#emeriobanque

IMF Extends $941 Million Loan to Aid Kenya's Economic Struggles

The International Monetary Fund (IMF) malhas given Kenya the green light for a fresh loan exceeding $941 million, aimed at stabilizing the nation's fragile financial state. Kenya grapples with economic challenges like soaring debt, escalating inflation, and a weakening currency.

The IMF said in a statement on Wednesday that the credit of $941.2 million for Kenya had been approved by its executive board. $624.5 million of this total will be distributed right now. Kenya has borrowed around $2.6 billion from the IMF overall with this most recent loan.

Antoinette Sayeh, IMF Deputy Managing Director and Acting Chair, remarked, "Kenya's growth has remained resilient despite mounting external and domestic challenges." She emphasized that the credit arrangements aim to support efforts to maintain macroeconomic stability, reinforce policy frameworks, withstand external shocks, advance key reforms, and promote inclusive and environmentally sustainable growth.

According to recent Treasury data, Kenya's public debt stands at 10.585 trillion shillings ($65.5 billion). In December, the country opted out of repurchasing a portion of a $2 billion Eurobond set to mature in June, instead paying $68.7 million in interest to avoid a potential default.

"In its unwavering commitment to upholding a resilient sovereign credit rating and facilitating access to new development financing, Kenya remains dedicated to fulfilling all debt obligations with international lenders," Ndung'u stated.

President William Ruto previously pledged to buy back $300 million of the Eurobond, admitting public debt had "become a source of much concern to citizens, markets and our partners."

To raise revenues, Ruto has introduced unpopular new or higher taxes, sparking legal challenges. With rising living costs squeezing households, the taxes have provoked widespread public outcry.

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China Cuts Bank Reserve Requirements to Bolster Fragile Recovery

In a surprise move, China's central bank announced a significant cut to bank reserves on Wednesday, injecting around $140 billion into the banking system. The People's Bank of China (PBOC) declared a 50-basis point cut, the largest in two years, effective from February 5th, aiming to support a fragile economy and counter-plunging stock markets.

This announcement, made as stock markets were closing, prompted a positive response with benchmark stock indexes and the yuan bouncing back.

PBOC Governor Pan Gongsheng indicated that the bank would unveil policies to enhance commercial property loans, providing hope for investors concerned about China's real estate sector. The move follows China's struggle for a robust post-COVID recovery amidst a housing crisis, local government debt risks, and weakened global demand.

The recent cut in banks' reserve requirement ratio (RRR) is the first this year and comes as China's benchmark indexes hit 5-year lows, reflecting challenges in the $9 trillion market. Pan stated that the RRR cut would release 1 trillion yuan ($139.45 billion) into the economy, surpassing analysts' expectations.

The central bank emphasized a commitment to a loose monetary stance throughout the year to ensure a strong start for the economy in the face of challenging conditions.

Market reactions were positive, with Hong Kong's Hang Seng Index experiencing its largest one-day gain in two months, ending up 3.6%. However, analysts remain cautious, awaiting a comprehensive set of policy supports before determining the overall market impact. Despite several previous measures, more stimulus is anticipated in 2024 to stimulate growth and address deflationary risks.

As China's leaders pledged additional steps to support recovery in December, experts suggest a focus on boosting consumption for a sustained economic rebound.

In the international trade platform, China is going to lose its longevity position as the US’s top #exporter. This is because of the tensions between the two big economies and a vital reconstitution of global supply chains. According to the latest reports, the #US Commerce Department exposes a significant downturn of around 20% in US product imports from China from January to December.  For the place of #China, Mexico will be positioned for the US for the whole year. As per reports, US #imports from Mexico were a record in 2023 making around 15% of the total for the first 11 months.  Smartphone imports from China had a remarkable decrease of 10% while having surged imports of fivefold from India. Likewise, laptop imports from China also dropped by 30% but quadrupled from Vietnam. The diversification is aligned with the Friend shoring policy of Biden that emphasizes the significance of preserving supply chains within the allied and partner countries. Biden administration policy has also decided to retain the $370 billion worth of tariffs on China products that were imposed by Donald Trump. 

Will Mexico take advantage of the US-China trade war?

Elevated restrictions by the #US on #China will witness a vital shift, with Mexico emerging as a leading beneficiary. Biden’s assertive moves, marked by restrictions and tariffs on critical technology exports from China have created a remarkable decrease in Beijing’s exports to the US. Chinese companies are planning to establish industrial operations in Mexico, which will change the dynamics of #trade in the region. 

China-India Trade Tensions Seem To Be Continuing In 2024, However, Beijing Doesn’t Want To Disturb The Status Quo

India’s punitive charges on Chinese industrial laser machinery seem to be adding fire to the anti-dumping investigations on made-in-China products. Though Chinese responses were measured, New Delhi has raised concerns about the growing #internationaltrade deficit with #Beijing. According to analysts, India’s harder line on Chinese #imports is not going to develop an all-out #tradewar. At the beginning of this month, New Delhi announced levying anti-dumping charges of 147.2% on Chinese industrial laser machinery for 5 years. The #bilateral relationship between the countries has already been overshadowed by the border dispute in the Himalayas and #India is getting more significant in the world for the containment strategy used by the #USA against #China.

Supply Chain Finance: Key Principles and Best Practices

Supply chain finance is a special category of #financing that optimizes #cashflow inside the #supplychain environment. It facilitates early payment to #suppliers and thereby enables companies to unlock the value trapped in their supply chain. It is performed based on certain Key principles in #supplychainfinance. Read to know more about the principles that help optimize financial processes and strengthen supply chain relationships.

Invoice discounting It involves accessing immediate funds by selling accounts receivables of a business to a #financialinstitution at a fixed discount. This method or basic principle helps increase cash flow as it converts outstanding invoices into cash. This helps companies to meet their financial needs.

Active discount platforms

The efficient supply chain financing principle makes the best use of active discount platforms that offer buyers the ability to provide suppliers with early payment discounts and they should prompt payment in return. Businesses can go for a negotiation and execution of discount terms. This technique promotes optimizing supply chain cash flow for both suppliers and buyers. A centralized and automated space is made available to manage early payment options.

Understand the International financial risk factors based on cross-border transportation

Businesses are venturing into new areas as the state of global trade becomes increasingly uncertain. They face growing difficulties in an ever-more complex trading environment.

It is highly probable that trade regime fragmentation will continue beyond 2022 from a macro perspective. Though tries at alternate liberalization have stalled and the dispute agreement system is mired in political gridlock, the World Trade Organization (#WTO) is facing its worst undertaking for the reason that its establishment. Enterprises come across the difficulty and value of handling the enlargement of bilateral and local change #agreements. These trade regimes present alluring prospects, particularly in developing #economies, but also varying degrees of distinct regulations, origin rules, tariffs, and non-tariff #trade barriers. This is evident in developing economies particularly under #worldwide #financial volatility.

The following major #supplychain issues need to be addressed by companies and their #supplier networks in order to #support the development of an efficient capacity for #internationaltrade:

Is the trial of Indonesia to ‘cover up’ the interest of poor foreign investors in project of Jokowi’s Nusantara capital?

The President Joko Widodo confirms that Indonesia is now prioritising the domestic investors for their legacy project that could shift capital of the nation. On the other hand, the critics says that the confusion over this project, and also ‘election drama’ with the high rate of interest, are now also pushing the foreign investors that could also adopt the approach of wait-and-watch.

The legacy of US$30 billion and the project by Joko Widodo, the Indonesian leader in East Kalimantan gets plagued by definitely uncertainty subsequent to the fact that it was revealed several of foreign investment as well as commitments to city is not well realised, with the set of the economists that are also suggesting overseas backers which is quite much sceptical.

The Critics even confirms that the claim through the authorities which the domestic investors are getting well prioritised in project is basically the cover-up for lukewarm appetite mainly for Nusantara, which is also tipped as next capital of the nation.

Also, Confusion for more that the infrastructure of government mainly focuses with key island related to the Java and also receiving huge set of the projects, along with the“election drama” as well as some high rate of interest that is deterring international investors, have also being contributed to the attitude of wait-and-watch, as per the observers.

On the other hand, Widodo initially indicated that state of the foreign investments available in the Nusantara at the time of the state visit to the United States during the previous week. On Monday, they again reiterated that there is “no real investment” made by the foreign backers that are available in the project, which is also mainly aimed at housing and a minimum of 1,200 of the civil servants in the month ofAugust for next subsequent year.

Hence, more than 300 are signed. I believe that this will also continue to enhance very soon. However, for this day, there is absolutely no real kind of which is also started” Widodo says this on Monday to the reporters.

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