Massive debt transfer eyed
Berlin would transfer about 500 billion euros (US$670 billion) of its debt into a redemption fund amid a proposal by Finance Minister Wolfgang Schaeuble, Passauer Neue Presse reported, citing an interview with him. Schaeuble last week proposed that each eurozone country set up a national fund to pay down its debt to boost market confidence in the joint currency. The plan would allow member countries of the eurozone to reduce their debt to 60 percent of GDP over 20 years, he said. In Berlin’s case, to reduce the country’s current debt level of 80 percent of GDP to 60 percent, the fund would amount to about 500 billion euros, including federal, state and municipal debts, Schaeuble was quoted as saying.
RBI to prop up rupee
The Reserve Bank of India (RBI) said on Saturday it would act to prevent a “downward spiral of the rupee” which has been hit by fears about the global economy. The rupee has fallen heavily against the US dollar as foreign investors abandon the country and other emerging market currencies in search of safe havens. It plunged to a record low of 52.73 against the US dollar last month on fears about the eurozone debt crisis and the world economy as well as falling local shares, which are faring the worst among their regional peers. “In volatile market conditions that we see today, RBI intervention to keep markets orderly and prevent a downward spiral of rupee is justified,” bank Deputy Governor Subir Gokarn said.
China, US in solar spat
China said it was “deeply concerned” about a preliminary ruling by the US International Trade Commission (ITC) that trade practices by Chinese solar makers are hurting US producers and said the decision underscored a US “inclination to trade protectionism.” Such protectionism measures would hurt bilateral trade and jeopardize mutual cooperation on new energy issues, the Chinese Ministry of Commerce said in a statement on its Web site. The statement came after the ITC approved an investigation into charges of unfair Chinese trade practices in the solar energy sector, setting the stage for possible steep US duties and ratcheting up tensions with Beijing on the green trade front. The commission voted 6 to 0 that there was a reasonable indication that SolarWorld Industries America and other US producers had been harmed by the imports or could have been.
New austerity budget ready
Dublin unveils a fresh austerity budget this week as the indebted nation looks to claw back 3.8 billion euros via spending cuts and tax hikes, with its recovery threatened by the eurozone crisis. The government will today announce cuts to welfare and education spending worth 2.2 billion euros, a day before Minister for Finance Michael Noonan gives details of tax hikes aimed at raising an extra 1.6 billion euros next year. Under the fiscal-raising plans, Dublin is expected to unveil a 2 percentage point hike in the highest rate of valued added tax on goods and services, to 23 percent. Prime Minister Enda Kenny’s government has pledged to slash the country’s public deficit to 8.6 percent next year and to less than 3 percent, the EU ceiling, by 2015, after the country was last year saved by an international bailout. The nation received an 85 billion euro EU-IMF rescue package in November last year as massive debt and deficit problems left the it on the verge of collapse.