economy. But entrenched differences over aspects of how this pot of money will be financed may mean an accord remains elusive.

The agreed budget would create a pot of about 20 billion euros ($ 22 billion) to facilitate investments and reforms and help give a boost to poorer nations, rather than help support economies in a downturn, as was initially intended. These funds, which would be part of the EU’s broader budget and distributed over seven years, will be used to help countries see through investments and reforms and help poorer nations catch up.

Proponents argue that the pared-down budget could still be a foot in the door that could evolve into something more powerful in times of crisis. Skeptics of the plan say it’s a toothless tool that could nonetheless help incentivize laggards to reform.

Stumbling Blocks

A key issue ministers will debate is whether the instrument can be financed entirely from the EU’s broader budget, paid in by all the bloc’s 28 governments, or whether it could be topped up by other funding sources in the future.

Countries led by France have been pushing for a deal that would allow funds to be added through further contributions. The Dutch and other fiscal hawks have pushed for it to be funded exclusively from the EU’s budget, a restriction that would limit its total size.

A compromise could include a so-called “enabling clause”, which would pave the way for countries that wish to top up the budget to do so in the future. But the Dutch have insisted that this would only be on a voluntary basis, a red flag for other members.

The other main issue to be discussed involves the details of the so-called co-financing rate, which determines how much money governments will receive from this budget for a project and how much they have to put up themselves. This contribution could vary depending on the member’s economic situation, being reduced during a downturn.

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.

Let’s block ads! (Why?)

Economy News

Italy expects budget deficit to rise next year, debt to fall: source

© Reuters. FILE PHOTO: French President Emmanuel Macron and Italian Prime Minister Giuseppe Conte meet in Rome © Reuters. FILE PHOTO: French President Emmanuel Macron and Italian Prime Minister Giuseppe Conte meet in Rome

By Gavin Jones

ROME (Reuters) – Italy will target its budget deficit at around 2.2% of gross domestic product next year, falling to 1.8% in 2021 and 1.4% in 2022, a political source said on Saturday.

Economic growth is seen around 0.6% next year, and rising to 1.0% in each of the following two years, according to a draft of the targets seen by the source.

The Cabinet is due to sign off on the new targets contained in the Treasury’s Economic and Financial Document (DEF) at a meeting on Monday.

The targets are still subject to possible marginal revisions ahead of Monday’s meeting, the source said. In particular the 2020 deficit goal could be lowered to 2.1% depending on ongoing negotiations with the European Commission.

This year’s deficit is seen at around 2.0% of GDP, Deputy Economy Minister Antonio Misiani said this week.

The new government of the anti-establishment 5-Star Movement and the center-left Democratic Party intends to avoid an increase in sales tax worth some 23 billion euros ($ 25 billion)scheduled for January, which was promised to the European Union as a backstop to ensure Rome respected the bloc’s fiscal rules.

However Prime Minister Giuseppe Conte, in comments on Friday, did not rule out possible adjustments to value added tax (VAT) rates.

Under an unchanged policy scenario, which includes the full VAT tax hike, next year’s deficit would fall to around 1.5% of GDP, two sources told Reuters earlier this week.

Italy has proportionally the second highest public debt in the EU after that of bailed-out Greece, and has made little progress in reducing its deficit toward a balanced budget in recent years as EU rules prescribe.

The debt is forecast to rise this year from last year’s 134.8% of GDP, the political source said, before declining in 2020, 2021 and 2022.

Italy has urged the EU to ease what it calls the “excessive rigidity” of EU fiscal rules to head off the risk of recession in the 19-nation euro currency bloc.

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.

Let’s block ads! (Why?)

Economy News

France 2020 budget deficit to be 2.2% vs April estimate of 2.0%

France raises spending, according to source cited by Reuters

  • The 2020 deficit expected at 2.2% compared to 2.0%
  • 2019 deficit unchanged at 3.1%
  • 2020 growth seen at 1.3% vs 1.4% prior

The changes are mainly a result of cheaper borrowing costs and the government concessions to the yellow vest movement.
ForexLive

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed

Italian draft budget is due mid-October: EU budget commissioner

Italian draft budget is due mid-October: EU budget commissioner Italian draft budget is due mid-October: EU budget commissioner

ALPBACH, Austria (Reuters) – Italy must hand in a draft budget by mid-October despite the political turbulence there, the European Union’s budget commissioner said on Friday.

“All member states have to deliver their draft budget mid-October,” Guenther Oettinger said at an economic event in the Austrian province of Tirol.

Italy’s president asked Giuseppe Conte on Thursday to return as prime minister in a new coalition of the 5-Star Movement and opposition Democratic Party (PD), a move that could improve Italy’s fractious relations with the EU.

Oettinger said he hoped Italy soon had a new government able to deliver at least a first budget draft. “If they say we need five or 10 more days, no problem,” he 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.

Let’s block ads! (Why?)

Economy News

US House has passed the debt-limit raising and budget deal – off to the Senate now

HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.

ADVISORY WARNING: FOREXLIVE™ provides references and links to selected blogs and other sources of economic and market information as an educational service to its clients and prospects and does not endorse the opinions or recommendations of the blogs or other sources of information. Clients and prospects are advised to carefully consider the opinions and analysis offered in the blogs or other information sources in the context of the client or prospect’s individual analysis and decision making. None of the blogs or other sources of information is to be considered as constituting a track record. Past performance is no guarantee of future results and FOREXLIVE™ specifically advises clients and prospects to carefully review all claims and representations made by advisors, bloggers, money managers and system vendors before investing any funds or opening an account with any Forex dealer. Any news, opinions, research, data, or other information contained within this website is provided as general market commentary and does not constitute investment or trading advice. FOREXLIVE™ expressly disclaims any liability for any lost principal or profits without limitation which may arise directly or indirectly from the use of or reliance on such information. As with all such advisory services, past results are never a guarantee of future results.

Let’s block ads! (Why?)

Forexlive RSS Breaking news feed

Exclusive: Libya government, central bank fail to agree 2019 budget – sources

© Reuters. FILE PHOTO: Cars are parked outside the Central Bank of Libya in Tripoli © Reuters. FILE PHOTO: Cars are parked outside the Central Bank of Libya in Tripoli

By Ulf Laessing

TUNIS (Reuters) – Libya’s internationally recognized government and the central bank have failed to agree a national budget for 2019 due to a row over spending priorities, and the wrangling could go on until March, three sources familiar with the talks said.

The conflict is a setback for Western powers and the United Nations, which have been pressing for reforms to tackle a war economy that has enriched armed groups in a conflict stemming from the overthrow of Muammar Gaddafi in 2011.

The World Bank, U.N. and Western powers hosted a meeting in Tunis with Libyan officials last week to prod them to finalize a budget which should have been approved in December.

But no deal was reached, as the Tripoli administration and the central bank could not agree how to use revenues from a new fee on hard currency transactions, among other issues, diplomats as well as the sources familiar with the talks said.

Agreeing on a budget could take as long as to March when the next meeting is planned, they and diplomats briefed on the talks said.

Officials at the Tripoli-based government including the finance ministry as well as the central bank did not respond to phone calls seeking comment.

With no budget, the government can only pay for public salaries and fuel subsidies but not for badly-needed investments to overhaul dilapidated schools, roads and hospitals.

Libya has had no proper budget since 2016 because its internationally recognized parliament is based in the east and supports a parallel administration there. Tripoli is home to the U.N.-backed government but has little power.

Since then Western countries and international institutions have been brokering meetings between Tripoli officials, the central bank and a senior lawmaker from parliament.

These efforts also include a tactical agreement with the eastern government whose salaries are paid by the central bank — the United Nations wants to keep an uneasy balance between west and east while trying to prepare Libya for elections to unify the institutions.

FEE

The budget row arises from a conflict about how to spend a new 183 percent fee imposed on private currency transactions in October, the sources said.

The Tripoli government and central bank had imposed the fee under Western pressure, amounting to a de-facto devaluation to lower the spread between official and black market dollar rates.

Armed groups have benefited from the spread as they, thanks to their power, get cheap central bank dollars and sell them on the black market.

The Tripoli government wants to use the fee for development but the central wants to pay back debt, sources said.

There would more room to spend this year because oil revenues rose by 78 percent to 24.5 billion dollars in 2018 as wave of blockage of oilfields ebbed, halving the deficit to 4.6 billion dinars ($ 3.32 billion).

The row has been complicated by a power play inside the Presidential Council running the Tripoli administration.

Three council members accused Prime Minister Fayez al-Serraj of seeking to "control power and decisions, (pursue) unstudied policies and irresponsible behaviors," a statement said. It warned of state collapse.

Diplomats said that row made it more difficult for officials to agree on the next reforms such as reducing fuel subsidies which also benefit armed groups who smuggle cheap fuel abroad.

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.

Let’s block ads! (Why?)

Forex News

Italy strikes deal with EU commission over budget: ministry spokeswoman

© Reuters. European Union leaders summit in Brussels © Reuters. European Union leaders summit in Brussels

ROME (Reuters) – Italy has done a deal with the European Commission over its contested 2019 budget, a spokeswoman at the Economy Ministry said on Tuesday, signaling an end to weeks of wrangling that had shaken financial markets.

However, a source in Prime Minister Giuseppe Conte’s urged caution, saying Rome had only received verbal assurances from Brussels. He added that a deal was not expected to be formalized until a meeting of EU commissioners in Brussels on Wednesday.

"There is reasonable expectation that the budget proposal will be brought to the Commission’s attention tomorrow and that this will be positive for Italy," said the source. "But it is necessary to wait for the procedure to be completed in order to consider the negotiation definitively concluded."

A Commission spokesman confirmed that the Italian budget would be discussed on Wednesday, but declined further comment.

The Economy Ministry declined to give further details and the contents of the agreement were not immediately available.

The Commission rejected Italy’s expansionary draft budget in October, saying it would not lower the country’s large debt and declaring it in clear breach of EU fiscal rules.

Rome submitted a revised plan last week with a lower deficit target, opening the way for an intensive round of negotiations. Conte will address parliament on Wednesday at midday to present all the latest information about the budget, his office said.

Italy’s original budget proposal envisaged a deficit equal to 2.4 percent of gross domestic product in 2019, up from 1.8 percent this year. The revised plan presented last week lowered that to 2.04 percent and it was not clear if the Commission had insisted on a further reduction.

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.

Let’s block ads! (Why?)

Economy News

Mexico's new government sees income, spending jump in first budget

© Reuters. Mexico's new Finance Minister Carlos Urzua presents the 2019 national budget next to lawmaker Porfirio Munoz Ledo of the ruling National Regeneration Movement party (MORENA) at the Congress in Mexico City, © Reuters. Mexico’s new Finance Minister Carlos Urzua presents the 2019 national budget next to lawmaker Porfirio Munoz Ledo of the ruling National Regeneration Movement party (MORENA) at the Congress in Mexico City,

By Anthony Esposito

MEXICO CITY (Reuters) – Mexico’s new leftist government on Saturday avoided major surprises in its closely watched first budget, sticking to fiscal promises made to investors who have been jittery about plans for Latin America’s No. 2 economy.

The 2019 budget plan reflected "the absolute commitment to fiscal and financial discipline," Finance Minister Carlos Urzua told reporters after presenting it to Congress.

Still, Urzua forecast a jump in both government revenues and spending in real terms, presenting numbers that will be pored over by bondholders keen to ensure the projections in the document are credible.

President Andres Manuel Lopez Obrador’s ambitious plans for developing Mexico require cheap credit, and his team has sought to court wary international investors. However, in a sign of investor anxiety, debt yields have spiked since late October after he used a straw poll to justify scrapping a partly built $ 13 billion airport.

Urzua said the budget redirected spending toward Lopez Obrador’s priorities, namely infrastructure and social outlays.

Some of the largest spending highlighted by Urzua included 100 billion pesos ($ 5 billion) in payments for the elderly and another 44 billion pesos ($ 2 billion) earmarked for unemployed youth.

The minister said overall government income was expected to rise by 6.3 percent in real terms in 2019 compared to the sum approved in the last budget. He argued that income in 2018 was higher than budgeted, making it easier to reach the 2019 target.

He proposed an increase in spending of 6.1 percent.

($ 1 = 20.2240 Mexican pesos)

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.

Let’s block ads! (Why?)

Forex News