Mexico granted $47bn IMF credit

The International Monetary Fund has formally approved a $47bn (£32bn) line of credit for Mexico.

It is the first country to get the credit under a new fast track scheme designed to help developing nations cope with the global economic crisis.

Several Eastern European countries are also seeking similar credit lines.

Mexico has said it does not intend to use the money, but applied for it as a precaution in the event of further deterioration in global markets.

Mexico, which sells 80% of its exports to the United States, has been hit hard by the global recession.

Industrial output last month fell by over 13%, the sharpest decline in 14 years.

The Mexican peso has also been on a generally downward path, falling around 20% against the dollar during the last year.

Applying for an IMF loan was once seen as a sign of desperation for developing countries.

News that the lender of last resort was stepping in would often be the final blow to their struggling economies.

But the Mexican government and the IMF are keen to stress that that there is no stigma attached to this particular type of loan, which is designed to support countries seen as strong economic performers during the global credit crisis.

Since President Felipe Calderon publicly announced his country was requesting the credit just before the G20 summit in London earlier this month, the peso and the Mexican stock market have strengthened.

India to grow at over 7 pc in the current fiscal: PMEAC

Prime Minister's Economic Advisory Council (PMEAC) said that it expects the country's economy to grow at over seven per cent in the current fiscal as it has already started showing signs of recovery.

"Seven per cent plus is what my 2009-10 overall forecast is...I think it has already started recovering in my own assessment," PMEAC Chairman Suresh Tendulkar told on the sidelines of a conference on broadband in New Delhi on Friday.


He further said it expects rebound in the economy after September as the worst was over.


"I have been maintaining that the worst is already over, (I expect) good recovery after September," Tendulkar added.


Asked if the contracting industrial production worried him, he said the revised industrial production numbers were higher than the provisional ones, so it did not bother him much.


Despite three stimulus packages announced by the government, the Indian economy grew by 5.3 per cent in the third quarter of the last fiscal, its lowest rate in over five years, against a whopping 8.9 per cent a year ago.


In the first nine months of last fiscal, the economy grew by 6.9 per cent.



For whole of 2008-09, the advance estimates of Central Statistical Organisation (CSO) pegged the economic growth at 7.1 per cent, which seems a tough task in the wake of dismal industrial growth numbers.



On account of slackening demand hitting Indian trade more than anticipated, PMEAC lowered the country's growth estimate to 6.5-7 per cent from the earlier estimate of 7.1 per cent for 2008-09.


To boost the economy, the government came out with three stimulus packages in the month of December, January and in the interim budget, providing incentives to various sectors.


The Reserve Bank also took monetary easing measures by infusing more than Rs 4 lakh crore since October.


However, industrial growth turned negative in October, December and in January.


Besides, exports declined for the fifth consecutive month in February after it had a good run in the first half of 2008-09, growing by over 30 per cent.


The orders got cancelled and exporters found it difficult to get new bookings, thereafter, with demands slackening overseas due to global financial crisis.


As a result, from October onward, exports have been on a decline, with export in February falling by 21.7 per cent, the lowest in 13 years.

World's largest airline, Delta closes Indian call centers

America's Delta Airlines, the world's largest airline, has announced to close down its Indian call centers, a major setback to India's flourishing call centers which provide employment to thousands of youths across the country.

Airlines officials said the decision is driven by poor customer feedback.

Delta's call in India was handled by a call center of Wipro Ltd.

Media reports said Richard Anderson, the airline's chief executive, told employees in a recorded message on Thursday night that Delta had stopped forwarding calls to India in the first quarter and would be bringing the function back in-house in the US.

"The customer acceptance of call centers in foreign countries is low and our customers were not shy about letting us have that feedback," Anderson said.

A Delta spokesman, was quoted as saying in the media that the airlines has hired about 4,500 call-center workers in the US after it ended its current outsourcing operations in India.

However, Delta's call centers in Jamaica and South Africa would continue, the spokesman said.

In February, the United Airlines too had announced to end its 165 overseas call center jobs. After the merger of the North West Airlines, Delta is now the world's largest carrier.

It had sent its call centers to India in 2002 to save money, which at that time was estimated to be about USD 25 million a year. (BJ-18/04)

Citigroup results beat forecasts

Citigroup has reported its first quarterly net profit in nearly two years, the latest US bank to see an improvement in its performance.

It made a profit of $1.6bn (£1.1bn) compared with a loss of $5.1bn a year earlier. Revenues rose 99% to $24.8bn.

However, once dividend payments to preferred shareholders were taken into account, it suffered a near-$1bn loss.

Shares in Citigroup initially rose, before falling into negative territory, closing 9% lower at $3.65 in New York.

The news, together with better than expected results from conglomerate General Electric, boosted markets as Wall Street's winning streak extended to a sixth week.

Among banks, shares in Bank of America, due to post its quarterly results on Monday, gained 2.5%.

"We had our best overall quarter since the second quarter of 2007," chief executive Vikram Pandit said.

'Tentative hopes'

Citigroup made a pre-arranged $2.7bn dividend payment to preferred shareholders, and said it had made a $7.3bn credit loss from bad loans.

However, it gained from an accounting rule that allowed the bank to post a one-time gain of $2.5bn. The bank also said it had seen an improvement in trading activity and it had cut costs.

Citi's results came hot on the heels of positive earnings reports from Wells Fargo, Goldman Sachs and JP Morgan.

"Of course the fact that all of these have had such a strong first quarter has led to some tentative hopes that perhaps the banking sector crisis is bottoming," said Richard Hunter, head of UK equities at Hargreaves Lansdown.

Challenges remain

Although Citi reported a profit, its losses in credit cards and consumer loans both increased sharply, the BBC's Karen Nye in New York pointed out.

"Even the strongest banks have admitted to a few weak spots," she added.

Citigroup has received $45bn in government aid from the Troubled Asset Relief Program (Tarp).

The bank has also cut the size of its workforce to 309,000 people from 374,000 at its peak.

"It was slightly better than anticipated, but we probably underestimated how much government support would be a wind at their back," said Michael Holland, founder of Holland & Co.

But Citi's problems are not over yet, he added.

"There's no doubt the challenges are still enormous for Citigroup."