Latest news with #economicrecovery


Arab News
a day ago
- Business
- Arab News
S&P Global lifts Pakistan's credit rating ‘B-' from ‘CCC+', outlook stable
LONDON: S&P Global raised Pakistan's sovereign credit rating to 'B-' from 'CCC+' and placed it on a 'stable' outlook on Thursday, saying the country's finances and reserves had been stabilized by International Monetary Fund support. 'The stable outlook reflects our expectations that continued economic recovery and government efforts to enhance revenue will stabilize fiscal and debt metrics,' S&P said in a statement on the move. 'We also expect that sustained official financing will support Pakistan in meeting its external obligations, and that the country will continue to roll over its commercial credit lines over the next 12 months.'


Reuters
a day ago
- Business
- Reuters
S&P Global lifts Pakistan's credit rating 'B-' from 'CCC+', outlook stable
LONDON, July 24 (Reuters) - S&P Global raised Pakistan's sovereign credit rating to 'B-' from 'CCC+' and placed it on a 'stable' outlook on Thursday, saying the country's finances and reserves had been stabilised by International Monetary Fund support. "The stable outlook reflects our expectations that continued economic recovery and government efforts to enhance revenue will stabilize fiscal and debt metrics," S&P said in a statement on the move. "We also expect that sustained official financing will support Pakistan in meeting its external obligations, and that the country will continue to roll over its commercial credit lines over the next 12 months."


Reuters
a day ago
- Business
- Reuters
Explainer: Senegal's billions in hidden debt, and why it is an IMF headache
DAKAR/LONDON, July 24 (Reuters) - Senegal is grappling with billions of dollars in debt that was hidden by the previous administration - a problem for the cash-strapped country whose Prime Minister Ousmane Sonko is expected to present a comprehensive economic recovery plan next week. The issue has also raised questions for the International Monetary Fund, which at the time had been monitoring Senegal's finances under a loan programme. What is the debt, why have the figures changed and what is next for Senegal and the IMF? In September 2024, Senegal said an audit of government finances, which had been ordered by newly elected President Bassirou Diomaye Faye, put the end-2023 budget deficit at over 10%, significantly wider than the 5% reported by the previous administration. Faye's government ordered a further audit, and the IMF froze Senegal's three-year, $1.8 billion credit facility, which had been agreed in June 2023. Since then, Senegalese authorities have worked to determine the full scale of the debt and keep the government running in the face of curtailed resources and a lack of access to IMF funds or international bond markets. It is unclear how the off-books borrowing was spent. Current Prime Minister Sonko has accused the previous government of corruption, and there are some ongoing court cases related to alleged theft of COVID-19 funds. A Court of Auditors review in February calculated that overall debt at the end of 2023 was equivalent to 99.7% of Senegal's gross domestic product, well above the previous figure of 74.41%. That new total implied hidden borrowing of around $7 billion. But in June, provisional figures put central government debt of around 23.2 trillion CFA francs ($41.73 billion) by end-2024, a more than 27% increase from end-2023. This translates to a 119% debt-to-GDP ratio, according to Barclay's economist Michael Kafe, who said on June 30 that the new figure presented "new risks to the debt trajectory and likely complicates on-going talks with the IMF." S&P Global Ratings, in its downgrade of Senegal's credit rating this month, pegged hidden debts at around $13 billion and the ratio at 118%. This would make Senegal one of the most indebted countries in Africa, placing it in a small, unenviable club alongside Zambia, Cape Verde and Sudan. Senegal is not the first case of hidden debt. Mozambique's infamous "tuna bond" scandal is the most recent high-profile example in Africa. But at roughly $3 billion, Mozambique's secret debt is dwarfed by Senegal's. The IMF, which has come under fire for not catching the off-books lending, did not comment when contacted by Reuters, but it has previously said it will review what happened once it has all the information. In the meantime, the IMF's executive board must approve either a waiver for misreporting or order Senegal to pay back previous programme disbursements. With a waiver, Senegal can negotiate a new programme. Few expect the IMF to order Senegal to repay, which would effectively punish the current government's transparency. But negotiations have taken longer than expected. Senegal had hoped for a new programme by June. The IMF said a decision on the waiver was unlikely before June or July. In a June 14 statement, the government said it had shared all the results from its "reconciliation exercise" with the IMF. Sources expect action on a waiver in September, though the IMF could discuss Senegal earlier. An IMF spokesperson said the board would consider the data misreporting "in due course". Prime Minister Sonko has said next week's economic recovery plan will "tell the Senegalese how to get the country back on its feet, point by point." A new IMF programme would help them finance that plan, but crucially would also give foreign investors confidence to lend again. To get one, however, Senegal must demonstrate how it will return to debt sustainability. Senegal's bonds rallied earlier this month after it said it would rebase its economy for the first time since 2018, which some investors say could push its debt-to-GDP back down into double digits, a potentially more palatable level for the IMF. The government could also attempt to reprofile debt by pushing payments further into the future but is expected to avoid a full restructuring. Senegal - due to its membership in the West African currency union UEMOA - does not have a problem sourcing the hard currency it needs to repay loans. And a restructuring could destabilise some regional banks holding its debt, which would be bad for the region. ($1 = 557.7500 CFA francs)


The Guardian
a day ago
- Business
- The Guardian
Lloyds boss warns Reeves against hiking taxes on banks as profits rise 17%
The boss of Britain's largest mortgage lender has warned Rachel Reeves that increasing taxes on banks in her autumn budget would damage Labour's plan for the City of London to power an economic recovery. Charlie Nunn, the chief executive of Lloyds Banking Group, said a rise in bank taxation 'wouldn't be consistent' with the chancellor's overtures as the government pushes to reboot growth. Against a backdrop of mounting speculation that Reeves could use her autumn budget to announce a fresh round of tax rises, his comments came as the high street bank reported a 17% jump in second-quarter profits. Nunn told journalists on Thursday the bank had not had any discussions with the government about a potential tax rise, and acknowledged that it was ultimately a 'political decision'. However, he said that targeting the financial services sector with higher taxes would mark a stark reversal by the chancellor, who last week announced a raft of changes to cut regulation and boost growth across the sector. He noted that Reeves had made the case for a 'strong financial services sector' to support the UK economy, and had highlighted that the industry had a 'huge role to play' to support households and businesses. 'We definitely believe that's an important thing to focus on, and obviously, therefore, [it] wouldn't be consistent with a tax rise,' Nunn said. He added that the UK already had 'the highest tax regime on the financial services sector of any major economy'. Banks face the 25% headline rate of corporate tax, as well as a 3% bank surcharge, and a further bank levy which is a charge on a portion of balance sheet assets. However, the Conservatives cut the levy from 8% in April 2023 in a measure opposition MPs decried as a costly giveaway. Earlier this month, analysts at Deutsche Bank speculated that Reeves could reverse the cut to raise about £1.5bn. Labour has placed financial services among its eight important sectors to receive government backing in its industrial strategy, while industry lobbyists have warned the chancellor that extra help is required to boost the City after Brexit. Estimates by lobby group UK Finance and PwC suggest that, when also accounting for employment taxes and VAT, banks in the UK are paying a total tax rate of about 45.8%. That compares with 38.6% in Frankfurt, and 27.9% in New York. 'We're proud of being one of the or the biggest taxpayer in the UK as Lloyds Banking Group,' Nunn said. 'So we are completely comfortable with that. But it is important when you look at the competitiveness of the City of London and the financial services sector that we remain a competitive tax regime.' Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Raising taxes on banks would also add to costs at a time when many lenders – including Lloyds – are bracing for a hefty compensation bill over the car finance commission scandal. A supreme court ruling is widely expected within the next week. Lloyds has put aside £1.2bn in provisions to cover potential costs. Updating the City on its second-quarter performance, the bank reported a 17% rise in pre-tax profits to nearly £2bn, up from £1.7bn last year, driven in part by higher fees from its pension, insurance and investments business. When asked whether he shared Reeves' view, expressed during her Mansion House speech last week, saying that regulation was acting like a 'boot on the neck' of business, Nunn replied: 'That's very much for the chancellor to use that language.' However, the bank boss said he believed there was a 'real opportunity to align regulation, increasingly, with competitiveness and growth.' Among the proposals welcomed by the Lloyds boss are plans in the coming months to review ring-fencing rules, which are the post-financial crisis regulations meant to protect consumer cash from a bank's riskier business activities. Bank bosses, including Nunn, had lobbied for ring-fencing to be abolished, arguing the rule is redundant as a result of other safeguards brought in after the 2008 banking crisis.
Yahoo
a day ago
- Business
- Yahoo
Euro zone business activity growth hits 11-month high in July, PMI shows
LONDON (Reuters) -Euro zone business activity accelerated faster than forecast this month, supported by a solid improvement in the bloc's dominant services industry and with manufacturing showing further signs of recovery, a survey showed on Thursday. HCOB's preliminary composite euro zone Purchasing Managers' Index, compiled by S&P Global and seen as a good guide to growth, rose to an 11-month high of 51.0 points from 50.6 in June. That was above the 50.0 mark separating growth from contraction and above expectations for 50.8 in a Reuters poll. "The euro zone economy appears to be gradually regaining momentum. The recession in the manufacturing sector is coming to an end, and growth in the services sector accelerated slightly in July," said Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank. For the first time in over a year, overall demand did not decline, though there was no expansion. The composite new business index came in bang on 50, its highest level since May 2024. The services PMI rose to 51.2 from 50.5, exceeding the Reuters poll forecast for a more modest lift to 50.7. Inflationary pressures eased with the services input and output prices indexes falling. The input prices index fell to a nine-month low of 56.7 from 58.1. Inflation was at 2.0% in June, official data showed earlier this month, right where the European Central Bank wants it. The ECB will hold policy steady later on Thursday, according to all 84 economists surveyed in a Reuters poll, while a small majority expect one more interest rate cut - most likely in September. A manufacturing PMI, which has been sub-50 for three years, climbed to 49.8 from June's 49.5, just ahead of the poll estimate for 49.7, while an index measuring output dipped slightly to 50.7 from 50.8. Although some of that activity was driven by completing past orders, factories did so at the slowest rate in around three years. The backlogs of work index rose to 49.0 from 47.1. Sign in to access your portfolio