Pakistan asks IMF for rescue loan

Pakistan has asked for a loan package from the International Monetary Fund worth at least $7.6bn (£5.1bn), its top economic adviser has said.

Shaukat Tarin, adviser to the prime minister, said the loan would stave off the country's balance of payments crisis and stabilise the economy.

Pakistan needs the money in order to avoid defaulting on international debt.

It had been exploring other sources of funds in order to avoid stringent IMF conditions but failed to find a deal.

Speaking at a news conference in Karachi, Mr Tarin said Pakistan would apply formally for the loan next week.

The government stands to receive $4bn this year as part of the 23-month IMF deal, the AFP news agency reports. It will start repaying the loan in 2011.

Flight of capital

In the past, Pakistani officials have said the IMF would be their last option due to its unpopularity at home


But Islamabad was left with few options faced with the need swiftly to raise billions of dollars in foreign loans to meet debt payments and pay for imports.

The Pakistani economy has grown by 7% to 8% over the last few years, but most of this growth has taken place in sectors such as consumer financing.

By 2006, trade imbalances because of high imports caused the economy to slow down; a subsequent rise in international prices of food and oil worsened the situation.

This led to a fall in the value of the Pakistani rupee and a flight of capital from the country.

IMF conditions entail cutbacks on the size of the government, development expenditure and some politically important subsidies.

Following the recent global financial turmoil, the IMF has agreed loans to several nations to support their economies, among them Ukraine, Hungary and Iceland.

Summit pledge to 'restore growth'

World leaders at the G20 financial summit in Washington have pledged to work together to restore global growth.

They said they were determined to work together to achieve "needed reforms" in the world's financial systems.

US President George W Bush said that finance ministers would now work on detailed reform proposals, and then report back.

Leaders of emerging economies said the summit marked a historic shift of power away from the richer countries.

Mr Bush's successor in the White House, Barack Obama, said in a statement that he was ready to work "together on these challenges" with the G20 when he takes office in January.

"The president-elect believes that the G20 summit... is an important opportunity to seek a coordinated response to the global financial crisis," said a statement issued in his name.

The meeting brought together leading industrial powers, such as the US, Japan and Germany, and also emerging market countries such as China, India, Argentina, Brazil and others - representing 85% of the world economy.

Summit agreements

For the leading emerging economies, the significance of this G20 summit was clear - they now have to be taken into consideration in the management of the global economy.

Brazil's President, Luiz Inacio Lula da Silva, said: "We are talking about the G20 because the G8 doesn't have any more reason to exist."

Key issues agreed by world leaders at this summit included:

reform of international financial institutions such as the World Bank and the International Monetary Fund
an agreement by the end of 2008, leading to a successful global free-trade deal
improvements to financial market transparency and ensuring complete and accurate disclosure by firms of their financial conditions
making sure banks and financial institutions' incentives "prevent excessive risk taking"
asking finance ministers to draw-up a list of financial institutions whose collapse would endanger the global economic system
strengthening countries' financial regulatory regimes
taking a "fresh look" at rules that govern market manipulation and fraud.
In his address at the end of the summit, Mr Bush said there was no doubt that the financial crisis facing the United States and many other countries was a severe one.

He said it had even been conceivable that the US "could go into a depression greater than the Great Depression".

"We are adapting our financial systems to the realities of the 21st century," he said.

Speaking after the summit, UK Prime Minister Gordon Brown said the group had reached important conclusions "about trade, about financial stability and about the expansion of our economies".

'Market principles'

Russian President Dmitry Medvedev said the global financial structures created at the end of WWII were now inadequate

It will be necessary to rebuild the whole international financial architecture, make it open and fair, effective and legitimate".

The stalled Doha round of global trade talks should be pushed forward so that a basic agreement can be reached before President Bush leaves office in January, said German Chancellor Angela Merkel.

"If there is the political will, it would be good if we could reach an agreement in the Doha round with the present US administration."

In their joint closing statement, leaders said the reforms would only be successful, if they were "grounded in a commitment to free market principles".

G20 leaders say they will meet again by 30 April, 2009, to review progress.

The next summit looks set to be held in London, with US President-elect Obama attending.

Although no formal decision has been announced, France's President, Nicholas Sarkozy, made it clear that he expects London to be chosen as the venue.

The G20 group of countries consists of 19 leading industrialised and developing countries, as well as the European Union.

More developing countries turning to WB for help: Zoellick

World Bank President Robert Zoellick said on Tuesday that in the past few weeks more developing countries are turning to the World Bank for help, a sign that more countries are now being hit by the global financial crisis.

Zoellick said the Bank is now estimating that global trade, the lifeblood of economies will drop for the first time since 1982 due to global credit strains.



The World Bank on Tuesday sharply cut its growth forecast for developing countries to 4.6 percent for next year, from 6.4 percent projected in June, due to a combination of financial turmoil, slower exports and weaker commodity prices.



Zoellick said the World Bank's war chest could allow it to commit up to $100 billion in new lending to emerging economies over the next three years.



It could also provide up to $42 billion in grants and low-interest loans to poorer countries who may not be directly hit by the financial crisis but will feel the effects of a slowing global economy, he added

No cut in fuel prices now -Deora

The Government will consider reducing petrol and diesel prices once rupee-dollar parity and crude oil stabilise at levels sustainable to public sector oil companies, Petroleum Minister Murli Deora said.

"Prime Minister has already said this, and I don't need to repeat that we cannot reduce prices just now because the oil companies are losing heavily," Deora said.



The rupee-dollar rate and international crude oil prices continue to be volatile and it would not be prudent to cut prices during such times, he said.



"We wanted to reduce prices but the rupee depreciation against the US dollar made things difficult," Deora said.



Indian rupee has depreciated 20 per cent against the greenback since April.



Prime Minister Manmohan Singh had earlier this week stated that the Government would wait for public sector oil companies to break even on fuel sales before considering a price cut.



International crude oil prices have slid from an all-time high of USD 147 to USD 60 a barrel, but public sector oil companies continue to make losses on sale of diesel, domestic LPG and kerosene.



Though Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum have started making profit on sale of petrol, they lose about Rs 155 crore per day on sale of other three products.



Oil firms make a profit of Rs 4.12 a litre on petrol but lose Rs 0.96 on every litre of diesel, Rs 22.40 per litre on kerosene and Rs 343.49 per LPG cylinder.



Deora said a second tranche of oil bonds for the state oil firms was expected next week. "There were differences over calculation of revenue loss. Finance Minister P Chidambaram is very cooperative and I hope more bonds will be issued next

week."



IOC, BPCL and HPCL were earlier this week issued oil bonds worth Rs 22,000 crore to compensate them for half of the revenue loss on sale of petrol, diesel, domestic LPG and kerosene in the first quarter of this year.



Parliament had last month approved issue of oil bonds worth Rs 65,942 crore to cover for half of the losses the oil companies incurred on fuel sale during January to September period in 2008.



They were to get Rs 14,956.17 crore worth of oil bonds for selling fuel below cost in January-March quarter.



An additional Rs 24,408 crore compensation for April-June quarter was to be given.



About Rs 22,000 crore worth of oil bonds were expected for July-September quarter.





However, the Finance Ministry has issued only Rs 22,000 crore worth of oil bonds.



Government compensates half of the losses the firms incur on sale of four products through issue of oil bonds.



The three companies were given assurance of bonds issue on paper which they account in their books of accounts.



Yet, IOC posted its largest-ever net loss of Rs 7,047.13 crore in July-September quarter.



BPCL posted a net loss of Rs 2,625.17 crore in the second quarter on top of Rs 1,066.70 crore in April-June, while HPCL reported a loss of Rs 888.12 crore in Q1 and another Rs 3,218.92 crore in Q2.



"If prices keep on going down, we can explore these possibilities (of reducing prices)," the Prime Minister had said.



State-run IOC, BPCL and HPCL are projected to lose Rs 1,28,135 crore in revenues on fuel sales this fiscal.



IOC, BPCL and HPCL lost Rs 92,853 crore on fuel sales (audited figures) in April-September and they are projected to lose Rs 35,282 crore in the second half of 2008-09 fiscal.

Rupee drops by another 57 paise against USD in early trade

The Indian rupee on Wednesday dropped further by 57 paise to 48.68/69 against the US currency in late morning deals following sustained weakness in equity markets and expectations of more capital outflows.

In active trade on the Interbank Foreign Exchange (forex) market, the local unit resumed sharply lower at 48.45/47 a dollar and dipped further to quote at 48.68/69 in late morning deals.



On Tuesday, the rupee had tumbled by 73 paise. It moved in a range of 48.44 and 48.81 in early trade.



Forex dealers attributed weakness in the rupee to bearish equity markets.



Indian benchmark Sensex on Wednesday was down by over 74 points at 1030 hrs while most of the Asian indices were also trading in negative terrain on the back of fall on Wall Street on Tuesday night.



Expectations of more capital outflows due to sustained sluggishness in stock markets amid prolonged global economic slowdown.



Fall in the collections of excise duty and customs duties during October 2008 also displayed possibility of losing pace in the domestic economic growth, which also partly on the rupee sentiment.

Panasonic aims to take over Sanyo

Japanese electronic rivals Panasonic and Sanyo are starting alliance talks, which could result in Panasonic taking over the smaller company.

Panasonic said it wanted to make Sanyo its subsidiary, effectively creating Japan's largest electronics maker.

Panasonic may be interested in Sanyo's green energy businesses, such as solar panels and batteries.

Sanyo has been facing problems in recent years, cutting thousands of jobs and selling unprofitable operations.

"Panasonic and Sanyo will start discussions with the aim of maximizing both companies' corporate values by pursuing synergies between both companies," Panasonic president Fumio Ohtsubo and Sanyo president Seiichiro Sano said in a statement.

This week, Sanyo reported a 67% drop in its July-September profit to 4.4bn yen ($44m, £29m) due to a stronger yen, rising material costs and falling gadget prices.

The same factors also contributed to a drop in Panasonic profit of 16% to 55.5bn yen for the same period.

But Panasonic is less dependent on exports to the USA than Sanyo, a factor which has helped it do better than some other rivals in Japan.

"The current environment will allow Panasonic to buy Sanyo at a relatively cheap price with few competitive bids," said Seiichi Suzuki, a market analyst at Tokai Tokyo Securities.

The two companies have historical ties, with their founders being brothers-in-law.

Christmas spending 'to fall 7%'

UK consumers plan to spend 7% less this Christmas than they did last year, a survey from business advisory group Deloitte has suggested.

Deloitte warned this festive season may be "one of the toughest in decades" for retailers. The expected fall compares with a 7% rise in spending in 2007.

Yet while 24% of UK consumers intend to spend less this Christmas, the report said 57% planned to spend the same.

A further 19% of respondents said they expected to spend more.

A separate poll of parents found that many were planning to cut spending this Christmas, and that one in 10 feared a family's main bread winner would be made redundant within the next six months.

'Less socialising'

The total average amount spent per adult this year will be £655 on gifts, socialising, and food and drink, the Deloitte survey estimates.

While the overall amount spent is set to fall by 7% from last year, it is socialising where the biggest cutbacks are planned - 12% less than last year.

At the same time, more people plan to buy some of their Christmas gifts from supermarkets as they seek lower prices - 56% compared with 52% last year.

"I think the main headline is this is worst Christmas for a generation," said Richard Hyman, strategic advisor to the retail practice at Deloitte.

"But as a nation we'll be spending £36bn so it's not a total disaster.

"Broadly speaking, we believe sales will be flat this Christmas, with a slight fall possible."

Mr Hyman added that retailers will be hopeful that last week's interest rate cut will boost people's disposable incomes.

Russia hikes rates to help rouble

Russia's central bank increased its key interest rate to 12% from 11% in an attempt to reduce an outflow of money and curb the decline in the rouble.

The move is also aimed at containing inflationary pressures.

On Monday the head of the central bank refused to rule out the possibility that the national currency, the rouble, could weaken.

However, Sergei Ignatiev stressed that both the bank and the government wanted to avoid a devaluation.

Russia has been spending billions of dollars to support the rouble.

A fall in its value would push the price of imported food even higher - in a country which is already struggling with double-digit inflation, said the BBC's correspondent in Moscow, James Rodgers.

Default memories

"I do not rule out more flexibility in the rouble exchange rate with some tendency towards weakening of the rouble in the current conditions," Mr Ignatiev said.

His comments suggest that Russia is preparing to reduce the huge sums it is currently spending to prop up its currency, and thus allow it - gradually - to fall in value.

But the word "devaluation" has a special, unpleasant association for Russians.


It brings back memories of the financial crisis of 1998, when the rouble plummeted in value and millions of people across the country suffered real hardship.

Seemingly aware of that nervousness, Mr Ignatiev, is stressing that both the bank and the government want to avoid a devaluation, and is fighting shy of the precise term.

Russian food imports have risen steadily since the beginning of the decade. Last year, they cost the country more than £17bn.

With a weaker rouble, that imported food is going to cost more in the shops - at a time when inflation is already running at over 12%, and one opinion poll suggests that almost half of Russians are worried about losing their jobs.

ING group reports its first loss

Dutch banking giant ING has reported its first quarterly loss for the three months to the end of September.

The group said it made a loss of 585m euros (£478m;$737m) for the period, compared with a profit of 1.95bn euros for the same period last year.

Net profits for the first nine months of the year fell by more than half compared with the same period in 2007.

The bank received 10bn euros from the Dutch government in October to help it cope with the financial crisis.

Michel Tilmant, chairman of ING, described his company's performance as "resilient" in light of the "challenging and highly competitive environment".

Net profits for the first nine months fell 56% compared with the same period last year, from 6.76bn euros to 2.98bn euros.

Retail deposits grew by 6.7bn euros and total bank deposits increased by 12.9bn euros, taking out the impact of foreign exchange.

Oil price slides to 20-month low

Oil prices have fallen to the lowest levels since the beginning of 2007, amid fears over lower energy demand and worsening economic prospects.

US light sweet crude declined by $1.43 to $57.90 a barrel in New York before rebounding to $58.40. Brent crude fell $1.20 to $54.51 a barrel.

Crude oil has fallen about 60% after reaching a record $147.27 in July.

Investors had hoped for solid growth in oil demand from China, but it has been weakening there, as well as in the US.

"We have a pretty good idea that global growth is going to be pretty awful next year and probably not much better in 2010," said Mark Pervan, senior commodity strategist at ANZ Bank in Melbourne.

Most analysts predict the US Energy Department will report on Thursday that US oil inventories have risen for the seventh week in a row, highlighting falling demand.

Analysts also expect the International Energy Agency (IEA) to cut its global oil demand forecast in its report to be published on Thursday.

"With definitive slowing in China, the market is even more sensitive to negative economic news out of the US and Europe," Mr Pervan added.

At the same time, the International Energy Agency (IEA) says the era of cheap oil is over and prices could soon be back up to $100 a barrel.

The IEA, in its World Energy Outlook for 2008, says prices could soar to as high as $200 a barrel by 2030.

G-20 says government spending can help ease crisis

Economic officials from 20 leading nations have called for increased government spending to boost the troubled global economy and said developing countries deserve a prominent role in talks to overhaul the world financial system.

Finance ministers and central bank presidents from the Group of 20, which includes wealthy and developing nations, agreed on Sunday that the world must work together to address

the current crisis.



But they approved no specific plans ahead of a meeting of G-20 heads of state set for Washington next week.



Ministers urged governments to increase spending or cut taxes as they can to help reverse an economic downturn that is expected reduce global trade next year for the first time since 1982.



Each country will have to design its own stimulus package to meet its specific needs, said David McCormick, the US Treasury's undersecretary for international affairs.



The G-20 also backed a call to bolster developing nations' voting power in key groups including the International Monetary Fund and the World Bank, following decades of complaints that

their voices have been stifled.



"Institutions must be comprehensively reformed so that they can more adequately reflect changing economic weights in the world economy and be more responsive to future challenges," the ministers' declaration said.



Yet the statement failed to address a French proposal that large emerging economies including Brazil, Russia, China and India be added to the powerful Group of Eight industrial nations, which has huge influence over global economic policy