1 Low interest rate a global financial risk, says
IMF (Larry Elliott in The Guardian) A prolonged period of low interest rates
will tempt banks to take greater risks and sound the death knell for final
salary pensions, the International Monetary Fund has warned.
A new study from the IMF said a continuation of the
cheap borrowing environment seen since the global financial crisis a decade ago
would pose a “significant challenge” to financial institutions and force them
to make fundamental changes to their business models.
Although interest rates have recently started to
rise in the US, the IMF said Japan’s experience suggested an imminent and
permanent end to the current low interest rate environment could not be
guaranteed. Some economists, such as the former US treasury secretary Larry
Summers, say the global economy is gripped by so-called secular stagnation, in
which excessive savings and weak investment lead to weaker growth and lower
interest rates.
The IMF, in a chapter from its forthcoming Global
Financial Stability Review, said the decline in real (inflation-adjusted)
interest rates since the mid-1980s had been caused by slow-moving structural
factors such as weaker growth and the desire of an ageing population to save
more for their retirement.
Japan has had ultra-low interest rates for almost
three decades, while other developed countries cut borrowing costs aggressively
in response to the deep financial and economic crisis that began almost a
decade ago.
The Bank of England held borrowing costs at 0.5% for
more than seven years before cutting them to 0.25% last August, the lowest
level in its 323-year history. The European Central Bank has adopted a similar
approach and its president, Mario Draghi, has said there would be no early rate
rise for the eurozone.
2 Kuwait best off among oil exporters (Gulf News) Kuwait’s
in the best position of major oil exporting nations in the Middle East, Africa
and parts of Europe to have a balanced government budget this year with oil
forecast to average $52.50 a barrel, according to Fitch Ratings.
Nigeria is worst off, needing an oil price of $139 a
barrel to balance its budget, Fitch said. Even after cuts in government
subsidies and currency devaluations, 11 of them won’t have balanced government
budgets this year, including Saudi Arabia, it said.
Only Kuwait, Qatar and the Republic of Congo have
estimated break-evens that are below Fitch’s oil price forecast for this year.
3 Norway to build world’s first ship tunnel (San
Francisco Chronicle) Norway plans to build the world's first tunnel for ships,
a 1,700-meter (5,610-feet) passageway burrowed through a piece of rocky
peninsula that will allow vessels to avoid a treacherous part of sea.
Construction of the Stad Ship Tunnel, which would be
able to accommodate cruise and freight ships weighing up to 16,000 tons, is
expected to open in 2023. It will be 36 meters (118 feet) wide and 49 meters
(162 feet) tall and is estimated to cost at least 2.7 billion kroner ($314
million).
Norwegian Transportation Minister Ketil Solvik-Olsen
had said that sea currents and underwater topography in this part of the
country's southwestern coast "result in particularly complex wave conditions."
"We are pleased that the ship tunnel now
becomes reality," Solvik-Olsen said, adding that travel time between
Norwegian cities and towns in the area would be reduced. Over the years, plans
for a ship tunnel in Stad had been floated but now a project with a financing
is ready, he said.
Under the plan, passenger traffic will be given
priority but leisure boats and other vessels can also use the tunnel. It will
be free of charge for vessels measuring less than 70 meters (230 feet), and
vessels longer than that would have to be led. Vessels sailing through the
tunnel likely will get slot times from a traffic center — like planes at an
airport — to avoid congestion.
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