IMF fees on war-torn countries closer to elimination 

A participant stands near a logo of IMF at the International Monetary Fund - World Bank Annual Meeting 2018 in Nusa Dua, Bali, Indonesia, on October 12, 2018. (REUTERS/File)
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Updated 20 August 2022

IMF fees on war-torn countries closer to elimination 

  • Citing worsening financial crises in Sri Lanka and Pakistan as examples, some accuse China of engaging in debt trap diplomacy 
  • A spokesperson for the fund says the surcharges are designed to discourage large and prolonged use of IMF resources 

WASHINGTON: The International Monetary Fund is facing pressure to reevaluate how it imposes fees on loans it disperses to needy countries like war-torn Ukraine — which is one of the fund’s biggest borrowers.
The move comes as more countries will need to turn to the IMF, as food prices and inflation internationally continues to rise.
Surcharges are added fees on loans imposed on countries that are heavily indebted to the IMF.
Treasury Deputy Secretary Wally Adeyemo said in Aspen last month that finance ministers of several countries realize they have to pay a price for Russia’s war in Ukraine, especially with food prices going up.
“They’re going to have to go to the IMF, they’re going to need to find assistance,” Adeyemo said.
However, the IMF fee system could change through USlegislation. An amendment to the National Defense Authorization Act, otherwise known as the defense spending bill, would suspend IMF surcharges while their effectiveness and burden on indebted countries is studied.
That was passed by the US House in July. The Senate is expected to vote on its defense bill in September. A representative of the Senate Armed Services Committee said an amendment may be offered in the next few weeks or even on the Senate floor.
As the largest IMF shareholder and member of the Fund’s executive board, the US can push for policy decisions and unilaterally veto some board decisions.
Citing worsening financial crises in Sri Lanka and Pakistan as examples, some accuse China of engaging in debt trap diplomacy — or having countries falls so deeply in debt to that they are beholden to it on international issues.
Advocates and civil rights organizations lodge the same complaint against the Fund, who claim the organization undercuts its core lender-of-last-resort role with countries in vulnerable positions to pay back debt.
With an ever-worsening risk of a global debt crisis and rising interest rates, the issue has become more pressing for countries looking to reduce their deficits.
However, some economists and representatives of the fund say the surcharges amount to responsible lending behavior, as they provide an incentive for members with large outstanding balances to repay their loans promptly. This applies especially for countries that may otherwise may not be able to obtain financing from private lenders.
Maurice Obstfeld, a Berkeley economics professor and former IMF research department director said as a lender of last resort, the Fund’s ability to lend is important as low and middle income countries face rising interest rates.
“The Fund’s staff is small and in a crisis, its efforts are better deployed serving member countries’ needs,” he said in an email to The Associated Press. “Surcharges could be relaxed temporarily in the face of intense pressures on borrowing countries, but at the expense of the Fund’s ability to serve its membership in the longer term.”
Illinois Congressman Jesús “Chuy” García, who offered the defense spending amendment, told The Associated Press “it is unfair for the IMF to require countries like Ukraine that are already deep in debt to pay surcharge fees. These surcharges increase poverty and hold back our global economic recovery.”
Ukraine’s projected real GDP is expected to decline by 35 percent, due in large part to Russia’s invasion of Ukraine, according to IMF data.
The country, engaged in a war with no projected end, has an outstanding balance of 7.5 billion SDRs — an IMF accounting unit valued at around $9.8 billion according to Ukrainian central bankers. The latest figures estimate that Ukraine will owe the IMF $360 million in surcharges between 2021 and 2023.
Economists Joseph Stiglitz at Columbia University and Kevin P. Gallagher at Boston University wrote earlier this year that “forcing excessive repayments lowers the productive potential of the borrowing country, but also harms creditors” and requires borrowers “to pay more at exactly the moment when they are most squeezed from market access in any other form.”
Serhiy Nikolaychuk, Deputy Chairman of the National Bank of Ukraine, said Ukraine is continuing to pay its debts “despite Russia’s full-scale war against Ukraine.”
“Our country will pay its debt and surcharges under previous programs and fulfill its obligations to the IMF,” Nikolaychuk said. “It will be difficult, but we will pay.”
For years, lawmakers, economists and civil rights organizations have called on the IMF, which has for decades loaned billions to low-income countries, to end its surcharge policy.
In January, 18 left-leaning lawmakers wrote to Treasury calling for the surcharge policy to be eliminated. And in April, a group of 150 civil society groups and individuals signed an open letter to the IMF, asking for the same, calling surcharges “regressive.”
A spokesperson for the fund says the surcharges are designed to discourage large and prolonged use of IMF resources.
“They only apply to countries with particularly large outstanding loans,” Mayada Ghazala said in an emailed statement, adding that poorest countries are exempt from the surcharges.
The fund’s executive board met in December 2021 and discussed the role of surcharges — it ultimately decided not to make a change to the fees, but said they would review them again in the future.
The IMF was created in 1944 at the United Nations Bretton Woods Conference — one of its missions is lending to maintain the financial stability of countries. Among its 190 countries, it lends around $1 trillion, according to the organization’s website.
An April review of the fund’s financial health for fiscal year 2022 and 2023 states that lending income excluding surcharges “remain strong and are expected to exceed expenses in FY 2023–2024.”
Andrés Arauz, a senior research fellow at the liberal Center for Economic and Policy Research says the IMF’s financial position shows “the surcharges are not necessary for sound finances.”
“There is no excuse for the IMF to be punishing countries under debt stress with surcharges,” he said. “There is also no logic to it, the amount of money that the IMF raises from surcharges is trivial relative to its income and capacity.”
Garcia said “I’m proud the House passed my amendment to support a pause and review of surcharges at the IMF, and I will keep up the fight until the President signs it into law.”
Separately, the US has sent roughly $7.3 billion in aid to Ukraine since the war began in late February, including a new $775 million defense aid package announced Friday. 


Putin makes Chechnya’s Kadyrov an army general

Updated 16 sec ago

Putin makes Chechnya’s Kadyrov an army general

MOSCOW: Chechen leader Ramzan Kadyrov, an ally of President Vladimir Putin, said Wednesday he was granted a top rank in Russia’s army, just as Moscow’s forces suffer a series of defeats in Ukraine.
The 46-year-old Chechen leader — one of the most outspoken voices in Russia backing Putin’s Ukraine offensive — said it was a “huge honor” for him.
Kadyrov, a former warlord who rules Chechnya with widespread violations of human rights, said Putin had “personally” informed him of the decision.
“The President of Russia awarded me the rank of colonel general,” Kadyrov said on Telegram. “This is a promotion for me.”
The rank of colonel general is the third highest command rank in the Russian military hierarchy.
Kadyrov’s appointment to the rank came as the Ukrainian army pushed back Moscow’s forces in areas that the Kremlin proclaimed to be “Russian forever.”
The Chechen leader said he would do “everything to end the special military operation quickly” — using the Kremlin’s term for its Ukraine campaign.
Chechen units — including Kadyrov’s own militia with a sinister reputation, the “Kadyrovtsi” — are fighting alongside regular Russian forces in Ukraine.
Kadyrov has thrown his full backing behind Putin’s campaign, regularly calling for the most drastic tactics to be used in Ukraine.
This week he called on Moscow to use low-yield nuclear weapons in Ukraine after Russian troops were forced to retreat from the town of Lyman.
He then said he was sending three of his teenage sons — aged 14,15 and 16 — to the front.

Bus plunges into gorge in northern India, killing at least 25

Updated 05 October 2022

Bus plunges into gorge in northern India, killing at least 25

  • Over 45 to 50 people, all part of a wedding party, were on bus— police 
  • Police say over 110,000 are killed each year in road accidents across India 

NEW DELHI: A bus in northern India plunged into a gorge, leaving at least 25 dead and over a dozen others injured, officials said. Police told the Press Trust of India news agency there were 45 to 50 people on board the bus, all of whom were part of a wedding party, when it fell Tuesday evening into a gorge in Pauri district in Uttarakhand state. State police and the disaster response force worked alongside locals to rescue 21 people Tuesday night at the site of the crash, police chief Ashok Kumar tweeted. Vijay Kumar Jogdande, a senior government officer, said they would be carrying out an investigation into the incident and will conduct postmortem examinations after retrieving the bodies from the site. Officials were seen clearing the area of bushes and trees to help with the rescue operation as they pulled up an injured person. Rescuers also retrieved a dead body using ropes before they were taken away on a stretcher. Prime Minister Narendra Modi said all possible assistance will be given to those affected. “In this tragic hour my thoughts are with the bereaved families. I hope those who have been injured recover at the earliest,” he tweeted Wednesday. Deadly road accidents are common in India due to reckless driving, poorly maintained roads and aging vehicles. More than 110,000 people are killed every year in road accidents across India, according to police.


Ten dead after Indian Himalayas avalanche hits climbers

Updated 05 October 2022

Ten dead after Indian Himalayas avalanche hits climbers

  • Several dozen climbing trainees caught in Tuesday's snowslide near summit of Mount Draupadi ka Danda-II
  • Indian air force and local disaster agency were assisting with rescue efforts before heavy snow and rainfall

New Delhi: Ten people are confirmed dead after an avalanche struck climbers in the Indian Himalayas, police said Wednesday, with 18 other members of the expedition still missing.

Several dozen climbing trainees were caught in Tuesday morning's snowslide near the summit of Mount Draupadi ka Danda-II in the northern state of Uttarakhand.

The Indian air force and local disaster agency were assisting with rescue efforts before heavy snow and rainfall forced them to abandon the search overnight.

"Rescue teams have recovered 10 bodies," the Uttarakhand state police force said on Twitter after operations resumed in the morning.

Fourteen people have so far been rescued from the site of the avalanche, around 4,900 metres (16,000 feet) above sea level, and police said five were being treated at a district hospital in Uttarkashi.

Police footage showed several rescued climbers arriving in the town and walking unassisted while escorted by officers.

Uttarakhand Chief Minister Pushkar Singh Dhami confirmed on Twitter that accomplished climber Savita Kanswal, who had summited Everest earlier this year, was among the dead.

Kanswal was an instructor with the expedition and had been feted by the climbing community for summiting the world's highest peak and nearby Makalu in just 16 days -- a women's record.

Dhami said the government would provide immediate financial assistance to those injured in the avalanche along with the families of victims.

State disaster agency spokesperson Ridhim Aggarwal told AFP that the climbers had been stuck in a crevasse after the avalanche hit.

The Nehru Institute of Mountaineering said the expedition included 34 of its trainees, seven instructors and a nursing assistant.

Two air force helicopters had been sent to the region to assist with the search, senior disaster management official Devendra Singh Patwal told AFP.

Fatal climbing accidents are common on the treacherous terrain of the Himalayas, home to Everest and several of the world's highest peaks.

In August, the body of a mountaineer was recovered two months after he fell into a crevasse while crossing a glacier in the neighbouring state of Himachal Pradesh.

And last week, renowned US ski mountaineer Hilaree Nelson's body was found on the slopes of Nepal's Manaslu peak after she went missing skiing down the world's eighth-highest mountain.

On the day of Nelson's accident, an avalanche hit on the 8,163-metre (26,781-foot) mountain, killing Nepali climber Anup Rai and injuring a dozen others who were later rescued.

Although no substantial research has been done on the impacts of climate change on mountaineering risks in the Himalayas, climbers have reported crevasses widening, running water on previously snowy slopes, and the increasing formation of glacial lakes.


Taliban report mosque blast at government ministry in Kabul

Updated 05 October 2022

Taliban report mosque blast at government ministry in Kabul

  • Explosion takes place inside Interior Ministry’s mosque, no immediate casualties reported
  • Blast follows last week’s attack on education center in Kabul where 52 people were killed 

KABUL, Afghanistan: A blast struck a mosque at a government ministry building in Kabul Wednesday as workers and visitors were praying, a Taliban official said.
The afternoon explosion went off inside the mosque of the Interior Ministry, which is responsible for security and law enforcement in the country.
A Taliban-appointed spokesman for the Interior Ministry, Abdul Nafi Takor, said in a tweet: “Unfortunately there was an explosion inside a(n) ancillary mosque where some Interior Ministry workers and visitors were praying. Will share the details later.”
He did not say if the mosque was inside the ministry or near it. There was no immediate information about casualties and no immediate claim of responsibility.
The mosque blast follows last week’s suicide bombing at an education center in Kabul that killed as many as 52 people, according to a tally compiled by The Associated Press, more than twice the death toll acknowledged by Taliban officials.
The reason for the lower death toll provided by the Taliban was not immediately clear. In the past, they have at times been slow to confirm casualty figures in the aftermath of attacks.
Taliban security officials initially said 19 people had been killed at the Kaaj Higher Educational Center, then revised the death toll to 25 over the weekend.
However, The Associated Press spoke directly to relatives of 39 of those killed and obtained the names and other information about the remaining 13.


Philippines’ Marcos Jr. open to buying Russian fuel, proposes new Myanmar approach

Updated 05 October 2022

Philippines’ Marcos Jr. open to buying Russian fuel, proposes new Myanmar approach

  • The Philippines, a US defense ally, has not imposed any sanctions on Russia
  • Myanmar’s ruling junta has been barred from regional summits

MANILA: Philippine President Ferdinand Marcos Jr. on Wednesday said his nation may need to turn to Russia to fulfil its fuel needs amid rising global energy prices, bucking pressure from Western allies for countries to shun Moscow.
Speaking to the Manila Overseas Press Club, Marcos, who is also agriculture minister, said the Philippines may also deal with Russia for supply of fertilizer.
“We take we take a very balanced view because the truth of the matter is, we may have to deal with Russia for fuel, for fertilizer,” said Marcos.
The Philippines like many countries is grappling with soaring inflation, due to supply woes fanned by Russia’s invasion of Ukraine. The Philippines, a US defense ally, has not imposed any sanctions on Russia.
Marcos, the son and namesake of the ousted late strongman who ruled the Philippines for two decades, also said he wanted his country to play a key role in promoting regional peace, amid challenges posed by North Korea and China-Taiwan tensions.
“We hope to be part of leading, the ones that are leading the effort for peace,” he said.
He said he would propose a new approach to the crisis in Myanmar at an upcoming meeting of the Association of Southeast Asian Nations (ASEAN) in November, which could involved engaging the military government directly.
Myanmar’s ruling junta has been barred from regional summits over its failure to implement a five-point peace plan it agreed with ASEAN in April last year, after violent turmoil erupted in the country following a military coup.
The generals have been outraged by ASEAN’s unusually tough stand and have said they intend to comply with its plan, but will not agree to its call to hold dialogue with a pro-democracy resistance movement they call “terrorists.” “It’s time to put together, to put forward some concrete proposals on what we can do to at the very least to bring at least representatives of the military government to the table so we can begin to talk about these things,” Marcos said.
On Wednesday, Cambodia, the current ASEAN chair, confirmed that a request had been sent to the State Administrative Council, as the junta is known, that it nominate a non-political figure to represent Myanmar at the upcoming leaders’ summits. “Again, the SAC has refused to send anyone to the summits,” Cambodia Foreign spokesperson Chum Sounry said.