Since the IMF’s launch in 1946, 27 countries have had overdue financial obligations of 6 months or more.* But the amounts involved have always been small, never exceeding SDR 1bn ($1.4bn). Read more »
Showing posts for "International Institutions"
IMF Chief Economist Olivier Blanchard has said that Greece needs to slash pension spending by 1% of GDP in order to reach its new budget targets. The Greek government continues to resist, arguing that Greeks dependent on pensions have already suffered enough. But it has yet to put a compelling alternative to its creditors. Read more »
On April 15, China’s finance ministry revealed the 57 “prospective founding members” of the new Asian Infrastructure Investment Bank, of which China is the architect. The likely founders include many U.S. allies, such as the UK, Australia, and South Korea, which the Obama Administration had lobbied not to join, seeing the AIIB as a Chinese alternative to the U.S.-architected World Bank. Read more »
Russia’s foreign exchange reserves have fallen by nearly 1/3 since October 2013; they’ve fallen 20% just since September 2014. Whereas the country still has over $300 billion in reserves, about $150 billion of this may be illiquid; it also has close to $700 billion in external debt. Read more »
IMF GDP growth “projections” accompanying emergency lending programs are nothing of the sort; they are targets the level of which is necessarily set high enough to enable the interventions.
Take Greece. After committing to lending of €30 billion over 3 years in 2010, the Fund projected that the crisis-mired nation would return to growth by 2012. As shown in the left figure above, Greece’s economy actually plunged by 7% that year – the year it completed the world’s largest sovereign restructuring, covering €206 billion of bonds. Read more »
Russian president Vladimir Putin is determined to wean his country off the dollar, or so he says.
In July, after insisting that the international monetary system depended too much “on the U.S. dollar, or, to be precise, on the monetary and financial policy of the U.S. authorities,” Putin signed off on a new BRICS development bank whose initial paid-in capital would be entirely in dollars – unlike the World Bank, where only 10% of paid-in capital was in dollars. So the new BRICS bank actually creates a new source of demand for dollar assets. Read more »
Russian President Vladimir Putin has hailed the new BRICS contingent reserve arrangement (CRA) as a substitute for the IMF, saying that it “creates the foundation for an effective protection of our national economies from a crisis in financial markets.” But does it? Read more »
The launch of the new BRICS development bank “reflects the disparity and democratic deficiency in the global governance and is trying to restart, to rethink that,” according to Nobel economist Joseph Stiglitz. But is the BRICS bank really more “democratic” than the World Bank, whose governance legitimacy its founders are challenging? Read more »
Brazil, Russia, India, China, and South Africa (the “BRICS”) made a splash last week with the official launch of their new development bank. The backers made no secret of their intention to challenge the way things are done in the established international financial and monetary architecture. Read more »
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