Afp, Washington

THE International Monetary Fund stepped up its warnings Monday on risks to the global economy, especially coming from Europe, as it trimmed its growth forecast for the rest of the year.

The IMF said the world economy appeared weaker since its assessment just three months ago, and while growth was only slightly off the expected pace, "downside risks continue to loom large," especially from inadequate or slow policy reactions in major economies.

"In the past three months, the global recovery, which was not strong to start with, has shown signs of further weakness," the fund said in its quarterly revision of economic forecasts.

"Financial market and sovereign stress in the euro-area periphery have ratcheted up," it said, while growth has fallen below expectations in a number of major emerging-market economies.

It pointed to renewed deterioration in the markets for European sovereign debt as a sign that eurozone leaders need to move fast on pledged reforms.

The IMF also singled out the overhanging risk from US political stasis that could send the country over a "fiscal cliff" due to laws that, if not changed, will force massive government spending cuts coupled with automatic tax hikes on January 1 that would severely crunch the world's largest economy.

"Avoiding the fiscal cliff, promptly raising the debt ceiling, and developing a medium-term fiscal plan are of the essence," the global crisis lender said in recommendations for the United States.

After forecasting in April that the global economy would expand by 3.5 percent this year, the IMF said it had cut 0.1 percent off the forecast, but that the number remained at 3.5 percent because of rounding.

For 2013, the forecast is 3.9 percent, down from 4.1 percent.

The change in the worldwide outlook mainly came from sharp cuts to growth forecasts for the large emerging economies like China, India, Brazil and newly industrialized Asia.

But in addition the IMF saw slower-than-expected growth in the United States, Britain and France, among the major industrialized nations. The US forecast dropped 0.1 point to 2.0 percent; France was down 0.1 to 0.3 percent; and Britain was projected to grow at just 0.2 percent, compared with 0.8 percent forecast three months ago.

The bank also said Spain's recession would persist through 2013, after having forecast in April that the country's economy would return to growth next year.

On the bright side, forecasts for this year for Germany and Japan were revised higher -- to 1.0 percent and 2.4 percent, respectively, though the 2013 prediction for each was also trimmed slightly.

Also getting an upgrade was the Middle East and North Africa region, much of which has been struggling through deep political turmoil in the past two years. The IMF said the region would grow about 5.5 percent this year, much better than the 4.2 percent predicted in April.

The IMF said that major economies were making progress on cutting their fiscal deficit burdens, but that doing so remained hampered by more volatility and risk aversion in debt markets, which have sent the borrowing costs of the troubled eurozone periphery countries skyrocketing.

The global lender reiterated its prescriptions of recent months: short-term fiscal balance targets for troubled economies like Spain and Italy can be de-emphasized to allow for growth while more focus is placed on medium-term adjustments and reforms.

"A steady pace of adjustment focused on the measures to be implemented rather than on headline deficit targets is preferable, especially in light of heightened downside risks to the outlook."

Moreover, the IMF suggested, the political stress of too much austerity -- set to meet fiscal targets -- could backfire in countries with IMF or IMF-linked bailout programs, like Ireland, Portugal and Spain.

"The recent deterioration in the political and economic climate in Greece serves as a warning about the potential onset of 'adjustment fatigue,' which remains a threat to continued program implementation."

The Daily Star/Bangladesh/ 17th July 2012

Standard Bank Ltd has decided to invest an additional Tk 100 crore in the capital market in the next two months, the Bank said in a statement yesterday.

The decision came from the 195th board meeting of the Bank held at its Gulshan office in Dhaka on Sunday.

Kazi Akram Uddin Ahmed, chairman of the Bank, presided over the meeting.

The Daily Star/Bangladesh/ 17th July 2012

The new loan classification and provisioning rules of the Bangladesh Bank may give rise to default loans in the short-term, but will ultimately reduce the number of wilful defaulters and benefit both banks and borrowers, according to a BB study.

The central bank in the study said, if the rules are followed strictly, the amount of default loans as well as the banks' insolvency will fall in the long run.

The study found that the amount of default loans may increase by only 2.38 percent over the existing amount under the new rules.

On March 31, the total default loans in the banking sector stood at 6.57 percent of their outstanding loans. The percentage could be 8.95 percent on the same day if the amount was calculated under the new rules, the BB found in the study.

The central bank presented the study report to the heads of credit departments of all banks yesterday.

The BB also organised a workshop at its head office where its Deputy General Manager Anwarul Islam showed the study results through a presentation.

BB Deputy Governor SK Sur Chowdhury at the workshop said some influential borrowers have repeatedly got their huge amount of default loans rescheduled.

The workshop was organised to remove misunderstandings created among the bankers regarding the new decision.

the new policy does not provide scope for rescheduling loans for more than three times, new entrepreneurs will get more access to loans and the banks will also overcome their liquidity crisis, Chowdhury said.

Islam said the new rules were issued to ensure accurate asset valuation in financial reporting and maintain the appropriate asset quality of banks in the changing global economic environment.

According to the changes in rules the central bank brought in June, if a loan remains in default for three months, it would be classified as substandard.

It means the borrower will not face any difficulty in getting new loans but the bank will have to keep 20 percent provisioning of the sub-standard loan.

Also, in line with the new rules, no loan can be rescheduled for more than three times.

After a new circular was issued in this regard, both business community and banks have requested the central bank to reconsider the decision.

However, BB officials said the impact of the new decision would be minimal.

According to Islam, the new decision will ensure better recognition of losses at banks, proper calculation of their income, and avoidance of overstatement of capital.

He also said the new rules will increase the banks' resilience, ensure better management efficiency, and bring transparency in financial reporting and discipline in the industry.

Islam said good borrowers will not face any adverse impact; instead, credit flow will increase to new entrepreneurs and productive sectors.

The number of habitual defaulters will fall and depositors' interest will be better protected, he said.

The Daily Star/Bangladesh/ 17th July 2012

Banks and non-bank financial institutions will not be allowed to spend more than Tk 35 lakh to buy cars and more than Tk 50 lakh to buy Jeeps from its own funds, the central bank said yesterday.

However, they can spend up to Tk 85 lakh if they buy Jeeps from the state-run Progoti Industries Ltd, the state-owned automobiles assembly factory, according to a notice by Bangladesh Bank.

The decision, which aims to cut extravagant spending on cars, has already come into effect.

The Daily Star/Bangladesh/ 17th July 2012

Standard Chartered Bank as part of its continuous effort to introduce the emerging markets to its global footprints, hosted a seminar on “Financing and Investment Opportunities in Bangladesh” on June 20 at hotel Taj Mahal Palace in Mumbai. The purpose was to showcase Bangladesh economy and its investment potentials to Indian commercial banks and other International Institutional investors, development and financial Institutions.

The session was inaugurated by Charles Corbett, regional head, Capital Markets, South Asia, Standard Chartered Bank.

The keynote address was made by T.C.A. Ranganathan, chairman and managing director, Exim Bank of India. Various aspects of Bangladesh economy were presented by David Rasquinha, executive director, Exim Bank of India and Samiran Chakraborty, head of Research, India, Standard Chartered Bank.

Top officials of the leading corporate houses from Bangladesh were present in the seminar. The prospective investors who participated in the event were multilaterals, public sector banks, private banks and various foreign banks.

The seminar consisted of two panels. The first panel discussion on the topic of “Regulatory Framework for Promoting the Investment Climate in Bangladesh” was coordinated by Alamgir Morshed, head of Global Markets, Bangladesh, Standard Chartered Bank.

The second panel discussion was held on “Roadmap for Accessing International Financial Markets by Bangladeshi Corporates” and was coordinated by Nirukt Sapru, head, OCC Growth Markets, SEA and South Asia, Standard Chartered Bank.

The Daily Independent/Bangladesh/ 16th July 2012