Month: May 2011
An International Monetary Fund (IMF) report stated last week that Swaziland might be close to financial collapse, sparking fears that the kingdom might have to devalue its lilangeni currency against the rand.
Some observers referred to the debt problems in Swaziland and Lesotho, which is also part of the rands common monetary area, as southern Africas own PIIGS – in reference to the ongoing debt crisis in eurozone countries Portugal, Ireland, Italy, Greece and Spain.
But when asked about possible risks that Swazilands debt may hold for SA, the Reserve Banks monetary policy committee did not have concrete answers.
Reports from the IMF have indicated it is a problematic situation, said Daniel Mminele, one of the Reserve Banks deputy governors. We will have to see what measure is agreed upon (by the IMF) to see how it will be stabilised.
That level of debt to GDP is unsustainable and – as a neighbour – we have to monitor it carefully, he said.
Lesetja Kganyago, the banks newest deputy governor, who moved from the position of director-general of the National Treasury only two weeks ago, said the formula for revenue distribution from the Southern African Customs Union (Sacu) was being reformed.
Swaziland relies heavily on these revenues from Sacu, but they fell by 60% last year, due to reduced imports by the region in the aftermath of the worldwide recession. There are no easy ways out for Swaziland, Kganyago said. Once the IMF arrives in your country with a briefcase, you have to make some difficult adjustments.
John Cairns of Rand Merchant Band said Swazilands debt problems were low for South Africa from a rand and monetary point of view. The difference between the southern African common monetary area (CMA) and the eurozone was that the CMA had one large dominant country that accounted for more than 90% of the areas GDP, said Cairns. Swaziland was too small to have an impact, he explained.
If Swaziland defaults or de-pegs its currency (from the rand) it will come as a bit of a shock to the market – and we could have one day of sell-offs of the rand and our domestic bonds, but that is all it will be.
Michael Keenan, head of forex research at Standard Bank, also said he did not foresee a major impact on South Africa.
Even if there was a deterioration in the fiscal balances of Swaziland and Lesotho, it should not have nearly the kind of contagious effect that we have seen in Europe, he said.
If anything, reduced Southern African Customs Union payments to the region, as a result of reduced import demand during the economic slowdown, might help the rand, as it would help curb a renewed widening of SAs current account, he said.
Cairns said the important question was whether the Treasury would bail out Swaziland from its debt. But the Treasury said it had no comment on Swaziland and any questions on that country might be better directed to the presidency.
A presidency spokesperson referred questions to the International Relations and Co-operation Department, saying it was an international relations issue. Clayson Monyela of that department said there have been discussions at the highest level between South Africa and Swaziland, but could not say who was involved in the talks or if they involved financial aid for Swaziland.
Swazi central bank governor Martin Dlamini said this week the kingdom had sufficient reserves to maintain its currency at a one-to-one parity with the rand. Losing the peg to the rand would not be in Swazilands interests as it helped maintain the countrys fiscal discipline.
But some would say Swaziland has seen little fiscal discipline in recent years, with a budget deficit of 14.3% of GDP.
Swaziland has run up $180-million in domestic arrears and the World Bank has agreed to lend it $20-million, but it will only be available in September.
Even as politicians try to absorb the impact from the latest jobs figures, the number of Republicans who said the economy and business are their top issues has grown, according to a Gallup poll released on Friday.
According to Gallup, 36% of Republicans in April said the economy and business were their top issues, up from 32% in March. That is roughly the same as those who say government spending and power are their top issues, 37%, and far higher than those who make social issues and moral values the most important factor, 15%.
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The Fluor Corporation, an engineering company, recorded a small profit increase that beat analysts’ estimates, while reporting that its backlog of work expanded to a new high. The company said after the close of trading Thursday that its first-quarter profit rose to $139.7 million, or 78 cents a share, from $136.6 million, or 76 cents a share, in the same quarter a year earlier. The profit topped the 76 cents expected by analysts, and the company’s stock rose $5.18, or 8 percent, to $70.87 a share. The company, based in Irving, Tex., said its order backlog rose 7 percent, helped by a mining project in Australia.
YRC Worldwideamp;#x92;s first-quarter loss fell sharply from a year ago, helped by higher revenue and an increase in shipping volumes.lt;/pgt;lt;pgt;The Overland Park-based trucking giant, which has been struggling with debt and uncertain business conditions, on Friday said its quarterly loss was $102 million, down from a year-ago loss of $274 million.lt;/pgt;lt;pgt;Consolidated operating revenue for the first quarter of 2011 was $1.1 billion, which the company said was hurt by extreme winter weather in the first two months of this year and included $8 million of restructuring professional fee expenses. lt;/pgt;lt;pgt;But that still was up from $987 million a year ago.lt;/pgt;lt;pgt;The trucking company also said shipping volumes were up 7.6 percent for its national operations and 8.5 percent for its regional operations. lt;/pgt;lt;pgt;The growth in freight hauling amp;#x93;is a very positive sign, and itamp;#x92;s been widespread in our national and regional business.amp;#x94; said Bill Trubeck, YRCamp;#x92;s interim chief financial officer.lt;/pgt;lt;pgt; Shares in YRC, one of the nationamp;#x92;s largest carriers, closed Friday at $1.31, down 4 cents.lt;/pgt;lt;pgt;YRC last week announced key debt holders had approved a major restructuring agreement, which could provide the company with about $100 million in much-needed capital and relieve pressure from creditors. lt;/pgt;lt;pgt;The agreement, which requires formal approval in July, will also turn about 97.5 percent of the company over to new owners, mostly unpaid lenders and employees represented by the Teamsters union.lt;/pgt;lt;pgt;Trubeck said in an interview that the restructuring plan amp;#x93;made a strong statementamp;#x94; to freight customers that the company is making amp;#x93;steady, consistent progress.amp;#x94;lt;/pgt;lt;pgt;He said the companyamp;#x92;s business momentum has carried over into the second quarter, and heamp;#x92;s hopeful that the economy will grow at a amp;#x93;bit faster paceamp;#x94; the remainder of the year. lt;/pgt;lt;pgt; While fuel is one of YRCamp;#x92;s largest costs, the company has offset price hikes at the pump because it has a fuel surcharge in place with customers. lt;/pgt;lt;pgt; Earlier this week, Fitch Ratings cut the junk debt status of YRC and said the trucker will continue to face amp;#x93;significant operational challengesamp;#x94; even if its restructuring plan goes forward later this year. If the deal fails to gain final approval, Fitch said YRC would likely be forced to seek bankruptcy protection.lt;/pgt;lt;pgt;Trubeck said he wasnamp;#x92;t surprised by Fitchamp;#x92;s rate change. amp;#x93;But we feel they missed the point,amp;#x94; he said. amp;#x93;The restructuring will be accomplished, and this will also provide the opportunity for the rating agency to take another look at the company.amp;#x94;
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Obama Highlights Indiana Business as Example of Recovery
May 06, 2011 1:11 PM
ABC News Tahman Bradley reports:
President Obama traveled to Indianapolis, Indiana today to discuss jobs and his energy policy.
The White House choose Allison Technology located in a Red state that Mr. Obama won in 2008 because the business employs 2,500 workers who build hybrid vehicle technology and manufacture fully automatic transmission for medium and heavy-duty commercial vehicles. In other words, they make parts for fuel efficient trucks and busses, and are making money doing so.
Allison apparently is doing very well, adding 50 jobs last month and planning to create 200 or more jobs by 2013. On a background conference call with reports, administration officials described Allison as a great success story. The company received $62.8 million in a cost share grant from stimulus funds.
Obama told the workers who gathered to hear him after a brief tour what they are doing is important.
This is where the American economy is rebuilding, where we are regaining our footing, he said. This economic momentum that’s taking place here at Allison is taking place all over the country.
Obama argued that new jobs will be created by places like Allison though new innovations like the technology used in trucks powered by Allison. America’s economy is always going to rely on outstanding technology, where we make stuff.
The president made his first comments on the April jobs numbers showing 268,000 private sector jobs added.
That means over the last 14 months, a little over a year, we’ve added more than 2 million jobs in the private sector.
Obama said the country has made this progress despite serious headwinds caused by high gas prices and the earthquake in Japan.
There’s always going to be some ups and downs like these as we come out of a recession, and there will undoubtly be some more challenges ahead, but the fact is we are still making progress and that proves how resilient the American economy is and how resilient the American worker is and that we can take a hit and we can keep on going forward. That’s exactly what we’re doing.
Obama greeted the crowd with a Hello Hoosiers before expressing his regret for what happened to the Indiana Pacers in the first round of the NBA Playoffs. He was being sarcastic because his beloved Chicago Bulls knocked off the Pacers.
Next for Obama today, a visit to Fort Campbell, Kentucky where he will speak to US service members who recently returned from deployment.
May 6, 2011
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Google is sending out photographers to snap shots of retail stores, restaurants, salons and other businesses in its Google Business Photos project.
The Mountain View, Calif.,company began taking applications Thursday from business owners for free photo shoots conducted byGoogle-paid photographers.
Google is assigning photographers to shoot businesses in the San Francisco Bay Area, Phoenix, San Antonio and St. Petersburg, Fla., as well as London, Paris, Seoul and select cities in Australia, New Zealand and Japan.
The effort is a move to beef up the content on Google Places pages for businesses and an expansion of a Business Photos pilot program launchedin October. Businesses can also upload their own photos to their Google Places pages, which come up when locations are searched for in Google Maps.
Millions of potential customers visit Google every day to learn about places and businesses, Google says on its Business Photos page. Through scheduled photo shoots, Google is introducing a new way for you to showcase your business to the world.
Googles new mission: Help create and spread knowledge
Google optimizes Google Earth for Android Honeycomb tablets
Google Maps updated with location of Osama bin Ladens compound
— Nathan Olivarez-Giles
trade mission. He even joked earlier this year that Quan could be his secret weapon in establishing lucrative relationships with Chinese industries that benefit the Port of Oakland.
In China and the world, successful economic development and jobs are created by business and government working hand in hand, Benjamin said at the start of the trade mission. We are excited by Mayor Quans leadership on this trade mission, which leverages the Port of Oakland — our global asset — to explore and foster new business opportunities and relationships.
According to US Census data, $14 billion worth of goods (import and export) moved between the Port of Oakland and China last year. For the first time the Oakland Ports overall exports exceed imports, and Quan and other mayors in the Bay Area have accepted President Barack Obamas challenge to double US exports by 2015.
Doubling exports at the Port of Oakland would create 5,000 new jobs, Quan said.
Joining Quan and Benjamin on the 12-member trade mission are Oakland City Council President Larry Reid; Maisha Everhart, Quans senior policy adviser; port commissioners Pamela Calloway and Michael Lighty; Deborah Ale-Flint, the ports director of aviation; James Kwon, port director of maritime; and port staff. Travel costs are being paid by the Port of Oaklands enterprise fund.
Quan and Reid have been to China several times, but not together and not since Quan was elected mayor and achieved something akin to rock star status, Reid said. The mayor acknowledged the interest her election has generated and said she hoped to capitalize on it.
We hope to promote our exports and get more publicity and put a different take on the Port of Oakland for the Chinese, Quan said. After the inauguration when I went to the White House there was a rash of publicity, so were hoping my being here will give our port a little more high profile.
The itinerary starts in Beijing on Monday. The group will meet with potential investors and tenants in Port of Oakland infrastructure projects. Quan said there could be interest in building a cold storage facility at the port to accommodate wine and agricultural exports to China.
The group then heads to Shenzhen, a major industrial hub that is also home to several US manufacturers. The group will meet with representatives of the port, shipping, airline and trucking administrations. The visit includes tours of the airport and passenger and airfreight facilities, as well as the maritime facilities of China Merchants Holdings International, a partner at the Port of Oakland.
The group will also meet with Mayor Xu Qin, of Shenzhen, and attend a reception of business and government leaders.
Next stop is Hong Kong, where the group will meet with China Merchants Holdings, tour airfreight facilities and attend an American Chamber breakfast briefing. Quan will also do her best to promote Oakland wineries on this leg of the trip. China is a growing market for California wines, and the Port of Oakland handles 90 percent of the exports.
The group plans to tour the Hong Kong Convention and Exhibition Center where Oakland winery Dashe Cellars has a display. A case of wine containing bottles produced by six Oakland vintners has been shipped to California Vintage, a wine bar and restaurant in Hong Kong that is owned by 22 California wineries. The Oakland wines will be added to the tasting menu when the group visits the wine bar on the last day of the trade mission.
Quan says its all part of making over Oaklands image and using every tool to promote international business for the Port of Oakland that benefits the entire region.
Jeff Cohn, JC Cellars owner and winemaker, said he appreciated the mayors support of Oakland wineries and hoped it would further his winerys efforts to be included in tasting room on a regular basis.
Im excited to be part of it, he said.
Contact Cecily Burt at 510-208-6441. Follow her on Twitter.com/csburt.