IMF Latest: Yellen Says Critical to Contain Middle-East Conflict

US Treasury Secretary Janet Yellen warned it’s crucial to prevent the war sparked by the Israel-Hamas conflict from becoming a wider, regional conflict.

(Bloomberg) — US Treasury Secretary Janet Yellen warned it’s crucial to prevent the war sparked by the Israel-Hamas conflict from becoming a wider, regional conflict.

“It’s critically important that the conflict not spread, and that’s what the United States is focused on,” Yellen said Friday in an interview with Bloomberg News in Marrakech, Morocco, where she’s attending annual meetings of the International Monetary Fund and World Bank.

Leaders of the global economy are gathering here to discuss challenges including poverty reduction, climate change and easing the debt burden of the world’s poorest nations. The ongoing Israel-Hamas war is adding additional uncertainty to the global outlook.

Brazil’s Haddad Says Congress Must Do Its Part on Budget Goals (7:24 p.m.)

Brazil Finance Minister Fernando Haddad is “optimistic” he will keep his promise to deliver a balanced budget next year, but only if congress does its part to help him zero the primary fiscal deficit, he said in an interview in Marrakech.

Ghana Confident of Signing Deal to Release $600M in IMF Support (7:22 p.m.)

Ghanaian Finance Minister Ken Ofori-Atta expects a debt deal to be signed by official creditors, paving the way for the International Monetary Fund to release the next tranche of money from the country’ $3 billion bailout.

“We met with the governor of the central bank of China, and the French group and they gave us assurances that they will deliver the MOU before the IMF board meets in November,” he told a press conference in Marrakech.

Sri Lanka Private Bondholders Offer Macro-Linked Debt Deal (6:38 p.m.)

A group of creditors has offered a debt restructuring package to Sri Lanka in a bid to end a default that has dragged on for more than a year. 

An ad hoc group of bondholders submitted a proposal that includes taking a 20% reduction on principal and issuance of new debt, including a so-called macro-linked bond, according to a statement. 

Lagarde Says ECB Can Act Again as Rate Impact Gauged (3:59 pm.)

European Central Bank President Christine Lagarde said officials will raise interest rates again if they have to, but they’re also gauging the impact of prior moves still feeding through.

Speaking to Bloomberg Television’s Tom Keene during a panel discussion in Marrakech, she said that policymakers are judging “multiple moving parts” that will affect the outlook of economies in the euro zone and around the world, including how previous hikes in borrowing costs are taking effect.

Bullard Says May Need More Fed Hikes If Inflation Quickens Pace (3:51 p.m.)

Former Federal Reserve Bank of St. Louis President James Bullard said investors were too complacent on inflation and the central bank might have to increase interest rates as high as 6.5% if it starts to rise again.

“The risk that’s underpriced in markets is that disinflation stalls out or stops altogether and core PCE inflation starts to go up again,” he said Friday in Marrakech. “If that happens the committee will have to contemplate going to 6% or 6.5%,” said Bullard, who stepped down from the Fed in August to take a job in academia.

Yellen, PBOC’s Pan Hold ‘Substantive and Productive’ Talks (3:49 p.m.)

US Treasury Secretary Janet Yellen and Pan Gongsheng, governor of the People’s Bank of China, held talks Friday in Marrakech, Morocco, extending a series of high-level meetings that could lead to another summit for Presidents Joe Biden and Xi Jinping next month.

“During the substantive and productive meeting, Secretary Yellen and Governor Pan exchanged views on macroeconomic and financial developments,” a Treasury spokesperson said in a statement after the two officials met on the sidelines of annual meetings for the International Monetary Fund and World Bank.

Egypt Seeks to Boost IMF Loan (12:41 p.m.)

Egypt is in talks with the IMF on augmenting its rescue program to over $5 billion, according to people familiar with the discussions, confident it can overcome the roadblocks facing its existing package by addressing concerns including its currency policy. 

Any announcement on a potential increase from the $3 billion secured last year would only come after Egypt completes its two delayed program reviews, said the people, who asked not to be identified as the matter is confidential. No decision has yet been made, they said.

Africa To Feel Impact of Slowing China, IMF Says (11:15 a.m.)

Sub-Saharan Africa’s growth will be hit by China’s slowing economy, the IMF said, urging countries in the region to do more to adapt to slowing import demand and declining Chinese economic engagement.

A one percentage point decline in China’s real GDP growth rate leads to about 0.25 percentage point decline in in sub-Saharan Africa’s total GDP growth within a year, IMF economists including Hany Abdel-Latif wrote in a report. Oil exporters would experience the largest impact, it added.

IMF Warns of Spillover From China’s Property Woes (11:02 a.m.)

IMF economists warned that China’s real estate sector downturn could erode growth prospects in the Asia Pacific region, which is already seeing signs of its recovery losing steam. 

“In the near term, the sharp adjustment in China’s heavily indebted property sector and the resulting slowdown in economic activity will likely spill over to the region, particularly to commodity exporters with close trade links to China,” IMF economists Yan Carrière-Swallow and Krishna Srinivasan wrote in a report.

World Bank Head Seeks Record Help Aiding Poorest Nations (9:20 a.m.)

World Bank President Ajay Banga urged the lender’s members to make record contributions in the next funding round for its arm that helps the 75 poorest nations, warning of declining progress in the fight against poverty. 

“We are pushing the limits” of the International Development Association, Banga said in Marrakech. “No amount of creative financial engineering will compensate for the fact that we need more funding.

–With assistance from Ekow Dontoh, Eric Martin, Abeer Abu Omar, Jana Randow, Mirette Magdy, Martha Beck, Kamil Kowalcze, Craig Stirling and Alexander Weber.

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