U.S. drops 4 points in corruption perception index; out of top 20

SAN JUAN – The 2018 Corruption Perceptions Index (CPI) released Tuesday “reveals the United States as a key country to watch in a global pattern of stagnating anti-corruption efforts and a worldwide crisis of democracy,” according to Transparency International, the organization that conducts the research in its efforts against corruption.

With a score of 71, the United States dropped four points since last year. This marks the first time since 2011 that it falls outside of the top 20 countries on the CPI.

The CPI measures public sector corruption in 180 countries and territories, “drawing on 13 expert assessments and surveys of business executives to give each country a score from zero (highly corrupt) to 100 (very clean). Five of the nine sources used to compile the score for the US showed a noteworthy drop in score,” the organization said–referring to the country’s rating by the World Economic Forum EOS, IMD World Competitiveness Yearbook, Varieties of Democracy Project, PERC Asia Risk Guide and Bertelsmann Foundation Sustainable Governance Index–adding that other sources showed no improvement.

“A four point drop in the CPI score is a red flag and comes at a time when the US is experiencing threats to its system of checks and balances, as well as an erosion of ethical norms at the highest levels of power,” said Zoe Reiter, acting representative to the United States at Transparency International. “If this trend continues, it would indicate a serious corruption problem in a country that has taken a lead on the issue globally. This is a bipartisan issue that requires a bipartisan solution.”

Transparency International’s cross-analysis–which includes data from the Democracy Index, produced by The Economist Intelligence Unit, and the Freedom in the World Index by Freedom House–reveals a link between corruption and the health of democracies.

“Full democracies score an average of 75 on the CPI, with no full democracy scoring less than 50. In 2016, the United States was downgraded from a full to a flawed democracy in the Democracy Index, a gradual downward trend which started in 2008. In 2018, the US received its lowest Freedom in the World Index score for political rights since 1972, when measurement began.

Denmark and New Zealand top the index with 88 and 87 points, respectively. Somalia, Syria and South Sudan are at the bottom of the index, with 10, 13 and 13 points respectively.

Overall, more than two-thirds of countries score below 50 in the 2018 CPI, with an average score of only 43. Since 2012, only 20 countries have significantly improved their scores, including Côte D’Ivoire, and 16 have significantly declined, including, Australia, Chile and Malta.

“Corruption chips away at democracy to produce a vicious cycle, where corruption undermines democratic institutions, and in turn, weak institutions are less able to control corruption,” said Patricia Moreira, managing director of Transparency International. “Around the world, we need to do more to strengthen checks and balances and protect citizens’ rights, and the US is no exception.”

In 2017, a public opinion survey published by Transparency International showed that the U.S. government is losing citizens’ trust. According to the survey, nearly six in 10 Americans believed that the United States was more corrupt than the previous year, with the White House considered its most corrupt institution.

Transparency International emphasized the following as essential pre-requisites for fighting corruption:

  • A robust system of checks and balances on political power.
  • Effective controls against conflicts of interest and private influence over government decisions.
  • Citizen participation in politics and protections against voter suppression and other forms of disenfranchisement.
  • A free, diverse and pluralistic media with regular and equal access to those in power.

To view the results, visit: www.transparency.org/cpi2018

Financial Action Task Force calls for ‘urgent’ regulation of virtual assets

SAN JUAN – The Financial Action Task Force (FATF), an intergovernmental organization founded on the initiative of the G7 economies–Canada, France, Germany, Italy, Japan, the United Kingdom and the United States–to tackle money laundering, said Friday that although “virtual assets and related financial services have the potential to spur financial innovation and efficiency and improve financial inclusion,” they are creating “opportunities for criminals and terrorists to launder their proceeds or finance their illicit activities.”

The FATF, which was holding its plenary meeting in Paris, had already issued guidance “on a risk-based approach” to virtual currencies in 2015, but stressed Friday that there “is an urgent need for all countries to take coordinated action to prevent the use of virtual assets for crime and terrorism.”

The FATF specified Friday that the Risk-based Approach requires jurisdictions to identify illicit financing risks, such as money laundering and financing of terrorism, and amended the FATF Recommendations and Glossary to “clarify” how guidance applies in the case of financial activities involving virtual assets.

The glossary now includes new definitions of “virtual assets” and “virtual asset service providers”–such as exchanges, certain types of wallet providers and providers of financial services for Initial Coin Offerings (ICOs)–to clarify how Anti-money Laundering/Combating the Financing of Terrorism (AML/CFT) requirements apply in the context of virtual assets.

“The changes make clear that jurisdictions should ensure that virtual asset service providers are subject to AML/CFT regulations, for example conducting customer due diligence including ongoing monitoring, record-keeping, and reporting of suspicious transactions. They should be licensed or registered and subject to monitoring to ensure compliance,” the organization said in a release.

The FATF said countries that do not monitor illicit activities will be put on a “gray list.”

See the organization’s 2015 guidance on virtual currencies here. 

Puerto Rico enters cryptocurrency game

European regulator recommends Sanofi’s dengue vaccine

SAN JUAN – The European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) has adopted a positive opinion for the marketing authorization of biopharmaceutical company Sanofi Pasteur’s dengue vaccine, recommending its approval in Europe.

According to the Associated Press,  the recommendation comes “despite concerns about the vaccine’s wide use and a lawsuit in the Philippines alleging that it was linked to three deaths.”

A person can get dengue more than once as there are four distinct virus serotypes circulating worldwide. Secondary dengue infections tend to be worse than the first.

The vaccine, known as Dengvaxia, is currently licensed in 20 countries. The indication for the dengue vaccine recommended by the CHMP is for use in prevention of dengue caused by virus serotypes 1, 2, 3 and 4 in individuals 9 to 45 years of age with prior dengue infection.

“Sanofi previously warned that people who had never been sickened by dengue were at risk of more serious disease after receiving the vaccine. The company said it expected to take a 100 million-euro ($118 million) loss based on that news,” the AP reports.

Dengue fever is a debilitating disease typically leading to prolonged fever and severe joint pain. Dengue infection can progress unpredictably to a life-threatening form of the disease called dengue hemorrhagic fever that often requires hospitalized care. There is no specific treatment available for dengue disease.

The dengue vaccine has been “evaluated in studies involving more than 40,000 people from 15 countries with up to six years of follow-up data from large-scale clinical safety and efficacy investigations,” according to Sanofi, which said European Commission approval of the vaccine is expected in December.

“This is good news for people living in dengue-endemic parts of the European territories where frequent outbreaks could put them at risk of re-infection with another dengue virus serotype, which is often more severe than the first infection,” said Su-Peing Ng, global medical head at Sanofi.

Related news:

Puerto Rico Vector Control Unit holds 1st annual symposium

World Economic Forum annual study: Competitiveness changed by ‘Fourth Industrial Revolution’

SAN JUAN – The World Economic Forum’s Global Competitiveness Report makes a case for the ability of digital technologies to continue to change the nature of economic competitiveness globally, while “creating a new set of challenges for governments and businesses, which collectively run the risk of having a negative impact on future growth and productivity.”

According to the report, which uses a new methodology to measure what is being dubbed as the “Fourth Industrial Revolution,” factors in idea generation, entrepreneurial culture, openness and agility.

The new tool maps the competitiveness landscape of 140 economies through 98 indicators organized into 12 pillars. For each indicator, using a scale from 0 to 100, it indicates how close an economy is to the ideal state or “frontier” of competitiveness. When combining these factors, the United States achieved the best overall performance with a score of 85.6, ahead of Singapore and Germany. The average score for the world is 60, 40 points away from the frontier.

WEF’s Global Competitiveness Index uses a new indicator to determine an economy’s level of productivity, “built around 12 main drivers of productivity. These pillars are: Institutions, Infrastructure; Technological readiness; Macroeconomic context; Health; Education and skills; Product market; Labor market; Financial system; Market size; Business dynamism; and Innovation. They comprise 98 individual indicators.”

The report’s authors stress that the world’s most competitive economies have plenty of room for improvement.

While the report’s Global Competitiveness Index finds that Singapore is the most ‘future-ready’ economy, it trails Sweden when it comes to having a digitally skilled workforce. Switzerland, meanwhile, has the most effective labor for reskilling and retraining policies and U.S. companies are the fastest when it comes to embracing change.

One of the report’s findings is a weakness to mastering innovation, “from idea generation to product commercialization.”

One hundred and three countries score lower than 50 in the innovation index which is topped by Germany, followed by the United States and Switzerland. The report also finds that attitude toward entrepreneurial risk is the most positive in Israel and tends to be negative in several East Asian economies. Canada has the most diverse workforce and Denmark’s corporate culture is the least hierarchical, “both critical factors” for innovation.

“I foresee a new global divide between countries who understand innovative transformations and those that don’t. Only those economies that recognize the importance of the Fourth Industrial Revolution will be able to expand opportunities for their people,” said WEF founder and Executive Chairman Klaus Schwab.

The report also reveals the importance of openness for competitiveness. For example, “those economies performing in indicators that denote openness such as low tariff and non-tariff barriers, ease of hiring foreign labor and collaboration in patent application among others also tend to perform well in terms of innovation and market efficiency,” WEF said. “This data suggests that global economic health would be positively impacted by a return to greater openness and integration. However, it is critical that policies be put in place to improve conditions of those adversely affected by globalization within countries.”

The report also argues that “redistributive policies, safety nets, investments in human capital, as well as more progressive taxation aimed at addressing inequality do not need to compromise an economy’s levels of competitiveness. With no inherent trade-off between competitiveness and inclusion, it is possible to be pro-growth and inclusive at the same time.”

For example, workers in the index’s 10 most competitive economies work on average five hours less per week than workers in the three BRICS economies – Brazil, India and Russia.

A key message from the report is that while “a strong focus on technology can provide leapfrogging opportunities for low and middle income countries, governments must not lose sight of ‘old’ developmental issues, such as governance, infrastructure and skills. In this light one worrying factor thrown up by this year’s Index is the fact that, for 117 of the 140 economies surveyed, quality of institutions remains a drag” on competitiveness.

“Competitiveness is neither a competition nor a zero-sum game—all countries can become more prosperous. With opportunities for economic leapfrogging, diffusion of innovative ideas across borders and new forms of value creation, the Fourth Industrial Revolution can level the playing field for all economies. But technology is not a silver bullet on its own. Countries must invest in people and institutions to deliver on the promise of technology,” said Saadia Zahidi, Member of the Managing Board and Head of the Centre for the New Economy and Society.

Regional and country highlights

The following is a summary provided by the WEF:

With a score of 85.6 out of 100, the United States is the country closest to the frontier of competitiveness. It notably leads the Business dynamism pillar, thanks to its vibrant entrepreneurial culture, the Labour market pillar (score of 81.9 out of 100) and the Financial system (92.1) pillar. These are among the several factors that contribute to making the US’ innovation ecosystem one of the best in the world (86.5, 2nd behind Germany). The country’s institutional framework also remains relatively sound (74.6, 13th). However, there are indications of a weakening social fabric (63.3, down from 65.5) and worsening security situation (79.1, 56th)—the United States has a homicide rate five times the advanced economies’ average. It is far from the frontier in areas such as checks and balances (76.3, 40th), judicial independence (79.0, 15th), and corruption (75.0, 16th). The country also lags behind most advanced economies in the Health pillar, with healthy life expectancy at 67.7 years (46th), three years below the average of advanced economies, and six years less than Singapore and Japan. Finally, ICT adoption is relatively low compared to other advanced economies, including aspects such as mobile-broadband subscriptions and internet users. With a score of 71.2, the United States trails Korea by a full 20 points.

In addition to the United States, other G20 economies in the top 10 include Germany (3rd, 82.8), Japan (5th, 82.4) and the United Kingdom (8th, 82.0). G20 results are highly diverse. Almost 30 points, and 80 ranks separate the United States from Argentina (81st, 57.5), the worst performing G20 economy.

Singapore ranks second in the overall rankings (score of 83.5), with openness as the defining feature of this global trading hub and one of the main drivers of its economic success. The country also leads the infrastructure pillar, with a nearly perfect score of 95.7, thanks to its world-class transport infrastructure and connectivity.

Besides Singapore and Japan, Hong Kong SAR (7th, 82.3) is the third economy from East Asia and the Pacific region in the top ten, confirming the widely held view that overall growth momentum in the region is set to last. These three economies boast world-class physical and digital infrastructure and connectivity, macroeconomic stability, strong human capital, and well-developed financial systems. Australia (14th, 78.9) and Korea (15th, 78.8) are among the top 20. The biggest gap in this region lies in the development of an innovation ecosystem—New Zealand ranks 20th on the Innovation Capability pillar, while the Republic of Korea ranks 8th. Emerging markets such as Mongolia (99th , 52.7), Cambodia(110th, 50.2) and Lao PDR (112th, 49.3) are only half way to the frontier, making them vulnerable to a sudden shock, such as a faster-than-expected rise in interest rates in advanced economies and escalating trade tensions.

Of the BRICS grouping of large merging markets, China is the most competitive, ranking 28 in the Global Competitiveness Index with a score of 72.6. It is followed by Russia which is ranked 43. These are the only two in the top 50. Next is India, which ranks 58, up five places on 2017: with a score of 62, it registers the largest gain of any country in the G20. India is followed by South Africa, which falls 5 places this year to 67. Last is Brazil, which slips 3 places to 72.

Europe is made up of a very competitive north-west, a relatively competitive south-west, a rising north-east region and a lagging south-east. Despite continuing fragility from recent political shifts, the continent’s basic competitiveness factors, such as health, education, infrastructure and skills, are firmly in place. Sweden (9th, 81.7) is the highest ranked of the Nordic economies, while France (17th, 78.0) is among the top 20. The greatest disparities in the region lie in national innovation ecosystems, with countries in Eastern Europe and the Balkans lacking basic innovation infrastructure, while countries such as Germany and Switzerland set the global standards for innovation.

Chile (33rd, 70.3) leads the Latin America and the Caribbean region by a wide margin, ahead of Mexico (46th, 64.6) and Uruguay (53rd, 62.7). Venezuela(127th, 43.2) and Haiti (138th, 36.5) close the march. The region’s competitiveness remains fragile and could be further jeopardized by a number of factors including increased risk from trade protectionism in the United States; spillover of Venezuela’s economic and humanitarian crisis; policy uncertainty from elections in the region’s largest economies, and disruptions from natural disasters threatening the Caribbean. Insecurity and weak institutions are two of the biggest challenges for most countries.

Competitiveness performance in the Middle East and North Africa remains diverse, with Israel (20th, 76.6) and the United Arab Emirates (27th, 73.4), leading the way in the region. Saudi Arabia is in 39th position with a score of 67.5 out of 100. A focus on intra-region connectivity, in combination with improvements in ICT readiness and investment in human capital would improve the region’s capacity to innovate, foster business dynamism and increase its competitiveness performance.

Seventeen of the 34 sub-Saharan African economies studied are among the bottom 20, and the region’s average (45.2) placed it less than halfway to the frontier. Mauritius (49th, 63.7) leads the region, ahead of South Africa and nearly 30 points and 91 places ahead of Chad (140th, 35.5). Kenya is in 93rd position with a score of 53.7 while Nigeria is in 115th position with a score of 47.5 out of 100.

Read the report at https://wef.ch/gcr

Gov. Rosselló signs declaration with former Caracas mayor for ‘reconstruction of Venezuela’

Puerto Rico Secretary of State Luis Rivera Marín, former Caracas Mayor Antonio Ledezma and Gov. Ricardo Rosselló (Courtesy)

SAN JUAN – Puerto Rico Gov. Ricardo Rosselló Nevares signed a joint statement with the former mayor of Caracas and leader of the opposition to the current Venezuela regime, Antonio Ledezma, to establish the Commission for the Reconstruction of Venezuela to “support the return of democracy” for the South American country.

The signing took place Tuesday morning during a meeting in the governor’s office, La Fortaleza, together with the of the Puerto Rico Secretary of State Luis G. Rivera.

“The free nations of the world, which include the United States of America, of which Puerto Rico is a part of, have made compelling expressions so that democracy will be reinstated in Venezuela as soon as possible,” the governor said.

Rosselló added that “based on the responsibility to protect fundamental human rights and the principles of international law, the countries that want the return to democracy in Venezuela are committed to opening humanitarian channels of support to that country, by land, air, and sea.”

According to the governor’s news release, Venezuela’s humanitarian crisis and instability has had “great repercussions throughout the region; this includes Puerto Rico,” which is about 500 miles away from Venezuela.

“Puerto Rico has a population of Venezuelans who, not only are committed to the values of a democratic government, but actively contribute to the economic life of the Island, as well as to its richness and cultural diversity,” the release further says.

According to the joint declaration, Puerto Rico, “as part of the United States—has the guarantees and legitimacy offered by a democratic government that respects human rights and shares with the people of Venezuela a Hispanic tradition and geographical proximity, which results in a cultural and linguistic convergence.

“Faced with this historical-political reality, the Island is the propitious place to articulate a plan that aims at the reconstruction of Venezuela, with full and active participation of the Government of the United States.”

Puerto Rico Secretary of State Luis Rivera Marín, Gov. Ricardo Rosselló and former Caracas Mayor Antonio Ledezma (Courtesy)

Through the commission, “Ledezma is committed to working with the different sectors and leaders of the opposition in Venezuela so that, in an integrated and comprehensive manner, they sign the joint declaration and ratify the suitability of Puerto Rico to host the Commission,” according to the release.

“[W]hen I think we are barely 500 miles from Caracas, I am convinced that once Venezuela returns to normal, different professionals, Puerto Ricans; professors, doctors, lawyers, among others, will be instrumental in helping to raise our Venezuelan brothers after two decades of a failed populist model,” Secretary of State Marín said, adding that “we must start thinking about the ‘day after’, on international support strategies by land, air, and sea when the dictatorship ends.”

Once it receives the approval of the federal government, the commission “will acquire full international legal effect” and will hold its first meeting on Oct. 20 and 21 in San Juan.

Commerce Department awards $5.58 million to Foundation for Puerto Rico

SAN JUAN – U.S. Commerce Secretary Wilbur Ross announced Wednesday that his department’s Economic Development Administration (EDA) is awarding a $5.58 million grant to Foundation for Puerto Rico to support recovery efforts for towns and cities that were struck by hurricanes Irma and Maria last year.

The foundation estimates the project will create 24 jobs, retain 432 jobs, and spur $80,000 in private investment.

“The Trump Administration stands shoulder to shoulder with the communities of Puerto Rico in the aftermath of last year’s devastating hurricanes,” Ross said in a release. “Through this project, the Foundation for Puerto Rico will provide essential assistance to the island’s businesses, while supplying critical resources to those in need.”

“In the past year, the Foundation for Puerto Rico has been active in the recovery efforts of the aftermath of Hurricanes Irma and María,” Resident Commissioner Jenniffer González-Colónsaid in the release. “The funding that is being announced today is a result of a collective effort with fellow members of Congress to provide additional aid for Puerto Rico’s recovery.

“This $5.6 million grant from the U.S. Department of Commerce will greatly assist the Foundation’s ongoing efforts to unleash Puerto Rico’s full potential,” the congresswoman added.

The project will support long-term recovery planning for six regions in Puerto Rico outside metropolitan San Juan, helping provide access to potable water, support water quality testing, provide alternative energy sources, and access to telecommunications equipment.

Moreover, the project will procure technical assistance to create a “Destination Plan” for each region, build the capacity of existing small and midsize businesses, assist with the creation of new tourism-related businesses, as well as arrange workshops promoting business continuity and preparedness, the department said.

The EDA makes investments in economically distressed communities to “create jobs for U.S. workers, promote American innovation, and accelerate long-term sustainable economic growth.”

Dominican Republic holds largest march against corruption yet

SANTO DOMINGO, Dominican Republic – Turning one of Santo Domingo’s main avenues into a sea of green, tens of thousands of Dominicans wearing their movement’s emblematic color protested what they consider is rampant government corruption.

Although the so-called Marcha Verde movement began in 2017 after brazilian construction conglomerate Odebrecht admitted to the U.S. Justice Department it had bribed officials in a dozen countries to win infrastructure contracts, Dominican demonstration Sunday is considered the largest in the country’s history.

Odebrecht has reportedly paid some $786 million to government officials worldwide, with reportedly $92 million going to Dominican lawmakers and the island’s administration. In May 2017, 15 island officials were apprehended in relation to the giant contractor’s case, with eight of them charged with taking bribes. Protesters claim the government has been slow, and perhaps has even been stalling the justice people have been demanding.

Nearly every Dominican newspaper Monday featured a cover photograph of the massive demonstration against government corruption, but at least five major dailies were delivered with a front-page wraparound ad. (CB photo)

On Monday, five major island dailies were printed with a government-paid wraparound, which social media users interpreted as an attempt to hide front-page coverage of the massive demonstration.

Even as officials continue to be prosecuted in relation to a $2 billion construction underway, a  coal-fired 750-megawatt plant, the island’s justice department made a deal to cease charging Odebrecht executives in exchange for a $184 million fine. The massive infrastructure project is one of 17 developed by the company throughout the island.

–María de Lourdes San Miguel contributed to this report.

Probe demanded into alleged Dominican election campaign financing by Odebrecht

Thousands march against corruption in Dominican Republic

Puerto Rico governor travels to South America

SAN JUAN – Gov. Ricardo Rosselló left Sunday evening for Bogotá, Colombia, to participate in the inauguration of President Iván Duque.

Rosselló’s office said he will also participate in a multisector trade mission with several Puerto Rican companies.

The topics to be discussed will focus on trade, housing, agriculture, and exports. In addition, Rivera Marín will meet with the president of the National Business Association of Colombia, (ANDI by its Spanish acronym), Bruce Mac Master, and with the chairman and majority shareholder of Avianca, Germán Efromovich. The airline operates a daily flight between Bogotá and San Juan. Also, Rivera Marín indicated that he may meet with Panamanian President Juan Carlos Varela, according to a separate release issued by Secretary of State Luis Rivera Marín.

“We are going to express to the president-elect the solidarity of the government of Ricardo Rosselló with the new government he is going to establish in Colombia, with the certainty that it will be one that will fully respond to the best interests of his people and will identify with international politics regarding human rights and the freedoms of its inhabitants. In Puerto Rico, we have a community of about 7,000 Colombians who contribute to our economy, and as part of the Governor’s public policy, we want to strengthen these relationships, including export possibilities through the Department of Economic Development (DDEC) and the Company of Trade and Export,” Rivera Marín said.

Rivera Marín added: “It is an opportunity to work with the incoming government of President Iván Duque, to promote the economic development of both Puerto Rico and Colombia and strengthen our economic and political role in the region, which can serve as a bridge between Latin America and the United States; we are the Connector of the Americas.”

Afterward, the governor will travel to Buenos Aires, Argentina, with first lady Beatriz Rosselló, who will be recognized at the Young Leaders Foundation’s 11th international summit.

The governor will hold meetings with Argentinian officials to discuss trade, politics and economic development of Puerto Rico, according to La Fortaleza, which added that Rosselló will speak at an academic session of the Argentine Council for International Relations, titled “Puerto Rico y los latinos en Estados Unidos,” to “discuss the importance and role of Latinos in decision-making in the United States,” La Fortaleza said.

Puerto Rico Justice Secretary Wanda Vázquez will serve as interim governor until Wednesday afternoon, when Rivera Marín takes over as interim governor until Rosselló returns Saturday.

“We are going to express to the president-elect the solidarity of the government of Ricardo Rosselló with the new government he is going to establish in Colombia, with the certainty that it will be one that will fully respond to the best interests of his people and will identify with international politics regarding human rights and the freedoms of its inhabitants. In Puerto Rico, we have a community of about 7,000 Colombians who contribute to our economy, and as part of the Governor’s public policy, we want to strengthen these relationships, including export possibilities through the Department of Economic Development (DDEC) and the Company of Trade and Export,” Rivera Marín said in separate release.

G20: Trade is key engine of economic growth

SAN JUAN – Amid global trade tensions, the third G20 meeting of finance ministers and central bank governors in Buenos Aires, Argentina, over the weekend reflected the support of the world’s main economies of international trade and investment as “important engines of growth, productivity, innovation, job creation and development,” according to the issued communiqué.

In the forum for the governments and central bank governors of Argentina (the current chair), Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States and the European Union, more than 55 senior officials discussed the “risks and opportunities” of the world economy over a two-day meeting at the Buenos Aires Convention & Exhibition Centre (CEC).

The document, agreed by all G20 member countries, reads that “global economic growth remains robust and unemployment is at a decade low.” However, it warns there are “downside risks over the short and medium term.” These include rising financial vulnerabilities, heightened trade and geopolitical tensions, global imbalances and inequality.

It adds that “although many emerging market economies are now better prepared to adjust to changing external conditions, they still face challenges including market volatility and reversal of capital flows.”

The 57 delegates, including ministers, central bank governors and senior representatives from international organizations, agreed to continue “using all policy tools to support strong, sustainable, balanced and inclusive growth.” Among these tools, the communiqué mentions fiscal measures and monetary policy, the continued implementation of structural reforms, and international trade and investment, according to a release by the G20.

“The G20 meeting of Finance Ministers and Central Bank Governors took place against the backdrop of continued strong but more uneven global growth. Indeed, the world economy is facing increasing risks, especially in the short term, from rising trade tensions, financial pressures in vulnerable emerging economies, and the return of sovereign risk in parts of the euro area,” Christine Lagarde, managing director of the International Monetary Fund (IMF), said in a statement after the meetings.

She reiterated that “trade conflicts be resolved via international cooperation without resort to exceptional measures.”

U.S. Treasury Secretary Steven Mnuchin disputed that protectionism is the issue, the Associated Press reports.

“People are trying to make this about the United States and protectionism. That’s not the case at all,” the AP quoted him as saying at a news conference. “This is about the United States wanting fair and free trade. … We very much support the idea that trade is important for the global economy, but it’s got to be on fair and reciprocal terms.”

On right, U.S Treasury Secretary Steven Mnuchin (Courtesy)

The meeting participants included 23 finance ministers, 14 central bank governors and 10 representatives from international organizations. Besides Argentine Minister of the Treasury Nicolás Dujovne, Argentine Central Bank President Luis Caputo, Secretary Mnuchin and the IMF’s Lagarde, these included Jim Yong Kim, president of the World Bank Group; José Ángel Gurría, secretary-general of the Organization for Economic Cooperation and Development; Luis Alberto Moreno, president of the Inter-American Development Bank; Mario Draghi, president of the European Central Bank; Liu Kun, China’s minister of finance; and Philip Hammond, UK chancellor of the Exchequer.

Read the G20’s full communiqué here.

Argentina could draw up to $50 billion from IMF over 3 years

SAN JUAN – Argentina and the International Monetary Fund (IMF) staff have reached an agreement on a 36-month “Stand-By Arrangement (SBA) amounting to US$50 billion (equivalent to about SDR 35.379 billion or about 1,110 percent of Argentina’s quota in the IMF),” according to an announcement by the Washington, D.C.-based international organization.

The arrangement assures Argentina that the IMF “stands ready to provide foreign exchange or SDRs in accordance with the terms of the decision,” and although not a legal contract, it “will be subject to approval by the IMF’s Executive Board, which will consider Argentina’s economic plan in the coming days.”

Argentina must undertake policy actions as part of the agreed-upon economic program to reduce economic imbalances and achieve sustainable growth. The loan must be repaid in accordance with the schedule.

Argentina would borrow an initial amount “but subsequently treat the loan as precautionary,” according to Friday’s press release.

“As we have stressed before, this is a plan owned and designed by the Argentine government, one aimed at strengthening the economy for the benefit of all Argentines,” IMF Managing Director Christine Lagarde said in a statement. “I am pleased that we can contribute to this effort by providing our financial support, which will bolster market confidence, allowing the authorities time to address a range of long-standing vulnerabilities.”

She further explained: “At the core of the government’s economic plan is a rebalancing of the fiscal position. We fully support this priority and welcome the authorities’ intention to accelerate the pace at which they reduce the federal government’s deficit, restoring the primary balance by 2020. This measure will ultimately lessen the government financing needs, put public debt on a downward trajectory, and as President Macri has stated, relieve a burden from Argentina’s back.

“We also strongly support the redoubling of efforts to lower inflation, which we know eats into the foundation of economic prosperity in Argentina and is borne directly by society’s most vulnerable. In this vein, we endorse the central bank’s decision to adopt realistic and meaningful inflation targets and their commitment to maintain a flexible and market-determined exchange rate. We are also encouraged by the authorities’ commitment to ensure legal independence and operational autonomy for the central bank and to immediately put an end to central bank financing of the federal deficit.

“A central plank of the authorities’ plan is to put in place measures that will offer opportunity and support to those living in poverty and for the less well-off members of Argentine society. As a clear signal of these priorities, the authorities have pledged to maintain a floor on social assistance spending. They are committed to ensuring that spending, as a share of GDP, does not decline during the next three years. Additionally, if social conditions worsen, there are provisions to further increase the budget allocation for social priorities.

“Finally, I am particularly supportive of the efforts to level the playing field between Argentine men and women notably by introducing reforms in the tax code and social legislation. This is also consistent with the agenda that President Macri has underlined during Argentina’s leadership of the G20.

“In sum, I believe that Argentina’s reforms deserve the support of the IMF and the international community and I look forward to soon discussing Argentina’s request for support with the IMF’s Executive Board.”

The South American country reportedly has one of the highest inflation rates, but the deal comes amid protests against new austerity measures and ones blamed on the IMF in the early 2000s.