In Brief
Istanbul inflation hits 9 percent in July Inflation in Istanbul, Turkey’s biggest city, accelerated to 9 percent in July, according to the city’s chamber of commerce. The rate rose from 5.7 percent a month earlier, according to figures on the chamber’s website. In the month, prices rose 1.2 percent, compared with a fall of 1.9 percent a year earlier, it said. (Bloomberg) Russia plans to borrow for the first time in 10 years MOSCOW(AFP) – Russia plans to borrow from international debt markets for the first time in 10 years, with the need to replenish state coffers depleted by the crisis, overriding the trauma of its 1998 default. The country is planning to issue eurobonds with a volume of $17.8 billion in 2010, followed by $20.7 billion in 2011 and $20 billion in 2012, according to the Finance Ministry’s plans. Russia’s under-reformed economy has been hit hard by the global slowdown and the country is facing dwindling revenues over the next years amid lower oil prices and dwindling tax receipts. Finance Minister Alexei Kudrin said Russia could even tap the markets as early as 2009. «If we see that the conditions are favorable, we will not restrain ourselves,» he said this week. But economists warn that, while market conditions are right for such a move, the government is running a risky strategy by allowing its debts to accumulate with a bond issue. «There are many uncertainties. Are foreign investors going to buy and at what yield?» asked Anton Struchenevksy, an analyst at the Troika Dialog investment bank in Moscow. He expressed fear of the consequences if Russia’s debts continued to increase and investors stopped buying the bonds after a certain period. «Then something similar to 1998 could take place.» Nuclear plant cancellation. Bulgaria may cancel construction of a 4-billion-euro ($5.5 billion) nuclear power station and sell shares in its state-run energy utilities to plug a widening deficit, according to Deputy Prime Minister Simeon Djankov. Djankov, 39, a former chief economist at the World Bank, is also finance minister in the government of Prime Minister Boyko Borisov, who took office July 27. Borisov ousted a Socialist-led coalition in July 5 elections, pledging to fight corruption and pull the European Union’s poorest nation out of recession. The new government’s plan to balance the budget by the end of this year may halt the planned reactor at Belene on the Danube River, in which Germany’s RWE AG is a partner. Djankov is seeking to raise cash from assets to bridge a 2.5-billion-lev ($1.8 billion) budget gap, Bulgaria’s first in eight years, and says spending cuts also will be needed. «There is an 80 percent chance that the Belene project will be stopped,» Djankov said in an interview. «The state has no funds to spare for its construction and it has been difficult to raise private funds because of the global crisis.» There is no economic assessment of the project’s profitability and legal analysis showed there would be no penalties if it was canceled, he said. Bulgaria selected RWE, Germany’s second-largest utility, last year to develop and manage the 2,000-megawatt plant. The government also hired BNP Paribas SA, France’s largest bank by market value, to arrange a 250-million-euro loan to help fund construction. (Bloomberg)
