- China announced that it would reform export taxes for 2,831 types of products, affecting approximately 37% of all export products on the Customs Administration’ list. The adjustments include; cancellation of export tax rebates for 553 products that are highly polluting and/or consume a high degree of energy in production; reduction of export tax rebates for 2,268 products that are subject to trade disputes- including textiles, paper and plastic. Analysts state that the policy is targeted at reducing the trade surplus and restructure the export product mix in favour of less polluting and higher-value added products. China’s exports in May amounted to $94 bn, an increase of 28.7% year on year.
- Ukraine issued a $500 million Eurobond yesterday, with a five-year maturity and an annual coupon of 6.385%. The book-runners for the deal were Citigroup, Credit Suisse, Deutsche Bank, and UBS. It was reported that the finance ministry originally intended to place a $1 billion Eurobond issue. Despite the ongoing political volatility, the country has still been viewed favourably by investors but analysts are concerned that policies ahead of the elections scheduled for 30 September may be less prudent.
- Kazakhstan’s parliament revised the 2007 budget, with the deficit target now 2.2% of GDP, against an earlier projection of 1.2% of GDP, pending presidential approval. GDP forecast was also revised and is now expected to reach 9.7% for 2007. Parliament also asked president Nursultan Nazarbayev to dissolve it and set a date for new parliamentary elections, well ahead of the scheduled poll in 2009, to allow recently adopted constitutional changes to come into force as quickly as possible.
- Fitch revised Egypt’s foreign currency issuer default rating outlook to positive from stable. The ratings agency said the country was now more creditworthy due to its ongoing economic reforms. The budget deficit remains a constraint on the ratings, but has declined to 6% of GDP in the fiscal year 2006-2007 compared with over 9% in 2005-2006. Fitch projects the gross debt ratio to fall to 80% of GDP in 2006-2007 from 90% in 2005-2006.