EU-DIGEST

Labels: EMU, EU, Greece, IMF

Labels: Economy, EU, Germany, Greece, IMF

The International Monetary Fund (IMF) says the global economy is back on the path to growth, but the recession is not over yet. In its World Economic Outlook, the IMF says although global growth is set to contract by 1.1% in 2009, this should reverse next year leading to economic growth of 3.1%. This, however, will be predominantly based on the strength of developing economies with advanced economies as a group not projected to return to sustained growth until the second half of 2010. The report suggests that the pace of any recovery is likely to be sluggish, as it will depend on the balance between the drag from the lingering impact of the financial shock and the recent increase in confidence. In particular the IMF says “activity and credit growth are likely to remain subdued in many economies” as consumption is projected to remain weakened in major economies.

Labels: Global Economy, IMF

Netherlands will not give up IMF and World Bank seats

The Netherlands is not prepared to give up its permament seats on the boards of the International Monetary Fund (IMF) and the World Bank. The US secretary of the treasury, Timothy Geithner, has said he wants to reduce the number of seats from 24 to 20, which would bring it in line with the G20, the group of the twenty largest economies which has lately been gaining importance over the G7. Emerging economies and developing countries want a bigger voice in the IMF and the World Bank in order to reflect the changes in the world economy. Geithner has also proposed giving emerging nations more voting shares.

Dutch development minister Bert Koenders suggested over the weekend giving equal voting power shares to countries who pay for development aid and those who receive the aid from the World Bank. But he said there could be no question of the Netherlands giving up its board seats. The Netherlands is an important donor country, Koenders said, and it also represents the interests of several other countries, including Moldavia and Israel, at the World Bank and the IMF.

Deputy finance minister Jan Kees de Jager said he doesn't see the point of the discussion. "We are a relevant country if you look at our economic weight, our exports and direct foreign investments and the size of our financial sector," he said.

Labels: Economy, EU, IMF, Netherlands, World Bank

Embarrassment for Britain's Darling as IMF immediately punctures his rosy predictions of growth by 2010

Alistair Darling's prediction Britain will emerge from the recession next year was immediately slammed by the International Monetary Fund today. In a second humiliation by the IMF in less than 24 hours, the Chancellor's forecast was dismissed as too optimistic. Mr Darling, in his bleak Budget speech, predicted the economy will shrink by 3.5 per cent this year before rising back in 2009 with 1.25 per cent in growth. The Chancellor added that growth would climb to 3.5 per cent by 2011. But the IMF, which oversees the global financial system, countered with a projection that output will in fact drop by a massive 4.1 per cent this year.

Note EU-Digest: the fact is that the IMF and national government predictions, specially those of Britain, have been wrong many times. What ever way we might want to spin the story, the key lies in the hands of the consumer. This means that economic stimulus programs must primarily focus on the bottom of the economic ladder. History has shown us that so called "trickle down" policies are flawed and that continued support for those that already have helped themselves to what was in "the kitty" does not work. The formula is 2+2=4 (not 5). Its as simple as that.

Labels: Britain, Economic Crises, EU, IMF

Germany, France underscores common ground in fighting financial crisis

They may not see eye-to-eye occasionally, but German Chancellor Angela Merkel and French President Nocolas Sarkozy showed a united front on Thursday in rejecting U.S. calls for more economic stimulus plans amid a global economic downturn, and they stressed that the upcoming summit of the Group of 20 (G20) should achieve binding results on tougher financial regulations.

Speaking after a German-Franco summit meeting in Berlin, Sarkozy stressed that the two countries have already invested a lot to check economic meltdown. "We don't want to spend more, " said Sarkozy, adding that the European priority now is to achieve international agreements to tighten up regulation of financial markets. Merkel said on Thursday that British Prime Minister Gordon has signed up to agreement achieved at a European summit in Berlin last month which called for tougher regulation of hedge funds, a crackdown on tax havens and more funds for the International Monetary Fund (IMF) to help countries in crisis.

But British Chancellor of the Exchequer Alistair Darling seemed to send a different signal by saying on Wednesday that his country and the United States "see eye-to-eye" on the need for economic stimulus.

Labels: Angela Merkel, Economy, EU, G20, Gordon Brown, IMF, Nicolas Sarkozy

E.U. Leaders Turn to I.M.F. Amid Financial Crisis - by Carter Dougherty

The leaders of Germany, Britain, France and other European nations called Sunday for the resources of the International Monetary Fund to double, to $500 billion, to help head off new problems in countries already hit hard by the global economic and financial crisis. Eyeing a contagion that is rapidly spreading to eastern Europe and even countries that use the euro, the leaders highlighted the crisis-prevention role of the I.M.F., an institution whose relevance to the current global economy seemed in doubt only a few years ago.

Labels: Economy, EU, IMF

Latvia's IMF handout could total euro 1.92 billion

Latvia could be in line to get around euro 1.92 billion(US$2.5b) from the coffers of the International Monetary Fund (IMF) and European Union (EU) according to an economic expert on the Baltic states. Over the weekend, the IMF confirmed that the Latvian authorities had asked it to provide 'technical and financial support' and that it stood 'ready to rapidly assist their efforts in the context of a comprehensive economic program.'

Labels: Economy, EU, IMF, Latvia

Europe ( as a result of British Generalities) unable to unite in credit crisis - by John Huizing

French President Nicolas Sarkozy, who currently holds the European presidency, has called on his European colleagues to reconvene in Brussels to tackle the credit crisis. During a lunch arranged at the last minute, the European leaders formulated a common position on Friday for the G20 summit, due next week in Washington. But Europe is not expected to play a strong leading role. "They are hardly long-term solutions," says Karel Lannoo from the Brussels think tank CEPS. He also questions the idea to give the International Monetary Fund (IMF) a larger role. If the IMF really wants to act as a financial policeman, then national governments would more or less have to be obliged to adopt its recommendations. And for this to happen the structure of the IMF itself would have to change radically. The US already has trouble accepting interference by international organizations in its national politics, warns Mr Lannoo. And there's another difficulty.the IMF is largely controlled by Europe. But the United States and the newer industrialized countries might prefer to see the voting positions and the capital chairs within the IMF rearranged. Something European countries may not like. Dutch Finance Minister Wouter Bos said: "We should watch out that we don't just formulate a general ambition, a general agenda for things that need to happen across the globe. In the worst case, it would result in endless discussions about what needs to be done in the world, while we forget there's a couple of things we need to do right now in Europe." It was a deliberate sneer at the British. They would like to arrange everything globally in the hope that London's financial center, the City, stays free of strict European regulation.

Labels: Britain, Council of Europe, G20, IMF, the Financial crises

For the complete report from the guardian.co.uk click on this link

The EU likely will take a 5 key point message to Washington

Europe is likely to take a five key point message to the Washington meeting on the overhaul of global financial institutions. This boils down a more extensive list of actions agreed by EU finance ministers, a draft paper showed. The paper, prepared by the French presidency of the European Union for a meeting of EU leaders on Friday, also said the EU would like the Washington summit to produce concrete proposals on priorities agreed within 100 days from Nov. 15.

The five priorities identified by the EU stick closely to the priority wish-list approved by the EU finance ministers earlier this week, and they are:
- to give the IMF "primary responsibility", together with the Financial Stability Forum, to recommend steps to restore confidence and stability. The IMF should be given the necessary resources and appropriate tools to help countries in trouble.
- registration of rating agencies and surveillance of implementation of codes of conduct relating to them.
- convergence of accounting standards and a review of the application of the "fair value" rule in financial institutions. The "fair value" rule currently requires instititions to value their assets at market value, which creates valuation problems when the market for a given security is not functioning.
- to take steps to ensure that no market segment, territory, or financial institution, including hedge funds, is beyond regulation or surveillance.
- to implement codes of conduct to avoid excessive risk taking in the financial industry, including the sphere of compensation. These codes should be taken into account by supervisors in evaluating the risk profile of institutions.

Labels: EU, G20, IMF, World Economy

IMF: World economy to slow sharply, led by US - by Jeannine Aversa

The world economy will slow sharply this year and next, with the United States likely sliding into recession reflecting mounting damage from the most dangerous financial jolt in more than a half-century. The International Monetary Fund, in a World Economic Outlook released Wednesday, slashed growth projections for the global economy and predicted the United States — the epicenter of the financial meltdown — will continue to lose traction.

Labels: IMF, World Economy

IMF report says turmoil to hit U.S. harder than Europe

The International Monetary Fund anticipates a "sharp downturn in the U.S." while the eurozone faces nothing worse than an economic slowdown. The author of the IMF report making that prediction, Charles Collyns, said the size of the U.S. banking crisis will double or triple the severity of decline in the country. "When the banking system suffers major damage, as in the current episode, the likelihood of a severe and protracted downturn in activity increases," he said.

Labels: EU Economy, IMF, recession, US Economy

The Netherlands - IMF says Dutch economy likely to keep growing faster than EU average

The International Monetary Fund (IMF) said the Dutch economy is expected to weather the turmoil in global financial markets fairly well and will continue growing faster than the European Union average.

'Sizeable fiscal consolidation and stability-oriented macroeconomic policies, complemented by broad-based structural reforms, have underpinned an extended period of strong growth, outperforming the EU average, and have shielded the economy from the recent global financial turmoil,' it said in a report on the Dutch economy.

'Despite an expected deceleration in growth following the U.S. economic slowdown, near-term prospects remain favorable, with real GDP expected to continue expanding above the EU average,' it said.

Labels: EU, EU Economy, IMF, Netherlands

Europe on the right economic track says IMF

The International Monetary Fund raised its forecast for economic growth in the euro region and dropped its view that the European Central Bank has room to cut interest rates this year. Economic expansion in the economy of the 15 nations that use the euro will slow to about 1.75 percent this year, the IMF said in a statement today, compared with 1.4 percent forecast earlier. The economy will expand 1.25 percent next year and inflation will fall below the ECB's 2 percent limit by the end of 2009, the IMF added.

European policy makers face accelerating inflation stemming from record food and oil prices even as economic growth slows. Consumer prices rose 3.6 percent on the year in May, matching the fastest pace in 16 years.

The ECB is set to present revised forecasts for economic growth and inflation following its rate-setting meeting June 5. The central bank will likely cut its growth forecast, said Laurent Bilke, an economist at Lehman Brothers Holdings Inc. in London. The IMF said the European economy is still to feel the main impact from the global credit shortage. European lenders have posted $199.6 billion of writedowns and losses related to the collapse of the U.S. subprime mortgage market.

Labels: EU, EU Economy, IMF

Europe fights plans to give emerging economies bigger say in IMF - by Renata Goldirova

France, Germany and the UK have joined forces to fight against plans to reform the International Monetary Fund (IMF) which would give a bigger say to emerging economies such as China, India and Brazil at the expense of European states. But senior IMF officials told the Financial Times that countries are locked in a dispute which pits Europe against the US and fast-growing economies."The UK, France and, to a lesser extent, Germany, have dug in their heels", a senior IMF official is cited as saying by the FT, adding that "Japan also fears being eclipsed by its Asian rivals".

On the other hand, the US – reportedly "annoyed with the Europeans' intransigence" – has pushed for more votes to the four most under-represented IMF members – Mexico, Turkey, South Korea and China. Washington is seen as a staunch ally of the first three, and wants to see Beijing change its currency policy. EU-Digest Comment: If Europe gives up their leadership in the IMF, the US should do the same in the World Bank.

Labels: EU, IMF, USA

Labels: EU, France, IMF

French president proposes Socialist ex-finance minister as next IMF chief

French President Nicolas Sarkozy wants a former finance minister from the opposition Socialist Party to lead the International Monetary Fund, he said in an interview released Saturday. «I want Dominique Strauss-Kahn to be France's candidate for the direction of the IMF because he seems the most fit for the post,» Sarkozy was quoted as saying in the Journal du Dimanche newspaper.

Labels: Europe, IMF, Sarkozy

"Europe is doing quite well", says Michael Deppler, Director IMF Europe

Michael Deppler notes: "If you look at the last few years, monetary policy in our view has been appropriately conducted not only in the ECB but also in other member states of the EU. We see fiscal policies which obviously ran into difficulties a few years ago, basically having gotten back on track over the past few years and through this year, and then also, structural reforms. Clearly, countries did significant structural reforms. Pensions, benefit systems, reservation wages, and wages themselves have been quite good.

In terms of spending, the fiscal authorities have been fairly prudent in their management of the fiscal situation, and in our view, this is quite appropriate, because it clearly is an overheating situation underlying the situation there, so the fiscal budget, which is in surplus, needs to remain in surplus, and basically use this money later to try and implement reforms and strengthen the supply side of the economy.

I think Europe underestimates how well it responds to competition. I know Europe has problems with closures of enterprises and turnover, but if you look at the tradable goods sector of Europe and you ask the question where is the strongest growth that has happened over the years in Europe, it's clearly in the export sector. This is the strongest influence on growth. And if you look at the size of the sector relative to other industrial countries, Europe is doing very much per the others."

Labels: Europe, IMF

IMF pleased with Norwegian economy

In its preliminary report on the Norwegian economy, the International Monetary Fund (IMF) points outh that inflation is low, employment growth is near record high. and the outlook for the near term looks bright.

According to the statement, the Norwegian economy has performed enviably, underpinned by a strong macroeconomic and monetary policy framework. Despite that the Norwegian economy is entering its fourth consecutive year of above-trend growth, inflation is low and employment growth is near record high. The outlook for the near term looks bright, supported by continued strong global demand and high oil prices.

Labels: Economy, IMF, Norway