Sandy cost runs in billions
New Jersey suffered at least US$29.4 billion in damage from Sandy, the Atlantic superstorm that left 37 people dead and washed out communities as it ravaged shore areas, New Jersey Governor Chris Christie said yesterday. The figure covers property and business losses as well as mass transit system damage, Christie said in a statement. He said the estimate reflects national aid already received and may be revised upward in coming weeks. New York Governor Andrew Cuomo last week said that Sandy had cost his state about US$33 billion. Cuomo said he would seek US$30 billion in aid from the federal government to mitigate physical and economic damage.
State deficit shrinks
The Ministry of Finance said the government deficit narrowed in the first 10 months of the year after a part of banks’ pension funds were transferred to the state. Based on comparable figures, the deficit of the central administration and social security agency was 6.05 billion euros (US$7.8 billion), less than a shortfall of 6.47 billion euros in the same period of last year, the ministry’s Budget Office said in a report on its Web site. Spending rose 0.7 percent, while personnel costs declined 13.7 percent. Tax revenue dropped 4.2 percent, with revenue from indirect taxes declining 4.5 percent and revenue from direct taxes falling 3.7 percent. This year’s revenue from taxes and social security contributions would be about 3.3 billion euros lower than planned in this year’s budget, Finance Minister Vitor Gaspar said on Oct. 3.
S&P downgrades rating
The nation’s credit rating was lowered to two steps below investment grade by Standard & Poor’s, which said the government’s policies are eroding medium-term economic growth prospects. The country’s long-term foreign and local currency sovereign ratings were reduced one level to “BB,” S&P said in a statement on Friday. The grade, on par with Portugal and Turkey, has a stable outlook, signaling the ratings company is more likely to keep it unchanged than to cut it or raise it. The government said the decision is “frivolous.” The country is in its second recession in four years. The government backtracked last month on a pledge to cut a special bank tax in half next year, as part of a salvo of measures to keep the budget deficit within the EU limit of 3 percent of economic outlook. S&P said it expects the government to meet its fiscal targets in the short term.
Central bank cuts rates
The central bank on Friday voted 4 to 3 to cut interest rates to the lowest level in a year after the nation’s biggest brokerage collapsed and industry contracted for a second month. Banco de la Republica, led by bank Governor Jose Dario Uribe, cut its benchmark interest rate by a quarter point to 4.5 percent, as forecast by only two of 33 analysts surveyed by Bloomberg. In a speech in Cartagena, President Juan Manuel Santos said Finance Minister Mauricio Cardenas provided the decisive vote in the decision. The move comes after the bank opened a so-called liquidity window for brokerages in an effort to avoid disruptions in financial markets following the collapse of Interbolsa SA’s brokerage this month.