A senior official in Russia’s finance ministry stated that the country’s sovereign wealth fund would target portfolio, rather than strategic investments in foreign companies. The ministry also said that the currency composition of the fiscal reserves would remain the same: 45% of Stabilization Fund assets are being kept in dollars, 45% in euros and 10% in pound sterling. As of 1 August, Stabilization Fund assets totaled $127.5 billion and the government forecasts assets to rise by $71-75 billion between now and the end of January 2008. (For more on sovereign wealth funds, please click here).
Lebanon’s parliament speaker Nabih Berri said that the presidential election would take place on September 25, despite the failure to find a solution to the country’s political deadlock. Berri rejected the idea that a simple majority for electing a president would be sufficient and said that a two-thirds majority was mandatory under the constitution. He reiterated the importance of forming a government of national unity as matter of urgency. Lebanon has been deadlocked since November when Hizbollah withdrew from the cabinet, demanding a government of national unity in which it would have the power of veto, and so far every attempt to bring the faction to the negotiating table with the supporters of Prime Minister Fouad Siniora has failed.
Russian distributor Gazprom threatened to reduce gas supplies to Belarus starting on August 3 unless the country pays its $456.2 million debt to the company. The daily supplies of gas will be reduced by 45%, the Russian company said in a statement. This aggressive warning comes only two days after the failure of the latest round of high-profile bilateral talks between Russia and Belarus. About 20% Russian gas supplies to Western Europe go via Belarus, and earlier this year, gas rows between Moscow and Minsk resulted in temporary decline of energy supplies to Europe. However, the company has said that any subsequent conflict with Belarus would not cause gas delivery problems to other European countries. (For more on pipeline politics in the region, please click here)
Nigeria’s monetary policy committee left the monetary policy rate unchanged at 8.0% yesterday at its bi-monthly rate- setting meeting. Analysts had expected this move after the bank’s previous meeting on 5 June, when it unexpectedly and aggressively cut the policy rate by 200bps from 10.0% and narrowed the lending and borrowing rate corridor from +/- 3% to +/- 2.5%. Given the challenges of managing the abundant naira liquidity, analysts say this move is appropriate. Bank governor Charles Soludo also said that the central bank would again intensify its liquidity mop-up operations through the issuance of central bank securities.
Inflation has accelerated in both Colombia and Peru. Colombia’s inflation in July increased by 0.17% reaching 5.77%, on the back of rising prices for basic services. This is far away from the central bank’s target range of 3.5%-4.5%. Similarly, consumer prices in Peru increased 0.48% with inflation reaching 2.2% in July.