The Star Online: World Updates
The Star Online: World Updates |
- IMF approves $17 billion bailout for Ukraine amid big risks
- U.S. resists pressure to give India worst offender rating in IP review
- Brazil's Rousseff lowers taxes for workers as popularity drops
| IMF approves $17 billion bailout for Ukraine amid big risks Posted: 30 Apr 2014 07:00 PM PDT WASHINGTON (Reuters) - The International Monetary Fund's board signed off on a $17 billion (10.07 billion pounds) two-year aid program for Ukraine on Wednesday to help the former Soviet republic's economy recover after months of upheaval as it continues to face geopolitical uncertainty. The IMF aid will allow the immediate disbursement of $3.2 billion to Kiev and unlock further credits from other donors of about $15 billion, intended to help Ukraine stabilize its economy in the middle of its worst civil turmoil since independence in 1991. IMF Managing Director Christine Lagarde admitted the program faced risks, including from the government's ability to carry out the politically unpopular measures necessary to get its finances in order. "In particular, further escalation of tensions with Russia and unrest in the east of the country pose a substantial risk to the economic outlook," she said in a statement. Pro-Moscow separatists seized government offices in more Ukrainian towns on Wednesday, a further sign authorities in Kiev are losing control of the country's eastern industrial heartland bordering Russia. The unrest in the east follows months of anti-government protests and Russia's annexation of the Crimea region, which had already pushed Ukraine's economy to the brink of bankruptcy and a likely economic contraction this year. Kiev is also in a dispute with Moscow over the price it will pay for natural gas exports in the future, and over about $2.2 billion Russia says it is owed for prior gas purchases.Ukraine's economy may further suffer if sanctions intensify on Russia, a key export market. Western nations have placed visa bans and asset freezes on Russian individuals and companies over what they see as meddling in Ukraine. "Anything that undermines the economic situation of (Ukraine) will jeopardize the implementation of the program, which is why we very strongly encourage the parties to negotiate, to come to terms," Lagarde told reporters after the board's decision. The IMF on Wednesday slashed its already modest growth forecast for Russia, warning that sanctions were scaring off investors and pushing the economy towards recession. SHRINKING ECONOMY The IMF said it also expects Ukraine's economy to contract by about 5 percent this year; government forecasts are for a 3 percent contraction. The economy should rebound to 2 percent next year, and 4 to 4.5 percent after that, according to the fund. External debt should rise to just below 100 percent of GDP this year as the government borrows money to finance itself and devalues its currency, even as revenues fall because of the economic contraction and political unrest. The decision from the IMF's 24-member board, which includes representatives from Russia and the United States, allows Ukraine to meet looming obligations and avoid a potential debt default. Of the first tranche, $2 billion is intended to support the budget. But political instability makes it even more difficult for Ukraine to get its economy back into shape, even though the new government has pledged to pursue reforms as a condition for receiving IMF aid.The IMF's board decided to meet every two months for the next couple reviews of Ukraine's program, rather than follow the typical three-month schedule, in order to closely track the government's commitment to reforms such as floating the currency and cutting fiscal deficits. Ukraine's previous two IMF programs were suspended after the government failed to do what it had promised.The IMF expects Ukraine to implement major reforms in its energy and financial sectors, including raising the price of gas for domestic consumers. The ultimate goal is to fully eliminate the deficit of Naftogaz, the state oil and gas company, by 2018. Naftogaz imports a vast amount of gas and oil from Russia for distribution to home consumers, selling it for lower prices than what it paid and constantly running a deficit. The Ukrainian government, in power until elections on May 25, has already said it would raise gas prices by more than 50 percent from this Thursday."(Ukraine) has demonstrated in the last few weeks that it can undertake comprehensive reforms and has actually addressed some of the issues that have been outstanding for a long time," Lagarde said. "We believe that Ukraine has an opportunity to seize the moment, to break away from previous practices, both from the fiscal, from the monetary, and from the governance point of view." (Reporting by Anna Yukhananov; Editing by Meredith Mazzilli, Gunna Dickson and Prudence Crowther) |
| U.S. resists pressure to give India worst offender rating in IP review Posted: 30 Apr 2014 06:10 PM PDT WASHINGTON (Reuters) - The United States has resisted lobbying by U.S. businesses to take tougher trade action against India for its intellectual property policies, deciding against risking ties with a likely new government in New Delhi. The U.S. Trade Representative avoided labelling India with the worst offender tag in its annual scorecard on protecting U.S. patents, copyrights and other intellectual property (IP) rights. Instead, the United States kept India, which is in the midst of elections, on its Priority Watch List along with China and eight other countries. It would start a special review of India in the fall and "redouble" efforts to address concerns with the new government, the U.S. Trade Representative said. A USTR official said the purpose of the review was to assess the new government's level of engagement and the USTR was not contemplating a change in India's status in 2014. A new process would start in 2015, he added, and stakeholders could give their input. "Labelling India as a Priority Foreign Country just as a new government comes to power would have meant that relations would start off on the wrong foot, but the potential penalty which would be levied against India will now hang over bilateral relations," said Center for Strategic and International Studies adjunct fellow Persis Khambatta. Some were disappointed that the USTR failed to name India as a "priority foreign country" - a label that can eventually lead to trade sanctions or the loss of trade benefits - although others stressed it was not off the hook yet. Orrin Hatch, the top Republican on the Senate Finance Committee and one of four top lawmakers who ordered an investigation into Indian trade policies last year, said the country was a "textbook example" of poor practices regarding intellectual property. "A stronger response is required to dissuade other countries from adopting similar policies," he said in a statement. Even so, the U.S. Chamber of Commerce and the Pharmaceutical Research and Manufacturers Of America (PhRMA), which had both wanted India named as a top offender, welcomed the special review. "Such a review provides a needed avenue for constructive engagement with the incoming Indian government on how to resolve the deteriorating IP environment in India," PhRMA President John Castellani said. Intellectual property lawyer Steven Tepp, the president of consultancy Sentinel Worldwide, said the planned special review allowed the USTR to change India's ranking and should tell the Indian government the issue needed "urgent attention". INTELLECTUAL PROPERTY WORRIES The USTR said India's limits on the approval of pharmaceutical patents, a convoluted process for patent challenges and the fact that the government was considering opening a series of patented drugs to generic manufacturers created "serious challenges" for some innovators. The spread of pirated goods in India, a stalwart of the U.S. IP black list, was also worrying. The report noted estimates that counterfeiting and smuggling lost copyright holders almost $12 billion (7.1 billion pounds) in 2012. Shops in Nehru Place market in India's capital New Delhi primarily deal in computer peripherals, but it has also been classified as one of the most notorious markets for piracy in the world. Pirated versions of copied software programs of companies such as Adobe and Oracle and various operating systems of Microsoft are on sale. The compact disc of Windows 7 operating system costs 100 rupees (98p), compared with about $100 for an original copy. Alok, who sells pirated games in the market, said he does not know about the losses incurred by companies because of piracy. "I only care about my daily wage of 130 rupees," he said. China, with the world's largest Internet user base, had low revenue from digital sales of movies and music, suggesting widespread piracy, the USTR said, while counterfeit goods were readily available online. Promises that government offices would only use legal software had not led to a jump in sales, it said. The USTR said it had "significant concerns" about the theft of trade secrets and urged the government to take steps to stop Chinese companies taking advantage of overseas competitors. Despite ongoing concerns about copyright, no action would be taken against last year's "priority foreign country," Ukraine, due to the current political situation, the USTR said. The USTR also removed Italy from the intellectual property black list altogether after it took new steps to combat copyright piracy over the Internet. (Reporting by Krista Hughes; Additional reporting by David Brunnstrom in Washington and Manoj Kumar and Aditya Kalra in New Delhi; Editing by James Dalgleish and Ken Wills) |
| Brazil's Rousseff lowers taxes for workers as popularity drops Posted: 30 Apr 2014 05:45 PM PDT BRASILIA (Reuters) - Brazilian President Dilma Rousseff on Wednesday announced lower taxes for workers and a hike in stipends for the poor as her popularity ebbs five months before elections. In a speech broadcast on the eve of Labour Day, Rousseff said she signed a decree to lower the income tax burden on workers and a 10 percent increase in the value of the Bolsa Familia family stipend program for millions of Brazilians. "This will be an important indirect salary gain and more money in the pockets of workers," Rousseff said. "I also vow to continue with policies that increase the minimum wage, which has brought so many benefits for millions of workers." Concerns about high inflation and a scandal surrounding Brazil's oil company have hurt support for Rousseff, increasing the chances her rivals can force a runoff in the Oct. 5 elections. Although Rousseff remains the clear favourite, a poll this week showed that the election race may be tougher than initially thought for the left-leaning leader. According to the poll, 37 percent of those surveyed said they intend to vote for Rousseff, compared to 43.7 percent in February. Poorer voters, millions of whom benefited from rapid economic growth and expanded social safety net programs under former President Luiz Inacio Lula da Silva, are the main electoral base for Rousseff's centre-left Workers' Party.It was not immediately clear what impact the measures could have on Brazil's weakening fiscal accounts. The decree increases by 4.5 percent the income bands used to tax workers, meaning most workers will end up paying less income tax. (Reporting by Alonso Soto; Editing by Cynthia Osterman) |
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