Over 80% of the $10 trillion rise in global debt in the first half to a record $307 trillion came from developed economies, the Institute of International Finance says.
The United States, where brinkmanship around a debt limit brought it close to a default, Italy and Britain are of most concern, more than 20 prominent economists, former policymakers and big investors told Reuters.. .
High funding needs and central banks removing support are increasing pricing uncertainty for investors, Sophia Drossos, hedge fund Point72 Asset Management economist and strategist, said.
"Deficit and debt levels make us uncomfortable," said Daniel Ivascyn, chief investment officer at bond giant PIMCO, which is a little bit reluctant to own a longer-term bond.
Spending plans lacking credibility were seen as most likely to spark market turmoil.
Longer term, "government debt trajectories pose the biggest threat to macroeconomic and financial stability", said Claudio Borio, head of the Bank for International Settlements monetary and economic department.
TIPPING POINTS
Budget wrangling has hurt U.S. credibility, costing it a top-notch AAA rating.
Olivier Blanchard, senior fellow at the Peterson Institute for International Economics, was most worried about the United States given a "broken political budget process" and large primary deficits.
"How does it end? I suspect not by default, but when markets start reflecting their worries in Treasury prices, by a political crisis and a potentially ugly adjustment," the former IMF chief economist said.
Hedge fund Bridgewater Associates' Ray Dalio expects a U.S. debt crisis.
A U.S. Treasury spokesperson highlighted Secretary Janet Yellen's recent comments on the budget deficit and rising rates.
Yellen told the Wall Street Journal last week the government was committed to a "sustainable fiscal policy" and the budget could be adjusted to ensure that.
The US has been leading a push for the past few months to use these assets to help Ukraine. Options on how to do that have ranged from outright seizing the assets and giving the money to Ukraine, to securitising them to issue debt, or using them to back some form of loan.
European countries have reacted with skepticism, raising concerns over the implications such a move would have on financial stability, the role of the euro as well as about the legal risks it could entail. The vast majority of the frozen assets are in Europe.
The topic will be a key focus of discussions between Group of Seven finance ministers meeting in Stresa, Italy later this week.
Published Mon, May 20, 2024 · 11:30 PM
US Treasury Secretary Janet Yellen urged European allies to act together with the US to find a way to unlock the value of around US$280 billion in frozen Russian assets so they can provide sustained financial support to Ukraine.
“It’s vital and urgent that we collectively find a way forward to unlock the value of Russian sovereign assets immobilized in our jurisdictions for the benefit of Ukraine,” Yellen said in excerpts of a speech on the transatlantic alliance she’s set to deliver on Tuesday (May 21) in Frankfurt.
Yellen touted US collaboration with the European Union under the Biden administration in a range of areas, and calls for intensified cooperation especially in the field of security, according to the excerpts, released by the US Treasury on Monday (May 20).
“It’s also critical that we ensure Ukraine has the support it needs to equip its military, fund critical services, and ultimately rebuild in the medium- to long-term,” Yellen said.
Yellen urges EU allies to act jointly on frozen Russian assets
US Treasury Secretary Janet Yellen urged European allies to act together with the US to find a way to unlock the value of around US$280 billion in frozen Russian assets so they can provide sustained financial support to Ukraine.
“It’s vital and urgent that we collectively find a way forward to unlock the value of Russian sovereign assets immobilized in our jurisdictions for the benefit of Ukraine,” Yellen said in excerpts of a speech on the transatlantic alliance she’s set to deliver on Tuesday (May 21) in Frankfurt.
Yellen touted US collaboration with the European Union under the Biden administration in a range of areas, and calls for intensified cooperation especially in the field of security, according to the excerpts, released by the US Treasury on Monday (May 20).
“It’s also critical that we ensure Ukraine has the support it needs to equip its military, fund critical services, and ultimately rebuild in the medium- to long-term,” Yellen said.
ONE MONTH AGO
Even after House acts, U.S. faces protracted battle over paying for Ukraine
and
Updated April 20, 2024 at 3:24 p.m. EDT | Published April 20, 2024 at 7:00 a.m. EDT
Yellen to push G7 on bond for Ukraine backed by frozen Russian asset profits
By David LawderWASHINGTONU.S. Treasury Secretary Janet Yellen will push fellow G7 finance officials this week to agree to a plan to bring forward the interest earnings on frozen Russian assets to provide more money to Ukraine quickly, a senior U.S. Treasury official said.
The official told reporters ahead of Yellen's May 21-25 trip to Frankfurt, Germany, and the Group of Seven finance ministers and central bank governors meeting in Stresa, Italy, that the G7 is "making progress" toward consensus on a plan to harness some $300 billion in Russian sovereign assets frozen since Moscow's February 2022 invasion of Ukraine.
Janet Yellen to push G7 to bring for ..
Janet Yellen to push G7 to bring forward interest on Russian assets to aid Ukraine - Times of India
The G7 finance ministers have been tasked with recommending a plan for G7 leaders to adopt at a summit in June in southern Italy. The G7 industrial democracies are the United States, Japan, Germany, France, Britain, Italy and Canada.
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- Since then, the U.S. has proposed a plan to pull forward the interest on the assets to back a bond or a loan that would provide Ukraine perhaps $50 billion in the near term as it battles increasing Russian military pressure in its east and north.
The plan comes with some controversy, because it would require Western powers to hold the assets for around 20 years, said Josh Lipsky, senior director of the Atlantic Council's GeoEconomics Center.
"It's a big mountain to climb, and the U.S. is going to push this strongly at the G7," Lipsky said. "If it doesn't happen now, I'm not sure that it will in the near future."
The reaction from G7 finance ministries so far has been cautious.- Japanese Finance Minister Shunichi Suzuki said on Friday that any proposals to use the frozen Russian assets must comply with international law.
- The French Economics and Finance Ministry said in a statement: "France supports and shares the fact that more resources are needed for Ukraine. We have taken note of the U.S. proposal and we will work together technically at the G7 level and at the European level to determine the best option."
- "What we are involved in is trying to engage in hard, detailed economic diplomacy to make sure we can all get on the same page. And I think we're making progress there," the official said, speaking on condition of anonymity.
- Another G7 official said the U.S. proposal to use revenues from the Russian assets as collateral for a bond is still on the table, adding that G7 ministers will discuss its feasibility, but any final decision will be up to G7 leaders
- Another G7 official said the U.S. proposal to use revenues from the Russian assets as collateral for a bond is still on the table, adding that G7 ministers will discuss its feasibility, but any final decision will be up to G7 leaders
CHINA TARIFFS, OVERCAPACITY
Yellen also intends to discuss joint efforts with G7 counterparts to combat China's excess industrial capacity in strategic industries, including electric vehicles, solar products and semiconductors.
- This will include the Biden administration's new punitive tariffs on Chinese imports announced on Tuesday.
- In Frankfurt, Yellen will receive an honorary doctorate from the Frankfurt School of Finance and Management and will deliver remarks on the importance of the transatlantic alliance.
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Pentagon vows to keep weapons moving to Ukraine as Kyiv faces a renewed assault by Russia
WASHINGTON (AP) — Defense Secretary Lloyd Austin committed Monday to keeping U.S. weapons moving to Ukraine as Kyiv faces one of its toughest moments against a renewed assault by Russia.
Austin and as many as 50 defense leaders from Europe and around the world were meeting Monday to coordinate more military aid to Ukraine, as Kyiv tries to hold off a Russian offensive in the northeast while launching its own massive assault on the Russia-occupied Crimean Peninsula.
“We're meeting in a moment of challenge,” Austin said, noting that Russia's new onslaught of Kharkiv showed why the continued commitment by the countries was vital to keep coming. Austin vowed to keep U.S. weapons moving “week after week.”
The U.S. announced no new aid packages Monday, even as Ukrainian forces continue to complain that weapons are just trickling into the country after being stalled for months due to congressional gridlock over funding. Pentagon officials have said that weapons pre-positioned in Europe began moving into Ukraine soon after the aid funding was approved.
It's unclear how much of that has reached some of the front lines, where Russian troops have intensified their assault.
Russian President Vladimir Putin said on Friday during a visit to China that Moscow's offensive in Ukraine's northeastern Kharkiv region aims to create a buffer zone but that there are no plans to capture the city.
Ukrainian troops have been fighting to halt Russian advances in the Kharkiv region, while also increasing their offensive attacks in Crimea, including on military infrastructure sites on the Black Sea coast and in the Russian-occupied city of Sevastopol.
In the three weeks since President Joe Biden signed the $95 billion foreign aid package, the U.S. has sent $1.4 billion in weapons pulled from Pentagon stockpiles and announced it was providing $6 billion in funding through the Ukraine Security Assistance Initiative.
Ukraine has also struggled to get enough troops to the front lines, as the war drags on into its third year and fighting takes its toll. In an effort to increase troop numbers, President
- Volodymyr Zelenskyy signed two laws, allowing prisoners to join the army and increasing fines for draft dodgers fivefold. The controversial mobilization law goes into effect on Saturday.
- USAI pays for longer-term contracts with the defense industry and means that the weapons could take many months or years to arrive.
In recent packages the U.S. has agreed to send
- High Mobility Artillery Rocket Systems (HIMARS) and rockets for them, as well as
- munitions for Patriot and National Advanced Surface-to-Air Missile Systems,
- artillery, anti-aircraft and anti-tank munitions, and
- an array of armored vehicles, such as Bradley and Mine Resistant Ambush Protected vehicles.
- The U.S. is also providing additional coastal and riverine patrol boats, trailers, demolition munitions, high-speed anti-radiation missiles, protective gear, spare parts and other weapons and equipment.
State said Ukraine has asked to buy three of the rocket systems, which would be funded by the government of Germany.
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Russian forces maintained their relentless assault on Ukraine’s Kharkiv region on May 20 -- including a massive drone attack on the city itself -- but local officials said the outgunned Ukrainian troops still held about 60 percent of the border town of Vovchansk, the focal point of Moscow’s drive over recent weeks.
May 20, 2024
Ukrainian Forces Holding Out In Vovchansk As U.S. Vows To Keep Aid Flowing
"The enemy continues to try to drive the armed forces of Ukraine out of Vovchansk," Roman Semenukha, deputy head of the regional military administration, said on national television.
"The town is about 60 percent controlled by the armed forces of Ukraine, [but] the assaults have not stopped.”
Semenukha said the Russians were concentrating their efforts on Vovchansk and Lyptsi, another area settlement with some 4,500 prewar residents.
Ukraine earlier said it had downed all 29 Shahed-type kamikaze drones launched by Russia against Kharkiv, Ukraine’s second-largest city, in the early hours of May 20.
Semenukha said the Russians were concentrating their efforts on Vovchansk and Lyptsi, another area settlement with some 4,500 prewar residents.
Ukraine earlier said it had downed all 29 Shahed-type kamikaze drones launched by Russia against Kharkiv, Ukraine’s second-largest city, in the early hours of May 20.
Elsewhere, Ukraine’s military also said Russia had launched an Iskandar-M ballistic missile but did not say whether it had been intercepted.
Russian troops began shelling border settlements in the Kharkiv region on May 10 and launched a ground offensive in the area of Vovchansk. On May 16, Russian units appeared to have entered Vovchansk, about 5 kilometers from the border, and the site of the fiercest fighting in the north.
The capture of Vovchansk -- with a prewar population of about 17,500 -- would mark Russia’s most important advance since the offensive began in the Kharkiv region as the Kremlin looks to stretch Ukraine’s forces in the northeast.
Meanwhile, the United States offered new words of support for Kyiv, urging other allies to maintain deliveries of weapons to aid in Ukraine’s defense.
U.S. Defense Secretary Lloyd Austin and some 50 defense chiefs from around the world were meeting on May 20 to coordinate additional deliveries of military aid to Ukraine.
“We're meeting in a moment of challenge,” Austin said as he vowed to keep U.S. weapons flowing “week after week.”
Russian troops began shelling border settlements in the Kharkiv region on May 10 and launched a ground offensive in the area of Vovchansk. On May 16, Russian units appeared to have entered Vovchansk, about 5 kilometers from the border, and the site of the fiercest fighting in the north.
The capture of Vovchansk -- with a prewar population of about 17,500 -- would mark Russia’s most important advance since the offensive began in the Kharkiv region as the Kremlin looks to stretch Ukraine’s forces in the northeast.
Meanwhile, the United States offered new words of support for Kyiv, urging other allies to maintain deliveries of weapons to aid in Ukraine’s defense.
U.S. Defense Secretary Lloyd Austin and some 50 defense chiefs from around the world were meeting on May 20 to coordinate additional deliveries of military aid to Ukraine.
“We're meeting in a moment of challenge,” Austin said as he vowed to keep U.S. weapons flowing “week after week.”
U.S. Treasury Secretary Janet Yellen plans on May 21 to urge Ukraine’s allies to stand together against Russian aggression and will speak about the need to find a way to unlock the value of frozen Russian sovereign assets to aid Kyiv.
"And let me be clear: It is also critical for the security of the American and European people," Yellen said in excerpts of a speech to be presented in Frankfurt.
"If we stand by as dictators violate territorial integrity and flout the international rules-based order, they have no reason to stop at their initial targets. They will keep going."
"And let me be clear: It is also critical for the security of the American and European people," Yellen said in excerpts of a speech to be presented in Frankfurt.
"If we stand by as dictators violate territorial integrity and flout the international rules-based order, they have no reason to stop at their initial targets. They will keep going."
With reporting by AP
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