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No one in Europe would oppose extension to Brexit talks: Juncker

EU Commission President Juncker delivers a speech at the opening of the EU Industry Days 2019 in Brussels
FILE PHOTO: European Commission President Jean-Claude Juncker delivers a keynote speech at the opening of the EU Industry Days 2019 in Brussels, Belgium, February 5, 2019. REUTERS/Francois Lenoir

February 18, 2019

BRUSSELS (Reuters) – No one in Europe would oppose a British demand for an extension of talks on Britain’s exit from the European Union beyond the March 29 deadline, the head of the European Commission Jean-Claude Juncker told the Stuttgarter Zeitung in an interview.

With only weeks left to the exit date, Britain’s parliament does not want to accept the withdrawal agreement that has been reached between Prime Minister Theresa May and the EU, and many EU officials see postponing the exit date as the only way to avoid Britain crashing out without any deal.

“Any decision to ask for more time lies with the UK. If such a request were to be made, no one in Europe would oppose it. If you are asking for how long the withdrawal can be postponed, I have no time frame in mind,” Juncker told the German newspaper.

Many EU officials note that elections to the European Parliament on May 23-26 and the first sitting of the new parliament at the start of July creates a natural time-limit for any extension, which should not go beyond end of June.

Juncker also indicated a longer extension could be problematic, but did not exclude it.

“With Brexit so many timetables have already gone by the wayside. But I find it hard to imagine that British voters would again vote in the European elections. That to my mind would be an irony of history. Yet I cannot rule it out,” he said.

“When it comes to Brexit, it is like being before the courts or on the high seas; we are in God’s hands. And we can never quite be sure when God will take the matter in hand.”

(Reporting By Jan Strupczewski; Editing by Mark Heinrich)

Source: OANN

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Hedge funds hunt for shipping debt in new market push

FILE PHOTO: A container ship crosses the Gulf of Suez towards the Red Sea before entering the Suez Canal
FILE PHOTO: A container ship crosses the Gulf of Suez towards the Red Sea before entering the Suez Canal, near Ismailia port city, northeast of Cairo, Egypt October 27, 2018. REUTERS/Amr Abdallah Dalsh/File Photo

February 20, 2019

By Jonathan Saul and Maiya Keidan

LONDON (Reuters) – A growing number of hedge funds are moving into shipping debt, an asset class few have invested in before, looking to buy up loans and bonds as banks cut their exposure to the troubled sector.

World economy worries and cost pressures are dampening prospects for a proper recovery in many segments of the shipping

sector, which has struggled with tough markets for a decade.

Meanwhile European banks, particularly German lenders, are trying to offload distressed and performing loans to the industry which attracts high capital requirements.

The European Central Bank’s banking supervisor has flagged troubled non-performing loans in 2019 as “a concern for a significant number of euro area institutions”.

In one of the first deals to have been concluded in recent weeks, finance sources said hedge and private equity firm Avenue Capital together with asset manager King Street Capital Management bought at least $100 million of loans from investment groups Varde Partners and Oak Hill Advisors.

In June last year funds managed by Varde and Oak Hill purchased $1 billion worth of legacy shipping loans – which sources said included mainly performing but also some distressed assets – from Deutsche Bank.

Varde and Oak Hill declined to comment, while Avenue Capital and King Street did not respond to requests for comment.

Hedge funds clocked up hundreds of millions of dollars in losses from investments in mainly equities when the shipping industry first turned sour a decade ago – and have made limited forays for the most part since.

Last year some equity-focused funds bet on a recovery for the global shipping industry through the stock and futures markets but many are now retrenching after heavy losses in the fourth quarter.

Debt-focused funds are hoping for more luck.

“There is more hedge fund buying interest in shipping debt than in equity now. I don’t think anyone believes the (shipping) market will recover any time soon,” said Basil Karatzas of New York based shipping finance advisory firm Karatzas Marine Advisors & Co.

“So, if you buy equities the upside potential is limited. You can more easily make double-digit returns through credit risk investments.”

Deals expected to generate hedge fund interest include a portfolio of distressed shipping loans that Greece’s Piraeus Bank is seeking to sell, finance sources said.

A source close to the Piraeus Bank deal said the portfolio of shipping loans, called Nemo, was made up of non-performing and performing loans with a nominal value of 500 million to 600 million euros. The source said a sale was expected to close in the second quarter of 2019, declining to provide any details on potential bidders.

Other hedge funds looking at distressed loans include York Capital Management and Cross Ocean Partners, the sources said.

A spokesman for York Capital declined to comment, while Cross Ocean Partners did not respond to requests for comment.

Och-Ziff Capital Management was amongst the suitors for a 2.7 billion euro distressed portfolio of shipping loans that was sold this month by ailing German state bank NordLB, which sources said was bought by private equity firm Cerberus.

Och-Ziff did not respond to requests for comment.

NordLB plans to wind down its remaining non-performing shipping loan portfolio of nearly 4 billion euros almost completely by the end of the year, which sources said is still likely to involve some loan sell-offs and expected to generate hedge fund interest.

Germany’s No.2 lender DZ Bank is also trying to offload over one billion euros of toxic shipping loans from its troubled transport financing division DVB Bank, although there have been multiple delays with the sales process, finance sources said.

Others though have opted for other types of investments, viewing toxic debt as too risky now.

“Hedge funds need to step in to shipping but it’s a bit early for the distressed cycle. It’s a question of timing,” said Louis Gargour, chief investment officer at hedge fund firm LNG Capital, which has around 10 to 15 percent of its total exposure focused on bond issuances by shipping companies.

(Additional reporting by George Georgiopoulos in Athens; editing by David Evans)

Source: OANN

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Democrats Want to Restore Tax Break for the Wealthy

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Democrats often complain that tax cuts primarily benefit “the rich,” but apparently they only think it’s a problem when rich conservatives get a tax break, because they’re outraged that President Trump’s tax cuts scaled back a generous subsidy enjoyed by well-off taxpayers in liberal states. 

A key provision of the 2017 Tax Cuts and Jobs Act was a new cap on the so-called State and Local Tax (“SALT”) Deduction, which allows taxpayers to deduct state and local taxes on their federal tax return. This provision forces taxpayers in low-tax states such as Florida and Texas to effectively subsidize those in high-tax states such as New York and California. 

For years, blue-state Democrats have been able to raise state income and property taxes far higher than voters might normally tolerate. That’s because the SALT deduction softened the impact for taxpayers in those states, particularly for the rich campaign-donor class. Since the SALT deduction only applies to taxpayers who itemize their returns, its benefits naturally accrue to those in the highest income bracket. 

There was previously no limit to how much taxpayers could deduct through SALT, but even though the Tax Cuts and Jobs Act capped the deduction at $10,000, almost 93 percent of American taxpayers will be unaffected. It’s likely that fewer taxpayers will elect to take advantage of SALT, since the law also doubled the standard deduction, but about 11 million of the highest-earning Americans living in high-tax states are seeing their federal income tax liabilities increase. 

It’s curious that liberals who criticized Trump so vociferously for “cutting taxes on the wealthy” are so upset by an element of the tax reform plan that merely takes away a tax break enjoyed disproportionately by the wealthy. 

Take New York Gov. Andrew Cuomo, for instance. His state has some of the highest tax rates in the country, yet it is nonetheless facing a $2.3 billion budget deficit. Cuomo is blaming the changes to the SALT deduction, saying that wealthy New Yorkers are now shifting their assets to other states or utilizing tax shelters to avoid the state’s punitive taxes. 

It turns out that without low-tax states paying a share of their taxes, rich New Yorkers and Californians have discovered that it makes more sense to relocate. I certainly did. California, where I used to live, has a top marginal income tax rate of 13.3 percent. Tennessee, where I hang my hat now, has none — at least on regular income. The barbeque is better here, too! 

In Cuomo’s case, most of his wealthy New Yorker donors were probably wintering in Florida anyway. Bad luck for him that Florida doesn’t have a state income tax, either, because if they start lining up for Florida driver’s licenses in any significant numbers, it’s going to bankrupt the Empire State. 

Most of the high earners left in these predominately coastal liberal strongholds have stuck around mainly because the SALT deduction gave them a hefty discount on their state taxes. In New York, for instance, the average SALT deduction was $22,000 before the reform. That money came straight out of the pot that pays for national defense, interstate transport, national parks, and all the other federally funded services that Americans depend on. 

Donald Trump’s historic tax reform has put an end to all of that, and Democrats are up in arms. Four high-tax states are even suing to get their money back, arguing that the federal government has a responsibility to provide lavish tax breaks to their richest residents. 

Next time you hear Democrats complain about “tax cuts for the rich,” remember that they’re the same ones who are going to the mat to protect tax breaks for wealthy liberals at the expense of middle-class Americans in low-tax states. 

Andy Puzder was chief executive officer of CKE Restaurants following a career as an attorney. He was nominated by President Trump to serve as U.S. labor secretary. He is the author of "The Capitalist Comeback: The Trump Boom and the Left's Plot to Stop It."

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1,000 replacements for Cuban doctors in Brazil quit program

Brazil's health ministry says more than 1,000 doctors who signed up to replace Cuban doctors who served in rural areas have quit within three months.

The doctors who quit represent 12% of the 8,500 physician positions that opened after the end of an agreement with the Cuban government.

The program known as More Medics was an agreement signed in 2013 between the Brazilian and Cuban governments that brought thousands of Cuban doctors to far-flung corners of rural Brazil where medical professionals were scarce.

Days after being elected, President Jair Bolsonaro said he would renegotiate the program, calling it "slave labor" because the Cuban government received a portion of the doctors' salaries. The Cuban government then said its doctors would no longer participate. Bolsonaro said they'd be replaced with Brazilian doctors.

Source: Fox News World

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The Collapse of the Entertainment Industry

The Collapse of the Entertainment Industry by Paul O’Brien After the disaster known as the Academy Awards reached record lows in viewers, many are asking when the entertainment industry will get a clue that what they are doing isn’t working. The answer is that they got the clue. They know they have pushed conservatives, Independents […]

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UK police prepare for any post-Brexit disorder, urge ‘temperate’ communication

Police officers stand guard outside Downing Street in London
FILE PHOTO - Police officers stand guard outside Downing Street in London, Britain, March 30, 2019. REUTERS/Alkis Konstantinidis

April 4, 2019

LONDON (Reuters) – British police have tested plans in recent months to have 10,000 officers respond within 24 hours to any disorder or increase in hate crime if Britain leaves the European Union with no deal.

In a statement, they also urged restraint in a political and public debate that has often been angry:

“There’s a responsibility on us all to think carefully and be temperate in how we communicate so we don’t inflame tensions,” said Martin Hewitt, head of the National Police Chiefs’ Council.

Chief Constable Charlie Hall added: “National and global events have the potential to trigger short-terms rises in hate crime and we saw this with the significant spike following the EU Referendum in 2016.”

Three years after Britons voted to quit the EU in a referendum, and with only a week left before a new, delayed exit date, government and parliament are still bitterly divided over how, when or even whether to leave.

An exit on April 12 without any transition deal to cushion the shock to trade, business or consumers remains a real possibility.

At the same time, there have been warnings from a number of Brexit supporters that failing to get Britain out of the EU could lead to civil unrest. Many lawmakers have received threats from extremists or are under police protection.

“At the moment, we have no intelligence to suggest there will be rises in crime or disorder,” said Hall, “but we are well prepared to respond to any issues that may arise.”

Part of that is a national mobilization plan that enables 10,000 officers to respond to emergencies within 24 hours.

Hall said the level of hate crime had abated since 2016, but was still higher than before the referendum.

(Writing by Elisabeth O’Leary; Editing by Kevin Liffey)

Source: OANN

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Comedian takes center stage in Ukraine’s presidential race

Volodymyr Zelenskiy, Ukrainian actor and candidate in the upcoming presidential election, hosts a comedy show at a concert hall in Kiev
Volodymyr Zelenskiy, Ukrainian actor and candidate in the upcoming presidential election, hosts a comedy show at a concert hall in Kiev, Ukraine February 22, 2019. Picture taken February 22, 2019. REUTERS/Valentyn Ogirenko

February 27, 2019

By Matthias Williams and Margaryta Chornokondratenko

KIEV (Reuters) – In a popular Ukrainian TV series, comedian Volodymyr Zelenskiy plays a president who is scrupulously honest and outwits crooked lawmakers and shadowy businessmen who try to stand in his way.

Zelenskiy’s character in the show “Servant of the People” is loved by Ukrainians fed up with how their country has been governed since independence in 1991. Now they have the chance to turn fantasy into reality in presidential elections on March 31.

The 41-year-old actor announced a presidential bid on New Year’s Eve and he has since emerged as the surprise frontrunner ahead of incumbent Petro Poroshenko and opposition leader Yulia Tymoshenko in a crowded field of 44 candidates.

Zelenskiy’s sudden rise comes at a time voters around the world have upended the status quo, propelling anti-establishment forces such as U.S. President Donald Trump and Italy’s 5-Star Movement, which was also once led by a comedian, to power.

Critics question Zelenskiy’s political inexperience while investors worry that he’s more of an unknown quantity than Poroshenko. After all, if he becomes leader the TV star would be in charge of a country at war in need of fundamental change.

Asked in an interview with Reuters what sets him apart from other candidates, Zelenskiy pointed to his face.

“This. This is a new face. I have never been in politics,” he said after hosting a TV comedy talent show.

“I have not deceived people. They identify with me because I am open, I get hurt, I get angry, I get upset. I do not hide my emotions on camera, I do not try to look different. If I’m inexperienced in something, I’m inexperienced. If I don’t know something, I honestly admit it.”

After performing in student theater, Zelenskiy came to prominence as a team captain in the TV show KVN, where teams compete against each other with jokes and song-and-dance routines. In 2003, his team formed the basis of TV production company Kvartal 95, which makes Servant of the People.

‘SELLING THE DREAM’

In the TV series, Zelenskiy starts out as a humble high school history teacher who becomes president after an expletive-laced tirade about Ukraine’s corrupt political class, secretly filmed by one of his students, goes viral.

Disaffection with how little has changed under Poroshenko has helped fuel Zelenskiy’s popularity, according to Serhiy Leshchenko, an investigative journalist and lawmaker.

“The desire of Ukrainian citizens is to have new faces, to have new politicians ready to reshuffle the whole political class,” he said, comparing the comedian to Trump.

“Both of them are TV stars, and both of them are selling people the dream, so people are ready to accept this dream because they are fed up with the old class of politicians.”

The Maidan protests in 2014 that ousted a Kremlin-backed president brought hope of change, but Poroshenko’s critics say progress has not come fast enough in a country where corruption remains entrenched, oligarchs amass wealth and influence and poverty levels are among the worst in Europe.

Zelenskiy’s squeaky clean fictional president is a powerful image, blurring the lines of where his character stops and the presidential hopeful begins. Even his party is called Servant of the People after the TV series.

At Friday night’s recording of the comedy talent show, the audience, many in their 20s and 30s, laughed and cheered at references and winking allusions to his presidential bid.

Backstage, he posed for selfies with some fans between skits. A trailer for a new series of Servant of the People played before the show, where the fictional president talks about his hopes.

He dreams of a day when Oleg Sentsov, a Ukrainian film-maker languishing in a Russian jail, will release a new film. War in the east will be over and Ukraine will host the Olympic Games in Crimea, once it has been taken back from Russia.

“(I) would just like to see him as the president. Ukraine needs something new. I am sick of all this,” said Volodymyr Bren, who was in the audience at the comedy talent contest.

IMF DEALS

With less than five weeks until the election, several polls have put Zelenskiy in front of Poroshenko and Tymoshenko.

Support for Zelenskiy is particularly strong among 18-35 year-olds who think he would be the best candidate to tackle corruption in state institutions, according to a December survey on behalf of the International Republican Institute https://www.iri.org (IRI).

His campaign has been propelled by his TV appeal and social media. He has 2.7 million followers on Instagram while Poroshenko has 194,000. On Facebook, Zelenskiy invites suggestions from followers on tackling problems such as high utility bills or their choice of prime minister.

Zelenskiy told Reuters he would not allow Ukraine to default on its debt commitments to the International Monetary Fund (IMF), which has propped up the economy with billions of dollars in loans and provides reassurance to investors.

He hopes the country will eventually stop relying on the IMF but, for now, he would not allow Ukraine “to default and spoil the image of our country”.

Tymoshenko and other opposition candidates have fiercely criticized Poroshenko after the government raised household heating tariffs as a condition for more IMF loans.

Asked for his position on heating costs, Zelenskiy was short on specifics. He said Ukraine’s tariffs were the lowest in Europe but still too high for many.

TACKLING CORRUPTION

Ironically, given the clean image of his fictional president, Zelenskiy has had to fend off suspicion that in real life he is a puppet of Ihor Kolomoisky, a prominent oligarch whose TV channel airs Zelenskiy’s shows.

Zelenskiy insists his relationship with Kolomoisky is strictly professional. He said he would not, as some fear, hand back ownership of PrivatBank, Ukraine’s largest lender, to Kolomoisky if he becomes president.

As part of an IMF-backed clean-up of Ukraine’s financial system, the government nationalized PrivatBank in 2016 – and later alleged the lender was used for large-scale fraud and money laundering. Kolomoisky called the allegations nonsense and has said the bank was nationalized on spurious grounds.

“Am I that crazy? Do I want to lose my life, reputation?” said Zelenskiy, when asked whether he would hand PrivatBank back to Kolomoisky.

The businessman also denies having undue influence over Zelenskiy. “I’m more his puppet than he is mine,” he told the Ukrainian news site lb.ua.

To tackle corruption, Zelenskiy said he would introduce a bill to strip the president, lawmakers and judges of immunity from prosecution. He also called for an independent anti-corruption court that the president could not unduly influence – with judges selected with the help of Western experts.

He said that would end a political culture where the president or someone else in authority simply picks up the phone and says: “It will be like this, like this or like this.”

Back in the world of make-believe at the comedy talent show, one contestant hands Zelenskiy a giant key.

The presidential hopeful says it is too big to fit into his pocket – to cheers and applause from an audience that knows Ukrainian politicians often pocket large bribes.

The contestant shouts: “Friends, you have a unique chance to vote for a candidate with small pockets.”

(Additional reporting by Pavel Polityuk; editing by David Clarke)

Source: OANN

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Venezuela's Foreign Affairs Minister Jorge Arreaza talks to the media during a news conference in Caracas
Venezuela’s Foreign Affairs Minister Jorge Arreaza talks to the media during a news conference in Caracas, Venezuela April 8, 2019. REUTERS/Manaure Quintero

April 26, 2019

WASHINGTON (Reuters) – The U.S. Treasury Department on Friday imposed sanctions on Venezuela’s foreign minister and a Venezuelan judge, according to a statement on the department’s website.

Foreign Minister Jorge Arreaza and a judge, Carol Padilla, were targeted over the ongoing crisis in Venezuela, the Treasury Department said, the latest in a list of officials blacklisted by U.S. authorities for their role in President Nicolas Maduro’s government.

(Reporting by Susan Heavey, Makini Brice and Lesley Wroughton; Editing by Chizu Nomiyama)

Source: OANN

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Avengers fans gather at the TCL Chinese Theatre in Hollywood to attend the opening screening of
Avengers fans gather at the TCL Chinese Theatre in Hollywood to attend the opening screening of “Avengers: Endgame” in Los Angeles, California, U.S., April 25, 2019. REUTERS/Mike Blake

April 26, 2019

LOS ANGELES (Reuters) – Marvel Studios superhero spectacle “Avengers: Endgame” hauled in a record $60 million at U.S. and Canadian box offices during its Thursday night debut, distributor Walt Disney Co said.

Global ticket sales for the film about Iron Man, Hulk and other popular characters reached $305 million for the first two days, Disney said.

(Reporting by Lisa Richwine; Editing by Chizu Nomiyama)

Source: OANN

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Funeral of journalist Lyra McKee in Belfast
Labour Party leader Jeremy Corbyn attends the funeral service for murdered journalist Lyra McKee at St Anne’s Cathedral in Belfast, Northern Ireland April 24, 2019. Brian Lawless/Pool via REUTERS

April 26, 2019

LONDON (Reuters) – The leader of Britain’s opposition Labour Party, Jeremy Corbyn, said on Friday he had turned down an invitation to a state dinner which will be part of U.S. President Donald Trump’s visit to Britain in June.

“Theresa May should not be rolling out the red carpet for a state visit to honor a president who rips up vital international treaties, backs climate change denial and uses racist and misogynist rhetoric,” Corbyn said in a statement.

He said maintaining the relationship with the United States did not require “the pomp and ceremony of a state visit” and he said he would welcome a meeting with Trump “to discuss all matters of interest.”

(Reporting by Andy Bruce; Writing by William Schomberg)

Source: OANN

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A bedridden 67-year-old woman and more than a dozen animals were rescued Thursday after a welfare check found that they were living in a home filled with trash, urine, and feces, Florida police said.

Pinellas County sheriff’s deputies said when they arrived at the home in Dunedin around 7:20 p.m. Thursday, they could smell the odor of rotting trash and animal feces as they walked up to the driveway.

“Inside the residence, the odor of feces and urine was so overwhelming that deputies had to don masks,” the sheriff’s department said in a statement.

FLORIDA SHERIFF ON BORDER CRISIS AFTER MAJOR DRUG BUST: ‘IT MAKES ME ABSOLUTELY CRAZY’

Walking throughout the residence, the deputies found 10 emaciated dogs and puppies living in bins filled with their own feces, five large Macaw birds flying freely, rats, bugs and overall squalor.

Puppies discovered living in their own feces inside a Florida home that was filled with trash, urine, and feces.

Puppies discovered living in their own feces inside a Florida home that was filled with trash, urine, and feces. (Pinellas County Sheriff’s Office)

Deputies said due to the large amounts of trash in the home, they had to clear a path to reach the victim’s bedroom.

“None of the home’s toilets were working and all were found to be overflowing with feces,” deputies said. “The only working sink was located on the opposite end of the house from the victim’s bedroom.”

They said there was no food or water for the victim or the animals.

FLORIDA MAN IN EASTER BUNNY COSTUME CAUGHT IN VIRAL BRAWL IS WANTED IN NEW JERSEY, HAS HISTORY OF ARRESTS

The victim was transported to a local hospital for injuries that were non-life threatening, while the animals were transported to shelters.

The woman’s caretaker, Richard Lawrence Goodwin, 65, was arrested and charged with abuse and neglect of an elderly person, disabled person, and cruelty to animals.

Richard Goodwin, 69, was arrested for abuse and neglect of an elderly and disabled person after deputies found she was living in deplorable conditions.

Richard Goodwin, 69, was arrested for abuse and neglect of an elderly and disabled person after deputies found she was living in deplorable conditions. (Pinellas County Sheriff’s Office)

The sheriff’s department said this was Goodwin’s second arrest for abuse and neglect of the same victim. He was previously arrested in May 2018.

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Neighbor Victoria Muenzerbeer told FOX 13 that Goodwin and the victim were hoarders and the conditions inside the home were horrible years ago when she visited once.

“I went in and it was absolutely, a human being couldn’t live there,” she said. “The kitchen wasn’t usable and part of the wall was falling in.”

Source: Fox News National

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Libyan Minister of Economy Ali Abdulaziz Issawi speaks during an interview with Reuters in Tripoli
Libyan Minister of Economy Ali Abdulaziz Issawi speaks during an interview with Reuters in Tripoli, Libya April 25, 2019. REUTERS/Hani Amara

April 26, 2019

By Ulf Laessing

TRIPOLI (Reuters) – Libya’s U.N.-recognized government has budgeted up to 2 billion dinars ($1.43 billion) to cover costs of a three-week-old war for control of the capital, such as treatment for the wounded, to be funded without new borrowing, the economy minister said.

Ali Abdulaziz Issawi suggested the government hoped for business to continue more or less as usual despite the assault on Tripoli, in the country’s northwest, by forces tied to a parallel administration based in the eastern city of Benghazi.

Once Africa’s third largest producer of oil, Libya has been riven by factional conflict since the fall of Muammar Gaddafi in 2011, with the country now broadly split between eastern-based forces under Khalifa Haftar and the U.N.-backed government in Tripoli, in the west, under Prime Minister Fayez al-Serraj.

Still, with Haftar’s Libyan National Army forces unable so far to pierce defenses in Tripoli’s southern suburbs, normal life and business activities continue in much of the capital and western coastal towns.

Issawi, in an interview with Reuters in his Tripoli office, also said Libya’s commercial ports and wheat imports were still functioning normally, although some roads have been blocked.

He said the Serraj government estimates it will spend up to 2 billion dinars extra on medical treatment for wounded, aid for displaced people and other “emergency” war costs.

He said this was not military spending but analysts believe that the sum will also cover expenditures such as pay for allied armed groups or food for fighters.

“We could actually spend less,” he added, in comments that gave the first insight into the economic impact of the fighting.

Issawi said the Tripoli government, which controls little territory beyond the greater capital region, would not incur new debt to fund the war costs, sticking to a plan to post a 2019 budget without a deficit.

Tripoli derives revenue largely from oil and natural gas production, interest-free loans from local banks to the central bank, and a 183 percent surcharge on foreign exchange transactions conducted at official rates.

But with centralized tax collection greatly diminished, public debt has piled up – to 68 billion dinars in the west, including unpaid state obligations such as social insurance.

Some analysts expect Serraj’s government will be forced to raise new debt if the war for control of Tripoli drags on.

With much of Libya dominated by armed factions that also act as security forces, the public wage bill for both the western and eastern administrations has soared as fighters have been made public employees in efforts to buy their loyalty.

The east has sold bonds worth 35 billion dinars outside the official financial system as the Tripoli central bank does not fund the parallel government apart from some wages.

Despite its limited reach, the Tripoli government still runs an annual budget of around 46.8 billion dinars, mainly for public salaries and fuel subsidies.

“This year we cannot finance via debt…we will not borrow (by agreement with the central bank),” Issawi said.

According to International Monetary Fund data, Libya’s central government debt-to-GDP ratio is 143 percent, making it one of the most heavily indebted in the world on that measure.

Issawi declined to say what parts of the budget would be trimmed to support the extra outlay for war costs.

However, with some 70 percent of the budget allocated to public wages, fuel subsidies and other welfare benefits, a portion devoted to infrastructure is most likely to be axed.

Widespread lawlessness has meant there have been no major infrastructural projects since 2011, when a NATO-backed uprising overthrew dictator Muammar Gaddafi, leaving schools, hospitals and roads in acute need of restoration.

FOREX SURCHARGE

Issawi said the government planned to raise as much as 30 billion dinars by the end of 2019 from hard currency deals after imposing in September a 183 percent surcharge on commercial and private transactions done on the official rate of 1.4 to the U.S. dollar. That fee has effectively devalued the official rate to 3.9, much closer to the black market equivalent.

Some 17 billion dinars have been raised since then, with hard currency allocated for import credit letters now issued without delays, Issawi said. The forex fee has helped the government forecast a budget in the black for 2019.

Despite the narrowing spread between the two rates, the black market continues to thrive. Dozens of traders remained at their favorite spot behind the central bank headquarters in Tripoli when Reuters reporters visited it last week.

But traders said it could take time for the Serraj government to register the extra forex receipts as official banking channels were taking up to six months to approve import financing, keeping the black market in play for dealers.

Issawi said authorities planned to lower the forex fee from 183 percent, without saying when. The black market rate has dropped from 6 to around 4.1 since September but it has hardly moved of late as demand for black market cash remains high.

The Tripoli government has stopped subsidizing food and bread, which used to be cheaper than drinking water in Libya. Wheat imports are now being arranged by private traders and there are surplus stocks of flour at the moment, Issawi said.

(Reporting by Ulf Laessing in Tripoli with additional reporting by Karin Strohecker in London; Editing by Mark Heinrich)

Source: OANN

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