IMF Chief Lagarde: The world economy is at a “very dangerous juncture”

December 20, 2011

“IMF chief Christine Lagarde warned Tuesday that the world economy is at a “very dangerous juncture,” speaking of the potential impact on poorer nations during her first visit to Africa. The International Monetary Fund managing director spoke of a crisis of confidence with high unemployment and slowing global growth.”

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Lack of government debt reduction, failure to promote long-term growth, and the lack of necessary liquidity to stabilize financial markets, among other concerns, overshadow the latest 200 billion euro EU/IMF debt deal

December 16, 2011

“Stocks tumbled around the world Wednesday, the euro slid to an 11-month low and borrowing costs spiked for heavily indebted Italy. The markets’ jitters reflect rising doubts about the deal European Union leaders reached at a summit last Friday in Brussels. The agreement requires the 17 countries that use the euro and nine other EU countries to balance their budgets and gives the International Monetary Fund up to €200 ($264 billion) to help countries with high debt loads.”

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International Monetary Fund approves a 2.2 billion Euro loan to Greece

December 8, 2011

“The International Monetary Fund Monday approved a $2.2 billion tranche of its emergency loan program for Greece, paving the way for the debt-ridden country to avoid default.”

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Treasury Secretary Geithner: the International Monetary Fund has an important role to play in resolving Europe’s debt crisis; the U.S. Federal Reserve will not loan money to Europe

December 8, 2011

“I would say the reports I’ve read in the press about what the Fed can do are not accurate,” Geithner said in Berlin when asked about European reports that the Fed could make more than $100 billion in loans to the IMF to backstop euro zone governments racked by debt woes.”

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Eurozone Leaders struggle with the rescue fund, may consider asking the International Monetary Fund for more assistance

November 29, 2011

“Eurozone ministers struggled to ramp up the firepower of their rescue fund and raised the possibility of asking the IMF for more help on Tuesday after Italy’s borrowing costs hit a euro lifetime high of nearly 8 percent.”

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Optimistic economic outlook on International Monetary Fund’s 600 Billion Euro ($794 Billion) emergency loan for Italy available if its debt crisis worsens

November 27, 2011

“The IMF money would give Italy’s Prime Minister Mario Monti 12 to 18 months to implement policy changes without having to refinance the country’s existing debt, the Italian daily reported. Monti could draw on the money if his planned austerity measures fail to stop declines in Italian debt, La Stampa said. Italy would pay an interest rate of 4 percent to 5 percent on the loan, the newspaper said. The amount could vary from 400 billion euros to 600 billion euros, La Stampa said.”

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Hungary’s new “safety net” from the International Monetary Fund not in the form of a new loan, thereby giving the IMF influence over Hungary’s economic policies

November 24, 2011

“[I]n the 2008 global recession, it became the first EU country to receive a bailout from the International Monetary Fund to avoid defaulting on its loans.

Last year, Prime Minister Viktor Orban’s government decided to forgo IMF support so it could apply unconventional economic policies, including allowing people to pay back foreign currency loans at exchange rates much lower than current market rates, with banks forced to absorb the difference.

Last week the government announced it would seek a “safety net” from the IMF and the EU but denied that the financial assistance would take the shape of a new loan, thereby giving the IMF undeniable say in Hungary’s economic policy.”

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Standard & Poor’s maintaining its negative watch on Hungary’s credit rating until the International Monetary Fund and European Union reach a new agreement

November 24, 2011

“Standard & Poor’s maintained its negative watch on the Republic of Hungary’s ratings after the country said it seeks a new agreement with the International Monetary Fund and the European Union.

S&P said the watch negative reflects its “opinion that the predictability of Hungary’s policy framework has lessened, affecting the economy’s medium-term growth prospects.”

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Sudan demands $15 billion in compensation for ‘lost oil’ to South Sudan

November 23, 2011

“Sudan is demanding $15 billion in compensation for lost oil revenues after South Sudan’s independence and doesn’t want the African Union to mediate negotiations with the south, said Pagan Amum, South Sudan’s chief negotiator.

“They want the south to shoulder the responsibility to compensate them for all the consequences of secession,” Amum, secretary-general of the south’s ruling Sudan People’s Liberation Front, told reporters today in Juba, the capital.

While Sudan says it needs $15 billion over seven years to make up for the lost revenue, the International Monetary Fund, the African Union and South Sudan have agreed on a figure of $5.4 billion, he said. Sudan’s Foreign Ministry spokesman, Al- Obaid Murawih, said by phone in Khartoum that he couldn’t immediately comment on Amum’s statement.”

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International Monetary Fund (IMF) updating its lending tools to ensure liquidity for indebted countries in the Eurozone crisis

November 23, 2011

“The IMF on Tuesday beefed up its lending instruments and launched a six-month liquidity line, throwing help to countries with solid policies that may be at risk from the euro zone debt crisis.

By updating its lending tools, the IMF hopes to ensure it can make liquidity available to countries that may be struck by contagion from the crisis, as opposed to nations already deep in the mire.

The announcement comes as concern grows over a crisis that has moved from debt-stricken Greece to larger economies such as Italy and Spain where bond yields have risen sharply, raising questions about the euro’s very survival.”

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Greece readies its austerity budget and awaits European Union and International Monetary Fund inspectors

November 17, 2011

“Greece’s new national unity government submits a 2012 austerity budget to parliament on Friday, its first task in meeting the terms of the country’s bailout and avoiding bankruptcy.

Prime Minister Papademos must get the rival parties in his coalition to cooperate in persuading Greece’s EU and IMF lenders to release a latest installment of emergency financing it needs to avoid default next month, plus longer term funding later.

Inspectors from the “troika” of the International Monetary Fund, the European Union and the European Central Bank will start arriving in Athens on Friday for talks on releasing the 8 billion euro installment, a troika source said.

One point of contention is sure to be a refusal by the leader of the conservative New Democracy party to sign a commitment to do whatever is needed to meet the terms of a 130 billion euro bailout agreed last month.”

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Chief of the International Monetary Fund’s European Department Antonio Borges resigns less that one year on the job

November 16, 2011

“The head of the International Monetary Fund’s European department quit less than a year into the job and was replaced by a veteran staffer as the European debt crisis worsens.

Antonio Borges, a Portuguese native whose unit oversees bailouts in the euro region, resigned for “personal reasons,” the Washington-based IMF said today in an e-mailed statement. His successor is Reza Moghadam, who has made his career at the fund and headed the strategy department.

The management change comes as the IMF, which is co- financing bailouts in Greece, Portugal and Ireland, is preparing to send a team to Italy for an unprecedented audit of the country’s efforts to cut its debt. Borges, a former vice chairman at Goldman Sachs International, last month retracted comments he made about the fund’s possible involvement in the European bond market.”

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Candidate Perry promises to reset foreign aid budgets at zero upon entering office if he is elected President

November 12, 2011

During the Republican Debate tonight, Texas Governor Rick Perry vowed to bring all foreign aid budgets down to zero.

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IMF Managing Director: Some East Asian countries can loosen their monetary policy; China’s fiscal spending is moving back to balance as expected

November 10, 2011

“International Monetary Fund Managing Director Christine Lagarde said some Asian countries can ease monetary tightening slightly, referring to those that have tightened extensively to fight inflation.

For China, though, fiscal policy—tax and spending— is a more appropriate lever to pull if the economy needs support, she said on Wednesday, and there is still scope to further tighten monetary policy to restrain credit growth,

China’s “fiscal policy is appropriately moving back to balance,” Ms. Lagarde said. “But if the growth outlook deteriorates significantly, it could become the first line of defense, given ample fiscal space and capacity to deploy resources quickly.”

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Is Italy too big to fail, but too big to save?

November 8, 2011

“Italy’s size makes the potential consequences if it were to fail more wide-ranging than the much smaller Greece.

“Italy has much more systemic implications,” Thanos Vamvakidis, Head of European G10 FX Strategy, BofA Merrill Lynch Global Research, told CNBC Monday.

“It’s too big to fail, too big to save.”

The problems facing Italy include the euro zone’s second-highest debt-to-GDP ratio, and the lack of a credible alternative to Berlusconi’s government.”

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