AFP

Ghana on Tuesday agreed on a $3 billion credit deal with the International Monetary Fund (IMF) as part of the country’s battle to end its worst economic crisis in decades.

The West African state is facing more than 40 percent inflation, a risky debt burden and a sharp decline in its cedi currency since the start of the year.

The IMF said Ghana’s government had committed to “a wide-ranging economic reform program” that will restore stability and debt sustainability.

“These are really grave times and in a really difficult economic environment,” Finance Minister Kenneth Ofori-Atta told reporters in Accra. 

“But this now today paves the way for the IMF management and executive board to approve Ghana’s programme request early, hopefully, next year.”

The three-year IMF loan agreement has yet to be approved by the fund’s board.

The programme also aims to reduce inflation, strengthen the economy’s resilience to external shocks and improve market confidence in the country, the IMF said. 

A top cocoa and gold producer, Ghana also has oil and gas reserves, but its debt has soared and like the rest of sub-Saharan Africa it has been hit hard by fallout from the Covid pandemic and the Ukraine war.

The crisis forced President Nana Akufo-Addo’s government to reverse its position earlier this year and seek IMF help as economists warned of a default on debt payments.

The government has already announced a domestic debt swap as part of the programme to ease a crunch in payments and is soon expected to release details about restructuring foreign debt.

– ‘Good news’ –

IMF mission chief Stephane Roudet said IMF board approval for the deal would come after Ghana’s creditors give assurances and the debt exchange programme is shown to be sufficient.

“What is very important for the IMF is that the government strategy as a whole be sufficient to put debt on a sustainable path and to bring debt sustainability over the medium term,” he said.

The government has already increased VAT by 2.5 percent and frozen state-sector hiring to help trim spending and boost domestic revenues. 

Officials say vulnerable groups will be protected, but critics are concerned the government programme will lead to more austerity.

“Ghana having reached a staff level deal with the IMF is quite good news, although we have yet to get the full details. But on the whole, it will facilitate the final approval,” Ghanaian economist Daniel Anim Amarteye said.

“The government really needs the bailout to bring about macroeconomic stability and credibility.”

Debt payments currently gobble up more than half of government revenues. A 50 percent slide in the cedi against the dollar has also increased Ghana’s debt values by $6 billion this year.

Major credit ratings agencies have downgraded their outlook on Ghana, reflecting market worries that the country risked missing debt payments.

The IMF negotiations came after a new tax on electronic transactions, known as the E-levy, faced resistence and failed to generate expected revenue levels for the government.

Stock markets mostly climbed Tuesday before the release of key US inflation data later in the session.

The November consumer price index (CPI) figures follow Friday’s forecast-beating print on US wholesale inflation, which dented hopes the Federal Reserve would scale back the size of its next interest rate hikes.

The central bank is widely expected to lift interest rates 50 basis points Wednesday — a slowdown from the previous four 75-point hikes — but its post-meeting statement and comments from boss Jerome Powell will be closely followed.

While the general view is that policymakers will stop increasing borrowing costs next year, there is debate about how high they will peak and when they will start to come down.

“I think CPI will be important but not necessarily for this meeting, for which a 50 basis-point hike is well flagged, but rather it will help determine the extent of further tightening,” said Mitul Kotecha, of TD Securities.

“Don’t expect clearcut signals from the Fed… on what they expect to be doing at early 2023 meetings,” said National Australia Bank’s Ray Attrill.

Elsewhere, China’s shift away from its economically damaging zero-Covid policy continued to support sentiment as the world’s number two economy opens up.

Top Chinese officials are meeting this week to draw up their economic blueprint for re-emerging from Covid, with observers predicting more stimulus measures and pledges of support for the troubled property sector.

But there is also a worry among investors that the quick relaxation of containment measures such as mass testing and lockdowns might lead to a massive surge in infections that could overwhelm the healthcare system and weigh on the economy.

Still, the expected pick-up in demand in China boosted oil prices further, with both main contracts extending Monday’s strong gains.

“China’s reopening is coming, it won’t happen overnight, but it will provide a major boost to demand in the outlook next quarter,” said OANDA’s Edward Moya. 

Ahead of the Wall Street open, United Airlines unveiled an order of 100 new Boeing 787 Dreamliners with options for an additional 100 jets.

And the US Securities and Exchange Commission charged disgraced cryptocurrency tycoon Sam Bankman-Fried with defrauding customers of billions of dollars.

– Key figures around 1215 GMT –

London – FTSE 100: UP 0.4 percent at 7,475.26 points

Frankfurt – DAX: UP 0.8 percent at 14,421.53

Paris – CAC 40: UP 0.7 percent at 6,697.02

EURO STOXX 50: UP 1.0 percent at 3,959.22

Tokyo – Nikkei 225: UP 0.4 percent at 27,954.85 (close)

Hong Kong – Hang Seng Index: UP 0.7 percent at 19,596.20 (close)

Shanghai – Composite: DOWN 0.1 percent at 3,176.33 (close)

New York – Dow: UP 1.6 percent at 34,005.04 (close)

Euro/dollar: UP at $1.0541 from $1.0539 on Monday

Dollar/yen: DOWN at 137.41 yen from 137.66 yen

Pound/dollar: UP at $1.2290 from $1.2268

Euro/pound: UP at 85.96 pence from 85.78 pence

Brent North Sea crude: UP 0.6 percent at $78.47 per barrel

West Texas Intermediate: UP 0.4 percent at $73.49 per barrel

Betting on robust demand for international travel, United Airlines on Tuesday unveiled an order of 100 new Boeing 787 Dreamliners with options for an additional 100 jets.

The huge order, the largest by an American carrier for this class of aircraft, marks a victory for Boeing, which has targeted mid-decade as the period it expects to return to its pre-pandemic financial health after the 737 MAX scandal and other woes.

United Chief Executive Scott Kirby, who also announced a giant Boeing and Airbus order in June 2021 ahead of rivals, predicted the airline’s ambitious 787 plan would pay off for the carrier during a capacity-constrained period.

“United is really uniquely positioned to grow in a way that’s going to be a huge challenge for others,” Kirby told reporters.

United expects deliveries of the jets to take place between 2024 and 2032, aiming the new aircraft as a replacement for the 767 fleet that will be removed from service by 2030. 

The Dreamliner saves 25 percent of the carbon emission compared with the jets being retired.

United executives did not offer an estimate as to the total potential cost of the contracts, but projected that capital spending would rise to $9 billion in 2023 and $11 billion in 2024.

United said it also exercised options for an additional 44 737 MAX planes between 2024 and 2026, and ordered 56 more MAX jets for 2027 and 2028.

– Production ramp-up –

After the 737 MAX, the 787 Dreamliner — which flies transatlantic journeys as well as other international itineraries — has been Boeing’s other leading source of orders and deliveries.

United officials said beefing up the fleet of 787s made sense at a time when the carrier already flies the jet, making it an easy transition for pilots and helping the company add capacity quickly.

But United officials praised the A350, the rival widebody offering from European aerospace giant Airbus, and said they still plan to take delivery of 45 of the Airbus jets from 2030.

For Boeing, the United order signals a victory for the 787, for which production was slowed to a trickle while the company halted deliveries of new jets for more than a year while addressing production problems.

Boeing resumed 787 deliveries in August after getting the green light from the Federal Aviation Administration, which has heavily scrutinized Boeing processes in the aftermath of the 737 MAX crisis.

“This is an opportunity for Boeing to ramp up at Charleston, perhaps with two production shifts,” said Michel Merluzeau, director of aerospace and defense analysis at AIR consultancy.

In October 2020, Boeing consolidated manufacturing of the 787 to Charleston, ending production of the wide-body jet in Washington state in an efficiency move as it battled financial losses during the Covid-19 downturn.

At its investor day in November, Boeing officials outlined a plan to restore 787 production to 10 passenger jets per month. 

Taken for granted by most consumers in rich countries, the humble LED lightbulb was identified on Tuesday as a strategic ally for Ukraine as Kyiv seeks to resist Russian bombing of its power grid.

Ukrainian President Volodymyr Zelensky highlighted how replacing the country’s old-style incandescent bulbs by modern LED versions would help the country escape blackouts this winter. 

“It maybe doesn’t seem very important but fifty million LED lamps will allow us to save one gigawatt of power,” he told an international aid conference in Paris attended by around 70 states and international organisations. 

Large parts of Ukraine face blackouts and regular load-shedding as the country’s power grid buckles under repeated Russian air strikes.

Zelensky said the current power shortfall in the country was around 2.5 gigawatts per day, meaning 50 million LED lightbulbs would reduce this by 40 percent.

European Commission president Ursula von der Leyen immediately announced that the European Union would fund the purchase of 30 million LED lightbulbs for 30 million euros ($32 million).

They are 88 percent more efficient than traditional ones, she estimated.

“The savings are crucial to reduce the pressure that we have on the power grid now,” von der Leyen said.

“In these times of suffering and darkness, it is so important to bring light to Ukraine,” she added.

Zelensky estimated that Ukraine needed around 800 million euros in emergency aid in total for its energy sector in the face of Russia’s onslaught.

The country is desperately seeking spare parts to repair its power lines, as well as transformers, gas turbines and generators to keep the lights on.

French President Emmanuel Macron, who also championed the idea of LED lighting for Ukraine, condemned Russia’s “cynical” and “cowardly” attacks on civilian infrastructure. 

“These strikes… which Russia openly admits are designed to break the resistance of the Ukrainian people, are war crimes,” he said in an opening speech.

“They violate without any doubt the most basic principals of humanitarian law. These acts are intolerable and will not go unpunished.”

The US Securities and Exchange Commission charged disgraced cryptocurrency tycoon Sam Bankman-Fried on Tuesday with defrauding customers of billions of dollars, a day after he was arrested in the Bahamas at the request of the United States.

Bankman-Fried had “built a house of cards on a foundation of deception” in his dealings with investors in his FTX crypto firm, the SEC said.

“Today we are holding Mr. Bankman-Fried responsible for fraudulently raising billions of dollars from investors in FTX and misusing funds belonging to FTX’s trading customers.”

The charge comes a day after Bankman-Fried was arrested in the Bahamas on the eve of his scheduled appearance at a US congressional hearing in which he was to testify under oath about the crypto exchange’s overnight demise.

The SEC said investigations “as to other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.”

The 30-year-old had in recent weeks defied legal advice and made multiple media appearances offering his version of his company’s sudden failure, usually by video link from the Bahamas, where his company is headquartered.

According to a press release from the attorney general’s office in the Bahamas, Bankman-Fried was to be held in custody before an expected request for his extradition by the United States. 

The Bahamian prime minister’s office shared news of the arrest, as well as a police statement saying Bankman-Fried was arrested in the early evening at his apartment complex in the capital Nassau.

He was taken into custody without incident, the statement said, and was to appear in court in Nassau on Tuesday.

As much as anyone, Bankman-Fried had embodied the apparent emergence of cryptocurrency as an above-board investment rather than a frowned-upon get-rich-quick scheme shunned by the banking establishment. 

His FTX platform was plugged by celebrities in advertising campaigns and the cyber whiz kid became a regular presence in Washington, where he donated tens of millions of dollars in political contributions.

But after reaching a valuation of $32 billion, FTX’s implosion was swift following a November 2 report on ties between FTX and Alameda, a trading company also controlled by Bankman-Fried.

The report exposed that Alameda’s balance sheet was heavily built on the FTT currency — a token created by FTX with no independent value.

– ‘Grossly inexperienced’ –

The price of FTT plunged in early November, roiling both Alameda and FTX, where Alameda had large trading positions. 

Reeling from customer withdrawals and short some $8 billion, FTX and around 100 related entities filed for bankruptcy protection on November 11, inviting scrutiny from regulators, prosecutors and furious clients. 

Among the revelations, FTX is suspected of fraud for propping up Alameda with billions of dollars in customer funds that are now likely lost forever.

Questions also linger over whether Bankman-Fried engaged in market manipulation, or illegally provided inside information to Alameda.

“If convicted he could be facing the rest of his life in prison, given the dollar amount of the fraud,” Jacob S. Frenkel, a former federal criminal prosecutor at Dickinson Wright, told AFP.

“We would not see an indictment if prosecutors were not absolutely convinced that they will win a conviction,” he added.

In his media interviews, Bankman-Fried has admitted to mistakes, but has denied intent to defraud his customers.

FTX CEO John Ray, who came to the company after the debacle, was to tell Congress on Tuesday that the problems arose because control was “in the hands of a very small group of grossly inexperienced and unsophisticated individuals.”

“Never in my career have I seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance whatsoever,” Ray said in prepared remarks.

The fall of FTX has caused major doubts about the long term viability of cryptocurrency and heaped stress on other platforms and entities that rode the success of Bitcoin and other currencies.

President Volodymyr Zelensky on Tuesday said Ukraine needed emergency aid for its energy sector totalling around 800 million euros to help his country survive Russia’s bombing of its civilian infrastructure.

Failing to make an impact on the battlefield in its invasion, Moscow has switched tactics since October when it began airstrikes targeting Ukraine’s energy network, plunging millions into cold and darkness at the onset of winter.

The alarm over Ukraine’s ability to cope comes nine months into the Russian assault against its neighbour, which has seen Moscow make only slight territorial gains in the face of fierce Ukrainian resistance.

Zelensky made the request for 800 million euros at international conference in Paris designed to raise material and money to repair Ukraine’s damaged infrastructure.

It is hosted by French President Emmanuel Macron with whom he has sometimes had testy ties.

“Of course it is a very high amount, but the cost is less than the cost of a potential blackout,” Zelensky told the gathering in Paris via video link.

“I hope that decisions will be made accordingly.”

Zelensky said that Ukraine needed transformers, equipment to repair damaged high-voltage power lines, as well as generators and gas turbines. 

“Because of the destruction of our power plants by terror attacks we will need to use more gas this winter than expected,” added Zelensky, whose wife Olena attended the conference in person.

Zelensky urged G7 nations on Monday to provide “about two billion cubic metres” of additional gas to get through the winter as well as more tanks and missiles to fight the invasion.

– Russia wants ‘darkness’ –

Ukrainian Prime Minister Denys Shmygal also appealed for help from the 70 states and international agencies gathered in Paris for the “Standing with the Ukrainian People” conference.

“They (Russians) want to put us into darkness and it will fail, thanks to our partners all over the world,” he added.

Shmygal also said Tuesday that the UN nuclear watchdog IAEA had agreed to dispatch permanent teams to the country’s nuclear plants, including the Russian-controlled Zaporizhzhia plant, a hotspot of fighting.

The prime minister said after a meeting with IAEA chief Rafael Grossi that teams would deploy to plants at Zaporizhzhia, Rivne, Khmelnytskyi, Pivdennoukrainska and Chernobyl without specifying a timeframe.

Ukrainian Energy Minister German Galushchenko told AFP ahead of the conference that Russia’s war against Ukraine “completely changes our understanding of nuclear security”.

Macron said the focus in Paris was on providing short-term assistance given Russia’s attempts to “sow terror” in Ukraine by “cowardly” bombing the country’s infrastructure.

“Very concretely, these are commitments to deliver generators, help repair infrastructure, deliver LEDs (light-emitting diodes) for lighting,” he said.

Macron has riled his Ukrainian allies in the past, most notably in June when he said “we must not humiliate Russia”.

Macron called for Russia to be offered “security guarantees” at the end of the war during an interview on December 3, drawing criticism from some Ukrainian and eastern European politicians that he was focusing on diplomatic compromises with Russian President Vladimir Putin.

But in a call at the weekend, he “reminded President Zelensky that Ukraine can count on France’s support for as long as is required to fully re-establish its sovereignty and national integrity,” the French presidency said.

UN chief Antonio Guterres will also make an address remotely to attendees, which include ambassadors from some Gulf states, as well as India and Indonesia.

China has not sent a representative.

– No Putin presser –

French organisers have stressed that the meeting is different from other recent international gatherings in Lugano, Warsaw or Berlin dedicated to long-term reconstruction.

Instead, they hope donors will pledge help from engineering expertise to generators and spare parts to carry out repairs on the energy grid.

One key outcome will be developing a new platform, agreed by G7 leaders Monday, that will enable donors to see Ukraine’s needs and coordinate their aid.

In Russia meanwhile, the Kremlin has announced that Putin will not hold his annual end-of-year press conference this year, a break with tradition amid the military setbacks.

Kremlin spokesman Dmitry Peskov gave no reason for not holding the event which Putin has hosted almost every year he has been in power since 2000.

Elsewhere, Belarus held a surprise inspection of its armed forces Tuesday, raising fears of a possible escalation in the conflict.

Belarus is a close ally of Moscow but Belarusian leader Alexander Lukashenko has repeatedly said he does not plan to send Belarusian troops to Ukraine.