Month: September 2018

Aid money urgently needs to be redirected to the poorest countries in order to reach the United Nations’ goal of ending extreme poverty by 2030, according to a report. The London-based Overseas Development Institute (ODI) says middle-income countries receive more aid than the 30 poorest nations. It also warns that at least 400 million people will still be living on less than $1.90 a day, despite government pledges to eliminate all extreme poverty. In northern Ethiopia, teams of workers dig irrigation channels through orchards and grain fields. Such projects have turned arid plains into fertile farmland, which has quadrupled agricultural production. The report from the ODI credits Ethiopia’s “Productive Safety Net Program,” launched in 2005, with lifting 1.4 million people out of extreme poverty. It also enabled Ethiopia to avoid another famine during severe droughts in 2010 and 2015. In contrast, neighboring Uganda has seen extreme poverty levels rise recently, after a rapid reduction in previous years. “One of the reasons is because climate change is starting to have an impact in that country,” said Marcus Manuel, author of the ODI report. “Now in Ethiopia, they’ve managed, with a lot of support partly from the U.S., to have programs that support farmers when a sudden climate or weather event happens. In Uganda, they didn’t. So when they had a drought, that led to a real increase in poverty. So it’s a matter of having the right systems in place.” Ethiopia’s program, the largest of any low-income country, pays beneficiaries to …

U.S. President Donald Trump has instructed aides to proceed with tariffs on about $200 billion more in Chinese products, despite Treasury Secretary Steven Mnuchin’s attempts to restart talks with China about resolving the trade war, Bloomberg reported on Friday. Reuters could not immediately verify the report, which had an immediate effect on financial markets. It led U.S. stocks to trade lower, fueled drops in the Chinese yuan in offshore trading and gains in the dollar index, and sent the S&P 500 index negative. The step comes exactly one week since Trump raised the possibility of duties on the $200 billion of imports and also threatened tariffs on $267 billion worth of goods. Trump has already levied duties on $50 billion worth of Chinese goods. The United States only imported $505 billion in goods imported from China last year. But 2018 imports from China through July were up nearly 9 percent over the same period of 2017, according to U.S. Census Bureau data. …

The Turkish central bank caught international markets by surprise Thursday as it aggressively hiked interest rates in an effort to strengthen consumer confidence, stem inflation and rein in the currency crisis.  Interest rates were increased to 24 percent from 17.75 percent, which is more than double the median of investor predictions of a 3 percent hike. The Turkish lira surged above 5 percent in response, although the gains subsequently were pared back. International investors broadly welcomed the move. “TCMB [Turkish Republic Central Bank] did show resolve in hiking the one-week repo rate substantially and going back to orthodoxy,” chief economist Inan Demir of Nomura International said. The central bank had drawn sharp criticism for failing to substantially raise interest rates to rein in double-digit inflation and an ailing currency. The lira had fallen by more than 40 percent this year. The rate hike is an apparent rebuke to Turkish President Recep Tayyip Erdogan, who has been opposed to such a move. Only hours before the central bank decision, Erdogan again voiced his opposition to increasing interest rates. The Turkish president reiterated his stance of challenging orthodox economic thinking, arguing that inflation is caused by high rates, although that runs contrary to conventional economic theory. Erdogan also issued a presidential decree banning all businesses and leasing and rental agreements from using foreign currency denominations. The central bank indicated further rate hikes could be in the offing. “Tight stance monetary policy will be maintained decisively until inflation outlook displays a significant improvement,” the …

Cuba’s street vendors are bringing back the pregon, the art of singing humorous, rhyming ditties with double entendres about the goods they are selling, with some modernizing the tradition by setting their tunes to reggaeton. The pregon is a centuries-old tradition that has inspired famous songs like “El Manisero” (the peanut vendor), composed in the late 1920s by Cuban musician Moises Simons on son music, the backbone of salsa. It faded out in Cuba after Fidel Castro’s 1959 revolution did away with most free enterprise. With the tentative liberalization of the centralized economy over the last few decades, however, it has made a comeback. Cubans can now get a permit to make and sell their own goods on the street, from coconut ice cream to juices. Vendors often opting for that option, rather than opening a shop, which remains an onerous venture given ongoing restrictions on private business. Others just illegally sell wares from stores at a mark-up, hoping to avoid authorities and a fine. Not all street vendors bother with the pregon. Some just shout out what they are selling and their prices in a blunt manner on a loop, often using loudspeakers that they strap to rickety carts or bicycles, adding to the urban cacophony. Cuba’s pregoneros however, like Lyssett Perez, who hawks paper cones of roasted peanuts to tourists in Old Havana, believe their ditties help them stand out. “Firstly, it’s so people listen to me. Secondly, so they love me,” said Perez. “For me the pregon …

Even before U.S.-China trade tensions began escalating dramatically, foreign businesses who operate in China were warning about the impact tariffs could have. And now, according to a newly released joint survey from the American Chamber of Commerce in China and AmCham Shanghai, many are already feeling the pinch. More than 60 percent say the initial $50 billion in tariffs rolled out by the United States and China are having a negative impact on business, increasing the demand of manufacturing and slowing demand for products. That number is expected to rise to nearly 75 percent if a second round of tariffs, an additional $200 billion in tariffs from Washington and another $60 billion from Beijing, goes ahead. The administration of President Donald Trump has threatened it could go ahead with $200 billion in tariffs and, if needed, $267 billion more after that. Unexpected consequences William Zarit, chairman of AmCham China said while there are expectations in Washington that an additional onslaught of tariffs could force Beijing to wave the white flag, it risks underestimating China’s capability to continue to meet fire with fire, he said. “It seems that American companies will be more harmed by the American tariffs than they will by the Chinese tariffs. I don’t think that this necessarily is a result that was expected,” Zarit said. President Trump argues that China is stealing jobs from the United States and not doing enough to address the huge trade deficit between the two economies. The tariffs are seen by proponents …

A new report by Transparency International suggests foreign bribery is alive and well.  The report, by the Berlin-based, anti-corruption watchdog, suggests little has changed in recent years in the way governments enforce their anti-bribery laws. Today, only seven major exporting countries actively crack down on companies that offer bribes to foreign officials in exchange for favorable business deals. The United States is one of the seven countries, which together account for 27 percent of world exports, Transparency International said. The others are Germany, Israel, Italy, Norway, Switzerland and the United Kingdom.  2016 a record year Between 2014 and 2017, the United States launched at least 32 investigations, opened 13 cases and concluded 98 cases involving foreign bribery, according to the report. Enforcement activity surged in 2016, resulting in a record $2.5 billion in penalties levied by U.S. authorities.  Among several high-profile foreign graft cases adjudicated in the United States, the report cited a case in which British aircraft engine maker Rolls-Royce payed law enforcement authorities in the United States, Britain and Brazil $800 million in 2017 to resolve allegations of bribing officials in at least a dozen countries over more than two decades The report rated the performance of 44 major exporting countries, including 40 nations that have signed the Organization of Economic Cooperation and Development’s (OECD) Anti-Bribery Convention. The 1997 compact requires signatories to make it a crime for companies and individuals in their countries to bribe foreign officials.  Transparency International’s last report on the topic, released in 2015, listed …

Labor unions and social groups blocked streets in downtown Buenos Aires on Wednesday, with more marches planned over the days ahead over   austerity measures proposed by the government and backed by the International Monetary Fund. Protesters are angry about the belt-tightening policies, which are cutting services to low-income Argentines already walloped by inflation of 31 percent and climbing. But Argentine leader Mauricio Macri says he needs to carry out such measures to regain investors’ confidence by reducing the country’s fiscal deficit. The outlook for Latin America’s third biggest economy is grim, according to orthodox and left-leaning economists alike. Planned cuts to public utility subsidies, forcing Argentines to pay more for transportation and electricity, are expected to keep upward pressure on consumer prices for the rest of 2018. “The day to day uncertainty is getting worse,” said protester Gabriela Gil, a 49-year-old mother of five. The year will close with inflation at more than 40 percent, according to economists’ forecasts. Hardest hit are low-income families that spend a high proportion of their income on food. “The poorest people in the country are on the verge of hunger,” said Daniel Menendez, a spokesman for Barrios de Pie, one of the groups that helped organized the march. Fiscal medicine Measures aimed at taming inflation, like the central bank’s 60 percent monetary policy rate, have helped push the economy into recession by choking off credit. Stimulus spending that might pep up the economy would dash Macri’s promise of bringing the primary fiscal deficit to …

The median U.S. household income reached $61,372 last year — its highest level ever, the U.S. Census reported Wednesday. The new median figure, meaning that half of U.S. families earned more money and half less, was a reflection of the robust U.S. economy, the world’s largest, that expanded 4.1 percent in the April-to-June period even as the unemployment rate held steady in August at 3.9 percent. The 2017 household income was 1.8 percent higher than the $60,309 figure in 2016. Middle-class income in the U.S. has been expanding in recent years as the country continues its recovery from the steep recession of a decade ago — a time when millions of people lost their jobs, and many lost their homes through foreclosure when they no longer had enough money to make monthly home loan payments. Now, one Census official said, many Americans are moving from part-time to full-time work, adding to their financial well-being. With the income improvement, the Census said that 12.3 percent of the 328 million Americans are living in poverty, a slight improvement from the 12.7 percent figure in 2016. It said 8.8 percent of Americans are without health insurance coverage, the same figure as the year before. …

The Islamic Development Bank has suspended a multimillion-dollar project in Somalia due to accusations of corruption and mismanagement. Started in October 2016, the Dryland Development Project was being conducted in three rural villages to help pastoralists build resilience to drought, give them access to health and education services, and develop livestock and crops. The project was set to cost $5 million overall, and since February 2017, the Islamic Development Bank (IsDB) had transferred about $1.5 million to an account at Somalia’s central bank in three installments. But according to an IsDB audit of the project, a progress report submitted by the project’s coordinator, Abdishakur Aden Mohamud, contained “no substantial information” on what the project has achieved. A letter by IsDB written on July 5 this year, seen by VOA Somali’s Investigative Dossier program, said there was no supporting evidence for the claims made in the report. The letter stated the audit raised several concerns, including the lack of a coherent payment system and overpayments to a supplier. The IsDB also said while the audit was being conducted, the project coordinator made cash and check withdrawals which it said was “not in line with the fiduciary and financial management system.” The bank has asked the Somali federal government to investigate and take appropriate actions. In the meantime, IsDB has frozen the account. Somali government prosecution Corruption is a problem that has bedeviled Somali governments for decades. The problem persists despite pledges from successive governments to eliminate it. Recently, the government of …

The Turkish central bank is facing growing pressure to decisively hike interest rates at a meeting Thursday to defend an ailing currency and rein in double-digit inflation.  But concerns remain over President Recep Tayyip Erdogan’s grip on monetary policy. The Turkish lira has fallen more than 40 percent, much of it in the past few weeks, fueling rampant inflation.   ”Just to keep up with the acceleration of inflation the central bank needs to hike by more than 400 basis points,” said chief economist Inan Demir of Nomura International, “This is only to keep up with the acceleration in inflation, since last formal hike.  If we consider the prospect of a further acceleration inflation outlook, perhaps more is needed [interest rate hikes],” he added. Demir says what has accelerated heavy lira falls are investor concerns the central bank can’t act decisively because of Erdogan, who has sweeping executive powers.  He has repeatedly voiced opposition to high-interest rates, which he claims “enslaves poor people.” In a statement, this month the central bank declared it was ready to alter monetary policy to rein in inflation.  Financial markets interpreted the comment as the bank preparing to hike rates aggressively.  “The statement suggests we will see some action,” Demir said, “but I am not very confident the policy response will be as large as the markets need.” This week, Finance Minister Berat Albayrak sought to talk up the Turkish economy, claiming the financial system was already “correcting itself.”   Albayrak is the president’s son in …