Argentina’s president Mauricio Macri said on Wednesday that the International Monetary Fund (IMF) agreed to accelerate funding in support of his government’s austerity programme.
However, the announcement did not calm the market as the country’s currency came under renewed pressure.
IMF chief Christine Lagarde said the Washington-based lender would look at speeding up payments of the bank’s US$50 billion (Dh184bn) loan after talks with Mr Macri on Wednesday.
The IMF approved the $50bn, three-year standby loan in June.
Ms Lagarde said the IMF would work to strengthen its arrangement with Argentina and “re-examine the phasing of the financial programme”.
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Risk of escalating emerging market pressure looms
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The “more adverse international market conditions” battering Argentina’s economy “had not been fully anticipated,” she said.
Mr Macri called for the early release of the funds in a phone call with Ms Lagarde on Wednesday.
It came amid heightened volatility in Argentina’s financial and currency markets, which have been battered by uncertainty over inflation, an economic downturn and budget deficits.
The Argentine peso has lost more than 40 per cent of its value against the dollar this year. Inflation is projected to surpass 30 per cent by the end of 2018.
And the peso continued its decline on Wednesday, plummeting 6.99 per cent through the day to fall to 34.48 to the dollar by the close.
Mr Macri had sought to soothe the turbulence in a statement before markets opened, assuring Argentines that help was on the way.
“Over the past week, we have had new expressions of lack of confidence in the markets, especially over our ability to obtain financing for 2019,” Mr Macri said.
He said the IMF would provide “all the funds necessary to guarantee the fulfilment of the financial programme next year”.
In return for an accelerated loan payment, the government has committed to reducing its budget deficit to 2.7 per cent this year, from 3.9 per cent in 2017, and to 1.3 per cent of GDP next year.
Doubts over Argentina’s ability to repay heavy government borrowing have grown and analysts said the move reflected growing desperation in Mr Macri’s centre-right government.
“The announcement was vague and was made by the president, which has its risks,” said analyst Lorenzo Sigaut, of consultants Ecolatina, who said it would have been more convincing if the announcement had been made by the economy minister.
Overall doubts of an Argentine default on borrowings had been assuaged “only until Macri’s term ends (in December next year) but as of 2020, they remain latent”.
“The dollarisation of assets is fuelled internally by Argentines’ distrust of the peso, because the government has promised much on the economy but hasn’t delivered,” said Mr Sigaut.
Part of the $50bn loan is to be allocated to support the budget, and the rest to the country’s central bank to shore up the peso over a three-year period.
The first $15bn tranche has already been released.
Economist Matias Carugati said there was a lack of information coming from the government to calm the markets.
“We know that the IMF is advancing money to cover us next year, but how much will they advance us and under what conditions?” he asked.
He maintained however that “the risk of a default is exaggerated”.
“Argentina does not have a solvency problem, but more a short-term liquidity issue. It’s urgent to achieve financial calm and then see how to repair the damage.”
The economy contracted 6.7 per cent in June, the third month in a row of negative growth, and the annual growth rate was a negative 0.6 per cent.
End of free parking
- paid-for parking will be rolled across Abu Dhabi island on August 18
- drivers will have three working weeks leeway before fines are issued
- areas that are currently free to park - around Sheikh Zayed Bridge, Maqta Bridge, Mussaffah Bridge and the Corniche - will now require a ticket
- villa residents will need a permit to park outside their home. One vehicle is Dh800 and a second is Dh1,200.
- The penalty for failing to pay for a ticket after 10 minutes will be Dh200
- Parking on a patch of sand will incur a fine of Dh300
Golden Shoe top five (as of March 1):
Harry Kane, Tottenham, Premier League, 24 goals, 48 points
Edinson Cavani, PSG, Ligue 1, 24 goals, 48 points
Ciro Immobile, Lazio, Serie A, 23 goals, 46 points
Mohamed Salah, Liverpool, Premier League, 23 goals, 46 points
Lionel Messi, Barcelona, La Liga, 22 goals, 44 points
Sustainable Development Goals
1. End poverty in all its forms everywhere
2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture
3. Ensure healthy lives and promote well-being for all at all ages
4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
5. Achieve gender equality and empower all women and girls
6. Ensure availability and sustainable management of water and sanitation for all
7. Ensure access to affordable, reliable, sustainable and modern energy for all
8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all
9. Build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation
10. Reduce inequality within and among countries
11. Make cities and human settlements inclusive, safe, resilient and sustainable
12. Ensure sustainable consumption and production patterns
13. Take urgent action to combat climate change and its effects
14. Conserve and sustainably use the oceans, seas and marine resources for sustainable development
15. Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss
16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
17. Strengthen the means of implementation and revitalise the global partnership for sustainable development
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Venue: Sharjah Cricket Stadium
Date: Sunday, November 25
Schedule:
Friday, January 12: Six fourball matches
Saturday, January 13: Six foursome (alternate shot) matches
Sunday, January 14: 12 singles
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