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AltAusterity Digest #79 December 13-19, 2018

This week in Austerity News:

Dec 21, 2018

The Economist discusses the first budget presented by Mexican President Andrés Manuel López Obrador (AMLO). The “fourth transformation” of Mexico is intended to make the economy more efficient, tackle poverty, and reduce corruption and crime. However, the finance minister Carlos Manuel Urzúa has set a primary surplus rate of 1% of GDP, which may conflict with the administrations goals of infrastructure spending, increased social spending for the youth and pensioners, and talk of state-provided energy services. The news of the conservative budget has “soothed investors for now.”

Italy and the European Union have agreed to a deal on the country’s budget, allowing a deficit of 2.04% next year. The business community was generally appreciative of this move as stocks reacted positively and the euro gained. Through negotiations with the EU, Italy’s proposed budget deficit has fallen by 15%, from an initially-proposed 2.4% to just over 2.0%. The agreement means that Italy will no longer be subject to fines under the EU’s Excessive Deficit Procedure (EDP).

Canadian Prime Minister Justin Trudeau has said that the country’s strong credit rating should reassure taxpayers about his administrations handling of the economy. The PM cited Canada’s triple-A rating with agencies like Moody’s and Standard & Poor’s, insisting that these scores mean experts have confidence in Canada’s fiscal responsibility and “stable” debt ratios. Rising concerns about debt levels follow Moody’s announcement last week that the Ontario government would be downgraded from Aa3 to Aa2 due to the provinces $14.5 billion deficit projection for 2018-19.

Ukraine has received a new loan from the International Monetary Fund (IMF) on Tuesday as Ukraine appeared to be heading towards default with $11 billion in debt coming due in 2020. This is the second IMF loan since 2014 when the IMF suspended aid after disbursing half of the funds. The new credit allocation, totaling $3.9 billion is projected by the IMF to help lead to 3.5% growth this year. In exchange for the funds, Ukraine is expected to create an independent anticorruption court, and to stimulate the natural gas industry, in turn lessening dependence on Russia.

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