Headlines

The International Monetary Fund announced Thursday it has reached a preliminary agreement to provide Sri Lanka with $2.9 billion over four years to help it recover from its worst economic crisis, the Associated Press reported. The arrangement will help restore financial and macroeconomic stability and debt sustainability as well as enable the country’s growth potential, an IMF team visiting Sri Lanka said in a statement.

Chinese factory activity shrank and home sales tumbled in August, as the world’s second-largest economy struggled to shake off the impact from Covid-19 flare-ups, its worst heat wave in six decades and a deepening real-estate downturn, the Wall Street Journal reported. As the heat wave led to electricity shortages and production disruptions, manufacturing activity shrank for a second consecutive month, China’s National Bureau of Statistics said Wednesday.

Russian sovereign bonds have staged a comeback this summer as investment banks have warmed up to trading the Kremlin’s debt again and investors outside the grip of Western sanctions on Moscow are buying bonds, WSJ Pro Bankruptcy reported. The run-up in prices reflects how Russia has maintained investor confidence in some pockets of the world and appears to be managing its economy amid the war with Ukraine.

Russia's economy shrank by 4.3% in July year on year after contracting by 4.9% in June, the economy ministry said on Wednesday, Reuters reported. In January through July, the economy shrank by 1.1% in year-on-year terms, the ministry said. First Deputy Prime Minister Andrei Belousov said on Monday that Russia's economy will shrink by less than 3% in 2022, a much shallower contraction than initially expected, while inflation will be below earlier projections. Read more.

The Bank of Mexico on Wednesday said it is not wed to hiking interest rates in line with the U.S. Federal Reserve and will evaluate all available data to bring down inflation, Reuters reported. There has been much market speculation on whether Banxico, as the Mexican central bank is known, will follow in lockstep with the Fed as it embarks on what has become the sharpest round of U.S. rate hikes since the 1980s.

Zambia's debt restructuring will be a mixture of haircuts to loans' original value and maturity extensions, a senior Zambian finance ministry official said Thursday, after the Fund approved a $1.3 billion program for the southern African country, Reuters reported. Negotiations with creditors to restructure debt that reached $17 billion at the end of 2021 are starting now, Mukuli Chikuba, the Permanent Secretary to the Ministry of Finance, said at a joint Zambian government and IMF news conference in Zambia's capital Lusaka.

The former Mexican airline Interjet has been formally accepted into a domestic bankruptcy process by a district judge. Interjet will now be able to negotiate up to 40 billion pesos in debt (nearly US$2 billion) with its creditors, SimpleFlying.com reported. On Tuesday, a Mexican judge approved the airline Interjet formally entering a bankruptcy process. Interjet ceased operations in December 2020, after a years-long crisis fueled by the COVID-19 pandemic.

One of China’s largest developers said the country’s property market has tumbled into a severe depression, using some of the strongest language yet to describe the yearlong downturn and the financial pain it has caused, the Wall Street Journal reported. Country Garden Holdings Co., which for years ranked as China’s top real-estate developer by contracted sales, on Tuesday reported a 96% drop in first-half profit after selling a third fewer homes than it did a year ago.

Lenders to Reliance Capital (RCap) received 14 resolution plans on Monday as part of the Anil Ambani-founded holding company's insolvency proceedings. A Piramal Group-led consortium, Oaktree Capital, Torrent Investments, IndusInd International and Cosmea Financial Services are among bidders who have either offered to acquire the entire company or submitted plans for select clusters, the Economic Times of India reported. Advent International and Zurich Insurance have bid for 100% stake in Reliance General Insurance (RGI), the people said.

Consumer prices in Europe continued their steady upward march in August, driven by soaring food and fuel prices and shortages caused by clogged supply chains, the New York Times reported. In the 19 countries that use the euro as currency, the annual inflation rate jumped to a fresh record of 9.1 percent, up from 8.9 percent in July, according to estimates released Wednesday by the European Commission’s statistical office. A year earlier, inflation was 3 percent — a rate that at the time marked a 10-year high and set off alarms, but would now be greeted with enormous relief.