CORRECTED-UPDATE 2-IMF tells Belarus fresh credit depends on reform
* IMF wants wage restraint, higher interest rates* Ex-Soviet republic hit by high inflationBy Andrei MakhovskyMINSK, Oct 17 (Reuters) -
The International Monetary Fund on Monday stressed the need to
restrain wage growth in Belarus and said the leadership of
President Alexander Lukashenko would have to show clear
commitment to reform if it hoped to secure new IMF credit.The ex-Soviet republic is in the grip of a severe financial
crisis which has drained its foreign currency reserves, forced a
65 percent devaluation in the national currency and pushed
inflation up to 75 percent in the year to date.Minsk has put out feelers for a possible new stand-by credit
programme from the IMF of up to $7 billion, according to
financial sources.Chris Jarvis, head of a visiting IMF mission, said that
while the Fund applauded the partial floating of the Belarussian
rouble as “an important step forward” there was a danger that
gains could be wiped out by high inflation.Speaking to journalists, he said Belarus had to raise
interest rates more sharply and the authorities should refrain
from any further public wage increases.The IMF wants Belarus, which is run for the most part on old
Soviet lines, to carry out structural and economic reforms to
fully liberalise the economy.”The authorities should also continue with and accelerate
their work on structural reform, especially enterprise reform,
privatization, price liberalization and banking sector reform,”
Jarvis said in a statement.”Deep structural reform is needed for Belarus to achieve
strong and lasting growth and to increase living standards in a
durable way,” he added.FOLLOW-UP ACTION NEEDEDIn a comment angled at Lukashenko, Belarus’s authoritarian
leader, Jarvis said the country’s “highest” authorities had to
show a clear commitment to reforms and follow through with
action if a fresh programme was to be forthcoming from the Fund.”Before programme negotiations could begin, as a first step,
the authorities will need to demonstrate a clear commitment,
including at the highest level, to stability and reforms and to
reflect this commitment in their actions,” he said.He implicitly criticised Lukashenko for raising public
sector wages shortly before an election last December in which
he won a fourth consecutive term in power, which is disputed by
the political opposition and in the West.”Wage restraint is … crucial. The role of the November
2010 wage increase in contributing to the crisis … is now
widely recognised,” he said.After a previous IMF programme had been completed in 2010
there had been a softening in economic policy especially in
credit policy and in the pay sector, he said.Belarus has introduced special free-trade sessions for the
rouble, while maintaining a separate official exchange rate
tightly controlled by the central bank.While this official rate stood on Monday at 5,692 roubles
per dollar, it was down at 8,990 per dollar in the
free-float trading session, up slightly from its low point of
9,010 last Friday.The Fund wants the national currency to be able to trade
freely across the board and authorities are indicating they may
meet the IMF on this point.A senior government official said on Saturday that
Belarus would lift administrative caps and reinstate free
currency trading.”The government along with the National bank made the
decision to carry out all currency trading in one session
starting Oct. 20 … with a flexible exchange rate regime,”
Deputy Prime Minister Sergei Rumas told Belarusian STV channel.”The government will not use administrative measures to
influence the currency exchange regime,” he said.The government curbed free currency trade in March in an
effort to rescue the rouble, which nevertheless was subsequently
devalued twice, losing 65 percent of its value in all against
the dollar.
Ex-reporter claims hacking at Trinity Mirror paper-Sky
Trinity Mirror has said the allegation is incorrect. Brown’s comments came in a written witness statement
prepared for an employment tribunal claim for unfair dismissal
against Trinity Mirror, but the statement was never used. Sky is part owned by Murdoch’s News Corp media empire. “A number of the methods used to pry into individuals’ lives
were illegal and I have little doubt that if these people knew
they had been spied upon, they would take legal action for
breach of their right to privacy,” Brown was reported to have
written. The people whose phones were hacked by the Sunday newspaper,
Sky said, included David Beckham’s children’s nanny and TV
presenter Ulrika Jonsson. Trinity Mirror, which also owns the Mirror newspaper, denied
the accusations. “All our journalists work within the criminal law and the
PCC (Press Complaints Commission) Code of Conduct and we have
seen no evidence to suggest otherwise,” it said in a statement. It added that the “unsubstantiated allegations” taken from a
draft statement had never been tested under cross examination. Brown declined to comment when contacted by Reuters. He was reported to have written that information had been
gleaned by others from Jonsson’s mobile phone. “This was done by ‘screwing’ or tapping Ms Jonsson’s phone’s
message bank,” he is said to have written. He said in the statement that Trinity Mirror had quickly
paid substantial damages to Beckham after running a front-page
story wrongly alleging the soccer star had left angry messages
on his nanny’s mobile. “It took the company less than a month to pay David Beckham
substantial damages because it knew it could not produce the
evidence of tapped mobile phones in any litigation,” the
statement reportedly said. Brown was fired from the Sunday tabloid in April 2006 for
gross misconduct, Sky said on its website. The statement, written in 2007, was not used because the
company settled out of court with Brown and he signed a
confidential settlement agreement, Sky said. When a News of the World reporter was arrested for hacking
in August 2006, a senior human resources figure “contacted
executives on Trinity’s national titles to tell them that if
they were asked by other newspapers or trade publications
whether they had used information from ‘screwed’ mobile phones
they should deny it,” Brown was said to have written. “(The) advice indicates that a major media plc was not only
allowing its staff to carry out illegal activity by, at best,
turning a blind eye to it, but also taking part in an organised
cover-up of that activity.” Trinity launched a review of is editorial controls and
procedures last August, and had obtained written confirmation
from its current senior editorial executives that they had not
engaged in phone-hacking since the introduction of an Act of law
in 2000. Allegations of hacking at its rival Sunday tabloid the News
of the World led to the closure of the 168-year publication.
Trinity Mirror soon afterwards said its circulation revenues had
risen.
Analysis: U.S. ducks recession for now, but Europe threatens
After wobbling early in the quarter, the economy regained some footing, with retail sales rising solidly in September and labor market conditions improving. Business spending has held up despite volatility in financial markets and factory activity has kept expanding.Economists now estimate U.S. gross domestic product grew at an annual pace of between 2.3 and 2.7 percent in the July-September period, a sharp step up from the 1.3 percent logged in the first quarter and a far cry from what some feared just a few weeks ago.”The economy held up surprisingly well in the third quarter but it’s too early to celebrate,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.Much of the re-acceleration in growth reflects the fading of disruption to motor vehicle production and sales after the big March earthquake in Japan. A surge in auto sales contributed to a solid 1.1 percent rise in retail sales in September.Declining gasoline prices, which stretched household budgets in the second quarter and crimped consumer spending, are also seen supporting third-quarter economic growth.But those factors should prove temporary, and with Europe’s economy likely to slow as it battles its debt crisis and the U.S. labor market still weak, economists believe the fourth quarter will prove weaker, with some fearing a contraction in the first half of 2012.”The euro zone debt crisis is still playing out. That remains a dark cloud on the horizon that can present a direct hit to the U.S. economic recovery,” said Anthony Karydakis chief economist at Commerzbank in New York.Although European leaders sound determined to come to grips with the debt crisis and could announce a bold plan in the next couple of weeks, analysts worry they might once again move too slowly for jittery financial markets.A DAY LATE”A bold plan would require some form of centralized fiscal policy, which means years of voting and changing the treaty and voting in individual parliaments,” said Diane Swonk, chief economist at Mesirow Financial in Chicago.”It’s not clear whether financial markets will have the patience for them to execute on it because you don’t have the ability in Europe to move as quickly on it and they have always been a day late in dealing with the crisis.”U.S. exports to the euro zone account for only about 2 percent of U.S. gross domestic product, but a worsening of the debt crisis could lead to a financial panic, with ripple effects on American banks and consumers.The euro zone turmoil has already led to tightening in credit availability, weighing on spending and employment.Economists at Goldman Sachs see U.S. growth slowing to a pace between 0.50 percent and 1 percent in the next two quarters, with the risk of a recession at about 40 percent.Others, however, think another recession is far fetched.”The economy is not in great shape but it is hardly falling apart,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “We are in a slow, steady, grinding recovery that is not creating lots of jobs.”Naroff, like many other economists, draws solace from the solid rise in retail sales in September reported on Friday and the need for auto manufacturers to replenish inventories after production was disrupted early this year.”Some of the momentum in final demand growth could carry into the fourth quarter. Early indications suggest that auto sales, which were an important element in third-quarter growth, are holding up well in October,” said Michael Feroli, an economist at JPMorgan in New York.”And while energy prices have backed up in recent days it should still be the case that moderation in headline inflation could give some lift to consumer spending power.”Much as Europe’s shadow looms large over the U.S. economy, belt tightening at home also poses a risk to growth, with a payroll tax cut and an extension of emergency unemployment benefits scheduled to expire in December.While economists expect the payroll tax cut to be extended, many doubt whether the emergency jobless benefits will be renewed, which would undercut already weak household income.”If political parties are unable to agree on any of these measures, that could be the straw that breaks the camel’s back,” said Harm Bandholz, chief U.S. economist at UniCredit Research in New York.”The spending cuts would impact growth not only directly via lower disposable incomes, but also indirectly via a massive loss of confidence in the ability of policymakers to steer events in the right direction in these critical times.”
Deals of the day — mergers and acquisitions
** The family that runs 99 Cents Only Stores
changed buyout partners to take the retailer private at
a higher price than an earlier proposal in March, marking the
latest private equity backed deal in discount retail.** Broadband technology and software provider ARRIS Group
Inc said it is to buy BigBand Networks for
$2.24 per share in cash to strengthen its networked video
technology capabilities.** Western Wind Energy said it received an
unsolicited takeover bid from Algonquin Power and Utilities
for at least C$150 million ($145.5
million).** Canada’s B2Gold Corp said it agreed to buy Auryx
Gold Corp for about C$130 million in a cash-and-stock
deal.** Jones Group Inc , a maker of clothing,
shoes and accessories, is in talks to sell its stagnating
jeanswear division for up to $400 million as it focuses on its
more profitable luxury brands.** Sinopec International Petroleum Exploration and
Production Corp (SIPC), a wholly-owned unit of state-owned
Sinopec Group, has completed the purchase of an 18 percent stake
in Chevron Corp’s Indonesian deep-water project for $680
million, a Sinopec official told Reuters on Tuesday.** Payment processor Heartland Payment Systems Inc
said its unit Heartland School Solutions acquired
privately held School-Link Technologies Inc for an undisclosed
amount, to expand its market share in the school services
payments industry.** Murata Manufacturing Co plans to acquire
Finland’s sensor maker VTI Technologies for 20 billion yen ($261
million), including debt, as it seeks to expand in the growing
market for smaller and low-energy sensors.** Eurasian Natural Resources Corp plans to buy the
outstanding 75 percent of Kazakh coal producer Shubarkol Komir
for up to $600 million plus assumed debt of about $50 million.** UK-based holding company Chime Communications PLC
said it will buy Gulliford Consulting Limited for an initial
consideration of 2.5 million pounds ($3.9 million) in a cash and
stock deal.
