` IMF : Pressures mounts to give `Green Light’ to an `Aid Program ‘ for Kiev ‘

#AceFinanceNews says that the `International Monetary Fund‘ is under increasing pressure from all sides to give the green light to an aid program for Kiev, even as it risks its own credibility in doing so.

President Putin visits Ukraine and Prime Minis...

President Putin visits Ukraine and Prime Minister of Ukraine Viktor Yanukovych. (Photo credit: Wikipedia)

A team of IMF experts landed in Ukraine on Monday to launch discussions with the authorities, dissecting the economy’s problems and shaping an aid plan, even as the new government struggles with the threat of Russia in Crimea and says it needs “at least” $15 billion.

An IMF loan does not appear to be imminent but the expectation is heavy. On Sunday, finance ministers from the seven leading industrial powers — the G8 minus Russia — emphasized that the IMF is “best prepared” to lead a support program for the country.

The United States, the country with the biggest voice in the IMF, has repeatedly said the Fund should be at the heart of any rescue program.

Europe, also holding a strong voting position in the Fund, has the same view.

“No member state will move without the IMF evaluating Ukraine’s financial needs,” a European source said Monday.

The IMF said last week it was ready to respond to an official Ukraine request for help, just days after a new government took power in Kiev following the ouster of pro-Russian president Viktor Yanukovych.

But the IMF also has its strict operating rules and it must be careful not to offend some member states which have reproached it for having at times given in to Western pressures.

Under its internal rules, the IMF can only lend to a borrower in exchange for implementing austerity policies and a “viable” plan that would take the country’s public finances to the point that it will be able to repay.

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` Super Rich Taxation could Boost the Economic Growth according to IMF ‘

#AceFinanceNews says that the `IMF says `Taxing Super Rich’can boost Economic Growth in the long run’

Published time: : March 01, 2014 20:28
 
Reuters / Kim Kyung-Hoon Reuters / Kim Kyung-Hoon
A new International Monetary Fund study has found that taxing the super wealthy does not stunt the economic growth of a country, and that redistribution can actually spur gross domestic product.

The paper argues inequality is harmful to a country’s growth, and that redistributing wealth using taxes can reduce inequality and boost growth and the length of growth cycles.

“There is surprisingly little evidence that increases in tax rates impede medium-to-long-run economic growth,” the IMF paper says.

Redistribution is a win-win situation and overall has a “pro-growth effect”, and is not a job killer, as many other economists argue.

Growth inequality is more common in countries that redistribute less, and more equal societies have “faster and more durable growth”. The paper addresses extremes in the formula that sometimes suggest huge redistribution has a negative effect on growth.

America’s tax authority, the International Revenue Service, released a report in November 2013 that shows that the US’s richest 1 percent now owns 31 percent of its wealth, while the rest of the population experienced an income rise of only 1 percent.

A recent Oxfam study shows that up to 146 million Europeans are at risk of falling into poverty by 2025, and 50 million Americans are currently suffering from severe financial hardship.

“We find that higher inequality seems to lead to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly negative) effect,” the IMF paper states.

However, the report admits that labor supply could be adversely affected by a top heavy tax scheme.

“Redistribution that takes from the rich and gives to the poor is likely to reduce the labor supply of both the rich (who are taxed more) and the poor (insofar as they receive means-tested benefits that reduce incentives to work),” the report said.

The IMF study, compiled by researchers Jonathan Ostry, Andrew Berg and Charalambos Tsangarides and published by Oliver Blancard, the institution’s chief economist and released on Wednesday, is meant to serve as a ‘discussion note’ and not an official stance of the Washington-based institution.

“Redistribution, Inequality, and Growth” stops short of declaring the paper economic gospel, as the authors admit the data, and discipline of economic theory, is complex and many different variables are at play.

‘Tax the rich’ has become the main mantra of Warren Buffet, America’s second richest man, who has urged Congress to raise taxes on millionaires to 30-35 percent.

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IMF’s Lagarde says euro crisis not solved, demands pre-emptive action from ECB

#AceFinanceNews says nice post “The Problems in the EU are Three Fold” Firstly the credit control situation, secondly the unemployment and thirdly and most importantly the corrupt element, always ready to distort the #truth

Global Geopolitics

Christine Lagarde, the IMF’s managing director, says it is premature to declare the eurozone crisis over

The International Monetary Fund has poured cold water over claims that the eurozone is safely recovering, calling on the European Central Bank to take pre-emptive action to alleviate the credit crunch for small business and head off the risk of deflation.

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