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Welcome to today’s Morning Brief, where we present the International Monetary Fund’s global agreements, Washington’s blockade of PC chip sales to China, and the fires burning the Amazon rainforest.
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Welcome to today’s Morning Brief, where we present the International Monetary Fund’s global agreements, Washington’s blockade of PC chip sales to China, and the fires burning the Amazon rainforest.
If you would like to receive Morning Brief in your inbox every day of the week, please log in here.
Indebted seek help from the IMF
From Sri Lanka to Zambia, much of the world is trapped in a perpetual economic nightmare, forcing many governments to turn to one company as a last resort: the International Monetary Fund (IMF).
As Sri Lanka’s economic difficulties deepen, its government and the IMF reached an initial agreement on a $2900 million bailout on Thursday, and it is not the only country turning to the fund for help. Indebted Zambia also sealed a $1300 million bailout deal this week. , just days after the IMF released a $1. 1 billion package for Pakistan.
“Sri Lanka is facing an acute crisis,” IMF officials said in a statement. “The economy is expected to contract by 8. 7% in 2022 and inflation has recently exceeded 60%. vulnerable.
Even before Russia invaded Ukraine, world economies were already reeling from the effects of the COVID-19 pandemic and the resulting lockdowns. But the war in Ukraine has further increased the costs of raw materials, such as energy and cereals, strangling countries that were already dominated. to the breaking point of the monetary abyss.
In countries like Pakistan, which is drowning in high debt, devastating weather events have compounded this pain. After excessive flooding, a third of the country is now underwater, officials say, fueling a humanitarian crisis that has raised food rates and could simply charge the economy more than $4 billion.
Other countries may soon face a similarly worried economic future, the IMF warned in July. “The picture has darkened significantly since April,” IMF Director of Studies Pierre-Olivier Gourinchas wrote in a blog post. “The world may also soon falter at the breaking point of a global recession, just two years after the last one. “
But while many countries are turning to the IMF, critics say the signing is occasionally not the silver bullet governments can expect. In January, 18 U. S. lawmakers suggested that the IMF eliminate additional fees it applies to loans. in public health” in countries that are already under pressure and may hinder economic recovery during the pandemic.
The firm has also filed complaints about the effectiveness of its contingent loans, as explained by FP’s Anusha Rathi. Economists say the firm has largely failed to meet the wishes of suffering countries, Rathi wrote, while pressuring them “to make possible painful choices such as cutting social benefits or fuel and food subsidies to shore up public books, measures that accountants love but that the starvation of other people on the streets tends to suffer.
“In theory, the IMF can act as an ambulance driving force for suffering economies,” Rathi wrote. “Actually, this ambulance ride is free. “
What we are following today
Sales of blocked tokens. Biden’s management has asked two U. S. chip companies to do so. The U. S. Government, Nvidia and Advanced Micro Devices, will freeze sales of certain types of PC chips to China, a move that reflects heightened tensions between Washington and Beijing over the technology. Subsequently, corporate stocks fell 6. 6% and 3. 7%, respectively.
Amazon burned. After an increase in illegal deforestation, 33,116 fires burned Brazil’s Amazon rainforest in August, the most wildfires per month in nearly five years. In August, Brazilian President Jair Bolsonaro downplayed its severity and accused critics of seeking to sabotage Brazil’s agribusiness.
Keep an eye on
Taiwanese forces shot down an unidentified drone flying over their outer islands, it said on Thursday. This week, Taiwan warned that it will “exercise its right to self-defense and counterattack” in opposition to beijing’s army invasion.
After colliding with an oil tanker this week, a bulk carrier anchored near Gibraltar spilled low levels of oil into the Mediterranean Sea, officials said Thursday.
“The priority is to collect and collect the floating oil that escaped from the dam, as well as to remove the oil that was left contained in the dam,” the Gibraltar Port Authority said.
Thursday’s maximum reading
• Gorbachev’s disputed legacy through Vladislav M. Zubok
• The ghosts of Pakistan weigh on Imran Khan through Arif Rafiq
• The undignified downfall of the diplomatic corps that was once worthy of Russia through Robbie Gramer and Amy Mackinnon
Tips
After a two-year hiatus due to the COVID-19 pandemic, another 15,000 people descended Wednesday in a Spanish village to throw overripe tomatoes at the Spanish food festival La Tomatina. in what concoction of tomatoes in sauce.
“We were on the hunt to resume our beloved party, so we could throw tomatoes on our backs and release all the adrenaline we’ve accumulated over the past two years,” Maria Valles, the city’s tourism manager, told Agence France. -Press.
Christina Lu is a journalist at Foreign Policy. Twitter: @christinafei
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