Economy
IMF to start Ukraine mission, stresses need for anti-graft efforts
The International Monetary Fund (IMF) will soon begin a staff mission to Ukraine to discuss its financing needs and a potential new lending program, spokesperson Julie Kozack said on Thursday, underscoring the need for continued anti-corruption efforts in the war-torn country.
Ukrainian Prime Minister Yuliia Svyrydenko on Thursday announced an audit of all state-owned companies, including in the energy sector, following an alleged $100 million corruption scandal that has led to the suspension of two cabinet ministers.
Anti-corruption authorities said this week they had detained five people and identified two others still at large suspected of involvement in the alleged plot to control procurement at nuclear agency Energoatom and other state enterprises.
Ukraine is in talks with the IMF about a new four-year lending program for the country that would replace the current four-year $15.5 billion program. Ukraine has already received $10.6 billion of that amount.
Kozack told reporters at a regular briefing that the IMF staff mission would center on policies to safeguard Ukraine’s macroeconomic stability and ensure its debt sustainability, with a focus on reforms to promote domestic revenue mobilization and to strengthen governance and combat corruption.
“We’ve been saying for some time that Ukraine needs a robust anti-corruption architecture to level the playing field, safeguard public resources, improve the business climate and attract investment,” Kozack said, calling efforts to fight corruption a central requirement for Ukraine’s donors.
Institutions must be able to do their work
“The most recent uncovered evidence of corruption in the energy sector … highlights the importance of pressing forward with anti-corruption efforts in Ukraine and ensuring that the anti-corruption institutions have the capacity, trust and freedom to go about their duties,” she said.
Kozack said the IMF was closely monitoring discussions that Ukrainian authorities were having with creditors, although it is not party to the discussions themselves.
She said the IMF team visiting Ukraine would liaise with Ukraine’s international partners to identify the appropriate financing vehicles to support the country, now in its fourth year of fighting Russia’s invasion.
That would include ensuring that any new financing is on “terms consistent with Ukraine’s overall debt sustainability,” she said, when asked about concerns raised by Ukraine’s GDP warrant holders last week about another debt restructuring.
Warrant holders last week said they wanted a “claim reinstatement mechanism” as part of any new bonds they accepted as part of Kyiv’s long-sought restructuring of the debt instruments.
Ukraine needs a new IMF program since the one agreed on in 2023 assumed the war would end in late 2025, a prospect that is still not in sight. As was the case in 2023, Western countries will have to offer assurances to guarantee the IMF loan since the fund normally does not lend to a country at war.
Türkiye is assessing short-term capital flows, particularly the growing amount of foreign and institutional money flowing into money market funds, reports said Wednesday.
Authorities are weighing new steps that may include taxation aimed at keeping capital in the country longer and channeling it into longer-term investment, private broadcaster CNBC-e reported.
The Treasury and Finance Ministry is studying the rising share of institutional investors in short-term funds and the scale of capital flowing into them, it said.
The review is aimed at limiting the financial risks associated with capital that enters and exits markets quickly while encouraging investment in production, employment and the broader economy, according to the reports.
No final decision has been made on any potential measure, and the review is focused on managing risks from short-term capital movements rather than simply increasing tax revenue.
Institutional investors in focus
Interest in short-term funds has increased among both domestic and foreign investors in recent years, with money market funds becoming particularly attractive because of their high liquidity and existing tax treatment.
The ministry is assessing whether short-term capital flows by foreign institutional investors through such funds make a sufficient contribution to economic growth and whether some of these resources could instead be directed toward longer-term investments.
The review is examining not only the size of capital inflows but also how long funds remain in Türkiye and their contribution to expanding the economy’s productive capacity.
Under the current system, income earned by individual investors from money market funds is subject to a 17.5% withholding tax under provisional Article 67 of the Income Tax Law.
There is currently no withholding tax on such income for corporate investors.
The Treasury is considering whether this difference in tax treatment has encouraged short-term capital flows and whether it should be reconsidered, the reports said.
It remains unclear which investor groups or types of funds could be affected if new measures are introduced.
Keeping capital in Türkiye longer
Authorities are seeking to limit the volatility that rapid movements of short-term capital can create in financial markets while encouraging funds to support production, employment and long-term investment.
If new taxation is introduced, the attractiveness of money market funds to investors could change.
Higher costs for institutional and foreign investors could encourage some capital to move into alternative investment instruments.
Markets will therefore be watching the scope of the Treasury’s review, particularly which funds and investor groups could be covered by any potential regulation.
Türkiye’s jobless rate fell to 7.9% in the April-June period, marking the lowest quarterly level since the country’s current unemployment data series began in 2005, official data showed Wednesday.
The seasonally adjusted unemployment rate declined 0.3 percentage points from the previous quarter, while the number of unemployed people aged 15 and over fell by 84,000 to nearly 2.78 million, the Turkish Statistical Institute (TurkStat) said.
The unemployment rate stood at 6.7% for men and 10.3% for women.
The number of employed people rose by 155,000 from the previous quarter to almost 32.48 million in the April-June period, the data showed.
The seasonally adjusted employment rate increased by 0.1 percentage point to 48.5%, with the rate at 65.8% for men and 31.6% for women.
The labor force grew by 71,000 to 35.28 million, while the labor-force participation rate edged down 0.1 percentage point to 52.7%. Participation was 70.6% among men and 35.3% among women.
In sectors excluding agriculture, Treasury and Finance Minister Mehmet Şimşek said the average informal employment rate over the past year stood at 15.7%, well below the historical average.
“The increase in formal employment, which provides social security for our workers, also yields significant gains for public finances,” Şimşek wrote on the social media platform X.
“We are continuing our policies that strengthen human capital, support employment and increase labor force participation.”
Youth unemployment also at record low
Unemployment among people aged 15-24 fell by 1 percentage point from the previous quarter to 13.9%, TurkStat said.
Labor and Social Security Minister Vedat Işıkhan said that the rate also marked the lowest since 2005.
“We will continue to implement initiatives that will facilitate our young people’s entry into the workforce and strengthen the link between education and employment,” Işıkhan wrote on X.
Youth unemployment was 11% among men and 19.3% among women.
The broader measure of labor underutilization, which includes the unemployed, people in the potential labor force and those in time-related underemployment, fell 0.2 percentage point from the previous quarter to 29.9%.
The combined rate of time-related underemployment and unemployment stood at 19.3%, while the combined rate of potential labor force and unemployment was estimated at 20%.
Annual inflation in the U.K. accelerated in July in line with analysts’ expectations, official data showed Wednesday, driven primarily by higher household energy bills.
The consumer price index (CPI) rose 2.9% in the 12 months to July, up from 2.6% in June, the Office for National Statistics (ONS) said in a statement.
The rise was spurred by a 13% hike in the price cap on household energy bills that took effect last month, a consequence of the ongoing U.S.-Iran war.
The ONS called it “the largest rise in gas prices for almost four years.”
Britain’s new prime minister, Andy Burnham, has pledged to ease cost-of-living pressures, unveiling measures such as a tax cut on household electricity prices and a cap on bus fares.
“Iran-war inflation continues to impact prices here at home, but Britain’s economy is resilient,” Treasury chief John Healey said in response to the latest figures.
“There is more to do to restore hope and build a stronger economy where prosperity is shared more fairly across Britain,” he added.
Analysts expect inflation to rise toward the end of the year as higher energy costs feed through to bills further, with little sign of a deal to end the Middle East war.
The Bank of England held its benchmark interest rate at 3.75% last month despite inflation remaining far above its 2% target.
“A renewed spike in inflation has been expected as the war in the Middle East continues to navigate a clunky cease-fire,” said Jonathan Raymond, investment manager at Quilter Cheviot.
“Things remain far from normal in the Strait of Hormuz and look unlikely to be resolved any time soon, meaning pressure is likely to remain on prices for the remainder of the year at least,” he added.
The United Arab Emirates (UAE) has reportedly halted all trade exchanges and financial transactions with Iran “until further notice,” according to a report shared by the state-run WAM news agency, citing the Foreign Ministry’s strategic communications director.
No further details were revealed as yet.
The agency, however, said that the head of strategic communications at the Foreign Ministry, Afra al-Hameli, rejected all allegations regarding the status of the economic relationship between the UAE and Iran.
Al Hameli also reiterated the UAE’s steadfast commitment to dialogue, cooperation, and regional integration as essential means of advancing peace, stability, and prosperity in the region.
He underscored that, in light of regional escalations “that undermine regional and international peace and security, all trade, commercial exchanges, and financial transactions with Iran have been halted until further notice,” the statement shared by the WAM read.
The announcement came after the UAE Defense Ministry said it detected two Iranian ballistic missiles that targeted maritime navigation, an Anadolu Agency (AA) report said.
Tensions in the Middle East have heightened after the U.S. and Israel launched joint strikes on Iran in late February. In response, Tehran retaliated with strikes in regional countries hosting U.S. assets, including the UAE.
In mid-June, Iran and the U.S. signed a memorandum of understanding (MoU) under Pakistani mediation aimed at ending their war and reaching a lasting peace agreement.
Talks, however, have since broken down amid ongoing disputes over the memorandum’s terms and navigation through the Hormuz Strait, a critical route for global energy exports.
A year after taking out a loan in Buenos Aires, Andrea is overwhelmed by shame because she can no longer pay it back.
And she is not alone.
Debt delinquency among Argentine families has tripled in a year, reaching its highest level in two decades under President Javier Milei, a radical free-market champion whose draconian austerity measures have curbed inflation but left many struggling to make ends meet.
Some 5.8 million people are more than 90 days behind on their debt payments, according to the Central Bank of Argentina.
Stagnant incomes, coupled with a cost of living crisis – due in part to Milei slashing subsidies for transportation, gas, medicine and other essentials – have nudged household finances to the brink.
Andrea, a 32-year-old mother who declined to give her surname because she felt ashamed of her predicament, tried to reinvent herself by starting a catering business after the stationery shop where she worked shut down.
But the purchase of a new oven landed her in hot water.
“I fell behind on payments, and in a couple of months the debt became too big to repay. It went from one million pesos (about $670) to five million (about $3,360),” she said.
No ‘gun to their head’
In total, some 21 million people, out of Argentina’s population of 46 million, have some type of debt, according to the Central Bank.
Milei has rejected any responsibility for the situation.
“Did they have a gun to their head to make them do it (take out a loan)?” he asked curtly in a recent interview.
The president of Buenos Aires’ Banco Provincia, Juan Cuattromo, rejects the notion that Argentines are themselves to blame for getting in over their heads.
He told Agence France-Presse (AFP) debt delinquency was “not a consequence of individual decisions” but the result of “a macroeconomic context that has worsened incomes, employment and economic activity.”
Interest rates of 1,000%
Personal loans and credit cards account for more than 70% of unpaid loans, according to a report by the Center for Argentine Political Economy.
“I go to bed and wake up thinking about how I’m going to pay,” Claudia Debaste told AFP, referring to her credit card bill.
Debaste, a 40-year-old single mother who works a low-pay office job, ran up a large bill on utilities, transportation, groceries and medicine.
She fell behind on her payments four months ago and is now seeking to reschedule her debt.
Milei has been hailed for his success in fighting high inflation, Argentina’s perennial bugbear, but slower price increases are a double-edged sword for people living on credit, as it means their loans retain their value over time.
Longer repayments – coupled with higher bills and stagnant wages – have created the perfect storm for many families.
The debt crisis coincides with the rise of easy access to credit from digital wallets such as Mercado Pago, the digital payment arm of e-commerce giant Mercado Libre.
Fintech companies have drawn in adolescents as young as 13, telling them they no longer need to be adults to gain access to “instant cash.”
But eye-watering interest rates soon land them in a debt spiral.
Gabriel Solano, leader of the Workers’ Party, filed a criminal complaint last week against Marcos Galperin, CEO of Mercado Libre, for usury.
“The total effective financial cost (of a loan from Mercado Pago) stands at 1,375%,” Solano wrote on the social media platform X.
Teenage debtors
The offer of credit, with few conditions attached, has also sucked in workers from the gig economy, with the platforms for which they work sometimes acting as their lenders.
Their rates start at 260% annually, quadruple those of banks, with the payments deducted from the workers’ earnings.
Those who don’t pay risk having their account on the platform blocked, effectively putting them out of business.
“It’s like being fired,” Leandro Hidalgo, a delivery driver and union representative, told AFP, accusing the platforms of “financial slavery.”
Canadian Prime Minister Mark Carney spoke with U.S. President Donald Trump on Tuesday as Ottawa sought to head off a new round of American tariffs on Canadian goods just hours before a midnight deadline.
Trump signed orders for the steep 50% duties last month, with the White House alleging “discriminatory treatment” by Canada against U.S. alcohol, automobile and dairy products.
The tariffs are set to take effect Wednesday, covering products such as wine, hockey sticks and cement.
Efforts to avoid the tariffs are going down to the wire.
Carney spoke by phone with Trump on Monday afternoon about the trade negotiations, a spokesperson for the Canadian leader told AFP.
On Monday, Carney said that talks to avert the duties were at an “intense and delicate” stage.
Overall, Trump’s incoming tariffs target around 5.5% of Canada’s exports to the United States, worth about $20 billion, Oxford Economics estimates.
While this only poses a “modest” negative risk to Canada’s economy, Oxford Economics said in a recent report that the duties would “affect central Canada’s manufacturing sector much more severely.”
Canadian negotiators have been in Washington to push for a deal to avoid the new tariffs and also secure relief on Trump’s sector-specific duties – which have battered Canada’s auto, steel, lumber and aluminum industries.
Ottawa has reportedly offered concessions such as pressuring provinces to put U.S. alcohol and wine back on their shelves, Canadian media said. But it remains unclear if a deal is imminent.
The U.S. Trade Representative’s office did not respond to queries on the matter.
“It’s not unusual for a trade negotiation to go right up to the deadline,” former U.S. commerce official Christopher Padilla told AFP.
He expects that the Trump administration threatened new tariffs to try and win early concessions from Canada as the countries negotiate over renewing the U.S.-Mexico-Canada free trade agreement (USMCA).
But even if officials reached a pact that was acceptable to both sides on the trade front, this might be rejected by Trump, who could seek to penalize Canada over other political concerns, he said.
This could include issues like Canada’s efforts to deepen economic ties with European countries or China.
“The relationship with Canada has been challenging from the beginning,” Padilla said.
He warned that Trump also has “a history of lashing out against allies when he is frustrated on other fronts,” such as when he is not getting what he wants from parties like Iran, China or Russia.
Oxford Economics anticipates that manufacturers who stand to be most impacted include those in the cement, paper, printing, wood, clothing and electronics equipment sectors.
With the U.S. Supreme Court striking down many of Trump’s global tariffs earlier this year, the president had tapped an untested legal provision for the new duties targeting Canada.
These duties will not apply to energy, potash or goods already facing sector-specific tariffs, but they are set to hit products covered by the USMCA.
Trump’s trade envoy Jamieson Greer said the tariffs aimed to “hold Canada accountable” for its retaliation against the United States.
Provinces have taken U.S. alcohol products off their shelves, he said, and “given better market access to dairy products from the European Union” among other actions, Greer said in July.
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