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from Breakingviews:

Bland Lagarde will escape the Bretton Woods curse

By Christopher Swann

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

Christine Lagarde may soon reap the benefits of being bland. The IMF chief is under investigation for signing off on a 403 million euro ($531 million) payout to a French tycoon when she served as the country’s finance minister. Dominique Strauss-Kahn, her predecessor at the Washington-based lender, and former World Bank President Paul Wolfowitz were both ousted for misconduct. Lagarde, though, has few enemies.

Her squeaky-clean appearance was part of her appeal when she was chosen to replace DSK in 2011. He had been accused of sexually assaulting a maid in a New York hotel. While those allegations never made it to court, the incident was a stain on the IMF’s reputation. That his successor is now embroiled in a potential scandal from six years ago is starting to make the top jobs at these supranational institutions look cursed.

It needn’t be fatal. Lagarde is accused of neglect, not active wrongdoing. The case revolves around a 403 million euro award granted in 2008 to businessman Bernard Tapie. He had alleged he had been defrauded by now-defunct state-controlled bank Crédit Lyonnais when it purchased his sports firm Adidas in 1993. Tapie was a vocal supporter of then-President Nicolas Sarkozy, so investigators are trying to determine whether the process was politically rigged.

from Breakingviews:

South Africa needs neighbors’ growth rates

By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Two decades after Nelson Mandela became president, South Africa’s post-apartheid generation will vote for the first time in next week’s general election. The ruling African National Congress represents his political legacy, but that’s undermined by the party’s weak economic results. Maybe the “Born Frees,” as they’re known, can help change that.

from Breakingviews:

World Bank boss Kim tested by Honduran loan fracas

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.

from Newsmaker:

Send your questions for World Bank President Jim Yong Kim

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

(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

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.

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