Prior actions passed will unlock Greek bailout cash

2015 ◽  
Keyword(s):  
Euro Area ◽  
Pension Reform ◽  
The Political ◽  
Content Type ◽  
The Government

Significance This allowed the Eurogroup of euro-area finance ministers to authorise the release of 12 billion euros (12.8 billion dollars) from the latest bailout package of 86 billion -- 2 billion euros to supplement budget needs and 10 billion for bank recapitalisation. Impacts There could be more parliamentary cliff-hangers over approving implementing legislation in such areas as pension reform. The opposition may support the government on some issues, but this could undermine Tsipras's authority. Another election is possible, but might not change the political balance.

Pension reform could derail France’s Macron

2018 ◽  
Keyword(s):  
Economic Reform ◽  
Euro Area ◽  
Global Economy ◽  
Pension Reform ◽  
Content Type ◽  
Reform Agenda ◽  
Innovation Fund ◽  
Business Confidence ◽  
The Government ◽  
The Eu

Subject Macron’s economic reform agenda. Significance President Emmanuel Macron views his reforms through the prism of power: by strengthening the economy, he hopes to win credibility with Germany, whose support he needs to reform the EU and euro-area. However, the apparent ease of his labour regulations reform in September does not diminish the risk of his next two targets: unemployment benefits and pensions. Impacts With a shrinking share of euro-area exports, France will see limited benefit from the stronger global economy. Business confidence may increase if the government eases the regulatory burden on medium-to-large businesses. Financing an innovation fund by selling off some state assets will take time and likely have little impact on confidence.

Pension plans carry high risks for France’s Macron

2019 ◽  
Keyword(s):  
Euro Area ◽  
Pension Reform ◽  
Pension Plans ◽  
Fiscal Rules ◽  
Budget Deficits ◽  
Content Type ◽  
Pension Schemes ◽  
Retirement Security ◽  
The Government ◽  
The Military

Subject Pension reform in France. Significance President Emmanuel Macron’s pension reform plans are designed to combat budget deficits and create more flexibility for people changing jobs. Concerns that future retirees will have reduced pension rights have resulted in strikes and protests throughout France. However, the government remains committed to implementing the reforms. Impacts Spending priorities such as the military and police may suffer if the government is forced to make expensive concessions on pensions. Additional private pension schemes could become more popular as households seek to bolster their retirement security. Budget overruns resulting from the failure to implement reforms would risk compromising euro-area fiscal rules.

Pandemic may drive new wealth taxes in Latin America

2021 ◽  
Keyword(s):  
Latin America ◽  
Social Welfare ◽  
The Political ◽  
Content Type ◽  
Latin Americans ◽  
Tax Revenues ◽  
Wealth Tax ◽  
The Government ◽  
Political Spectrum ◽  
Tax Cuts

Significance The region’s current tax and spending policies redistribute very little. The COVID-19 pandemic brought a deep and persistent recession, despite new spending, tax cuts and monetary easing aimed at limiting the damage. In December, the government of Argentina, which was particularly hard hit, passed a temporary (and additional) net wealth tax on the very richest households. Impacts OECD-led transparency efforts offer the long-sought possibility of taxing the foreign assets of wealthy Latin Americans. The pandemic will increase both existing inequalities and the need for tax revenues to finance social welfare and stimulus spending. Efforts to strengthen tax collection more broadly will likely be undertaken by governments across the political spectrum.

German shift on austerity would risk 'wrong' lessons

2015 ◽  
Keyword(s):  
Euro Area ◽  
Credit Rating ◽  
Bond Yields ◽  
Trade Surplus ◽  
Fiscal Stimulus ◽  
Content Type ◽  
Black Spots ◽  
Angela Merkel ◽  
Deficit Financing ◽  
The Government

Significance Chancellor Angela Merkel faces a rising tide of euro-area members in favour of a policy shift away from austerity and possibly towards more favourable debt deals for euro-area black spots. Adding to the pressure for change, her own voters may prefer a slower pace of debt reduction: German government debt has already been falling as a percentage of GDP -- from over 80% in 2010 to under 77% at the end of 2014 -- and debt is starting to fall in absolute terms as well. The government has delivered enough stabilisation (ie, austerity) and growth to tame the 2009-10 debt surge and maintain its AAA credit rating, but is now over-achieving in terms of its own tough targets because the greater-than-expected fall in debt interest costs is pushing the budget into surplus. Some modest spending adjustments look likely to curb this windfall surplus, yet many will argue that more could be done to re-energise the sluggish economy -- and boost the euro-area. Impacts The plummeting euro will provoke another rise in German exports (already near 50% of GDP) and tensions over Germany's bulging trade surplus. While a fiscal stimulus and/or higher wage payments could address these tensions and raise imports, there is no sign of such action. Germany's critics are gathering support to end austerity, to the point of ignoring the risks of deficit financing and reneging on debts. Ultra-low German bond yields, encouraged by the prospective supply fall, are dragging down euro-area yields, delivering wider benefits.

Syriza may be troika's best hope for Greek deal

2015 ◽  
Keyword(s):  
Stock Market ◽  
European Commission ◽  
Financial Market ◽  
Euro Area ◽  
The Political ◽  
Costs And Benefits ◽  
Content Type ◽  
Political Left ◽  
Unexpected Outcomes ◽  
Market Exuberance

Subject Unexpected outcomes in the Greece-troika imbroglio. Significance Negotiations between Greece and its 'troika' of official-sector creditors (the European Commission, ECB and IMF) are taking place amid two meetings of the euro-area finance ministers and one summit of EU leaders before the end of February. While it is impossible to know now what the result will be, it is possible to speculate on the costs and benefits of any given scenario. Impacts If Syriza fails to achieve meaningful debt reduction, it could discredit the political left as well as the notion of EU solidarity. Greek sovereign yields and the Greek stock market are likely to react extremely positively to any deal between the troika and Greece. Financial market exuberance towards Greece will be unwound as the implications of Greece's continuing high debt load become clearer.

Insecurity and drought undermine Madagascar president

2016 ◽  
Keyword(s):  
Interest Rate ◽  
Prime Minister ◽  
Commodity Prices ◽  
Southern African Development Community ◽  
Political Elite ◽  
The Political ◽  
Gdp Growth ◽  
Content Type ◽  
African Development ◽  
The Government

Significance Rifts within the political elite are deepening, evidenced by the departure of former Prime Minister Jean Ravelonarivo -- and his cabinet -- last month. However, the installation of a new administration does not portend stability. Impacts The central bank's decision to cut its benchmark interest rate to 8.3% from 8.7% will facilitate borrowing by firms and households. This is unlikely to boost GDP growth given the countervailing effects of political volatility and low commodity prices. The UN secretary general's appeal (on an official trip earlier this month) for the government to tackle graft is unlikely to be heeded. If Madagascar experiences another coup, the Southern African Development Community bloc will likely expel it -- again.

Brazil faces stagnation risk in 2017

2017 ◽  
Keyword(s):  
Government Spending ◽  
Pension Reform ◽  
Investment Decisions ◽  
Fiscal Crisis ◽  
New Wave ◽  
Short Term ◽  
Business Investment ◽  
Content Type ◽  
The Government

Subject The risk that the Brazilian economy will stagnate, rather than recover, this year. Significance The recent passage of legislation freezing government spending and the ambitious pension reform currently under discussion in Congress are the flagship policies of the government of President Michel Temer. Both seek to defuse Brazil’s fiscal time bomb in the long term. However, they offer little support to immediate expansion in an economy that not only has been in recession since the second quarter of 2014 but is also locked in a low-growth trap will few apparent short-term escape routes. Impacts Popular dissatisfaction may trigger a new wave of demonstrations, further weakening the government. As long as the fiscal crisis persists, the government’s ability to stimulate the economy will be limited. Political risk will be a crucial factor in business investment decisions in Brazil.

Italy's Renzi will face critical tests before year-end

2016 ◽  
Keyword(s):  
Political System ◽  
Turning Point ◽  
Political Leadership ◽  
Economic Recovery ◽  
The Political ◽  
Deep Uncertainty ◽  
Content Type ◽  
The Government

Significance This is a crucial step for the government before year-end, together with long-term banking issues and slowing economic recovery. The European Commission has allowed Italy considerable fiscal flexibility; the government promises to start reducing its debt-to-GDP ratio this year. However, the slowdown could delay achieving this goal. Under this scenario, the government has to campaign for the referendum on its Senate reform. A 'yes' vote is key not only for reforming the political system, but the government's survival. Impacts A 'no' outcome would pull Italy into deep uncertainty concerning its political leadership. It would also end Renzi's premiership; a new majority could follow up to the 2018 general election. However, since Renzi is the PD leader, he is unlikely to support a new government; early elections are likely. In case of a 'yes' outcome, Renzi's premiership will be reinforced, marking a turning point to his declining popularity.

Denmark's weak new government faces complex alliances

2015 ◽  
Keyword(s):  
The Political ◽  
Political Strategy ◽  
Right Wing ◽  
Social Democrats ◽  
Content Type ◽  
People's Party ◽  
Reform Agenda ◽  
The Government ◽  
Political Spectrum ◽  
The Right

Significance The new government will have only 34 of the 179 seats, because policy differences among the right-wing parties, and the political strategy of the electorally strengthened anti-immigration, Euro-sceptic Danish People's Party (DF), mean DF will remain outside. Policy-making will be difficult. The government will be more economically liberal and pro-EU than it would have been with DF, but to make policy it will rely on partners across the political spectrum, especially the ousted Social Democrats -- who remain the largest party -- and DF. Impacts If DF is seen as a welfarist protector of ordinary citizens, it is more likely to repeat, at least, its 22% vote in the next election. The much-tighter immigration regime which is in prospect could taint Denmark's image and make it less attractive to foreign investment. The new government is likely to be an ally for much of UK Prime Minister David Cameron's EU reform agenda.

Hardening German attitudes on Greece risk a rupture

2015 ◽  
Keyword(s):  
Central Bank ◽  
Euro Area ◽  
Capital Controls ◽  
Financial Assistance ◽  
Content Type ◽  
Bank Deposits ◽  
Reform Programme ◽  
System Collapse ◽  
Greek Government ◽  
The Government

Significance Pressure is intensifying on the negotiators representing the Greek government and its creditors -- most importantly Germany -- to reach some form of agreement allowing the release of sufficient financial assistance for Greece to meet its payment obligations due by the end of June. However, the governing Greek coalition does not appear stable enough to adopt the reform programme demanded by its creditors. Meanwhile, German economic opinion on Greece is hardening, in the gathering belief that the risks to the rest of the euro-area from any concessions to Athens are now greater than those of a possible rupture. Impacts If the Greek negotiations drag on, the government may have to introduce capital controls to stem the outflow of bank deposits. Greece's central bank remains reliant on the ECB to continue authorising ELA, but opposition to ELA in Germany is growing. If the ECB withdrew ELA, Athens's choices would be to meet its creditors' demands, see a financial system collapse or exit the euro.

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