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The International Monetary Fund ended its semi-annual gathering of global finance chiefs without a consensus for the first time in its history on Thursday, a sign of the strains created by Russia’s invasion of Ukraine. Online News
The war and the raft of sanctions on Moscow have endangered the global recovery from the Covid-19 pandemic and threatened global cooperation.
“This meeting has obviously not been business as usual,” Spain’s Economy Minister Nadia Calvino told the reporters at the conclusion of the IMF spring meeting.
“Russia’s war against Ukraine has made it impossible to come to a consensus on a communique,” she said.
The Washington-based crisis lender, created after World War II to help in the reconstruction of Europe, relies on consensus among ministers at these meetings, although the day-to-day operations rely on the IMF board, where the United States wields a deciding vote.
Instead of the traditional communique, Calvino — who chairs the fund’s steering committee, the International Monetary and Financial Committee — issued a statement saying she had the support of the “overwhelming majority” of the 189 members.
In addition, there was “virtual unanimity on the substantive issues on the table,” she said.
The Russian attack on its neighbor has caused food and energy prices to soar worldwide, fueling already-rising inflation, and causing the IMF to slash its growth forecast for the global economy to 3.6 percent this year.
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It also raises fear of a food and debt crisis amid reduced grain supplies, and rising interest rates to combat inflation.
Finance ministers and central bankers “have made an overwhelming call to stop the war,” and voiced concerns about the economic impact, “which goes beyond neighboring countries and has a global scope,” Calvino said.
“If there has been a time for multilateralism it is now and against this truly challenging background, we need the international community to come together, stand strong and demonstrate our full commitment to cooperation.”
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With many poor nations facing debt distress, officials this week have lamented the slow pace of implementation of the G20 Common Framework created during the pandemic to help heavily indebted countries find a path to restructure their obligations.
A key hurdle has been the lack of information on the size of debt owed to China, and only three countries — Chad, Ethiopia and Zambia — have even requested assistance under the framework.
But IMF Managing Director Kristalina Georgieva said China made “a very concrete commitment” to join the creditors committee for Zambia and “to work constructively” on the debt resolution process.
Earlier Thursday, US Treasury Secretary Janet Yellen called on Beijing to do more to advance the process of helping indebted countries.
“I have been very disappointed by the failure of that framework to deliver relief for more countries. And I’ve explicitly called out China,” Yellen told reporters.
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Notes from APS Radio News
During the past few years, a number of the world’s central banks have engaged in massive programs of monetary expansion, even as jobs and businesses were lost by way of virus-related restrictions and quarantines.
For example, beginning in March of 2020, the US Federal Reserve engaged in a substantially greater program of monetary expansion by purchasing hundreds of billions of dollars of Treasury and corporate bonds.
Since the early part of March 2020 to date, the Federal Reserve has added over $4 trillion to its holdings.
In particular, whereas on or about February 24, 2020, the holdings of the Federal Reserve stood at $4.2 trillion, on or about January 17, 2022, the holdings of the Federal Reserve stood at about $8.9 trillion.
As well, the Federal Reserve has kept interest rates low.
Recently, Jerome Powell, the head of the Federal Reserve, said that he wasn’t concerned about inflation and that, for the none, the Federal Reserve would keep interest rates at low levels.
Another examples is that of the Bank of Japan.
According to Fred Economic Data, as of October 2021, the Bank of Japan’s holdings were about $6.4 trillion or about 725 trillion Yen.
In the early part of March 2020, the Bank of Japan’s holdings were $5.3 holdings. During the period mentioned, the Bank of Japan added over one trillion dollars to its holdings.
A number of corporations have been borrowing money inexpensively and have been purchasing their own shares of stocks, increasing share prices of stocks.
Still, there are concerns among investors.
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A number of them have expressed concerns about central banks’ eventually increasing interest rates, as, during the past year, inflation levels have been increasing.
The combination of low interest rates, expansive monetary policies, fiscal stimulus programs, which themselves have infused trillions into the US economy, and shortages of goods and services caused by virus-related restrictions and lockdowns has increased levels of inflation.
Investors also worry, for example, about announcements recently made by Toyota and VW; those companies have announced that because of shortages of particular types of material, they will be reducing levels of production.
Some weeks ago, the results of a survey of UK manufacturers were released.
That survey indicated that many businesses in the UK are concerned about shortages of supplies and will be making necessary adjustments.
In general, jobs and businesses have been lost by way of mandates, restrictions and quarantines, which, in their turn, were imposed by way of the virus narrative.
In the US, overall, the mortality rate of the virus is about .069%, according to Statista, an award-winning service.
The recovery rate is over 99% for most age groups.
What has followed in the wake of lockdowns and mandates has been the infusion of trillions of dollars into the US economy, the increasing succeess of online businesses like Amazon and other large online retailers, various bank and tech-related stocks, the shuttering of small to medium-sized businesses and the loss of millions of jobs.
Another result has been the increasing levels of inflation, especially those of food and fuel.
In official terms, for purposes of reporting, the US Labor Department uses what is called “core inflation”.
Core inflation excludes items like food and fuel, as those are deemed too volatile.
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