Lebanon’s presidential selection has been postponed until 30 November. Last Friday, the opposition boycotted a parliamentary vote to find a successor for the outgoing president Emile Lahoud. Prime minister Fouad Siniora is now interim head of state. Standard & Poor’s placed the nation’s ‘B-’ rating on negative outlook, following the political stand-off. The agency is not only concerned with the frail economy but fears “there is a growing danger that parallel administrations will be established. This would raise serious concerns over the prospects for policy-making and the administrative capacity of the government to service its debt, expected to reach at least 173% by year-end 2007.” (For analysis on how the political crisis is affecting the country's economic reform programme, please click here)
There is growing concern over the poor performance of the Romanian leu, with country’s finance minister Varujan Vosganian arguing that the currency is undervalued by 6.5% against the euro. Market participants say the central bank intervened in the FX market on Friday to prop up the currency. But analysts argue that the sell-off is likely to continue, as the leu’s is more vulnerable than other currencies in the region, due to the country’s loose fiscal/monetary policy mix and ballooning current account deficit.
Colombia’s central bank unexpectedly hiked the overnight interbank rate by 25 bps to 9.50%, due to “rapid growth in credit and aggregate demand and high utilization of manufacturing capacity,” according to its own statement. The monetary authority has raised the policy rate nine times over the past year in a bid to bring the nation’s growth, which is projected at 7.8% this year, to sustainable levels. Central bank governor Dario Uribe maintained this year’s 3.5% to 4.5% inflation target range for 2008 – the country’s agriculture minister recently asked the central bank to make allowances for high food prices in setting its 2008 target. It is also seeking to boost the value of the peso to mitigate inflation, which was at 5.16% year-on-year in October 2007. “The gradual process of disinflation is coherent with our constitutional mandate of preserving the currency’s purchasing power,” the bank said in the statement. (For an interview with Dario Uribe, please click here)
Poland’s new finance minister Jacek Rostowski has set six economic goals of the new administration during a parliamentary debate on the 2008 budget. He aims to lower the debt-to-GDP ratio by 4-7% to 41-44% of GDP by 2011. The government will lower and streamline personal income taxes, boost spending on health and education, increase privatization, further liberalize the economy and prepare for euro adoption only when the country is fully ready, Rostowski said. (For interviews with current and former policy-makers setting out what the new government’s economic priorities should be, please click here)