Greece debt deal boosts euro value

EURO V US DOLLAR Last updated: 13 Apr 2010, 23:56 UK *Chart shows local time €1 buys change % 1.3609 +0.0016 +0.12 More data on this currency pair

The euro has jumped sharply against the dollar and the pound after the eurozone agreed details of a multi-billion euro loan package to debt-ridden Greece.

The euro rose by 2 cents, or 1.5%, against the dollar, to $1.3672, before slipping slightly. Against the pound, it rose by 0.75p to 88.45p.

Eurozone nations have agreed to provide up to 30bn euros ($41bn; £27bn) in the first year of a three-year package.

Greece hopes it will not have to ask for the emergency loans.

Instead, it hopes that an extensive package of austerity measures will help to cut its debt levels and restore confidence in Greek government debt.

This would mean it could raise money itself, rather than relying on financial assistance from the eurozone and the International Monetary Fund (IMF), which is also contributing to the 30bn-euro loan package.

I suspect that many investors will still look at the state of the economy and the public balance sheet and conclude that, sooner or later, Greece's time is going to run out Stephanie Flanders, BBC economics editor Read Stephanie's blog in full

As a result of the deal, the yield on Greek government bonds fell sharply on Monday, reflecting the fact that investors now view the bonds as less risky.

The yield is the return investors receive on government debt - in other words the compensation they get for taking on the risk of the government defaulting on its debts.

The yield on three-year bonds fell from more than 7% on Friday to 6.1% in early trading.

Raising money

The loan deal comprises a three-year financing programme at interest rates of about 5%, based on IMF formulas.

An exact interest rate for the loans will only be finalised if Greece formally requests help.

The rate is less than the rate the Greek government would have to pay to raise money on the open market.

Luxembourg Prime Minister Jean-Claude Juncker said there were no elements of subsidy in the loan offer.

Greece has to find about 11.5bn euros ($15.7bn; £10.2bn) by next month to meet its financial obligations. Its total debt stands at nearly 300bn euros.

It intends to auction a 1.2bn-euro package of treasury bills on Tuesday.

In Greece, this is increasingly being portrayed as a battle with speculators Gavin Hewitt, BBC Europe editor Read Gavin's blog in full

"The amount and reiteration of support may well be enough for the markets to continue funding Greece as, in the short term, the immediate impact is to remove the prospect of a Greek default," said Gary Jenkins at Evolution Securities.

However, some observers said the loan package might not be enough to solve Greece's debt crisis.

"In the short term, this gives the Greek government breathing space," Yanis Varoufakis, professor of economics at the University of Athens, told the BBC.

"But I think that it will become very clear, very soon, that, in the medium term, the problem is going to resurface."

He pointed out that the German government, which would provide the lion's share of the 30bn euros should it be needed, can borrow money on the open market at 3%, and then lend it to Greece at 5%.

"In the long term, instead of this representing a bail-out, it will represent a net transfer of wealth from Athens to Berlin."

Continuing doubts

The eurozone was forced to act after its initial proposal of a 22bn-euro support package agreed last month failed to convince investors that Greece would be supported fully by its partners.

The latest offer is simply a more detailed, beefed-up version of the original package.

EURO V POUND STERLING Last updated: 13 Apr 2010, 23:56 UK *Chart shows local time €1 buys change % 0.8851 +0.0006 +0.07 More data on this currency pair

In recent weeks, the euro has weakened and the rate at which the Greek government borrows money on the international capital markets has increased.

Although Greece has maintained it does not plan to turn to its eurozone partners and the IMF for any loans, investors believe it will have little choice.

The country has struggled for months to lower its borrowing costs, and investors remained unconvinced that the Greek government's programme of spending cuts and tax rises, which have proved deeply unpopular at home, will be enough to restore confidence in the country's ability to repay its debts.

On Friday, ratings agency Fitch downgraded Greek government debt by two notches, from BBB+ to BBB-.

The BBB- rating is significant, as this is the lowest rating that qualifies as an investment grade bond. Any further downgrade would mean Greece losing its investment grade status with Fitch.

If the two other major credit rating agencies, Standard & Poor's and Moody's, were to follow Fitch's lead, then a lot of big institutional fund managers, such as pension funds, would not be allowed to invest in Greek debt.

Greece is currently rated BBB+ by Standard & Poor's and A2 by Moody's.

Much will now depend on Greece's efforts to raise money this week. If it struggles to raise the 1.2bn euros it wants to, then confidence in the country's ability to repay its debts could take another dive.

India's economy: Can the boom last?

India's economy: Can the boom last?

By Kaushik Basu Professor of Economics, Cornell University

For the Indian economy the year 2003 ended on a high - on 20 December, the foreign exchange reserves breached the $100bn mark.

Fancy shopping malls cater to newly-enriched consumers

The year also saw Indian companies breaking into the international corporate market, making 35 global acquisitions totalling $450m.

Thinking internationally, Prime Minister Atal Behari Vajpayee floated the idea of a common currency for South Asia.

And the industrial sector is booming. Car sales in November were 41% higher than the previous year. Overall, Gross Domestic Product is expected to grow by more than 7% in the financial year ending in March 2004.

But it is easy to over-interpret this news.

Your views on India's economic prospects

Growth challenge

A sober analysis indicates that India is continuing to do well, as it has done since 1993, with 6% per annum average growth.

Boom-time in Bombay: Record share prices spark a trading frenzy

This robustness, combined with the advantage of its size, means that it is a country that global players cannot ignore.

But if India is to go beyond this, to a sustained annual growth rate of over 8%, and with benefits reaching all levels of society, more needs to be done by government than whipping up electoral support by pointing to the headlines.

It is worth remembering that India has seen brief growth spurts before - its growth rate in 1988-89 exceeded 10%.

The challenge therefore, is to bring about sustained growth.

Economic interest

Consider the $100bn foreign exchange (forex) news.

India is a potential global economic power. But for that potential to be realised, its promise must not be treated as an instrument of short-term electoral popularity.

The large reserve points to a good performance by the Reserve Bank - the reserve was $5.83bn in 1991.

But, in itself, this does not mean as much as the screaming newspaper headlines on 21 December suggested.

What was more significant was the fact that the news made the headlines.

Never before has dry, economic news been celebrated so widely in India.

The interest of the citizenry in such matters was reminiscent of South Korea in the 1980.

It augurs well for India as it compels politicians to divert some of their attention from politics to economics.

The forex reserve of a government is like an individual's bank balance.

The fact that it is high does not indicate economic strength and preparedness to respond to emergencies. Rather, it reflects the person's preference for keeping money in a bank rather than investing it in assets.

Indeed, there are economists who argue that India should run down a part of its reserve to increase investment.

Order first

The other big news was also one where the symbolic value outstripped the actual.

Appetite for luxury: A saleswoman shows off costly Indian jewels

This was the idea floated by Indian Prime Minister Vajpayee of a common currency for South Asia.

Although this is not about to happen, the suggestion shows a level of maturity that political leaders can think in terms of economic co-operation even while political irritants remain.

Moreover, the very effort to build such co-operation could serve to reduce the risk of political conflict.

To guarantee long-run strength, the Indian Government needs to:

Raise the level of investment (and that includes investment in people)

Make a fetish of efficiency

Make it easier for new private firms to start up business.

India's investment rate has remained virtually stationary at 24% (with a slight fall in the last three years).

A sustained growth rate of over 8% will not be possible unless the investment rate rises to 30%. That, in turn, requires the government to put its fiscal house in order.

Sweet subsidies

On the human side, India has done better than Pakistan, but worse than its much poorer eastern neighbour, Bangladesh, in many dimensions.

In 1990, under-5 child mortality (that is, the number of deaths before age 5 per 1000 children) was 144 in Bangladesh, 128 in Pakistan and 123 in India.

By 2001 the numbers were Bangladesh 77, India 93, and Pakistan 109.

India's rural poor are still waiting for their share of the economic pie

As far as school enrolment of girls as a percentage of boys go, the figure for Bangladesh is an exemplary 103%, whereas for India it is 78 and for Pakistan 61.

India is a potential global economic power.

But for that potential to be realised, its promise must not be treated as an instrument of short-term electoral popularity. Instead, the government must invest more on infrastructure and social improvement.

For the Indian government to spend as much as it does - on subsidies and the bureaucracy - and then to wonder why the economy is not growing faster is like my father's youngest sister who in her old age lamented to me, "I don't know why I keep such poor health - I eat only sweets."

Indonesia's Debt Last 5 Years Greatest Throughout History of Indonesia

Indonesia's Debt Last 5 Years Greatest Throughout History of Indonesia Monday, June 15, 2009
Posted by Quito in Apa Kabar Indonesia Riantori?.
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Indonesian Team Up (TIB) noted Indonesia's debt in the last 5 years have increased by 31 percent to Rp 1667 trillion. This represents a debt of Indonesia's largest debt in history.

This was conveyed by the Chairman of Indonesian Team Up, Rizal Ramli in a press conference at Hotel Bumi Karsa, Jakarta, Tuesday (1/4/2009).
He explained, in the last five years the number of Indonesia's debt increased by 31 percent from Rp 1275 trillion in December 2003 to Rp 1667 trillion in January 2009 or an increase of approximately Rp 392 trillion.
"That puts Indonesia in the record of the largest debt in history," he asserted.
Meanwhile, Rizal also said the amount of debt per capita of Indonesia has increased. If in 2004 the per capita debt of about USD 5.8 Indonesia surprise per head, then in February 2009 jumped so Rp 7.7 million per head.
"Kan strange, TIB data showed rising debt, how dare the government make debt ads down," he said.

Indonesia useless Arrived To G-20
Indonesian Team Up (TIB) also assess Indonesia's arrival at the G-20 could be wasted if not bring a special economic interest for Indonesia itself.
"There is no point if Indonesia is in the G-20 did not bring a specific agenda that prioritizes the economy in Indonesia, will all be in vain," said economist TIB Hendry Saparini the same occasion.
According to Hendry, if the presence of Indonesia only strengthen the role of the IMF and the World Bank and opened wide the door of free trade, the same as it would be detrimental to Indonesia because of the impact of free trade will drop the local industry because the market will be flooded by imported products.
"Loss if we did not bring an agenda that does not address our economic interests, but only deal with the IMF and World Bank," he explained.
"We do not want fooled. So far developed countries have never opened the door wide free trade. If Indonesia does not dare to fight for their economic interests aja ya useless to be there, "he said.

Debt Maturity RI Reaches Rp 116 trillion in 2010

Jakarta - The value of government debt maturing in 2010 reached Rp 116 trillion. Of this amount,Rp 54 trillion from foreign debt, and Rp 62 trillion comes from the State Securities (SBN).

Thus the data from the Directorate General of Debt Management Department of Finance was quoted detikFinance, Saturday (26/12/2009).

Total debt maturing in 2010 was, a sharp increase when compared to the amount of government debt maturing in the year 2009 the amount reached Rp 29 trillion.

According to these data, the peak height of the Indonesian government debt is maturing in the year 2033. In that year, the amount of maturing debt reached Rp 129 trillion. Of this amount, Rp 127 trillion comes from ex BLBI debt.

Indonesian government debt until October 2009 was recorded at U.S. $ 167.86 billion, equivalent to USD $ 1602.86 trillion. This figure has declined compared to the amount owed as of the end of 2008 which reached USD 1636.74 trillion.

The debt consists of borrowings of U.S. $ 65.65 billion and marketable securities of U.S. $ 102.2 billion. Using Indonesia's GDP amounted to USD 5401 trillion, then Indonesia's debt ratio was recorded at 30%.

source: detikfinance

Indonesian Team Up (TIB) noted Indonesia's debt in the last 5 years have increased by 31 percent to Rp 1667 trillion. This represents a debt of Indonesia's largest debt in history.
This was conveyed by the Chairman of Indonesian Team Up, Rizal Ramli in a press conference at Hotel Bumi Karsa, Jakarta, Tuesday (1/4/2009).

He explained, in the last five years the number of Indonesia's debt increased by 31 percent from Rp 1275 trillion in December 2003 to Rp 1667 trillion in January 2009 or an increase of approximately Rp 392 trillion.

"That puts Indonesia in the record of the largest debt in history," he asserted.

Meanwhile, Rizal also said the amount of debt per capita of Indonesia has increased. If in 2004 the per capita debt of about USD 5.8 Indonesia surprise per head, then in February 2009 jumped so Rp 7.7 million per head.

"Kan strange, TIB data showed rising debt, how dare the government make debt ads down," he said.

Indonesia useless Arrived To G-20

Indonesian Team Up (TIB) also considered the arrival of Indonesia in the G-20 could be in vain if it does not carry the special economic interests for Indonesia itself.

"There is no point if Indonesia is in the G-20 did not bring a specific agenda that prioritizes the economy in Indonesia, will all be in vain," said economist TIB Hendry Saparini the same occasion.

According to Hendry, if the presence of Indonesia only strengthen the role of the IMF and the World Bank and opened wide the door of free trade, the same as it would be detrimental to Indonesia because of the impact of free trade will drop the local industry because the market will be flooded by imported products.
"Loss if we did not bring an agenda that does not address our economic interests, but only deal with the IMF and World Bank," he explained.

"We do not want fooled. So far developed countries have never opened the door wide free trade. If Indonesia does not dare to fight for their economic interests aja ya useless to be there, "he said.

Pay off debt crisis, the government is relying on a surplus of Indonesian banks

 KOMPAS.com - The government is relying on a surplus of Bank Indonesia to pay off debt that comes due to the monetary crisis in 1998-2000, which is valued at Rp 129 trillion. Peak load of debt maturities coming from bond issuance Special Rate, Bank Indonesia, or SRBI 001, it will happen in the year 2033. 
Minister of Finance and the Executive Office of Economic Coordinating Minister Sri Mulyani Indrawati has revealed that in Jakarta, Sunday (14 / 6). 
SRB-01/MK/2003 are government bonds issued on August 7, 2003, as a substitute for Government Securities (SU)-001utan and SU-003. Debentures were issued related to the completion of BI liquidity support (BLBI). Nominal value of Rp 144.54 trillion, the issuance of SRBI. 
SRBI mature in 2033 with a coupon rate of 0.1 per cent a year calculated from the remaining outstanding principal, which is paid periodically twice a year. 
SRBI repayment can be sourced from a surplus of BI that is part of government, and will be conducted if the ratio of capital to the monetary obligations of BI on top of 10 percent. 
In 2006, the ratio of capital to the monetary liabilities of more than 10 percent of BI. BI to use these advantages to reduce the outstanding value of Rp 1.52 trillion SRBI. 
According to Sri Mulyani, SRBI-001 rate is relatively low so as not to burden the government that took power in 2033. Especially when taking into account the time value of money (net present value of money), then the interest expense was very light because interest rates were not influenced by the increase in inflation. 
"If the BI get the excess proceeds from the management of finances, it will automatically reduce the SRBI 001. From the years 2009 to 2033 there was still time 24 years, that means, SRBI-001 was able to in-reprofiling (ie, among others, by extending the maturity date), "said Minister of Finance. 
Do not reducible 
According to economic analysts Indonesian Team Up, Revrisond Baswir, the debt problem should not be reduced to the problem of finance and management. 
Debt, said Revrisond, is a social issue politics. "The statement repeated that the ratio of debt to GDP (gross domestic product) declined to show the economic team lazy to find a comprehensive solution to the problem of debt," he said. 
Until May 29, 2009, total government debt, including bonds BLBI domestically, and abroad reached USD 1700 trillion. The period of maturity which is high will occur in 2010, 2012, and 2014, ie each value of Rp 110 trillion, Rp 127 trillion, and Rp 130 trillion. 
source: compass

Two Options for Century's Victims

KOMPAS/YUNIADHI AGUNG

Century Bank customers demonstrating for a refund of their money and for the Century case to be solved

KOMPAS.com - The government has come up with two options to solve the problem of the customers of PT Antaboga Delta Securitas who lost their money, which is part of the Century Bank case.

The first option is to help the customers through state funding with the consent of the House of Representatives. The second option is to refund the customers after the Century Bank asset reclaiming, which is being processed by the law, is done.

The two options were stated by the Coordinating Minister for Politics, Law and Security Djoko Suyanto, and the Attorney General Hendarman Supandji, Jakarta, Tuesday. The options were given in response to the recommendation of the House for the government to immediately solve the problem of the Antaboga customers.

"If it's through state funding, then it must have the consent of the House. But, if it's through the asset and funds of Century Bank and Mutiara Bank, then it has to wait till the asset has all been reclaimed, then we can calculate how much the refund is and how much asset is available."

Hendarman Supandji also added that, regarding the Century Bank fund that has been taken abroad, the AGO, police, and Financial Transaction Analysis and Report Center will try to block the assets of Hesham Al Waraq, Rifat Ali Rizvi, and Robert Tantular, which are spread over 12 countries. Their blocked assets are estimated to be around Rp. 3 trillion.

This value is much lower than the initial estimation by the police detective unit, which was around 12 to 14 trillion rupiahs. But the current block is only temporary and can only be processed after there is a stronger ruling from the court.

"It wasn't a miscalculation, it could be due to fluctuating share value. According to Mr. Susno it was Rp. 12 trillion, but the interdepartment team said it was Rp. 3 trillion."

BUSINESS offspring ACHIEVE 600 SOE | SOE Banned Grandchildren Business Forms (ANAK CUCU USAHA BUMN CAPAI 600 | BUMN Dilarang Bentuk Cucu Usaha)

JAKARTA, KOMPAS.com - state-owned enterprises or SOEs are prohibited form company grandchildren so that the structure of the company becomes very inefficient. The ban will be published in the Ministry of SOEs in the near future. 
"We've asked all state enterprises to restructure the children and grandchildren of their efforts, including mandatory reporting Intellectual Property Sheet Officers him. So we are seriously to issue rules that prohibit the establishment of a grandson to keep the effort out of control and difficult to control," SOE Minister said Mustafa Abubakar in Jakarta, Thursday (18/3/2010), after he delivered a key presentation in the Discussion Forum Focused on the Urgency Policy Options Toward Holding BUMN Perkebunan Profitisasi and Increased Competitiveness. 
This problem is considered serious because the children and grandchildren estimated state efforts already reached 600 companies. In fact, the number of listed state-owned companies currently only 139 companies and will be reduced to 89 companies. 
According to Mustafa, it seeks to rule on the prohibition of this business grandchildren forthcoming. This rule will limit the establishment of child-level attempt to three. Each state will be urged to establish at most only subsidiary in level (layer) two. 
"But, if so required, we will provide a highly selective permission. Because we were concerned about the possibility of going out of control and shift assets. If only up to the subsidiary would be easier to control, detect, or identification," he said. 
On the basis of rules that will be published later, the grandson of state-owned businesses will be encouraged to immediately didivestasi or removed from its mother. Grandchildren release program efforts will be regulated in detail the technical rules.