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Spotlighting downturns UN agency challenges current economic wisdom

“There is a global glut in both labour and product markets, with too many goods chasing too few buyers and too many workers chasing too few jobs,” UNCTAD Secretary-General Rubens Ricupero said in his overview of the Trade and Development Report 2003. “Intense price and exchange rate competition among major exporters have been adding to instability and deflationary pressures, while many developing countries facing tight payment positions are being forced to curtail imports.”The report added that the developed economies looked set to repeat the substandard growth rate of less than 2 per cent of the past two years.The developing countries in Latin America and Africa, meanwhile, had changed to policies based on optimism about globalization and in many cases had regressed.”The current economic landscape in the developing world has an uncanny resemblance to conditions prevailing in the early 1980s” with its debt and development crises, Mr. Ricupero said. Blaming the economic failures of the 1980s on government intervention led to a new policy approach of “deferring to the invisible touch of global market forces.”The result has been that between 1980 and the 1990s only eight of 26 countries selected for analysis were able to raise the share of manufacturing value in their gross domestic product (GDP) and increase their share of investment. The production structure in much of Latin America and Africa had moved away from sectors with the greatest potential for productivity growth towards those producing and processing raw materials.UNCTAD Senior Interregional Adviser Jan Kreger told a news conference at UN Headquarters in New York that Latin America was experiencing premature de-industrialization. It has been moving rapidly to a service economy, although the service sector could not absorb the surplus labour in manufacturing.Sound macro-economic fundamentals – bringing about low inflation, opening economies to international trade and reducing government share in economic activity – have been very successful in providing price stability, he said. They had failed, however, at the microeconomic tasks of adjusting domestic production to meet international competition and increasing exports and foreign exchange earnings, thus helping countries to service their debts.”We don’t have a ready answer, but what we’re attempting to do is draw attention to the fact that simply placing emphasis on introducing sound macroeconomic fundamentals is not sufficient to allow developing countries to reach a sustainable growth path, and that we need to continue and to do more research in order to attempt to identify ways in which we can make these two sets of policies compatible,” Mr. Kreger said.He also dismissed the idea that one development policy could fit countries at different levels of development. The difference between Latin America and more successful Asia was that the Asian countries had tried a very wide range of policies to improve their economies, he said. read more

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Katanga Mining settles legal dispute with Gecamines in DRC

first_imgGlencore has referred to an announcement by Katanga Mining in which it announced the settlement of the DRC legal dispute with La Générale des Carrières et des Mines (Gécamines) and an agreement for the resolution of the capital deficiency at Katanga’s 75%-owned DRC operating subsidiary Kamoto Copper Company (KCC).“Glencore is pleased that this matter has now been resolved and looks forward to supporting KCC’s closer partnership with Gécamines as the parties work together to ensure that the Joint Venture reaches its full potential for the benefit of all stakeholders.”The key highlights of Katanga’s settlement agreement with Gécamines are as follows:Conversion of $5.6 billion of KCC’s total debt of approximately $9 billion into new KCC equity such that, with retroactive effect as at January 1, 2018, KCC has $3.45 billion of debt to KML Group, bearing interest at the lower of US$ Libor 6 month + 3% and 6% per annum;Katanga and Gécamines’ shareholdings in KCC remain unchanged at 75% and 25% respectively;A one-time payment to Gécamines of $150 million relating to historical commercial disputes;Certain amendments to the dividend payment and free cash flow provisions of KCC including an amortisation schedule for the repayment of the residual debt;Payment of approx $41 million to Gécamines in relation to outstanding expenses incurred as part of an exploration program;Waiver by KCC of its entitlement (or financial equivalent) to replacement reserves and associated incurring of drilling costs on Gecamines’ behalf, amounting to $285 million and $57 million respectively, and; Withdrawal of all legal action by Gécamines. The entry of the settlement agreement between Katanga and Gécamines constitutes a smaller related party transaction as defined in Listing Rule 11.1.10 because Gécamines holds more than 10% of the voting rights in a material subsidiary of Glencore. Accordingly, as a condition precedent to the Settlement Agreement becoming effective, Glencore must obtain written confirmation from a sponsor that the terms of the Settlement Agreement with Gécamines are fair and reasonable as far as the shareholders of Glencore are concerned. Glencore aims to obtain such written confirmation on or before 14 June, 2018.last_img read more

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