The IMF and the World Bank approved on Sunday measures to
make debt relief worth about $50 billion available to 20 of the world's poorest
countries by the end of the year.
The plan, approved here by the policymaking bodies of both
institutions, would begin to ease the debt burden more quickly than is now the
"We are moving the debt relief process forward in a way
that we had pledged to do," British Chancellor of the Exchequer Gordon
Brown, chairman of the IMF's International Monetary and Finance Committee, told
a press conference.
"Our aim is debt reduction, leading to poverty
reduction, leading to economic development."
The World Bank and the IMF had last year pledged to
accelerate the pace of their Heavily Indebted Poor Countries (HIPC) initiative.
The four-year-old scheme offers debt relief to up to 40
impoverished nations that adhere to IMF economic reforms over a period of three
years and commit themselves to poverty reduction action plans.
To date, however, only 10 countries — Benin, Bolivia,
Burkina Faso, Honduras, Mali, Mauritania, Mozambique, Tanzania, Senegal and
Uganda — have been formally declared eligible by the World Bank and the Fund
for HIPC benefits.
The aim of the latest measures is to add 10 more countries to
the eligibility list by the end of the year. The 20 countries would then be
entitled to receive HIPC debt relief worth $30 billion.
Together with traditional debt easing mechanisms, the 20
would be in line for a total of $50 billion in relief, according to the IMF.
2Q GDP growth revised up
The U.S. economy grew faster than previously estimated in the
second quarter, although there was less inflationary pressure than earlier
indicated, a government report said Thursday.
The Commerce Department's final report on second-quarter
gross domestic product said the nation's output of goods and services grew at an
annual rate of 5.6 per cent, up from a 4.8 per cent rise in the first quarter.
The government's previous estimate for the quarter had been
for a 5.3 per cent growth rate in the broadest measure of the U.S. economy.
Analysts had forecasted the report to show little change at either 5.3 or 5.4
The GDP chain deflator, which accounts for prices and is a
closely watched inflation indicator, was revised down to a 2.4 per cent increase
during the quarter. The previous estimate was for a 2.6 per cent increase in the
"This suggests the government saw more real growth and
less inflation in the quarter," said Gary Thayer, chief economist for A.G.
Edwards, in an appearance on CNNfn's Before Hours program Thursday.
The final second-quarter report is a relatively ancient look
at the economy, and many reports looking at July and August statistics suggest
the rate of economic growth has cooled off considerably since then. That
mitigates the impact of this report.
"The upward revision results from the slightly lower
than previously estimated trade deficit," said Mark Vitner, economist with
First Union. "We've already seen in July data that trade deficit has
worsened in the third quarter."
The report comes as the Federal Reserve prepares to meet
Tuesday to consider its next move on interest rates. The Fed has raised rates
six times over the last 15 months in a bid to slow the economy and ward off
Euro weathers Danish 'No'
The euro held its ground against the dollar Friday morning,
despite the cloud covering the currency after Denmark the previous day voted
against joining the euro zone.
After the Danish referendum produced a 53.1 majority against
adopting the euro, the country's central bank was quick to defend the Danish
crown, raising its key repo rate by half a per centage point to 5.60 per cent,
although it left other official rates unchanged. There had been speculation that
a "No" vote would lead to pressure on the Danish currency.
The euro stood at 88.05 U.S. cents, marginally stronger than
its level in late New York trading Thursday. Traders said the market was wary of
punishing the currency too much for fear of sparking a further round of central
Last Friday a number of central banks spent billions of
dollars buying euros in an orchestrated effort to drive the currency up from
all-time lows below 85 U.S. cents.
President Clinton announced Wednesday that the federal budget
surplus for fiscal year 2000 amounted to at least $230 billion, making it the
largest in U.S. history and topping last year's record surplus of $122.7
"Eight years ago, our future was at risk," Clinton
said Wednesday morning. "Economic growth was low, unemployment was high,
interest rates were high, the federal debt had quadrupled in the previous 12
years. When Vice President Gore and I took office, the budget deficit was $290
billion, and it was projected this year the budget deficit would be $455
In June, the administration predicted the surplus would be
$211 billion, and would increase by as much as $1 trillion over the next 10
Asian markets higher
Most Asian markets were trading higher Friday, as investors
selectively bought technology shares, encouraged by the previous day's rally on
the U.S. Nasdaq market, its first advance this week.
In Tokyo, the benchmark Nikkei 225 average closed up 0.8 per
cent at 15,747.26. Hong Kong's Hang Seng Index was up 1.7 per cent at 15,682.20
at the end of its morning session, boosted by tech and telecom stocks.
Singapore's Straits Times index was up 0.9 per cent at
The Taiwan Weighted index ended down 2 per cent at 6,432.36
as foreign investors sold shares and chipmakers fell.
In Seoul, the Kospi rose 1.2 per cent to 613.22.
Australia's S&P/ASX 200 index inched up 0.2 per cent to
3,296.2. Telstra edged up 0.7 per cent.
Bangkok's SET index slipped 0.2 per cent and Kuala Lumpur's
KLSE Composite fell 0.4 per cent. Manila's PHS Composite index ended down 0.5
per cent, while Jakarta's JSX was up 1.4 per cent.
Europe techs, telecoms up
Europe's main markets edged higher at the start of trading
Friday as telecom and technology shares rose, following sharp gains by their
counterparts on Wall Street Thursday.
London's benchmark FTSE 100 index rose 0.2 per cent to
6,277.6, with index heavyweight Vodafone Group (VOD) up 2.5 per cent.
In Paris, the CAC 40 blue chip index rose 0.4 per cent to
Frankfurt's electronically traded Xetra Dax inched up 0.1 per
cent to 6,838.99, with drug maker Schering up 1.9 per cent.
The SMI in Zurich was 0.2 per cent higher and Amsterdam's AEX
rose 0.3 per cent.
The pan-European FTSE Eurotop 300, a broader index of the
region's largest stocks, climbed 0.4 per cent, with its technology sub-index up
1.7 per cent.
In the U.S. Thursday, the Dow Jones industrial average rose
1.8 per cent to 10,824.06 and the Nasdaq Composite index rose 3.3 per cent to
Airbus wins $8.6b order
Singapore Airlines said Friday it ordered 25 superjumbo A3XX
aircraft from Airbus Industrie worth about $8.6 billion, but no large aircraft
from Boeing Co., the archrival of Europe's Airbus
Europe to OK $135b deal
The European Commission is proposing to give its approval for
America Online Inc.'s proposed $135 billion takeover of Time Warner Inc.,
attaching some conditions, but will block the planned joint venture between
Warner Music and EMI Group PLC, a European Union source said on Thursday.
Asked if the Commission was planning to clear AOL-Time Warner
and block the other deal, the source said: "Yes, that is the situation at
the moment, although the Commission has not yet taken a formal decision."
Mergers & Acquisitions
Endesa—Iberdrola: Spanish power firms Endesa SA and
Iberdrola SA said Wednesday they were in talks aimed at creating an electricity
firm worth more than 35 billion euros ($31 billion).
Exodus—GlobalCenter: Exodus Communications Inc. agreed
Thursday to buy Global Crossing Ltd.'s GlobalCenter Inc., a specialist in
hosting Internet site infrastructure and managing e-commerce, for about $6.53
billion in stock.
U.S. Retail—First Washington Realty Trust:
Partners LLC agreed to acquire First Washington Realty Trust Inc. for about $800
million in cash and debt, marking the end of the real estate investment trust.
Nordstrom—Faconnable: Nordstrom Inc. agreed Wednesday
to acquire French apparel company Faconnable S.A. for about $170 million in cash
and stock in a move to expand the upscale retailer's exclusive brands.
Rodamco—Urban: Rodamco North America N.V. agreed
Tuesday to acquire fellow shopping mall company Urban Shopping Centers Inc. for
$3.4 billion in cash and debt assumption, making it the third-largest regional
mall company in the United States.
Siemens—Acuson: Siemens AG agreed Wednesday to buy
Acuson Corp., a U.S.-based maker of ultrasound systems, for about $700 million,
giving another boost to the German technology company's health-care operations.
Treasurys end mixed
U.S. Treasury securities ended mixed Thursday in quiet
trading, as a drop in oil prices lifted the 30-year bond while shorter
maturities, such as two-year notes, were pressured by a strong rebound in
The benchmark 10-year Treasury note was flat in price at
99-15/32, its yield at 5.82 per cent Wednesday.
The 30-year bond gained 6/32 of a point in price to 105-1/32.
The yield, which moves in the opposite direction to price, fell to 5.88 per cent
from 5.90 per cent.
Aussie No to shared money
Australia said on Thursday it did not favor the idea of a
shared currency with eastern neighbor New Zealand, but might consider the
possibility at a later date.
"We're not pushing it," Australian Prime Minister
John Howard told a media briefing held jointly with New Zealand Prime Minister
France Telecom's U.S. plans
France Telecom Tuesday said it planned to build a 15,000-mile
transmission network in the United States, connecting 28 major cities. The move
signals the formal end of its ties with Sprint and gives it a foothold in the
market for Internet traffic.
The Paris-based telecommunications company said it plans to
invest $200 million to build the network, which will be connected to its
pan-European backbone network.
Euro finds a friend: Iraq
Iraq has decided to stop trading with the U.S. dollar and
replace it with the euro or another currency because of "hostile American
policy," the country's finance minister said Tuesday.
"The cabinet has decided to stop trading with the
American currency, the dollar, and replace it with other currencies such as the
euro," Deputy Prime Minister and Finance Minister Hikmat Mezban Ibrahim
said in a statement carried by the Iraqi News Agency on Tuesday.
Nortel wins Asia contracts
Nortel Networks said Thursday it received contracts totaling
$525 million to build next-generation wireless Internet and data service
networks in Taiwan and China.
Chungwa Telecom will pay Nortel $250 million to expand its
dual-band cellular network in Taiwan, which includes base stations to enable
roaming, and radio software upgrades to support high-speed Internet services.
And China Unicom will spend $275 million on new networks and expansions of its
network in China.
Mortgage rates fall
U.S. Mortgage rates moved slightly lower despite uneasiness
in the bond and stock markets, according to a report released this week by
The 30-year fixed-rate mortgage, the industry benchmark,
averaged 7.88 per cent for the week ending Sept. 29.
The average for a fixed-rate 15-year mortgage was 7.53 per
One-year adjustable-rate mortgages (ARMs) this week averaged
7.21 per cent.