NEW YORK (Reuters) -The board of the International Monetary Fund said on Monday it had completed a third review of Suriname's $630 million program, allowing the government of the South American country to withdraw about $52 million.

The IMF also sees Suriname and China, its only official or private creditor without a debt agreement, advancing in debt talks before the next program review.

"The authorities have made concerted efforts to advance debt restructuring negotiations, with the agreements in line with program parameters reached with all creditors except China," said in a statement Kenji Okamura, the fund's deputy managing director. "Both sides expressed commitment to work towards an agreement on comparable terms with other creditors by the next review."

The government and the fund had struck a staff-level agreement late last month. The board's approval allows the government to draw about $52 million, most of which will be used for budget support.

Even as Suriname did not meet all performance criteria, the board also approved the government's request for a waiver "based on the corrective measures already taken."

Pension plans for the largest U.S. companies are at their healthiest in over a decade, according to financial services firm Aon (NYSE:AON). The average pension "funded ratio" for public companies in the S&P 500 stock index was 102% as of last Thursday, marking the highest level since at least the end of 2011 when the ratio stood at around 78%.

The funded ratio is a measure of a pension's financial health, comparing a company's pension assets against its liabilities. Essentially, it assesses the money a pension currently has on hand versus the funds a company needs to pay future pension income to workers.

"This is a really good thing," Byron Beebe, global chief commercial officer for Aon, said on Monday. "It's at the highest it's been in a really long time." However, as the American Academy of Actuaries points out, pension funding is merely a "financial snapshot ... at a single moment," and can change based on factors like the health of the U.S. economy.

This improvement in pension funding is significant for workers. A better funded status makes it more likely companies will keep their pensions active and reduces the risk of benefit cuts for some workers. In extreme cases, underfunding can lead to benefit cuts. Companies with failed pensions may transfer their obligations to the federal Pension Benefit Guaranty Corp., which guarantees pension benefits up to a limit, based on age.

Pensions in the private sector have become rarer over the decades as companies have replaced them with 401(k)-type plans. Defined-benefit plans peaked in 1983 with 175,000 plans in the private sector, but by 2020 that number had declined to about 46,000, according to U.S. Department of Labor data. Many of these plans are now "frozen" and no longer allow workers to accrue benefits.

The recent improvement in pension funding is largely attributable to three factors: a rise in interest rates, strong stock performance, and policy changes to how some companies fund their plans, according to John Lowell, partner at October Three, a pension consulting firm. Higher interest rates on bonds generally mean companies don't have to contribute as much money to their pensions today to satisfy future benefits. Furthermore, companies have become more proactive about making contributions to their plans to ensure they're fully funded due to rising insurance premiums paid to the PBGC.

Companies have also adopted investment strategies that fluctuate less with the whims of the investment markets, said Beebe at Aon. For a portion of the portfolio, they buy bonds whose income matches that of future pension promises, offering more predictability.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

The U.S. is witnessing a notable surge in energy costs, with oil futures escalating by approximately 30% over the last quarter, adding significantly to inflationary pressures. This rise in prices, which began in the summer, presents a formidable task for the Federal Reserve as it grapples with managing consumer price inflation, particularly with the escalating cost of energy.

If the increase in oil prices persists, it could potentially decelerate consumption and economic growth. However, strategists at Goldman Sachs have indicated that such a scenario would represent a bearable obstacle for the U.S. economy. They maintain that despite the potential negative impact on consumption and economic growth, the resilience of the U.S. economy will be tested but manageable if the rise in oil prices continues.

The upward trend in energy prices is contributing significantly to headline inflation, amplifying the challenges faced by the Federal Reserve. The central bank's efforts to manage these inflationary pressures are being tested as it navigates the escalating cost of energy.

Strategists at Goldman Sachs continue to express confidence in the resilience of the U.S. economy amidst these challenges. They anticipate that the economy will be able to withstand this headwind if the rise in oil prices persists over the coming months.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

KYIV (Reuters) - An International Monetary Fund monitoring mission started work on Monday on the second review of a $15.6 billion multi-year loan program for Ukraine.

Vahram Stepanyan, IMF's resident representative, said in a statement that the discussions with the Ukrainian government would be held on recent economic developments and fiscal, financial and structural policies.

The IMF's four-year programme for Kyiv is part of a $115-billion global package to support the economy as Ukraine battles Russia's invasion.

Ukraine's economy has been hit by the 19-month-old war and the government has relied heavily on Western aid to finance social and humanitarian payments.

The government has said Ukrainian businesses have adjusted to the new wartime reality and that the economy has been recovering more quickly than expected this year.

"After a decline of 29.1% last year, today we see a gross domestic product growth," Yulia Svyrydenko, economy minister, said in a post on Facebook (NASDAQ:META).

"Now we can say with confidence that the economy has adapted to force majeure conditions. We predict that the positive trend will continue."

Official statistics showed that GDP grew by 19.5% in the second quarter of the year compared with the same period a year earlier.

The economy ministry expects the economy to grow by about 4% this year and by up to 5% next year.

Ukraine has already received about $3.6 billion from the IMF so far this year, according to finance ministry data.

India's rapid economic growth, the fastest among major economies, is under threat as increasing household debt payments diminish consumer spending power. This trend, highlighted by recent data from the Reserve Bank of India, has emerged as a significant concern for the robustly expanding economy.

The data shows that the nation's household financial assets, which include bank deposits, cash, and equity investments, have declined after accounting for debt servicing and consumption. As a percentage of the country's GDP, these household assets have decreased from 7.2% in the previous fiscal year to 5.1% in the fiscal year that ended in March.

This reduction indicates a significant drop in spending power for Indian households. The increasing burden of debt repayments appears to be a key factor in this worrying trend, potentially restricting the flow of funds that fuel this rapidly growing economy.

The implications of this trend could be far-reaching, as consumer spending plays a vital role in driving economic growth. With household debt payments on the rise and consumer spending power decreasing, there are concerns that this could slow down India's accelerating economic growth.

This situation underscores the challenge faced by policymakers in balancing economic growth with household financial health. As India continues its economic expansion, addressing this issue will be crucial to sustaining momentum while ensuring the financial stability of its households.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

By Anant Chandak and Susobhan Sarkar

BENGALURU (Reuters) - Thailand's central bank will leave its key policy rate unchanged at 2.25% on Wednesday and likely through 2024, marking an end to a year-long tightening cycle, according to a Reuters poll, though a few economists still expect one final hike.

Despite inflation in Thailand edging up slightly to 0.88% in August, it remained below the central bank's 1-3% target range for a fourth consecutive month, suggesting little need for the Bank of Thailand (BOT) to continue hiking.

Governor Sethaput Suthiwartnarueput recently said both economic growth and inflation were expected to be lower than previously forecast due to softer tourism spending and a weak economic outlook for China, the country's major trading partner.

A strong majority of economists in a Sept. 18-22 poll, 21 of 27, expected the BOT to keep its benchmark one-day repurchase rate at 2.25% on Wednesday. Only six forecast another quarter-point hike to 2.50%.

"The BOT will switch to a wait-and-see mode. It is actually in a relatively comfortable position to take its time in terms of making its policy decisions because growth is strong, inflation is low," said Lavanya Venkateswaran, senior ASEAN economist at OCBC.

"We don't see inflation coming back to within BOT's target for the rest of this year at least, and possibly even in Q1 next year ... so I don't think in the near term there's a need to rush into further hikes."

None expected the central bank to raise interest rates at the following meeting in November. Median forecasts showed interest rates remaining at 2.25% through next year.

However, there was a split among those with a longer-term view on rates, with 47% of economists, nine of 19, expecting the BOT to keep rates at 2.25% until end-2024, while six predicted another hike to 2.50%, and four anticipated a cut -- three to 2.00% and one to 1.75%.

"Despite growth slumping ... it's clear the BOT is determined to raise rates at least one more time to reach its estimated neutral rate," noted Aris Dacanay, ASEAN economist at HSBC.

By Nick Carey

(Reuters) - The European Union and Britain need to take urgent action to postpone rules for electric vehicles traded between the bloc and the UK that will trigger 10% tariffs, Europe's car industry group said on Monday.

"Driving up consumer prices of European electric vehicles, at the very time when we need to fight for market share in the face of fierce international competition, is not the right move," European Automobile Manufacturers' Association (ACEA) president and Renault (EPA:RENA) CEO Luca de Meo said in a statement ahead of a planned trade meeting between EU and UK officials this week.

Under the EU-UK post-Brexit trade deal, EVs need to have 45% EU or UK content from 2024, with a 50%-60% requirement for their battery cells and packs, or face British or EU import tariffs of 10%.

The problem is that neither carmakers in Britain nor the EU have built up their EV supply chains sufficiently to meet those requirements and have called for the rules to be postponed until 2027.

Stellantis (NYSE:STLA) has said British car plants will close with the loss of thousands of jobs unless the Brexit deal is swiftly renegotiated, while Ford (NYSE:F) has said it will slow the transition to electric.

The ACEA has said the rules could cost carmakers up to 4.3 billion euros ($4.57 billion) in tariffs and hit output.

So far, the EU executive has been reluctant to renegotiate the deal.

In June, Stefan Fuehring, a European Commission official overseeing the post-Brexit EU-UK trade agreement, said the EU rules of origin were "fit for purpose" and that the bloc was not considering changing them.

($1 = 0.9400 euros)

By Munsif Vengattil and Shivangi Acharya

NEW DELHI (Reuters) - India will defer an import licence requirement for laptops and tablets, two government officials said, a policy U-turn after industry and the U.S. government complained about the move, which could hit Apple (NASDAQ:AAPL), Samsung (KS:005930) and others.

The plan will be delayed by a year, after which the government will consider whether to implement a licensing regime or not, one of the officials told Reuters, requesting anonymity.

The licensing regime, announced abruptly on Aug. 3, aimed to "ensure trusted hardware and systems" enter India, reduce dependence on imports, boost local manufacturing and in part address the country's trade imbalance with China.

But following industry objections, the initial plan was quickly delayed by about three months.

Last month U.S. trade chief Katherine Tai raised concerns with India over the move, which would also affect companies such as Dell (NYSE:DELL) and HP (NYSE:HPQ).

India's electronics ministry is now proposing a simpler import registration process that is due to start in November, said the officials, who have direct knowledge of the discussions.

A representative for India's IT ministry did not immediately respond to a request for comment.

The new 'imports management system' will need companies to obtain 'registration certificates' for imports of laptops, tablets and personal computers, instead of licences proposed earlier by the Aug.3 order, one of the officials said.

The ministry conveyed the proposal to industry officials in a meeting on Friday, they added.

India's electronics imports, including laptops, tablets and personal computers, stood at $19.7 billion in the April to June period, up 6.25% year-on-year.

India to delay import licensing of laptops after US, industry push back, sources say

2

Comments (2)

BRUSSELS (Reuters) -Europe's trade chief will push Beijing for fewer restrictions on European businesses on a four-day visit to China, when he can expect tough conversations over a planned EU investigation into electric car imports.

Trade Commissioner Valdis Dombrovskis will take part in a joint economic and trade dialogue, meet Chinese officials and European companies active in China and deliver two speeches during his Sept. 23-26 trip to Shanghai and Beijing.

For the European Union, the visit is designed to renew dialogue with China after its COVID-19 closure and as EU wariness grows over Beijing's closer ties with Moscow following Russia's 2022 invasion of Ukraine.

Dombrovskis will arrive just over a week after the EU executive said it would investigate whether to impose punitive tariffs to protect European producers against cheaper Chinese electric vehicle imports.

The enquiry may result in a frostier reception in China, but sources with knowledge of the trip say it could usefully lead to a more focused discussion on "trade irritants".

The EU blames its 400 billion euro ($426.32 billion) trade deficit partly on Chinese restrictions on European companies and says the EU market is largely open.

A "thousand" barriers to market access have propelled the trade deficit to its "highest in the history of mankind", EU Ambassador to China Jorge Toledo lamented at a forum in Beijing on Thursday.

EU's trade deficit with China widened to $276.6 billion in 2022 from $208.4 billion a year earlier, Chinese customs data show.

The economic and trade dialogue on Monday between Dombrovskis and Chinese Vice Premier He Lifeng, the 10th such discussion since 2008, will be a "litmus test" for two sides, according to Chinese nationalist tabloid Global Times.

'DE-RISK'

The European Union Chamber of Commerce in China said in a report on Wednesday that Chinese authorities were sending contradictory messages to foreign businesses. For many, a swift economic rebound expected after the reopening of China's borders in January failed to materialise.

"Although official announcements aimed at improving the business environment have been released, so has a slew of national security-focused legislation, which has deepened uncertainty and raised compliance risks," the report said.

This includes an anti-espionage law that bans the transfer of information related to national security and interests that it does not specify. It could result in punishments for foreign companies engaged in regular business.

The EU is also expected to be asked during the visit to clarify what it means by "de-risk" in the context of China.

EU officials say the bloc is seeking to curb its reliance on the world's second-largest economy, particularly for materials and products needed for its green transition, but wishes to retain trade ties.

Large European industries have started revising their supply chains to see where they have excessive dependency on China, as they have been "shocked" by Chinese restrictions on exports of strategic metals germanium and gallium, Toledo said.

China placed export curbs on eight gallium and six germanium products from August in its latest salvo of an escalating war between Beijing and Washington over access to materials used in making high-tech microchips.

Germany is also planning to force telecoms operators to slash the use of equipment from Huawei and ZTE (HK:0763) in their 5G networks, prompting a warning from China that it would not "stand idly by" should Berlin proceed with the curb.

($1 = 0.9383 euros)

U.S. bond yields have climbed to a significant 17-year high this week, following the Federal Reserve's decision to maintain a higher interest rate stance at its September policy meeting. The two-year U.S. Treasury note yield reached 5.2% on Thursday, marking a 1.4 percentage point increase since May and its highest level since 2006. The 10-year Treasury note yield is also nearing a 16-year high of 4.5%.

This surge in yields is largely attributable to the Federal Reserve's interest rate cuts in 2020, introduced in response to the Covid-19 pandemic. Investors flocked to safe assets like Treasuries, leading to an increase in Treasury prices and subsequently suppressed yields.

However, due to ongoing economic strength and a tight labor market fueling persistent inflationary pressures, the Federal Reserve is expected to continue its tightening policy well into 2023. This could potentially lead to further decreases in bond prices as markets anticipate a higher peak in the federal-funds rate this year and fewer cuts in 2024.

This trend of rising monetary policy rates isn't exclusive to the U.S., with 38 central banks worldwide reporting their highest rates since 1995 when adjusted for gross domestic product. With persistent inflation and a robust economy, interest rates are unlikely to revert to zero in the near future.

Investors are being advised to secure current yields through Treasuries, bank certificates of deposit, or other structured investments. Despite potential short-term increases, bond yields are expected to be significantly lower a year from now.

By 2024, the Federal Reserve is likely to ease off in response to progress on inflation and signs of slowing U.S. economic growth. This easing may not immediately involve cutting the federal-funds rate but will allow officials to signal that they have reached peak rates for this cycle more definitively.

Evidence suggests that the 10-year yield typically peaks a few months after the Federal Reserve's final rate hike, which could occur at the Federal Open Market Committee's November or December meetings. Other international central banks, such as the Bank of England, European Central Bank and the Swiss National Bank, appear to have ceased hiking their rates, while Brazil and Poland have started reducing interest rates from their recent peaks.

Despite the largest increase in bond yields in decades, the stock market has experienced a rally in 2023 due to expanding valuation multiples. However, the higher-for-longer interest rates pose a risk for stocks and offer upside potential for bond prices. In a weaker economy scenario that necessitates rate cuts, earnings may fail to meet expectations. Therefore, adding more bonds to a portfolio today can provide an attractive return rate and diversification, offering stability to investors' portfolios.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.