European finance ministers will today seek to meet a self-imposed deadline for drawing additional aid to the debt crisis and to form new budget rules as investor confidence that a comprehensive solution is achievable wanes.
Euro-area finance ministers will hold a conference call at 3:30 p.m. Brussels time to discuss 200 billion euros ($261 billion) in additional funding through the International Monetary Fund and the mechanics of a so-called fiscal compact that was negotiated at a Dec. 9 European Union summit, according to two people familiar with the planning.
“They’ll try to get as much done as they can before Christmas, but it’s doubtful they’ll put markets in a Christmas mood,” Carsten Brzeski, an economist at ING Group in Brussels, said in an interview. “There is still so much uncertainty.”
The accord to ratchet up budget rules failed to ease concern that the monetary union risks buckling under the weight of the two-year-old crisis. Fitch Ratings lowered France’s credit outlook and put other euro-area nations on review Dec. 16, saying an overall crisis solution may be “technically and politically beyond reach.” Belgium’s rating was cut two levels to Aa3 by Moody’s Investors Service on the same day.
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Gandhi Bill Strains India to Give Food to Poor
India approved plans to grant the nation’s poor the right to buy food grains at subsidized rates, meeting a pledge by the ruling Congress party to spread the benefits of growth while putting at risk the deficit target.
The Food Security Bill was approved by the Cabinet, Information and Broadcasting Minister Ambika Soni told reporters in New Delhi yesterday, without elaborating. The bill will need the consent of the parliament to become law.
Prime Minister Manmohan Singh is betting on the legislation, the drafting of which was overseen by Congress party President Sonia Gandhi, to woo voters before elections in five states in the first half of next year. Providing cheap grain to the poor in India, the world’s second-biggest consumer of wheat and rice, may inflate the subsidy bill by about 320 billion rupees ($6.1 billion) every year and widen the nation’s fiscal deficit.
“In the current fiscal situation it will add to the strain,” said Dharmakirti Joshi, an economist at ratings company Crisil Ltd., the Indian unit of Standard & Poor’s. “You need a social safety net, but it has to be appropriately designed. There are so many subsidies which hardly reach” the intended groups in India, he said.
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European Ministers Seek $261B IMF Crisis Funds
European finance ministers will today seek to meet a self-imposed deadline for drawing additional aid to the debt crisis and to form new budget rules as investor confidence that a comprehensive solution is achievable wanes.
Euro-area finance ministers will hold a conference call at 3:30 p.m. Brussels time to discuss 200 billion euros ($261 billion) in additional funding through the International Monetary Fund and the mechanics of a so-called fiscal compact that was negotiated at a Dec. 9 European Union summit, according to two people familiar with the planning.
“They’ll try to get as much done as they can before Christmas, but it’s doubtful they’ll put markets in a Christmas mood,” Carsten Brzeski, an economist at ING Group in Brussels, said in an interview. “There is still so much uncertainty.”
The accord to ratchet up budget rules failed to ease concern that the monetary union risks buckling under the weight of the two-year-old crisis. Fitch Ratings lowered France’s credit outlook and put other euro-area nations on review Dec. 16, saying an overall crisis solution may be “technically and politically beyond reach.” Belgium’s rating was cut two levels to Aa3 by Moody’s Investors Service on the same day.
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