Month: September 2018

After lengthy delays, an $8.2 billion revamp of a colonial-era rail line snaking from the Arabian Sea to the foothills of the Hindu Kush has become a test of Pakistan's ability to rethink signature Chinese "Silk Road" projects due to debt concerns. The rail megaproject linking the coastal metropolis of Karachi to the northwestern city of Peshawar is China's biggest Belt and Road Initiative (BRI) project in Pakistan, but Islamabad has balked at the cost and financing terms. Resistance has stiffened under the new government of populist Prime Minister Imran Khan, who has voiced alarm about rising debt levels and says the country must wean itself off foreign loans. "We are seeing how to develop a model so the government of Pakistan wouldn't have all the risk," Khusro Bakhtyar, minister…

Tesla and its CEO Elon Musk have agreed to pay a total of $40 million and make a series of concessions to settle a government lawsuit alleging Musk duped investors with misleading statements about a proposed buyout of the company. The settlement with the Securities and Exchange Commission allows Musk to remain CEO of the electric car company but requires him to relinquish his role as chairman for at least three years. Tesla must hire an independent chairman to oversee the company, something that should please a number of shareholders who have criticized Tesla’s board for being too beholden to Musk.  The deal was announced Saturday, just two days after SEC filed its case seeking to oust Musk as CEO. ‘Reckless tweet’ Musk, who has an estimated $20 billion fortune,…

Canadian Foreign Affairs Minister Chrystia Freeland postponed her U.N. speech Saturday as free-trade talks between the U.S. and Canada intensified. Freeland had been scheduled to deliver Canada's address to the General Assembly in New York, but Canada exchanged the slot with another country. Freeland may or may not give the speech on Monday. A senior Canadian government official said they were making progress in the talks but that it wasn't certain that they would reach a deal soon. The official, who spoke on condition of anonymity, said Canada would sign only a good deal. Canada, the United States' No. 2 trading partner, was left out when the U.S. and Mexico reached an agreement last month to revamp the North American Free Trade Agreement. The U.S. and Canada are under pressure to…

U.S. consumer spending increased steadily in August, supporting expectations of solid economic growth in the third quarter, while a measure of underlying inflation remained at the Federal Reserve's 2 percent target for a fourth straight month. Economists said Friday's report from the Commerce Department should allay fears of the economy overheating and likely keeps the U.S. central bank on a gradual path of interest rate increases. The Fed raised rates Wednesday for the third time this year and removed the reference to monetary policy remaining "accommodative." "Growth is solid and inflation pressures modest," said Chris Rupkey, chief economist at MUFG in New York. "This is exactly the environment the Fed needs to move interest rates up at a gradual pace as further rate hikes start to look like tightening." Consumer…

Tesla without Elon Musk at the wheel? To many of the electric car maker's customers and investors, that would be unthinkable. But that's what government securities regulators now want to see. The Securities and Exchange Commission has asked a federal court to oust Musk as Tesla's chairman and chief executive officer, alleging he committed securities fraud with false statements about plans to take the company private. The agency says in a complaint filed Thursday that Musk falsely claimed in an Aug. 7 statement on Twitter that funding had been secured for Tesla Inc. to go private at $420 per share, a substantial premium over the stock price at the time. The SEC is asking the U.S. District Court in Manhattan to bar Musk from serving as an officer or director…

Italy’s stock market fell sharply Friday after the new populist, euroskeptic government announced a sharp public spending increase that will push the budget deficit to 2.4 percent of gross domestic product next year, risking a collision with the European Union. The benchmark FTSE MIB dropped 2.2 percent early Friday, hours after the government announced its first financial targets since taking office three months ago.  Italy’s government partners, the 5-Star movement and the League, pressed for money to fulfill campaign pledges, namely a basic citizen’s income for job seekers and a flat tax. Finance Minister Giovanni Tria, who is politically unaligned, had wanted to keep the budget deficit capped at no more than 2 percent. The leader of the 5-Star Movement, Luigi Di Maio, called the document approved early Friday by…

Puerto Rico Gov. Ricardo Rossello flew to New York this week on a mission: convince potential tourists that the hurricane-ravaged island was ready for their return. But Puerto Rico's recovery from last year's Hurricane Maria has been a "mixed bag," Rossello told Reuters on Thursday, acknowledging that the bankrupt U.S. territory, while improving, was far from out of the woods. Puerto Rico has received only a small fraction of the federal funding it needs to get back on its feet, Rossello said in a 75-minute interview, and getting access to the rest could take more than a decade. $4 billion or less His administration estimates that fixing Puerto Rico fully will require $139 billion, but the federal government has earmarked only about $60 billion to $65 billion for the recovery, he said. Of that, only about $3 billion to $4 billion has actually…

U.S. securities regulators on Thursday accused Tesla Inc. Chief Executive Elon Musk of fraud and sought to ban him as an officer of a public company, saying he made a series of "false and misleading" tweets about potentially taking the electric car company private last month. Musk, 47, is one of the highest-profile tech executives to be accused of fraud by the Securities and Exchange Commission. Losing its public face and guiding force would be a big blow for money-losing Tesla, which has a market value of more than $50 billion, chiefly because of investors' belief in Musk's leadership. Tesla shares tumbled 12 percent in after-hours trading. Company officials were not immediately available for comment. The SEC's lawsuit, filed in Manhattan federal court, came less than two months after Musk told his more than 22 million Twitter followers on Aug.…

The United States and Japan have agreed to begin negotiations on a bilateral free-trade agreement, reducing the prospect that Washington might impose tariffs against another trading partner. “We’ve agreed today to start trade negotiations between the United States and Japan,” U.S. President Donald Trump said at a summit with Japanese Prime Minister Shinzo Abe in New York on the sidelines of the U.N. General Assembly. “This was something that for various reasons over the years Japan was unwilling to do and now they are willing to do. So we’re very happy about that, and I’m sure that we will come to a satisfactory conclusion, and if we don’t, ohhhhhh,” Trump added. Fast-track authority The White House released a statement after the meeting, stating the two countries would enter into talks…

Ford chief Jim Hackett on Wednesday ramped up his warnings about the tariffs imposed by President Donald Trump, saying his company was seeing profits slashed by $1 billion. Hackett said the global automaker could face more damage if the trade confrontations were not resolved quickly. “The metals tariffs took about $1 billion in profit from us,” Hackett said in an interview on Bloomberg Television. “If it goes on longer, there will be more damage.” Trump in June imposed steep tariffs on steel and aluminum and has hit $250 billion in Chinese products with tariffs, prompting retaliation from US trading partners and raising costs for many industries. The company earlier this year estimated materials costs would be $1.5 billion over 2017, which had already seen a jump.  And in the July…

Somalia's finance minister says World Bank grants to the government are a sign the country has "trustable leadership" again after decades of chaos and corruption. The World Bank said Tuesday it will provide $80 million in grants to Somalia's federal government, the bank's first direct grants to a Somali central authority in 27 years. In an interview with VOA's Somali service, Finance Minister Abdirahman Duale Beileh said the grants are "proof of Somalia's merit." Beileh said $60 million will be used to increase the capacity of Somalia's financial institutions, and $20 million will go toward education and energy projects to build the country's resilience. He said the grants show that international financial agencies have faith the government is capable of fighting against corruption. "The work we have done and the…

The Federal Reserve on Wednesday raised a key interest rate for the third time this year in response to a strong U.S. economy and signaled that it expected to maintain a pace of gradual rate hikes. The Fed lifted its short-term rate — a benchmark for many consumer and business loans — by a quarter-point to a range of 2 percent to 2.25 percent. It was the eighth hike since late 2015. The central bank stuck with its previous forecast for a fourth rate increase before year's end and for three more hikes in 2019. The Fed dropped phrasing it had used for years that characterized its rate policy as "accommodative'' by favoring low rates. In dropping that language, the central bank may be signaling its resolve to keep raising…

The U.N. Conference on Trade and Development warns the world economy remains fragile, one decade after the collapse of the U.S. financial titan Lehman Brothers triggered a global economic crisis. In its report Trade and Development Report 2018: Power, Platforms and the Free Trade Delusion, UNCTAD says the world economy once again is under stress. It views trade wars and escalating tariffs as symptoms of a growing economic malaise. It warns the world economy is walking a tightrope between debt-fueled growth and financial instability. Lead author of the report Richard Kozul-Wright says many of the underlying problems that caused the 2008 financial crisis have not been addressed. He says footloose capital, precarious jobs, persistent inequality and rising debt remain problematic. “We see growing asset bubbles and emerging crises everywhere," he…

Trade conflicts, rising debt and the potential impact from rising interest rates in the U.S. will likely dampen growth in the coming year, the Asian Development Bank said Wednesday in an update of its regional economic outlook report.  The Manila, Philippines-based regional lender said Wednesday that it expects economic growth to remain at a robust 6.0 percent in 2018 but to slip to 5.8 percent next year.  It cited looming financial and trade shocks as the biggest sources of potential trouble. If the U.S. economy shows signs of overheating, interest rate hikes by the Federal Reserve could disrupt currency markets and other capital flows, leading to problems with bad loans.  Overly high housing prices also are risks for China, Hong Kong, Malaysia and South Korea, it said.  But it said…

After losing his job with a foreign food company in March, Alexander Costa surveyed Brazil's anemic labor market and decided to start selling cheap lunches by the beach in Rio de Janeiro to try and provide for his young family. "I could have stayed home, looking for work, sending out resumes, with few jobs and things very hard," Costa said. "But I didn't stand still. I decided to create something different ... to reinvent myself." Many other Brazilians have also had to reinvent themselves in recent years, as Latin America's largest economy struggles to overcome a jobs crisis more than a year after officially exiting recession. Nearly 13 million people - or more than the entire population of Greece - are out of a job, with the unemployment rate hovering…

The five remaining parties to the Iran nuclear deal have agreed to establish a special payment system to allow companies to continue doing business with the regime, bypassing new sanctions imposed by the United States. Envoys from Britain, France, Germany, Russia, China and Iran issued a statement late Monday from the United Nations announcing the creation of a "Special Purpose Vehicle" that will be established in the European Union. The parties said the new mechanism was created to facilitate payments related to Iranian exports, including oil.  Federica Mogherini, EU's foreign policy chief, told reporters after the deal was announced that the SPV gives EU member states "a legal entity to facilitate legitimate financial transactions with Iran...and allow European companies to continue to trade with Iran in accordance to European Union…