FINANCE
Germany reveals huge inflation-relief package
Published
2 years agoon
The German government has agreed a €65 billion financial aid package to ease inflation-driven pressure from a tightening power-supply crisis in the European Union, AFP reported on Sunday, citing a policy paper.
“Timely and proportionate relief for citizens and businesses is necessary due to the rapidly increasing burden of high energy prices,” the country’s coalition partners said in the document, adding that the total package came to “over €65 billion.”
The measures reportedly include a one-off payment of €300 to millions of German pensioners, as well as a smaller one-off payment of €200 and a heating cost payment for people receiving housing benefits.
The latest step follows two previous relief packages, totalling €30 billion, involved a reduction in the tax on gasoline as well as heavily subsidized public transport ticket pricing.
Germany, which is heavily reliant on Russian energy imports to meet its needs, has seen energy prices spiralling as supplies of natural gas from Russia have been dramatically reduced over the past severals month.
Sanctions hinder Russian gas flow to EU – Gazprom
Nord Stream 1, the key route for natural gas from Russia to Germany, had been operating at reduced capacity since July due to the shutdown of several gas turbines. Some of these were sent to Montreal for repairs and became stuck there due to Canadian sanctions on Moscow over Russia’s military operation in Ukraine. At Germany’s request, Ottawa announced an exemption for the turbines in July, returning one, but Gazprom refused to take delivery, citing irregularities in the documentation.
The Russian company has cited faulty or delayed equipment as the main reason for the 80% reduction of gas deliveries via the pipeline. Earlier this week, Moscow said only sanctions are preventing Nord Stream 1 from working at full capacity. Gazprom CEO Alexey Miller had also warned that sanctions could obstruct Siemens Energy from carrying out regular maintenance of the pipeline’s equipment.
In August, German inflation rose to 7.9%. The surge in energy prices is forecast to send it soaring around 10% in Germany and the Eurozone by the end of 2022, the highest in decades.
It’s now $45 trillion higher than its pre-pandemic level and is expected to continue growing rapidly, a top trade body has warned
The global debt pile increased by $8.3 trillion in the first quarter of the year to a near-record high of $305 trillion amid an aggressive tightening of monetary policy by central banks, the Institute of International Finance (IIF) has revealed.
According to its Global Debt Monitor report on Wednesday, the reading is the highest since the first quarter of last year and the second-highest quarterly reading ever.
The IIF warned that the combination of such high debt levels and rising interest rates had pushed up the cost of servicing that debt, prompting concerns about leverage in the financial system.
“With financial conditions at their most restrictive levels since the 2008-09 financial crisis, a credit crunch would prompt higher default rates and result in more ‘zombie firms’ – already approaching an estimated 14% of US-listed firms,” the IIF said.
Despite concerns over a potential credit crunch following recent turmoil in the banking sectors of the United States and Switzerland, government borrowing needs to remain elevated, the finance industry body stressed.
According to the report, aging populations and rising healthcare costs continue putting strain on government balance sheets, while “heightened geopolitical tensions are also expected to drive further increases in national defense spending over the medium term,” which would potentially affect the credit profile of both governments and corporate borrowers.
“If this trend continues, it will have significant implications for international debt markets, particularly if interest rates remain higher for longer,” the IIF cautioned.
The report showed that total debt in emerging markets hit a new record high of more than $100 trillion, around 250% of GDP, up from $75 trillion in 2019. China, Mexico, Brazil, India and Türkiye were the biggest upward contributors, according to the IIF.
As for the developed markets, Japan, the US, France and the UK posted the sharpest increases over the quarter, it said.
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The West African country has built a giant oil refinery to cover domestic demand
Nigeria will commission its new Dangote Petroleum Refinery on Monday in hope of alleviating the chronic fuel shortages that have turned Africa’s biggest oil producer into a fuel importer.
The processing plant, which has capacity of 650,000 barrels per day, is expected to cover all of the country’s fuel demand, according to Nigerian media.
Built by Dangote Group, a conglomerate owned by billionaire industrialist and Africa’s richest man Aliko Dangote, at the Lekki free trade zone near the city of Lagos, the refinery is being touted as a way to end the country’s reliance on imports for nearly all of its refined petroleum products.
The giant complex is one of Nigeria’s single largest investments. It comprises a 435-megawatt power station, a deep seaport and a fertilizer unit. Initially, $12 billion was earmarked to build the refinery, but the project ended up costing $19 billion after years of delay.
Crude processing is scheduled to begin in June, although the research consultancy firm Energy Aspects said that commissioning was an intricate process and that the facility may only start operating later this year. It is expected to reach about 50-70% of processing capacity next year and full capacity by 2025.
The refinery will produce Euro-V quality gasoline and diesel, as well as jet fuel and polypropylene, the company said, adding that the facility was “designed to process a large variety of crudes including many of the African crudes, some of the Middle Eastern crudes and the US Light Tight Oil.”
Despite being Africa’s biggest oil producer, Nigeria imports petrol, diesel, and processed petroleum products because many of its own refineries have dilapidated over the years.
Russia accounts for lion’s share of India’s oil imports – Reuters
Dangote expects the new plant to cover Nigeria’s domestic fuel needs and produce extra volumes for export. It is also expected to boost the market for Nigerian crude to $21 billion per year, the company added.
The Nigerian National Petroleum Corporation has a contract with Dangote to supply some 300,000 barrels of crude per day. However, theft, pipeline vandalism, and underinvestment poses a threat to achieving full output, economist Kelvin Emmanuel told Reuters.
In April, Nigerian oil production slumped under 1 million bpd, below Angola’s output, data showed.
According to Emmanuel, Dangote might be importing oil from international trading companies such as Trifigura and Vitol, as the refinery has not yet signed agreements with oil majors in Nigeria.
Meanwhile, Energy Aspects expects the Dangote refinery to not only solve Nigeria’s fuel shortages but also to reshape the gasoline market in the Atlantic basin.
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FINANCE
US will default if debt deal fails – treasury secretary
Published
1 year agoon
May 24, 2023The current borrowing limit is a constraint on Washington’s ability to meet its obligations, Janet Yellen insists
America’s chances of paying its bills after June 1 are “quite low,” US Treasury Secretary Janet Yellen warned on Sunday in an interview with NBC’s ‘Meet the Press’.
According to Yellen, if Congress fails to reach an agreement on raising the country’s $31.4 trillion borrowing limit by that time, it will be forced to default on “some bills” shortly after.
“There’s always uncertainty about tax receipts and spending. And so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15, while being able to pay all of our bills, is quite low… My assumption is that if the debt ceiling isn’t raised, there will be hard choices to make about what bills go unpaid,” Yellen said.
The treasury secretary did not say which ‘bills’ she had in mind, but noted that the government’s most immediate obligations range from paying interest on outstanding debt to “obligations to seniors who count on social security, military, contractors who’ve provided services to the government.”
She added that “there can be no acceptable outcomes if the debt ceiling isn’t raised.”
The administration of US President Joe Biden and Republicans led by House Speaker Kevin McCarthy have been at an impasse over raising the debt ceiling for several months, despite warnings that the US could face its first-ever default unless it is raised by June 1.
Republicans are refusing to agree to the move unless Biden agrees to government spending cuts and curbs on social programs.
Some lawmakers have called on Biden to invoke his powers under the 14th Amendment to the Constitution and bypass Congress and unilaterally raise the debt ceiling. However, Biden told reporters on Sunday that while he has considered doing so, there is likely not enough time before the deadline.
Biden and McCarthy are scheduled to meet again on Monday to discuss the matter.
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US will default if debt deal fails – treasury secretary
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LIFE
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