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IMF: constructive US-China dialogue and reduced tensions are good for the world economy
The?International Monetary Fund stated on Thursday that they?welcome?the initial dialogue between U.S. president Donald Trump and Chinese president Xi Jinping. They added that reducing tensions and uncertainties between the two world's largest economies is good for the entire world. When asked to comment on the initial results of the Trump-Xi Summit in Beijing, IMF spokesperson Julie Kozack said at a press briefing: "It is important that the two world's largest economies engage at the highest levels." "We certainly welcome the fact there is a constructive dialog between the two nations." Kozack said that anything that reduces trade tensions, or creates less uncertainty, is good for these two large economies and the global economy. Kozack said that due to the Middle East conflict and Iran's closing of the Strait of Hormuz which have kept crude oil above $100 per barrel the "global economy" is moving towards the middle of three scenarios that were outlined by the IMF in their?April World Economic Outlook. IMF's "adverse scenario" assumes that the global GDP will grow by 2.5% in this year. This compares to 3.1% growth in the "reference forecast", which assumes an end to the war in 2025. The negative scenario assumes that oil will be $100 per barrel for the entire year, but also tightening financial conditions and increasing inflation expectations. Kozack stated that while higher energy prices may have increased expectations for short-term increases in price, the IMF believes medium-term expectations are well-anchored. She said that the financial conditions of the global economy are still "accommodative". ASSISTANCE TALKS IMF is continuing to discuss financial assistance with member countries who are suffering from higher energy and commodities costs because of the Middle East conflict. She did not give any specifics on countries or comment on a report that Iraq had sought financial aid. International Monetary Fund Director Kristalina Georgeieva stated during the IMF and World Bank Spring Meetings in April that a minimum of 12 countries were expected to require assistance from both institutions totaling between $20 billion and $50 billion. The two institutions are currently consulting on how to best assist member countries. Kozack refused to update these figures. She added, "We're seeing that many countries actually ask us for help in the policy field." "They ask us for advice on policy." How can they respond best to shock, given their individual country's circumstances? In April, the Fund said that member countries should not provide broad fuel subsidies because they would drain fiscal resources at a time when oil supplies are limited and increase prices. Reporting by David Lawder, Editing by Andrea Ricci
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IMF Board to Review Sri Lanka Staff Agreement in Coming Weeks
IMF spokesperson?Julie Kozack stated on Thursday that the executive board of the International Monetary Fund will'review' a staff-level agreement reached with Sri Lanka in the coming weeks. She told reporters that once the Extended Fund Facility agreement with the IMF is approved by the IMF board, Sri Lanka would have access to $700 million. Sri Lanka and the IMF reached an agreement at staff level in April that required reforms to ensure growth, including fuel levies. The 'island nation' is trying to recover from the worst economic crisis it has experienced in decades. This led to a default on foreign debt in 2022 and a $2.9 billion IMF bailout program. However, the conflict in the Middle East created new challenges. As a result, Sri Lanka has seen a rise in energy costs, as have many other Asian nations. Kozack stated that Sri Lanka had to take a number of actions before considering the agreement at the staff level. These included the restoration of cost-recovery for electricity and fuel pricing. She said that the Sri Lankan people and economy?had demonstrated remarkable resilience in the face of the double?shocks? caused by Cyclone Ditwah as well as the Middle East conflict. The IMF has pledged its unwavering support to Sri Lanka as it strives for a more stable economic system.
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Canada plans to double the capacity of its electricity grid by 2050
Canada announced a C$1 trillion ($729 billion), strategy on Thursday to double its capacity of 'electricity grids by 2050. The plan was based on the rapidly growing 'power demand' and the need for energy safety. Mark Carney's announcement comes at a time when Canada's electrical systems are being put under increased strain by industrial growth, AI data centers and the use of electric vehicles. However, the?country?s total electricity production has decreased, in part due to droughts that have reduced hydroelectric capability and the retirements of coal-fired plants. Canada is looking to reduce its trade dependence on the United States because of President Donald Trump's tariffs. Canada's regional grids trade with the U.S. more than they do among themselves, according to Canada Energy Regulator. Its U.S. imports of electricity have also increased each year since 2020. The strategy for electricity aims to encourage the construction of east-west interconnections to connect regional power grids by using new investment tax incentives. Canada has also announced that it will amend its clean electricity regulations in order to make use of more credible offsets and to give existing natural gas-powered units greater flexibility to maintain reliability. The move softens regulations that were introduced by former Prime Minister Justin Trudeau. These regulations had been criticized?by provinces such as Alberta, who depend on natural-gas to produce power. Carney said that natural gas could play a complementing role in Canada's grid but will be dwarfed by the clean electricity investments made in Canada in hydropower and nuclear power.
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Cuba's electric grid collapses in part as protests erupt
Cuba's electrical system suffered a partial failure early 'on Thursday morning', according to the grid operator UNE. This'snuffed out power in eastern Cuba,' and tested the patience of Cubans who were already tired from'seemingly endless blackouts' amid a 'U.S. fuel blockade. Grid operator reported that by mid-morning, officials had restored some essential services to the region. However, much of Cuba east from Camaguey including the second largest city of the island, Santiago de Cuba remained without electricity. This month, the Caribbean island with its 10 million people reached a tipping-point as the summer heat set in. The vast majority of the population, including those in Havana's capital city, now live without electricity 20 hours or more per day. In January, blackouts grew worse after U.S. president Donald Trump threatened to impose tariffs on any country supplying fuel to the island. Venezuela and Mexico were once the top suppliers of crude oil to the United States. They have since stopped supplying it. Trump predicted that Cuba would "collapse", and he has stated that he wants the communist government to be ousted. Cuba's Energy and Mines Minister said that on Wednesday, the island was completely out of diesel and fuel oil, both essential to powering its electrical grid. He blamed the blackouts on U.S. sanctions. On Wednesday evening, Havana was awash with protests as power cuts lasted for 24 hours in certain?parts? of the city. This threatened to spoil frozen food and make sleep nearly impossible for residents. Rodolfo Aragón, 55, is a small business owner and he said that the country had no fuel. He also stated that he did not see much hope for the future due to the conflict between Cuba and the United States. "Our economy has hit rock bottom." Last?week, the United Nations called Trump's blockade of fuel illegal, saying it had undermined "the Cuban people's rights to development, while obstructing their right to food, water, sanitation, education and health." (Reporting and additional reporting by Mario Fuentes, Editing by Nia William)
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Venezuela claims refiner Citgo has increased in value, and calls for the sale to be stopped
Lawyers for Venezuela have told a U.S. court this week that Citgo Petroleum, the Venezuelan-owned U.S. refining company, has seen its value 'increase since the sale of their 'parent company was ordered last year. This should prevent the execution process. Amber Energy, a hedge fund affiliate, and a Delaware judge approved in November a $5.9billion bid from Elliott Investment Management for Citgo Holding, the parent company of Citgo. This was after a court-organized share auction to pay creditors. The sale has yet to be approved by the U.S. Treasury Department and a U.S. Venezuela and rival bidders have asked an appeals court to temporarily suspend the sale due to a disagreement over the company's value and a conflict of interest with firms that advise the Delaware court. In the months following the hearing, the value for publicly traded refiners increased substantially," Alexandra Cumings wrote in a letter to Delaware Judge Leonard Stark, dated May 12, which was unveiled on Thursday. Citgo's value should be $15.1 billion based on the conservativest valuations discussed in court. Cumings said the sale shouldn't be carried out at $5.9 billion. She said that such a result was unfair to CITGO and the Venezuelans, as well as to creditors who were out of money. Oil assets are valued higher due to a 50 percent increase in price since U.S. and Israeli joint attacks against Iran sparked a war – now in its 'third month' - which has limited global energy supplies. Gregory Goff, chief executive of Amber Energy, a subsidiary of Elliott, wrote in a Wall Street Journal opinion piece published last month that the company has an investment plan worth $11 billion for Citgo. He also added, "The U.S. The government should permit the sale to be completed as quickly as possible. Lawyers for Venezuela claim Citgo should be a major player in restructuring the $150 billion debt announced recently by interim president Delcy Rodriquez, rather than being auctioned to pay off a few creditors. Cumings claimed Goff's article was in violation of a confidentiality agreement, which stipulated that Citgo would share strategic information with the bidders during the auction. Her letter also raised conflict-of interest issues by stating that some of the firms?that advised Robert Pincus who was appointed as special master to oversee the auction also worked for Elliott. Elliott has denied all the allegations. Pincus and Judge Stark are not commenting on the back-and forth between the parties.
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Iraqi Parliament approves partial government headed by PM Zaidi
Ali al-Zaidi, Iraq's new prime minister was sworn into office on Thursday with a partial cabinet. This is because lawmakers failed to reach consensus over key posts such as interior and defense. Basim Mohammed has been appointed the new oil minister, while Fuad Hassein will remain as foreign minister. The new government has 14 ministers who were approved by the parliament. However, the remaining positions including those in defence and interior have not been able to be agreed upon. Some lawmakers were reportedly enraged by the heated debate that took place during the session after they objected to the nomination of the interior minister. "Parliament approved fourteen ministries, while nine ministries are still pending." "Three of them failed today to win the confidence of parliament", Muqdad al Khafaji, MP told. Donald Trump, U.S. president, voiced his strong support of Zaidi on May 1. This was after the Iraqi coalition of Shi'ite political groups, the Coordination Framework in April, named Zaidi its nominee for prime minister, and gave him 30 days to create a government. Zaidi is a multimillionaire Iraqi in his 40s with interests in several sectors including banking, and the supply of Iraq's massive government food basket program that feeds millions. The new premier faces many challenges. These include disarming militias backed by?Iran, fighting?corruption, and balancing relations between Washington and Tehran. Reporting by Muayad Hamed in Baghdad; additional reporting by Ahmed Tolba; writing by Yomna Elhab. Editing by Mark Potter, Ros Russell and Mark Potter.
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Iraq seeks financial assistance from IMF and World Bank in response to Iran war
Iraqi officials have approached the International Monetary Fund (IMF) to secure financial assistance due to?the Middle East conflict, said a source with the IMF as well as an Iraqi official on Thursday. The IMF source said that initial discussions took place at the spring meetings in Washington of the IMF and World Bank last month. Discussions are still ongoing on how much funding Iraq will need and the structure of any loan. Iraqi officials who advise on financial policy have said that Iraq has begun preliminary talks with the IMF and World Bank about a loan for the country's finances, due to a severe revenue shortfall caused a halt in?oil sales following the Iran War and the closing of the Strait of Hormuz. Officials said that the official expected the talks to be "finalized" once a new administration is in place. The massive U.S. and Israeli bombing campaign that began on 28 February against Iran, which triggered the closure of the Strait of Hormuz by Tehran has shook the Middle East. It has caused damage to infrastructure and economies. Iraq was hard-hit by the war. Its oil exports, which represented nearly all of the government's income, were cut off due to the closing of the crucial waterway that previously carried around one-fifth the world's crude oils. IMF spokesperson Julie?Kozack stated that the IMF worked with the World Bank, and the International Energy Agency in order to assess the effects of the war on its member countries. She added that the Fund is also actively engaged in discussions with its member countries, many of whom are seeking policy advice. She said that IMF Director Kristalina Georgeeva had stated the IMF was seeing demand from at least twelve countries for $20 billion to $50 billion but refused to provide any details as to which countries had requested help. Iraq is the fifth-largest petroleum producer in the world, and its economy is heavily dependent on oil exports. Iraq's latest financial deal was with the IMF. It was a $3.8billion standby agreement that expired in July 2019. Of this amount, $1.49bn?was withdrawn. Iraq is owed $2.39 billion by the global lender, which includes $891 million that was provided through a rapid funding instrument. Reporting by Andrea Shalal, Washington, and Muayad Hamed Suadi, Baghdad. Editing by Louise Heavens. Chizu Nomiyama. William Maclean.
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US Admiral: Iran's capability to threaten its neighbors has been dramatically reduced
The?U.S. has?dramatically reduced Iran's ability to threaten its neighboring countries and U.S. interest. A senior U.S. Admiral stated on Thursday that the bombings have slowed down Tehran's defence industry by 90%. Admiral Brad Cooper of U.S. Central Command emphasized 'the tactical success of the military campaign he led against Iran and said that the war has dramatically reduced the danger posed by Iran to the Middle East. Cooper refused to directly address the reports of and other news organizations that Iran had significant drone and missile capabilities. These reports cited U.S. Intelligence sources. Cooper, speaking to a U.S. Senate Committee, said that Iran's threat has been significantly reduced. They no longer have the ability to threaten regional partners or the United States in ways they could do previously, in?every area. "They have?significantly?degraded." Cooper said Iran is no longer in a position to provide arms and other resources to the main allies in the region, including Hezbollah (in Lebanon), the Houthis (in Yemen) and Hamas in Gaza. He said, "These transfer paths and methods have been removed." Reporting by Phil Stewart, Doina Chiacu and Chizu Nomiyama; editing by Paul Simao and Chizu Simao
Gold prices remain stable as markets wait for signals from Middle East and Trump-Xi meetings
The gold price remained largely unchanged on Thursday as investors focused on the latest developments in Middle East and President Xi Jinping's meeting with the U.S.
At 1:01 pm EDT (1701 GMT), spot gold was down by 0.1% to $4,680.26 an ounce. U.S. Gold Futures for June Delivery fell by 0.4% to $4686.20.
The U.S. Dollar was up by 0.3%, making greenback-priced gold more expensive for holders other currencies.
Iran's state media reported that 30 vessels had allegedly crossed the Strait of Hormuz, despite reports of attacks in the area.
Bart Melek is the global head of commodity strategies at TD Securities. He said that a downturn in gold is possible if the Middle East conflict does not end. He added that inventories and supplies of energy products may be reduced to the extent where prices increase sharply.
CME Group's FedWatch tool says that the prospects of a rate cut in the United States have faded largely, following a sharp rise in U.S. consumer and producer prices for April.
Gold is often considered to be a hedge against inflation, but higher interest rates can weigh down on this non-yielding material.
Gold lacks a firm direction, as markets weigh lingering uncertainty in geopolitics, the economic fallout resulting from the Middle East conflict, and the hope that the Trump-Xi summit could 'help broker a resolving?, Nikos Tzabouras said, in a Tradu.com note.
Xi also told Trump on Thursday that the trade talks are?making good progress,' but warned that disagreements over Taiwan might disrupt?relations. Taiwan was not mentioned in the U.S. summary.
The Indian government has announced that it will cap gold imports at 100 kilograms under its scheme of advance authorization, which gives Indian exporters some exemptions.
Silver spot fell by 3.6%, to $84.84 an ounce. Platinum dropped 3.1%, to $2,071.53, while palladium fell 3.5%, to $1,447.52. (Reporting by Ishaan Arora in Bengaluru; Editing by Paul Simao, Nick Zieminski and Diti Pujara)
(source: Reuters)