Will Britain borrow from IMF?
Friday, 17 April 2009
Fazle Rashid in New York
BRITAIN, one of the financial giants of Europe and a member of the prestigious Group of Seven (G7), and whose economy remains submerged under the debris of the devastating global economic meltdown , may well be in need of assistance from the IMF. This may be a distant possibility. But even that such a possibility exist should send shivers through the spines of policy managers across the globe.
Speculation that Britain may once again seek IMF assistance and become the first major western European country to do so in this crisis rests upon a crucial, uncertain assumption that the combination of its steep debts and wounded banking sector will put too much pressure on already wobbly pound, the New York Times reported the other day.
Britain's budget deficit is 11 per cent of its gross domestic product (GDP) compared to 13 per cent forecast for America this year. Quoting analysts, the NYT said Britain's debt will jump to 80 per cent of the total economy in the coming years from level of 40 per cent now. Prime Minister Gordon Brown scotched off the idea of IMF assistance. Britain sought IMF assistance last time in 1976 when the "country's economy was on its knees"
And in the US, the results of the "stress test" of the 19 major banks will be unveiled soon. The full details may not be made public because it could scare the investors. President Barack Hossain Obama conceded that recession would cause more pain this year but added that the aggressive efforts at boosting the US economy has started to "bear fruit".
Sounding a note of "wary" optimism Ben Bernanke, US Fed Reserve Chairman said, "economy was no longer falling off a cliff". Sharp decline is slowing , he said.
Moscow said it will borrow funds from the international markets for the first time in a decade to try to plug the hole in the national budget and assist companies to raise funds. Russia's budget deficit will be 7.3 per cent of its GDP this year. Russia has lost $200 billion of its reserves this year. South Korea's Hyundai Heavy Industries will lease up to 50,000 hectares of farmland in Russia in a bid to increase food security by outsourcing agricultural production.
Arab nations were the first to take resort to agricultural outsourcing to meet food shortage that sparked riots. Saudi Arabia is set to invest $800 million in overseas agricultural products signalling a large step-up in Riyadh's efforts at outsourcing food production. Experts greeted the Saudi decision saying such fund is enormous in the current agri-investment arena.
Meanwhile, Philips, the Dutch electronic giant said the first three months of 2009 were worse than the final quarter of 2008. It sees no material change in the current quarter. Philips said sales and sentiments had slumped in a very dangerous way.
Newspaper advertisements suffered by far the sharpest drop in generations during the first quarter of 2009, down 30 per cent for some papers, the NYT said. Nearly every large paper has made significant budget cuts including laying off staff and reducing the number and size of the pages. Many companies have filed for bankruptcy.
BRITAIN, one of the financial giants of Europe and a member of the prestigious Group of Seven (G7), and whose economy remains submerged under the debris of the devastating global economic meltdown , may well be in need of assistance from the IMF. This may be a distant possibility. But even that such a possibility exist should send shivers through the spines of policy managers across the globe.
Speculation that Britain may once again seek IMF assistance and become the first major western European country to do so in this crisis rests upon a crucial, uncertain assumption that the combination of its steep debts and wounded banking sector will put too much pressure on already wobbly pound, the New York Times reported the other day.
Britain's budget deficit is 11 per cent of its gross domestic product (GDP) compared to 13 per cent forecast for America this year. Quoting analysts, the NYT said Britain's debt will jump to 80 per cent of the total economy in the coming years from level of 40 per cent now. Prime Minister Gordon Brown scotched off the idea of IMF assistance. Britain sought IMF assistance last time in 1976 when the "country's economy was on its knees"
And in the US, the results of the "stress test" of the 19 major banks will be unveiled soon. The full details may not be made public because it could scare the investors. President Barack Hossain Obama conceded that recession would cause more pain this year but added that the aggressive efforts at boosting the US economy has started to "bear fruit".
Sounding a note of "wary" optimism Ben Bernanke, US Fed Reserve Chairman said, "economy was no longer falling off a cliff". Sharp decline is slowing , he said.
Moscow said it will borrow funds from the international markets for the first time in a decade to try to plug the hole in the national budget and assist companies to raise funds. Russia's budget deficit will be 7.3 per cent of its GDP this year. Russia has lost $200 billion of its reserves this year. South Korea's Hyundai Heavy Industries will lease up to 50,000 hectares of farmland in Russia in a bid to increase food security by outsourcing agricultural production.
Arab nations were the first to take resort to agricultural outsourcing to meet food shortage that sparked riots. Saudi Arabia is set to invest $800 million in overseas agricultural products signalling a large step-up in Riyadh's efforts at outsourcing food production. Experts greeted the Saudi decision saying such fund is enormous in the current agri-investment arena.
Meanwhile, Philips, the Dutch electronic giant said the first three months of 2009 were worse than the final quarter of 2008. It sees no material change in the current quarter. Philips said sales and sentiments had slumped in a very dangerous way.
Newspaper advertisements suffered by far the sharpest drop in generations during the first quarter of 2009, down 30 per cent for some papers, the NYT said. Nearly every large paper has made significant budget cuts including laying off staff and reducing the number and size of the pages. Many companies have filed for bankruptcy.