A Hurting
Dollar Pains the World
The US dollar has dropped to a new record low against the euro and dipped to its
lowest level against the yen since early 2000 — and the slide isn’t over.
Standard & Poor’s expects the greenback to drop throughout 2005, to $1.45/euro.
Such a decline will only stop the trade gap from widening rather than narrow it.
The tumble poses a greater risk to the rest of the world than to the US economy.
The problem of America’s huge deficit in its balance of payments [which measures
the country’s economic transactions with the rest of the world, including both
goods and services] is growing. Moreover, prospects for quick improvement are
bleak. The usual market cure for a large deficit is a currency decline. In the
long run, the lower dollar will make US goods more competitive overseas, thereby
increasing exports, and foreign goods will be less competitive in America,
reducing imports.
The mechanism is simple, and it’s starting to work. Export volumes have
accelerated, and import volumes are beginning to slow. The process is
illustrated by a recent contract my son’s company won. The previous holder of
the contract was a British business. Both outfits bid about the same as they did
five years ago, but with the pound at $1.90 instead of $1.40, the business went
to North Carolina.
BLAME AMERICA. However, curing the trade-gap problem will be a slow process.
Many contracts are long-term, and it will take a while for them to change hands.
Since international concerns have plants scattered throughout the world, their
production is determined by capacity, not current prices. It takes a while for
changing investment patterns to alter trade patterns. It may take even longer
because so many US imports come from developing countries whose currencies
aren’t rising against the dollar.
A falling greenback usually pushes up import prices faster than it reduces
volumes. As a result, the import bill measured in dollars rises, inflating the
trade deficit. It takes about 18 months for the volume effects to offset the
price effects, meaning at best the trade gap won’t start closing until late next
year. [This effect is called the “J-curve” in economics literature.]
The weak growth of other industrial economies is also a problem for the US.
Their muted demand for imports causes difficulties for US exports — even if
prices are competitive. The growth imbalance also increases pressure on the
central banks to intervene, as the falling dollar cuts into export growth in
Europe and Japan, which is their major source of strength. The bottom line: If
the US reduces its balance-of-payments deficit, other countries must reduce
their surpluses. They will blame the US for this situation.
YANK DOLLAR HOLDINGS?
The dollar’s woes are exacerbated by the financing of so much of the trade gap
by official sources [central-bank intervention] — over the last 12 months,
official holdings offset half the shortfall. This helps explain why bond yields
are so low. These official holdings end up in Treasury securities. In fiscal
2004, they offset 60% of new Treasury borrowing. [The increase in foreign
official holdings during fiscal 2004 was $252 billion, compared with a federal
budget gap of $413 billion.]
Bank of
Malaysia opts for automation
By Express Correspondent
International Bank of Malaysia (T) Ltd, which currently changed its
name to International Commercial Bank (T) Ltd effective 1st of January this
year, have started upgrading its core banking to a fully automated system.
Changes of the name comes with the bank’s upgrading to automate its systems that
will support modern delivery channels such as ATMs and Internet Banking thus
enabling it to provide its customers with better products and services.
As part of this upgrade and consequential expansion, all ICB branches will be
connected online in the first half of this year, affording its customers the
convenience and flexibility of banking at any of its branches.
In November last year ICB also launched three new loan products namely the
Executive Loan, Express Loan and Housing Loan to meet the specific personal
needs of Tanzanians and this has definitely attracted many new customers in view
of its flexibility and attractive terms.
The bank’s team of product developers is currently highly geared towards
creating more new exciting products to be launched in this year.
As part of its expansion plan and growth, the banks will also opening new
branches in new locations to serve a wider clientele.
“Being part of the ICB banking Group, the bank will also continue to enjoy
synergy with a global network of the banks located in ten countries and which
spans three continents” the statement state
The statement more over said that, the changes of name is to streamline and
align the bank with the other International Commercial Banks operating in Asia,
Europe and Africa under the global umbrella of the ICB Banking Group.
“This change is part of the corporate branding process to enable the group to
plan and establish the direction, strategic focus and integration throughout the
organization”, it has been said.
Govt requests
World Bank to extend assistance for privatization
By Timothy Kitundu
The government has requested the World Bank to fund various support
programmes and awareness campaigns which have played important roles in the
process of privatization. After the successful year in 2004 by Presidential
Parastatal Sector Reform Commission (PSRC), the request for an extension has
been forwarded to WB authorities.
World Bank, through an IDA credit under the Privatisation and Private Sector
Development Project (PPSDP), supported the divestiture programme in the year
2004.
“The government has already submitted a request for extension and a decision is
expected soon,” read part of the annual review and the Action Plan for 2004/05,
PSRC.
The new IDA Loan Administration Change Initiative (LACI) and Project Management
Reporting (PMR), according to the review, continued to be implemented during the
year.
PSRC Coordinator Dr. Heavenlight Kavishe recently told journalists in Dar es
Salaam that the IDA Credit also supports the creation of an infrastructure and
utilities regulatory framework, related institutions and appropriate capacity
building, activities which were advanced further during the review year.
“IDA Credit also offers support for improvement of the business environment to
enable the private sector to play a stronger role in the development process and
to improve its contribution to economic growth,” Dr. Kavishe said.
The review indicates that the support by DFID to enable PSRC to meet critical
institutional capacity costs continued during the review period which provided
for the continued engagement of a Utilities Advisor up to 31 May 2005.
As part of its support to Tanzanian investors, PSRC has the objective of putting
the commercial activities under the private sector which the government has
identified as the engine for economic growth. “Within this objective, the
government intends to achieve broad ownership of the privatized public
enterprises by Tanzanians,” adds the review.
This, according to the review, has been achieved through outright trade sale,
share sale and sale of assets of public enterprises to individual Tanzanians or
registered companies owned and controlled by Tanzanians.
Staggered payment terms were applied to facilitate their start-up. Other
parastatals have been sold to management and employees under the management and
employee buy-out (MEBO) scheme on more concessionary terms.
"Fund African
development" Annan
By Joshua Mshana
DEVELOPMENT partners should increase their assistance, especially on
priority areas to make African countries achieve their goals in the NEPAD plans.
In recent years, donor aid policies and international trade practices have
reduced Africa’s share of the world market has declined dramatically since 1970,
bringing estimated losses of income of about 70 billion US dollars a year almost
five times what Africa receives in aid annually. The continent especially needs
reforms in agricultural trade including elimination of agricultural subsidies in
developed countries, which place Africa’s agricultural exports at a competitive
disadvantage.
This was said by Kofi Annan, the Secretary General of United Nations (UN) in his
second Annual Report on NEPAD’s implementation, which is in the UN Development
Programme (UNDP) report.
“As implementation of NEPAD moves forward, a strengthened partnership is needed.
Within that partnership, African countries would deepen their commitment to
NEPAD,” he said.
Helping to
reroute travel plans after the Tsunami disaster India issues temporary visas to
international tourists
By Timothy Kitundu
Following the Tsunami disaster which hit South East Asia, the Government of
India has decided to allow temporary visas at the metro airports for all
tourists who are re-routing their travel plans in various destinations in India.
Sunil Uke, First Secretary at the Indian High Commission in Dar es Salaam said
through a statement over the weekend that the move is aimed at rendering
assistant to tourists who have cancelled their trips to severely affected areas.
“The move will allow those tourists who have cancelled their trips to South East
Asia to re-route their travel plans to Goa and other destinations in India,” he
said.
According to press reports, the death toll in the massive earthquake and tidal
waves that slammed the Indian Ocean shorelines last week is estimated at over
125,000 deaths last week.
Further reports say that the Indian Islands of Andaman and Nicobar thousands are
missing, feared killed by last week’s Tsunami but few bodies have been located
so far.
At least 12,709 people are dead or feared dead in India, more than 7,400 in
Tamil Nadu alone. Most of the dead were women and children who could not
scramble fast enough to escape the waves.
The tsunami hit India’s fishing community hardest as the southeastern coast is
dotted with small fishing villages, about 100,000 fishermen homes and some
40,000 boats were badly damaged.
However, Uke said that the calamity has affected one part of India while the
rest of India remains safe for tourists who have already made plans to visit the
country.
Uke confirmed that the disaster has affected Andaman and Nicobar Islands and the
States of Andhra Pradesh, Tamil Nadu, Union Territory of Pondicherry and some
parts of Kerala.
Power
generation decreases
By Timothy Kitundu
Lack of generation and distribution facilities of electricity is forcing people
to depend on the conventional mode of energy, charcoal, which in turn is causing
destruction to the environment although the country is endowed with an abundance
of energy resources such as electricity, biomass, natural gas, coal and
renewable energy.
According to General Economic Review contained in the Tanzania Economic Survey
generation of electricity decreased by 4.8 per cent from 2791.3 Gwh in 2002 to
2668.3 Gwh in 2003, a decreased which was caused by drought, which affected
generation of hydro-power electricity.
Energy is an important means of accelerating economic growth, improving social
services, and fighting poverty. Consumption pattern of energy in Tanzania shows
that biomass account for 90 per cent, petroleum 8.0 per cent, and electricity
1.2 per cent. Other sources like coal, solar and wind contribute less than 1.0
per cent.
The survey indicates that the growth rate of electricity sector from 3.0 per
cent in 2002 to 5.0 per cent in 2003.The increase in the growth rate resulted
from an increase in new customers being connected to electricity for various
uses.
The survey further reveals that installed capacity for generating hydro and
thermo electricity for the national grid was 618.6 megawatts in 2003 with other
installed capacities as IPTL 100 megawatts.
“Amount of electricity generated by hydro and thermo power plants decreased to
2553.9 Gwh in 2003 from 2720.1 Gwh in 2002. Installed capacity of other
electricity producers was 26.1 megawatts in 2003 and electricity generated from
isolated stations increased from 71.2 Gwh in 2002 to 114.3 generated in 2003,”
reads part of the survey.
Electricity sales to households decreased from 1,120 Gwh in 2002 to 1,016.6 Gwh
in 2003, while customers connected to electricity increased from 465,763 in 2002
to 514,870 in 2003.
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