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Argentina PHOTO

Argentina seeks IMF financial aid to avoid crisis

Argentina is to start talks about a financing deal with the International Monetary Fund (IMF) on Wednesday amid reports it is seeking $30bn (£22bn).

Finance minister Nicolas Dujovne is due to fly to the IMF’s Washington offices.

After recent turmoil that saw interest rates hit 40%, President Mauricio Macri said IMF aid would “strengthen growth” and help avoid crises of the past.

The talks come 17 years after Argentina defaulted on its debts and 12 years since it severed ties with IMF.

Mr Macri said in an address to the nation on Tuesday: “Just a few minutes ago I spoke with (IMF) director Christine Lagarde, and she confirmed we would start working on an agreement.”

“This will allow us to strengthen our program of growth and development, giving us greater support to face this new global scenario and avoid crises like the ones we have had in our history,” he said.

Local media and Bloomberg reported that Argentina was seeking $30bn, although the government declined to comment.

The peso has lost a quarter of its value in the past year amid President Macri’s pro-market reforms.

Last week the central bank raised interest rates from 33.25% to 40%.

Many people still blame IMF austerity requirements for policies that led to a financial and economic meltdown in 2001 to 2002 that left millions of middle class Argentines in poverty.

Argentina eventually defaulted on its debts. And although its last IMF loan was paid down in 2006, the country severed ties with the Washington-based body.

Reforms

Mr Macri said Argentina was suffering as a result of high oil prices and the expectation that US interest rates would rise in the coming months.

Describing Argentina as a “valued member” of the IMF, Ms Lagarde said: “Discussions have been initiated on how we can work together to strengthen the Argentine economy and these will be pursued in short order.”

Argentina is in the middle of a pro-market economic reform programme as Mr Macri seeks to reverse years of protectionism and high government spending under his predecessor, Cristina Fernandez de Kirchner.

Inflation, a perennial problem in Argentina, was at 25% in 2017, behind Venezuela as the highest in Latin America.

This year, the central bank has set an inflation target of 15% and has said it will continue to act to enforce it.

Last week’s rate rise to 40% was the third increase in eight days in an attempt to boost the peso.

Avoid Crises

News of the new talks may be controversial in some quarters. Many people in Argentina still blame the IMF for the policies that led to the 2001 financial and economic crisis. The country defaulted on $80bn (£59bn) of sovereign debt – the biggest in history.

Millions of middle class Argentines were plunged into poverty as a result.

However, Mr Macri said the new negotiations with the IMF would give the country “greater support to face this new global scenario and avoid crises like the ones we have had in our history”.

Markets reacted positively to the news, with both local shares and the peso recovering some ground.

Miguel Kiguel, a former Argentine finance official who runs local consultancy Econviews, tweeted: “An IMF line of credit is the least expensive option for growth in Argentina.”

Argentina has had a turbulent relationship with the IMF.

In 2013 the country was censured by the Fund over the inflation and economic growth data published by the administration of President Cristina Fernandez de Kirchner. It was a step in a process that could ultimately have led to Argentina’s expulsion from the IMF.

Earlier, many had blamed the IMF for contributing to a financial and economic crisis that came to a head around the end of 2001, which set back living standards severely.

Relations have improved under the current president, Mauricio Macri, whose approach to economic policy was much more consistent with that favoured at the IMF.

The prospect of a new IMF loan will test that improvement. It will come with economic policy conditions, including almost certainly spending cuts and tax rises, which are likely to aggravate political strains in Argentina.

SA PHOTO

UK likely to be SA’s biggest foreign direct investor — even after Brexit

Created after the Brexit decision, the UK’s department for international trade sees SA as a key business partner.

Last month marked a year to go until the UK leaves the EU. While we’ve been clear that we will remain close friends and partners of the EU in future, we also have a unique opportunity to re-invigorate our relationships with other trading partners around the world.

The UK’s new department for international trade, created after the referendum, is leading the way. As we look to establish our own independent trade policy for the first time in more than 40 years, our business relationships with countries such as SA will be key to our mutual prosperity.

After all, as the International Monetary Fund (IMF) predicts, 90% of global growth will be outside the EU in the coming decades, and the UK’s new trade policy should be about helping businesses from both our countries work together even more extensively.

UK businesses are already recognising SA as a great place to do business. SA’s bilateral trade with the UK was worth £8.8bn in 2016 — a 9.2% increase on the previous year. The UK remains SA’s biggest long-term foreign investor, with 45% of SA’s FDI stock originating from the UK. And there are many South African companies active and present in the UK, growing their businesses and sustaining jobs in SA.

We are clear that this strong relationship will continue as the UK leaves the EU. I’m pleased to report that we’re making excellent progress in our discussions to ensure continuity of the regional Economic Partnership Agreement with SA, the other members of the Southern African Customs Union, and Mozambique.

The UK and partners in the region share a common goal of replicating this trade agreement to provide certainty of our trading relationship for businesses, and so that we have a framework that will allow us to build an even closer economic partnership in future.

I’m looking forward to discussing this with Trade and Industry Minister Rob Davies when we meet in Johannesburg this week.

But we can do even better. To improve our already impressive record of working together in business, we need to make it even easier for UK and South African companies to operate in each other’s markets, to overcome any regulatory barriers that make trade more expensive.

There is huge potential, given the complementary nature and shared entrepreneurial spirit of the UK and South African economies. Our companies stand to benefit if we are better able to bring together the home-grown technology and innovation we see being created in SA and the UK. Our shared strong commitment to open trade, democracy and the rule of law gives us the solid foundation from which to build an exciting and prosperous future.

Supporting this ambition is where our post-Brexit relationship can flourish further. Our expertise can be SA’s expertise, and UK companies stand ready to help advance economic transformation for SA’s future. The UK’s export credit agency, UK Export Finance (UKEF) has nearly £3bn available to support UK companies doing business in SA, as well as South African companies looking to buy British goods and services.

And as the UK welcomes a diverse community of 52 Commonwealth nations at next week’s Commonwealth Heads of Government Meeting, including many of SA’s regional partners, I look forward to embracing a future of fair and free trade that we can build together for shared success.

Bitcoin India PHOTO

Crypto BANNED? Is cryptocurrency legal in India?

Bitcoin and other cryptocurrencies are facing a crackdown from governments around the world, including India and China, in a bid to tighten up regulations and protect consumers. But are cryptocurrencies legal in India?

Since the start of 2018, Bitcoin has suffered a massive price crash after its stratospheric growth last year sparked concern among central bankers.

International Monetary Fund (IMF) chief Christine Lagarde is the latest economic chief to wade into the argument, saying cryptocurrency regulation is “inevitable”.

And bitcoin’s price fall – slumping more than 55 percent since its December high of $19,982 – has been partly blamed on countries that are beginning to introduce cryptocurrency regulations.

Some of the most outspoken countries are India, South Korea and China.

Is the cryptocurrency legal in India?

Bitcoin and other cryptocurrencies have a complicated relationship in India because although they are not technically banned, they are not considered to be legal tender by financial institutions.

This was outlined by Finance Minister Arun Jaitley during a budget speech on February 1.

Mr Jaitley said: “The government does not consider cryptocurrencies as legal tender or coin and will take all measures to eliminate the use of these crypto assets in financing illegitimate activities.”

Last August he told the Indian Parliament that the government had no authority to regulate cryptocurrencies.

Bitcoin trading is hugely popular among Indians and has surged in recent months across the country.

According to one estimate by bitcoin platform Unocoin, its website saw a steep rise in users towards the end of last year.

Company founder Sathvik Vishwanth told the Financial Times in January: “Early last year we were gaining about 10,000 new users each month.

“In December it was about 7,000 to 8,000 each day.”

Is cryptocurrency legislation on its way in India?

While India is not outlawing cryptocurrency just yet, it does seem to be making things very difficult for investors.

In recent days, India’s Income Tax Department announced it had issued notices to 100,000 cryptocurrency investors suspected of concealing profits.

Sushil Chandra, chairman of the Central Board of Direct Taxes, said: “We found out that there is no clarity on investments made by many people, which means that they have not declared it properly,”

“People who have made investments in cryptocurrency and have not paid tax on the profit earned by investing, we are sending them notices as we feel that it is all taxable.”

On Saturday, the Securities and Exchange Board of India chairman Ajay Tyagi said regulations on cryptocurrencies was being finalised, along with the individual roles of regulators, according to the New Indian Express newspaper.

No further information was given but investors will now be nervously waiting to hear what happens in the coming days and weeks ahead.