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from Breakingviews:

World Bank boss Kim tested by Honduran loan fracas

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By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Newish World Bank President Jim Kim’s goal of cutting $400 million from the multilateral lender’s budget just got harder. With the Washington-based institution under fire for lending to a Honduran company accused of thuggish behavior, the temptation will be to add to red tape. That would slow the already sluggish loan process and impede efforts to cut poverty.

The $15 million credit in question, to Honduran agribusiness Dinant, emphasizes a key dilemma for the World Bank. Shareholders like the United States and Germany hold the financier to the highest ethical standards. All loans are meticulously vetted to ensure they don’t involve graft or harm the environment and local citizens.

Yet the bank is also expected to operate in some of the world’s most corrupt and unstable nations – where, by no coincidence, live many of the world’s poorest. This tension helps explain why securing World Bank loans has become agonizingly time-consuming and why many countries prefer to borrow from rivals that attach fewer strings, notably China or local development banks like Brazil’s BNDES.

from Newsmaker:

Send your questions for World Bank President Jim Yong Kim

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World Bank Group President Jim Yong Kim will be at a Thomson Reuters Newsmaker event in London on June 19 discussing the threat to economic development posed by climate change, the business case for going green, global economic development, sustainable growth in the developing world and mobilising capital in international financial markets.

The Newsmaker will be President Kim’s first major public event in London since he was appointed World Bank Group President last year. He has committed the bank to a new strategy that will aim to "end extreme poverty and promote shared prosperity".

from Global Investing:

The Sub-Saharan frontier: future generations

As growth in Sub-Saharan Africa is set to post a steady 5-6 percent per annum to 2017 according to IMF estimates,  investors will be taking notes on the region's growth story not least with the financial sector.

Growth projections have rebounded from forecasts of around a 3 percent rise in 2009 after falling commodity prices have hit one of the region's main revenue sources. Yet, according to the World Bank's recent Global Development Finance report, stronger commodities will firm growth prospects in the coming years. In recent weeks, commodities have dipped, dampening the outlook for some resource-rich countries, but as 76 percent of the region's population do not have access to a bank account, lenders are set to grow their presence in the region.

from India Insight:

Thirty-three percent of world’s poorest live in India

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(Any opinions expressed here are those of the author and not necessarily of Reuters)

India has 33 percent of the world’s poorest 1.2 billion people, even though the country's poverty rate is half as high as it was three decades ago, according to a new World Bank report.

from Global Investing:

Twenty years of emerging bonds

Happy birthday EMBI! The index group, the main benchmark for emerging market bond investors, turns 20 this year.  When officially launched on Dec 31 1993, the world was a different place. The Mexican, Asian and Russian financial crises were still ahead, as was Argentina's $100 billion debt default. The euro zone didn't exist, let alone its debt crisis. Emerging debt was something only the most reckless investors dabbled in.

To mark the upcoming anniversary, JPMorgan - the owner of the indices - has published some interesting data that shows how the asset class has been transformed in the past two decades.  In 1993:
- The emerging debt universe was worth just $422 billion, the EMBI Global had 14 sovereign bonds in it with a market capitalisation of $112 billion.
- The average credit rating on the index was BB.
- Public debt-to-GDP was almost 100 percent back then for emerging markets, compared to 69 percent for developed markets.
- Forex reserves for EMBI countries stood at $116 billion
- Per capita annual GDP for index countries was less than $3000.
Now fast forward 20 years:
- The emerging debt universe is close to $10 trillion, there are 55 countries in the EMBIG index and the market capitalisation of the three main JPM indices has swollen to $2.7 trillion.
- The EMBIG has an average Baa3 credit rating (investment grade) with 62 percent of its market cap investment-grade rated.
- Public debt is now 34 percent of GDP on average in emerging markets, while developed world debt ratios have ballooned to 119 percent of GDP.
- Forex reserves for EMBIG members stand at $6.1 trillion
- Per capita annual income has risen 2.5 times to $7,373.

from Global Investing:

Easy business trend in emerging Europe

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Polish central bank governor Marek Belka doesn't apportion a lot of importance to the fact that Poland can boast the second biggest improvement in the latest World Bank's ease of doing business index, after Kosovo.

"This year we have improved, but I don’t care too much about it,"  Belka said at a meeting in London today.

from Breakingviews:

IMF’s long-term worry: decades of higher rates

By Christopher Swann and Martin Hutchinson

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The International Monetary Fund has a new long-term worry: decades of higher interest rates. Don’t get too comfortable with low borrowing costs, is the downbeat message from the normally overoptimistic fund’s flagship World Economic Outlook. Slightly feebler growth of 3.3 percent for 2012 is the short-term concern. But past fiscal excesses and an ageing population could push up interest rates for a generation.

from David Rohde:

The BRIC laggard

SAO PAULO – For decades, Denis Dias’s parents could never break into Brazil’s middle class. They started a bakery and a pizzeria in the 1970s and 1980s, but the country’s economic instability and hyper-inflation consumed their businesses and their hopes. His father ended up owning a newsstand. His mother worked as a maid. And Denis attended dilapidated state-run schools.

Over the last 10 years, Denis and at least 35 million other Brazilians have achieved their parents’ dream. Denis is a corporate lawyer at a Brazilian energy company and a new member of Brazil’s middle class, now 100 million people strong. Denis, his company and his nation have ridden the exports of iron ore, soy, oil and other natural resources to prosperity.

from Africa News blog:

Is Joyce Banda the answer to Malawi ’s problems?

By Isaac Esipisu

The continents’ newest and second Africa’s  female president took over the reins of power in Malawi to offer a new and more responsive style of leadership that is expected to spur economic recovery of one of Africa’s poorest nation. Joyce Banda was sworn in as president two days after President Bingu wa Mutharika died of heart attack at 78.

The new president, Joyce Banda started her presidency in an enthusiastic and robust way; mending ties with foreign donors that could see Malawi pull out of an economic crisis. The new president of Zambia , Michael Sata, is making the transition easier, contributing 5 million litres of petrol that should help the economy. Banda, a 61-year-old policeman's daughter who won recognition for championing the education of underprivileged girls, now enjoys widespread support among a population whose lives grew increasingly difficult under Mutharika

from Felix Salmon:

Is the World Bank board sure what Jim Kim thinks?

William Easterly is uncharacteristically credulous today. He spoke to one of those Senior Administration Officials on Wednesday, and the Official gave Easterly the official explanation for why Jim Yong Kim has failed to RSVP for the CGD/Washington Post forum or for any other public appearance.

The official said it was purely logistical: Kim has been constantly on the road meeting member governments, and would continue to be on the road right up until the vote.

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