Argentina launches $2 billion repurchase agreement to boost reserves
The deal - announced alongside other measures to increase the central bank's reserves - comes ahead of an expected review with the International Monetary Fund (IMF) of the country's recently signed $20 billion loan agreement.
Argentina needs to boost its reserves ahead of the review, and has said it will not purchase dollars locally to do so. On Monday, the bank reported $38.60 billion in reserves, short of the $40 billion needed.
The REPO deal is set for Wednesday, the central bank said in a statement.
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Reuters
2 hours ago
- Reuters
Trump tariffs weigh on Brazil chemical exporters, spark order cancellations
SAO PAULO, July 25 (Reuters) - Chemical products companies in Brazil, which exported $2.4 billion to the U.S. last year, face a slew of contract cancellations as President Donald Trump has threatened a new 50% tariff on the South American nation's exports from August 1. Since Trump's announcement, export orders have been canceled for certain resins and compounds used to make fertilizers, which Brazil supplies to the U.S. agriculture sector, Andre Cordeiro, head of Brazilian chemical lobby Abiquim, said on Friday. "Fundamentally, these decisions are being made because the bet is that he will actually apply the tariff," Cordeiro said. One company in Brazil had all its contracts for exports to the U.S. canceled, Cordeiro said, adding that other businesses have seen some of their contracts canceled. There are also cases where sellers had secured export financing for the order, which was later revoked. He declined to name the affected exporters. Losses associated with the tariffs go beyond direct exports, as almost every industry uses chemicals in manufacturing processes, from oil to steel, from machinery to production of agricultural commodities, he said. "No one produces coffee, even grains, without some kind of chemical product in the process." Cordeiro added that chemical companies are losing export business and also local sales to clients that export goods into the U.S. market. Brazilian plywood exporters, for example, use chemicals for bonding and themselves have faced U.S. order cancellations, he said. Orange juice makers, which sent 42% of their exports to the U.S. last year, also use chemical preservatives. Brazilian companies like Braskem ( opens new tab have operations in the U.S. and could be affected. Dow Chemical (DOW.N), opens new tab, which has 10 plants in Brazil and sizeable exports of silicon metal for processing in the U.S., is also at risk. Braskem and Dow did not immediately comment. Exxon Mobil (XOM.N), opens new tab, which declined to comment, operates in Brazil and serves clients in various industries. Tariffs are unjustified because Brazil's chemical sector runs a $7.9 billion trade deficit with the U.S., Abiquim said.
Leader Live
2 hours ago
- Leader Live
Chancellor faces fiscal risks and ‘significant challenges' amid trade war
The IMF said the UK's 'limited' so-called headroom on its public finances gave little room to manoeuvre and called on Rachel Reeves to consider some tax changes or spending cuts. In its annual report on the UK economy, the IMF said: 'Risks to this strategy must be carefully managed. 'In an uncertain global environment and with limited fiscal headroom, fiscal rules could easily be breached if growth disappoints or interest rate shocks materialise.' The IMF praised the Government's fiscal plans, saying they 'strike a good balance between supporting growth and safeguarding fiscal sustainability'. It added that the pro-growth agenda 'covers the right areas to lift productivity'. But the IMF cautioned that 'delivering on this agenda will require overcoming significant challenges' amid the fallout from US President Donald Trump's trade war. 'Shockwaves from trade policies and rapid geopolitical developments are affecting global growth and creating heightened levels of volatility in financial markets,' it said. Added to this, it said, 'fiscal space is limited and constrained by an elevated interest burden and increasing demands on public resources, including defence and aging-related spending'. Ms Reeves said the report 'confirms that the choices we've taken have ensured Britain's economic recovery is under way, and that our plans will tackle the deep-rooted economic challenges that we inherited in the face of global headwinds'. 'Our fiscal rules allow us to confront those challenges by investing in Britain's renewal,' she said. The Washington-based IMF also recommended cutting the number of assessments of whether the Government is on track with its fiscal rules by the Office for Budget Responsibility (OBR) from two to just once a year, ahead of the autumn budget. This could 'reduce pressure for overly frequent changes to fiscal policy', it said. The Chancellor's headroom against her main fiscal rule was estimated at £9.9 billion at the time of the spring statement in March. But the Government's U-turns on planned cuts to spending since then, such as changes to the welfare bill, are seen as having wiped this out, according to experts. This has raised fears that Ms Reeves will be forced to raise taxes or cut spending in the autumn budget. The IMF left its forecasts unchanged for the economy to grow by 1.2% this year and 1.4% in 2026. However, it added a note of caution, saying that 'risks to growth remain to the downside'. 'Tighter-than-expected financial conditions, combined with rising precautionary saving by households, would hinder the rebound in private consumption and slow the recovery,' the IMF said. Shadow chancellor Sir Mel Stride said: 'This is yet more confirmation that Labour's mismanagement means that yet more tax rises are coming in the autumn.'
Times
3 hours ago
- Times
Jonathan Reynolds rules out ‘daft' wealth tax and says ‘get serious'
The business secretary has ruled out a 'daft' wealth tax as the International Monetary Fund (IMF) warned that other taxes will have to rise. Jonathan Reynolds told Labour backbenchers to 'get serious', dismissing the idea as a populist gesture that would not work. Lord Kinnock, Labour's former leader, has led calls for a 2 per cent annual levy on assets more than £10 million, which has been backed publicly by more than a dozen Labour MPs and privately many more. Rachel Reeves has been reluctant to rule out a wealth tax despite senior minsters privately concluding it would not work. • How could a UK wealth tax work? The impact examined Now Reynolds has made the government's most explicit public criticism by ridiculing the suggestion that a 'magic wealth tax' would dig the country out of a hole. He said an effective wealth tax 'doesn't exist anywhere in the world' and 'we're not going to do anything daft like that'. Reynolds told GB News: 'I say to people: 'Be serious about this.' The idea you can just levy everyone … What if your wealth was not in your bank account, what if it was in fine wine or art? How would we tax that? This is why this doesn't exist. 'There's a lot of populism out about this, and I'm frustrated. I see colleagues sometimes say this in parliament and I say: 'Come on, get serious.'' Reynolds said: 'This Labour government has increased taxes on wealth as opposed to income — the taxes on private jets, private schools, changes through inheritance tax, capital gains tax. But the idea there's a magic wealth tax, some sort of levy … that doesn't exist anywhere in the world. Switzerland has a levy, but they don't have capital gains or inheritance tax.' Experts, including the Institute for Fiscal Studies, have warned the government that no country has raised significant sums from a wealth tax, citing concerns over valuing assets and discouraging investment. Most countries that have introduced them have since abandoned them. However, Richard Burgon, the Labour MP for Leeds East, who delivered a petition on the tax to No 10 this week, said that 'the government has seriously damaged its own support by refusing to tax wealth — all while cutting support for disabled people, targeting the winter fuel allowance, and maintaining the cruel two-child benefit cap.' It came as the IMF said in its annual report on Britain that the chancellor would need to make 'tough fiscal choices' such as raising taxes on middle earners, scrapping the triple lock on pensions or introducing charges for the NHS. While it praised Reeves for 'growth-friendly' policies such as liberalisation of planning and said an 'economic recovery is underway', it warned that she would have to do more to raise cash or cut spending. The chancellor is already expected to raise taxes in the autumn after U-turns on winter fuel and welfare cuts combined with deteriorating forecasts left her facing a gap of £20 billion or more in public finances. With the government now facing months of speculation about how she will plug it, the IMF recommended raising even more cash in the budget to give herself more headroom against her fiscal rules and prevent a repeat next year. The IMF said the 'first best' option to reduce the need for constant tax and spending tweaks would be 'to maintain more headroom under the rules, so that small changes in the outlook do not compromise assessments of rule compliance'. It also suggested moving to one official assessment a year of whether Reeves is on target to hit her rules, instead of the two carried out by the Office for Budget Responsibility. However, in a warning to those hoping this would reduce the need for tax rises or spending cuts, the IMF warned that Britain's ageing population and high debt interest bill mean Reeves cannot avoid such painful choices in the long term. 'Unless the authorities revisit their commitment not to increase taxes on 'working people', further spending prioritisation will be required,' its report said. The IMF urged Reeves to press ahead with welfare reforms that have proved toxic with Labour MPs and replace the triple lock with a cheaper policy that would increase state pensions in line with the cost of living. 'Access to public services could also depend more on an individual's capacity to pay, with charges levied on higher-income users, such as co-payments for health services,' the IMF added. Mel Stride, the shadow chancellor, said the report showed that Reeves 'has already maxed out the credit card, her only options are to cut spending or raise taxes. The welfare debacle showed Labour are completely incapable of reining in spending. Businesses and families must brace for an even higher tax burden'. Reeves said the report 'confirms that the choices we've taken have ensured Britain's economic recovery is underway, and that our plans will tackle the deep-rooted economic challenges that we inherited'.
