INTERNATIONAL

 

Mar 24 -30, 2003 

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

IMF CLEARS ARGENTINA LOAN

The IMF has approved the latest payment under its Argentine loan programme.
The move paves the way for the release of $307m (193m) in cash which the nation will use to repay earlier IMF loans.
It is another step on the long road to economic recovery for Argentina.

 

 

 

 

The country defaulted on a debt of $95bn in January 2002 after a crippling four-year recession.

In January, the IMF gave Argentina about $6.78bn in credit and loan repayment extensions, helping the country avoid default on earlier loans from the IMF.

"The arrangement is designed to cover all payment obligations to the IMF through August 2003," the IMF said in statement.

"It is expected that Argentina will use these resources to repay obligations falling due to the IMF."

The latest IMF approval was widely expected after the lender said in early March that Argentina's economic programme was on track.

Meanwhile, the Argentine government said its economy shrank by 10.9% in 2002, in what it said was the worst performance in a century.

A record debt default and steep devaluation flattened consumer spending and sent investors fleeing.

Gross domestic product sank last year to levels on a par with the United States during the Great Depression of the 1930s.

The government is forecasting 4.2% growth this year as the economy bottoms out.

And some analysts expect to see growth of as much as 10 % this year.

CHINA'S LEADERS STRESS REFORM

Chinese President Hu Jintao and Prime Minister Wen Jiabao have pledged to forge ahead with economic reforms, in their first public comments since being appointed.

Mr Wen, 60, whose main task is to oversee China's economy, told a news conference that rural living standards had to be raised and that unemployment was a continuing concern.

The new premier, who referred to his reputation for having a brain like a "computer", reeled out a string of numbers which illustrated his daunting task a 740-million-strong labour force increasing by 10 million a year, 14 million laid-off state workers and 30 million people living below the poverty line.

Mr Hu stressed that "only socialism can save China", but that continuing reforms would be an important job.

Mr Wen also called for an early resumption of the stalled dialogue with Taiwan which Beijing considers a renegade province and would like to see reunited with the mainland.

Both men pledged to continue with the work of their predecessors Jiang Zemin and Zhu Rongji.

Mr Wen highlighted the problems of a growing wealth gap between rich and poor, as well as unemployment, which has risen as state firms laid off millions of workers in a drive to become profitable.

He said he would continue to pump money into the economy to keep it growing fast enough to provide jobs.

"I think the main problems facing us lagging agricultural development and slowing income growth of farmers have become a major factor restraining our efforts to expand domestic demand," he said.

He said the private sector was an important channel for creating jobs and would no longer be discriminated against in terms of bank loans and taxes.

 

 

FRANCE HALVES GROWTH TARGET

France's economy will grow at barely half the pace previously predicted this year thanks to the global downturn and the effect of impending war, the country's prime minister has admitted.

In an interview with French business daily Les Echos, Jean-Pierre Raffarin said the government saw expansion of 1.3% rather than the 2.5% predicted in the budget six months ago.

It had considered a 1.5% prediction, but decided to err on the side of caution because the effect of war in Iraq, and of the increasingly volatile exchange rate of the euro, he said.

He also called for the European Central Bank to cut interest rates further, after its cautious quarter-point cut last month.

And he warned that the rolling tax cuts the centre-right government promised when it won last year's election might have to wait till economic growth returned to 2.5%.

WAR WORRIES EUROPE'S INVESTORS

European investors are showing jitters at the start of war in Iraq.

Ending a four-day rally, European markets initially saw their main stock indexes fall by up to 1%, but an hour later they had all recovered their losses.

Asian markets, in contrast, had posted strong gains, while the US dollar was trading firm after US aircraft began to strike targets in Iraq.

Tokyo's Nikkei index gained 1.8% or 144 points to close at 8,195 although during the market experienced fairly hefty swings.

In Hong Kong there was more uncertainty. The Hang Seng index initially gained more than 120 points or 1.3%, only to lose all of that.

TEA GROWERS FEAR PRICE FALLS

Kenya's tea exporters are struggling to cope with falling prices which they fear could threaten the viability of their industry.

Tea is a major export crop for Kenya, outflanking coffee and contributing 20% of the country's foreign earnings.

But a mix of falling demand and rising output has caused a sustained drop in prices.

Part of the problem, Kenyan tea traders say, is that South East Asian countries such as Indonesia and Vietnam have increased the amount of tea they are growing.

"Vietnam, which expanded their coffee industry to the detriment of Kenya they are going to expand their tea industry without a doubt," says Norman Wilson, managing director of Africa Tea Brokers in Mombasa.

US REJECTS ARCTIC OIL DRILLING PLAN

The US Senate has narrowly rejected a plan to allow oil drilling in an Alaskan wildlife refuge.

The defeat is a major setback for President George Bush's administration, which had insisted that oil exploration in the 19m acre (7.7m hectare) Arctic National Wildlife Refuge would help safeguard America's supply of energy.

Despite intense lobbying by the White House, an amendment was passed by 52 votes to 48 removing the provision allowing drilling to commence from the 2004 budget resolution.

 

 

DIAMOND MINERS FACE 8% CHARGE

Mining companies in South Africa are to be charged royalties of up to 8% on the sales of diamonds and other minerals they extract.

The government says the money will be used as part of its programme to repair some of the social and economic damage done to the country's non-white communities by decades of apartheid.

Under the proposals gold producers will pay a 3% royalty, platinum miners 4% and diamond producers 8%.

The coal-mining industry will be charged only a 2% royalty and the whole system will be phased in by 2007.

BAPTISM OF FIRE FOR JAPAN BANK BOSS

Japan's central bank chief has started his first day on the job just as a massive push is prepared to prop up the finances of the country's banks.

Taking office as US missiles began to fall on Baghdad, the new Bank of Japan governor Toshihiko Fukui walked straight into a meeting of a special committee to work out what the war might do to Japan's fragile economy.

As well as "closely monitoring" developments, the central bank plans to inject 1 trillion yen into the economy by buying up government bonds.

US AND JAPAN TO PROTECT MARKETS

Just days ahead of a war, the US and Japan are prepared to co-operate to support the financial markets if there is a crisis.

A deal was struck in the US between a former Japanese finance minister and the head of the US central bank, the Federal Reserve's Alan Greenspan.

FED ON WAR ALERT

US interest rates have been left unchanged at a 41-year low of 1.25%.

But the Federal Reserve signalled it was ready to cut rates quickly if a war in Iraq takes an economic toll.

The Fed said it would practice "heightened surveillance" over the situation in Iraq.

And, in an unusual move, it failed to issue its usual assessment of the risks facing the US economy.

The Fed's Federal Open Markets Committee (FOMC) usually releases a statement with a clear signal to the markets about whether it is leaning to a future lowering, raising or no change in rates.

 

 

LONRHO DESERTS AFRICA

Lonrho Africa, once one of the continent's most powerful and wide-reaching business empires, has decided to desert Africa for more profitable ventures elsewhere.

Chairman Bernard Asher said in a statement that the firm would sell its remaining assets in Africa this year to seek opportunities with "good investment returns and more secure operating conditions than prevail in much of Africa today".

US SEEKS $289BN IN TOBACCO CLAIM

The US Justice Department is suing the world's leading tobacco companies for $289bn (184.5bn) of their profits for the alleged fraudulent marketing of cigarettes.

A court filing by the US government claims the companies lied about the link with cancer and the addictiveness of cigarettes.

"In short, defendants' scheme to defraud permeated and influenced all facets of defendants' conduct research, product development, advertising, marketing, legal, public relations and communications in a manner that has resulted in extraordinary profits for the past half-century, but has had devastating consequences for the public's health," the court document said.

SMITH & NEPHEW BUYS 1.5BN RIVAL

British medical devices company Smith & Nephew has said it is buying Swiss firm Centerpulse for 1.5bn.

Smith & Nephew said in a statement the deal would create a "leading global orthopaedics company."

The newly combined group is set to become the global number three in the $14bn (8.9bn) orthopaedics market with a market capitalisation of 4.7bn.

UK HOUSE PRICES FALLING

UK house prices have dropped for the first time in two years and the fall is the largest since 1995, according to a survey by the Royal Institution of Chartered Surveyors (RICS).

Surveyors reported London was hardest hit as prospective buyers worried about war, possible terror attacks and continued economic uncertainty.

Other parts of southern England suffered price falls but further north the market continued to enjoy robust growth.

UK INFLATION REACHES 3%

UK inflation jumped by more than expected last month to reach 3%, its highest level since May 1998.

The underlying rate which excludes mortgage interest payments rose from January's figure of 2.7%, pushed higher by the rising cost of clothes and shoes.

The figures, from the Office for National Statistics, showed the headline rate of inflation rose to 3.2%, up from 2.9% in January.

Despite the increase in prices, analysts said the Bank of England was unlikely to respond by raising interest rates.

BUSINESS LEADERS' BUDGET PLEA

The CBI has urged the Chancellor Gordon Brown not to raise taxes on business in next month's budget.

The employers' organisation said any tax increases risked more cuts in investment by companies which would damage the UK economy.

It said investment by firms has dropped by 15% over the past couple of years, mainly due to higher taxes and more red tape.

The CBI also called for 1bn of measures to help business deal with urgent problems with pensions and employer insurance.

BANK VOTED 8-1 FOR STEADY RATES

One member of the Bank of England's monetary policy committee (MPC) voted for a cut in interest rates earlier this month.

Minutes of the latest MPC meeting, showed that Christopher Allsop voted for a 0.25% cut in rates.

The minutes of the March 5-6 meeting showed the committee voted 8 against 1 to keep UK interest rates steady at a 48-year low of 3.75%.

OIL GIANTS SHUT NIGERIA PLANTS

A second major oil producer has shut down some of its facilities in the southern Delta region of Nigeria following several days of clashes which have left 10 people dead.

The Nigerian subsidiary of Chevron Texaco said it was withdrawing staff from the area to ensure their safety.