Daily Press Cuttings

 

Wednesday 8^th September 1999

FT: Debt relief \ IMF: Agreement to sell part of the IMF's gold reserves to finance debt relief for poor countries is “politically unreachable”, according to an analysis released by the Dutch finance ministry. The analysis says that the Fund now intends to revalue 10m ounces of its 103m ounce gold stockpile to market value. This would release a $1.1bn profit that would be transferred to a new fund and invested in market securities. The Fund has been forced to abandon plans for open market sales of gold following opposition from the US Congress. The document also sounds a note of caution about the “case by case” approach being adopted in involving the private sector in the resolution of financial crises. The Dutch are wary of this US-supported approach, fearing that smaller countries will be disadvantaged and have less access to international capital markets.

Ecuador: Ecuador's decision to become the first country to default on Brady bond debts has sent a shiver of anxiety through global markets. Economists say that the default – of $96m interest payments on $6bn Brady bond principle – marks the first test case of US and IMF policy towards emerging markets since Russia defaulted on its domestic debt in August. The IMF shocked financial markets by refusing to bail out Russia's private sector creditors in spite of encouraging investors to believe the country was too important to be allowed to go bust. Now it has extended this precedent to Brady bonds – defaulted commercial bank debt from the 1980s repackaged as bonds and collateral of US Treasury bonds – by approving Ecuador's move. In effect, Washington and the IMF have signaled a significant change in policy towards emerging markets.

Literacy: In a letter to the editor, James D. Wolfensohn, president of the World Bank, calls on the private sector to sponsor literacy programs in developing countries, to `ensure global membership of the information society'.

Tibet: The board of the World Bank will this week take up an embarrassing challenge in connection with its controversial project to resettle Chinese farmers in Tibetan lands. The loan ignited a storm of controversy among pro-Tibetan groups.

Guardian: IMF: Gordon Brown is set to become the new head of the IMF's advisory body. He will move into the top job at the interim committee as it transforms itself into a more political forum which could eventually rival the G7 in importance. Western finance ministers have long believed the time has come to give developing countries a greater voice in global finance, and the committee is seen as the best place to do it. The IMF expects developing countries to recover from their turmoil far more quickly than forecast, and has upped the global growth forecast.

Indonesia: The West's links with Indonesia are examined – amongst them, $33bn in loans from international financial institutions and governments, plus £31bn from private creditors. UK arms exports last year were worth £112m, although the government is now to withdraw an invitation for Indonesia to attend Britains largest arms fair next week.

Kenya's `Sunday Nation': Kenya has lost its sovereignty as the Government dances to the tune of the World Bank and IMF. The leader of the Democratic Party says the country is in receivership by these key donors. His remarks come on the heels of reports that the Government planned to streamline the civil service drastically in line with a World Bank strategy aimed at healing Kenya's economy.

Independent: Nicaragua: Hurricane Mitch, which devastated four countries in central America last year, is now being blamed for a plague of rats threatening an estimated 300,000 people in Nicaragua. Up to 95 per cent of the region's food supplies have been devoured.

Times: Russia: The IMF has announced an investigation into whether the Russia Central Bank has misappropriated loans.

Tuesday 7^th September 1999

Guardian: Philippenes: The debt-ridden Philippine government is finally planning to salvage what it can from the most wasteful remnant of the Marcos dictatorship – a potentially lethal nuclear power facility that has never been used. Nearly a quarter of a century after work began on the ill-conceived project the country's taxpayers are still paying more than $170,000 a day in interest for the Bataan plant. The government has decided to dismantle and sell the plant. It cost $2.3bn, but never began operation as it was declared unsafe and inoperable. The government has spent $1.2bn servicing the plant's debts – money which should have gone to basic services like schools and hospitals. Marcos was accused of making $80m in kickbacks from the plant.

Angola: Angola could be so much richer than it is, but its oil and diamonds have been funding civil war. Angolans face a fearful humanitarian crisis, but there are still buyers for the country's high-quality gems. The secretive diamond business has been tightened up, but parts of it are funding continued suffering.

FT: AIDS: Researchers in Uganda have found that a low-cost drug cuts the chances of mothers with HIV passing the infection to their children. The new treatment costs just $4. Nevertheless, in a continent where governments spend barely that amount per person per year on healthcare, even $4 is controversial. Some say there may be better ways of spending the money. Over the next five years two-thirds of all infant mortality in Botswana will be caused by AIDS, in South Africa and Zimbabwe it will lead to a 100% increase in child deaths. These trends threaten to destroy the hard-won health improvements of the last 30 years.

Trade: Latin American and Caribbean banana exporters, whose disagreement over access to the European market led to a trade war between the US and EU, are seeking a negotiated end to their dispute. Representatives from Ecuador, the world's largest exporter, and the Caribbean countries, are discussing possible changes to the present marketing arrangements.

Russia \ Serbia: Russia has promised to extend a $150m credit to Serbia and reschedule old debts under a deal to buy gas and oil.

IHT: Congo: After two armed rebellions in the past three years, no one can be optimistic about the latest cease-fire in the DR Congo. In a continent too familiar with civil strife, Congo's troubles matter more than most. It is rich in natural resources, but mired in poverty and corruption. Its troubles have sucked in neighbouring countries. The US and other wealthy countries should offer as much support as possible to the African leaders who have helped negotiated the pact, and to Congo itself.

Independent: Africa: Libyan leader Mummer Gadaffi's public relations drive includes hosting an extraordinary summit of the Organisation for African Unity this week. More than 35 African heads of state are expected to show up to hear Mr Gadaffi bill himself a peacemaker in Africa.

Kenya: Kenya's President Moi has drastically cut the civil service. His action is seen as a clear statement ahead of meetings with the IMF and World Bank this month, where Kenya will press for negotiations to relaunch its $205m ESAF. The World Bank has long called for substantial cuts to the vast civil service, seen as a major contributor to Kenya's malaise.

Zimbabwe: Zimbabwe's labour federation and civic groups are to launch a political party to try to unseat President Mugabe in elections next year.

Monday 6^th September 1999

Business week, 13^th Sept: Trade: When South African President Thabo Mbeki travels to Washington in late September, he will ask the US to sign off a controversial trade policy that pits copyright and patent protection laws against the devastating consequences of an end-of-century tragedy. A rampant AIDS epidemic is ripping through South Africa, and few victims can afford the costly drugs devised to keep the virus at bay. In a law passed two years ago, Pretoria claims the right to parallel imports – cheap knockoffs of patented medicines often made by countries that are not signatories to international copyright agreements. The health minister can also require that multinationals licence local drugmakers to produce drugs patented by the likes of Glaxo Welcome. The big pharmaceutical companies fear that South Africa could inspire other nations to violate patents and are pushing Washington to defend the present order – but the moral and political implications are lost on no one. Hopes remain that a compromise can be reached.

FT: Brazil: A leading Brazilian cabinet minister was sacked at the weekend after publicly disagreeing with the government's economic austerity strategy, calling instead for a swift resumption of growth. The departure of Clovis Carvalho, the development minister, is the latest conflict within the government and its allies over whether to pursue the tough fiscal cuts agreed with the IMF, despite a sluggish economy and falling poll ratings.

Ethiopia: Ethiopia has rejected the final part of an agreement to end its border war with Eritrea, dashing hopes that the 16-month conflict was drawing to a close

China: President Jiang Zemin of China yesterday launched a searing attack on the US, accusing it of engaging in `gunboat diplomacy and economic neo-colonialism' to the detriment of development, world peace and international security.

Indonesia: The World Bank and IMF have warned Indonesia that funding could be suspended over the Bank Bali scandal – `Baligate'. This is a corruption scandal involving a payment of $70m of state funds to Bank Bali, a private bank. The central bank has labelled the payment criminal and police have charged a senior official of Golkar, the ruling party, which backs President Habbibe. The Fund's next review of Indonesia's economic reforms is scheduled for mid-September. This is required before the next tranche of $450m in credit can be approved.

Express: Charity: After Live Aid, now it's the internet that can feed the world, with the Hunger Site (. Every time a visitor clicks the button, the site's advertisers pay the UN World Food Programme half a cent – enough to keep a child alive for another day. It could be the greatest breakthrough in charitable giving since Live Aid.

The Voice: Africa's two economic giants, South Africa and Nigeria, have pledged to forge closer business and political ties in an effort to bring peace and stability to Africa.