Business

IMF tells Argentina not to risk ‘scarce’ reserves after bond buyback

Published

8 months ago

February 1, 2023

admin

IMF tells Argentina not to risk 'scarce' reserves after bond buyback

The International Monetary Fund said on Wednesday it would prefer that Argentina’s government, which announced a $1 billion buyback of foreign currency bonds, not undermine the targets of their multi-billion-dollar program.

“We do have targets in the program for reserves. Reserves are scarce, and we would prefer not to have actions that undermine the reserve accumulation that we’re assuming in the program,”

Nigel Chalk, deputy director of the IMF’s Western Hemisphere department, said when asked whether the buyback fits with the program objective of accumulating foreign reserves.

Argentina’s bond repurchase program was announced on Jan. 18. The government has spent some $404 million in market purchases of bonds with a nominal value of more than $1.1 billion, according to Portfolio Personal Inversiones (PPI), a local brokerage.

Moody’s considered it a “distressed exchange” tantamount to a default, while S&P Global Ratings called it “opportunistic” and equivalent to a debt restructuring as it affirmed its rating on the sovereign.

“The team has been working with the Argentine authorities on this plan with the debt buyback … first on the scale of it, how it’s being operated and then how it fits in with the program,” Chalk said in an interview with Reuters.

He added that the upcoming program review – a regular assessment that determines whether the next round of cash will be freed to the Argentine authorities – will judge whether targets were met at the end of December.

“But obviously, that review has a forward-looking element to it, and we want to have some comfort that reserves will also be met on a forward basis as well.”

Argentina’s gross FX reserves total some $42.3 billion, according to its central bank as of Jan. 27, while calculations by Moody’s and PPI see net reserves closer to $6 billion.

“According to our estimates, the net reserve stock closes January at $6.1 billion, receding almost $2 billion in the month mainly due to coupon payments for $1.05 billion,” the brokerage told Reuters.

Argentina has the largest active IMF program, an Extended Fund Facility for $44 billion at the time it was announced on March 2022. About $24 billion has already been disbursed, most of which has been used to repay the fund what it is owed from a failed 2018 program.

The program’s original targets ask for Argentina to accumulate $4.0 billion more in reserves this year.

Post Views: 35

Business

Nepra approves Rs3.28 per unit increase in power tariff

Published

2 days ago

September 23, 2023

admin

Nepra approves Rs3.28 per unit increase in power tariff

The National Electric Power Regulatory Authority (Nepra) has approved Rs3.28 per unit increase in power tariff on the account of fuel cost adjustment for fourth quarter of fiscal year 2022-23.

The regulatory body has sent his decision to the federal government for final approval. The increase in electricity prices will come into effect immediately after it is approved by the government.

The distribution companies (Discos) would recover Rs159 billion from consumers during the period of six months (October 2023 to March 2024).

The revised rate will be applicable on all customers.

Post Views: 7

Business

Inflation goes up as people feel effects of fuel price hikes

Published

2 days ago

September 23, 2023

admin

Inflation goes up as people feel effects of fuel price hikes

Food and fuel prices continue fuelling inflation in Pakistan as the Sensitive Price Indicator (SPI) for the week ended September 21 witnessed a 0.93 per increase amid the complete government failure to check the rates.

Read more: Food prices owing to weaker rupee, supply shortages will push Pakistan inflation: ADB

The latest data released by the Pakistan Bureau of Statistics (PBS) shows that chicken price had jumped by 8.49pc followed by petrol 8.51pc, diesel 5.54pc garlic 5.19pc and onion 3.02pc.

At the same time, the year-on-year increase in SPI stood at 38.66pc when compared with the corresponding week of last year.

Read more: More food inflation as fuel price hikes increase production, transportation costs

The rising inflation in Pakistan urgently needs government intervention and a study of how different governments are dealing with the challenge. Tax on cut on food items is one of methods.

Read more: Fighting the food inflation: From net-zero VAT to supermarkets seeking price cuts

Earlier this week, the Asian Development Bank (ADB) had warned that average inflation in Pakistan will soar to 29.2 per cent caused by supply shortages, continued currency depreciation, import restrictions, and fiscal stimulus for post-pandemic recovery.

Meanwhile, the rising food prices shouldn’t be a surprise given that the regular fuel price hikes are increasing the production and transportation costs.

The main reason behind the persistent inflation in Pakistan is devaluation as the rupee had dropped to the record against the US dollar – a trend that is being reversed somewhat amid a crackdown on blacking marketers on hoarders.

However, the exchange rate is still too high, requiring further correction, as the people have also been hit hard for power and gas tariffs as the conditions set by the International Monetary Fund (IMF).

Post Views: 8

Business

Power tariff hikes: The more you devalue rupee, the more capacity charges you pay

Published

6 days ago

September 19, 2023

admin

Power tariff hikes: The more you devalue rupee, the more capacity charges you pay

Devaluation – a process that started under former finance minister Miftah Ismail in late 2017 and late 2018 but gained momentum under the PTI government – is the root cause of inflation shouldn’t be a contested statement as it has made imports even more expensive for Pakistan.

And that’s countries like Pakistan are the worst affected due the rising commodities prices in global market as weaker currencies mean the overall impact is much deeper for them than the rest.

Read more: Rupee collapse is the reason behind all ills Pakistan is facing

This argument was endorsed by none other a high-ranking government official – Power Division Secretary Rashid Langrial who said on Monday that the capacity [charges] payment had doubled after the dollar exchange rate increased from Rs100 to Rs300, thus resulting in skyrocketing electricity tariffs for consumers.

Post Views: 26