World’s largest oil producer, Saudi Arabia brought several austerity programmes on Monday in its effort to adjust with the continuing oil price slide. The austerity measures include spending cuts, subsidy reform and call for privatization. Saudi Arabia’s budget deficit is expected to be a staggering 15 per cent of GDP in 2015. IMF has warned that Saudi Arabia may empty its foreign exchange reserves in five years if it makes deficit like the size of the current year. After the oil slide, the Saudi Arabian Monetary Agency has withdrawn $70bn in funds managed by overseas financial institutions. The Kingdom’s foreign exchange reserves have fallen by almost $73bn th
China on Friday has formally established the Asian Infrastructure Investment Bank (AIIB) in Beijing. "The AIIB is legally established as the Articles of Agreement take effect today," intimated China’s Minster of Finance, Lou Jiwei in Beijing. The AIIB was formally established after 17 countries having 50.1% votes ratified it. According to the AIIB Charter, if at least 10 signatories with a combined voting strength of at least 50% ratify the Charter, the institution comes into effective. The bank with headquarter in Beijing has 57 members at present. Chinese officials repeatedly indicated that membership will be expanded in future as important countries like Japan yet to joi
China’s top policy making body indicated that the administration is going to introduce a group of measures to correct the existing abnormalities and guide the economy to achieve higher growth. The Central Economic Work Conference, where economic policy guidelines are taken, decided to increase government deficit and to make monetary policy more flexible. China is experiencing moderate growth, which according to the policy makers is the ‘new normal’, given the economy’s current phase of development. But a more fundamental and deep problem for China is that in the context of declining global demand for its exports, domestic demand is not picking up. Declinin
The Brent grade crude prices dipped to the 2004 levels indicating that oversupply continues to drive oil prices down. On Monday, Brent recorded $36.1, the lowest figure since 2004. A similar pattern is visible on the other variety- the WTI (West Texas Intermediary). Renewed momentum in US sites is considered to be the immediate reason for the price fall. On another development, the US has revealed its intentions to enter the export market. Last week, Congress ratified a plan to remove its 40 year old ban on crude oil exports. Observers point out that it will take considerable time for the US decision to take effect. But still crude has got a new price fall factor. According to th
Five years after the IMF Board of Governors approved the historic quota reforms of the IMF, the US Congress has given consent to it on December 18th. The Congress has passed the quota reform after rejecting the IMF Board of Governor’s decision several times during the last five years. IMF’s voting pattern is peculiar as it gives vote share (and the quota or share of money that a member country has to give to the IMF) in accordance with the economic weight of members. Every important decision including the quota reforms need 85% of votes in the IMF. The US has nearly 17% of the total votes and that gives it a veto power. In the US, international treaties need the c
The Nairobi Ministerial Conference has been extended to few more hours and the closing ceremony extended to Saturday amidst unsettled rift between India led developing nations and the advanced countries. Closing ceremony of the conference was postponed twice on Friday and ultimately to the next day with developing countries demanding firm trade distorting domestic subsidy removal commitment from the developed countries. Negotiations are also going on is other two critical issues related to agriculture- public stockholding of food grains and special safeguard mechanisms. In another development the developing countries have developed more unity with the African group attacking the
Progress at the tenth round of the WTO’s Ministerial Conference (MC) indicates that the inevitable clash between the so called ‘new issues’ and the Doha Development Agenda is driving the MC towards a crash finish. So far the draft distributed at the Conference doesn’t include the agenda of the G-33- the Special Safeguard Mechanism. On the other hand, it contains the new issues though there is no specific mentioning of the measures that the developing world doesn’t entertain right now. Members have the freedom to suggest the changes and submit it on the final day of the summit on Friday. The Chair of the MC declared that the Confe
The US Federal Reserve has made its first rate hike after the financial crisis today, indicating the end of its sever year long easy money policy. The move is extra ordinary as it will end a period of seven year long easy liquidity situation in the world that flooded liquidity in financial markets across the world including the debt and equity markets of the EMEs. In its monetary policy statement on Wednesday, the Fed Chairman Janet Yellen announced increase in its policy rate which is known as the Fed rate by 0.25%. This is the interest rate that charged by the Fed while giving short term loans to the commercial banks. The Central bank has signaled more increases to come &
India has strongly mobilized the opinion of the developing world in favor of the Special and Safeguard Measures all of a sudden. Couple of months back, the SSM was not an agenda at the pre – Ministerial Conference discussions. The late activation of the SSM constitutes an important strategy of India’s trade discussions at Nairobi. This is because WTO is such a forum where countries exchanges concessions in a reciprocal manner. If India has to get a concession say in the form of permission to its food procurement, it has to give a concession to the opposite group- the developed countries n another issue like the new issues. Now, at Nairobi, the advanced countries are b
Objecting to the WTO Director General Roberto Azevedo’s stand that Nairobi is the last opportunity, India has disagreed for setting any artificial deadlines. India’s commerce secretary, Rita Teaotia indicated that negotiations take long time and Doha Development Agenda has not been settled even after fourteen years. Ms Teaotaia’s firmed India’s stand against the potential agenda broadening by the developed countries at Nairobi by bringing ‘new issues’. Pre- Ministerial Conference (MC) talks indicate that the developed countries are in a mood to reintroduce the so called new issues – environment, competition policy government procur
Dictionary on Indian Economy
- Logic of withdrawing Rs 1000 and Rs 500 notes
- Why the GST reform is transformational?
- Raghuram Rajan: The Gladiator returns to Chicago
- Good intention but poor thinking - what troubles demonetization?
- India Black Money Report: CBI underestimates black money at Rs 25 lakh crore
- High interest rate rather than inflation is the macroeconomic problem for India right now
- Japan’s first trade deficit in 30 years is part of the Global Shift
- Why we need an emergency monetization plan as well?
- Arvind Subramanian rocks with 'Chakravyuha' in Economic Survey
- NREGS: give respect to the tax payer’s money