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Talks to restructure Puerto Rico power company debt fail

HAVANA — Mediation talks to restructure more than $9 billion in debt held by Puerto Rico’s power company failed, officials announced Saturday, raising concerns about the future of the bankrupt government agency.

A federal control board that oversees Puerto Rico’s finances said the impasse with bondholders means it would resume litigation against them in an attempt to restructure the debt, warning that any cost associated with debt repayment would be passed along to consumers.

Gov. Pedro Pierluisi said the mediation did not achieve the desired outcome: “My administration cannot accept a deal that unduly strains the wallets of our hard-working families, or the resources businesses need to fuel our economy and create and maintain jobs on the island.”

In a press conference on Saturday, Pierluisi said the power company will remain in a state of bankruptcy given pending litigations.

Creditors could not be immediately reached for comment.

Board member Justin Peterson criticized the board for abandoning mediation efforts as he advocated for bondholders to be paid and said that a deal to end bankruptcy and avoid expensive and lengthy litigation “was clearly in reach.”

“It would have catalyzed much-needed private sector investment to rebuild and modernize Puerto Rico’s grid and would have provided the citizens…with cleaner, more reliable and more affordable power,” he said. “Now, all of this could be delayed for years.”

Puerto Rico’s power grid remains frail after Hurricane Maria razed it in 2017, with outages reported daily. The grid was already crumbling before the storm hit as a result of aging infrastructure and a lack of maintenance.

The failed talks come after Gov. Pedro Pierluisi announced in early March that his administration was scrapping a proposed debt restructuring deal for the island’s Electric Power Authority that was several years in the making because it wasn’t feasible or in Puerto Rico’s best interest.

The power company’s debt is the largest of any government agency, and economists have said that restructuring it would help boost economic development on an island mired in a deep economic crisis.

It is one of two government agencies whose debt have yet to be restructured more than five years after Puerto Rico’s government filed for the largest municipal bankruptcy in history. Puerto Rico’s Highways and Transportation Authority still holds $5.8 billion in debt.

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US envoy ‘will not be admitted’ to Nicaragua, vice president says | Elections News

Nicaraguan Vice President Rosario Murillo says decision due to new US ambassador’s ‘interfering’ attitude.

Nicaragua will not allow the new United States ambassador to enter the country due to his “interfering” attitude, Vice President Rosario Murillo has reiterated, amid months of escalating tensions between the two nations.

The US envoy, Hugo Rodriguez, “will not under any circumstances be admitted into our Nicaragua”, said Murillo, who is also the wife of President Daniel Ortega.

“Let that be clear to the imperialists,” she said on Friday, reading a statement from the foreign office on state media, as reported by the AFP news agency.

The US Senate confirmed Rodriguez’s nomination to the ambassador post on Thursday, despite Nicaragua saying in July that it would reject it.

The diplomatic fight comes as the Biden administration has imposed a slew of sanctions, including US visa restrictions, on Nicaraguan state officials and their relatives over a crackdown on opposition politicians and human rights activists in the Central American nation.

Ortega has overseen a sweeping arrest campaign that targeted opposition leaders and presidential hopefuls in the lead-up to a November 2021 vote that saw the longtime leader re-elected to a fourth consecutive term as president.

But Washington and its allies, including the European Union, slammed the vote as a “farce”. Human rights organisations also denounced the crackdown, which has seen dozens of people arrested and sentenced to often lengthy prison terms.

Other opposition figures have fled the country, often to neighbouring Costa Rica.

Ortega has said his government’s actions are lawful, accusing the opposition figures of not being real candidates, but rather “criminals” and “terrorists” who posed a danger to the country.

In July, Nicaragua withdrew its approval of Rodriguez’s ambassador posting in the country after Rodriguez criticised the Ortega government.

Rodriguez, a former senior adviser in the US Department of State’s Bureau of Western Hemisphere Affairs, told a US Senate hearing that he would “support using all economic and diplomatic tools to bring about a change in direction in Nicaragua”.

He also described Nicaragua as a “pariah state in the region” and branded Ortega’s government a “dictatorship”.

Nicaraguan Foreign Minister Denis Moncada responded that the government, “in use of its powers and in exercise of its national sovereignty, immediately withdraws the approval granted to the candidate Hugo Rodriguez”.

On Friday, Nicaragua’s former ambassador to the Organization of American States (OAS), Arturo McFields, slammed the government’s decision to deny entry to Rodriguez, saying the US-Nicaraguan relationship had reached “one of its worst crises” in over a decade.

McFields resigned from his post in March, accusing Ortega’s administration of rights abuses.

Earlier this week, the Reuters news agency reported that Nicaragua had asked the European Union’s ambassador to leave the country, according to three diplomatic sources.

European Union Ambassador Bettina Muscheidt was summoned to the foreign ministry, where she was declared “non grata” and notified that she should leave Nicaragua, one of the diplomatic sources said.



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American consumers spent more in August, as prices rose | Inflation News

Consumers spent a bit more in August than the previous month, a sign the economy is holding up even as inflation lifts prices for food, rent, and other essentials.

Americans boosted their spending at stores and for services, such as haircuts, by 0.4 percent in August, after it fell 0.2 percent in July, the Department of Commerce said Friday. Yet much of that increase reflected higher prices, with an inflation gauge closely monitored by the Federal Reserve rising 0.3 percent in August, the government’s report showed.

The figures suggested that the economy is showing some resilience despite sharply rising interest rates, violent swings in the stock market, and high inflation.

Still, there were signs that rising prices are weighing on shoppers. Consumer spending, adjusted for inflation, is growing at a weaker pace. It increased at an annual rate of 2 percent in the April-June quarter. Yet July and August data indicate that spending growth is on track to slow to an annual rate of just 0.5 percent in the July-September quarter, economists said.

The economy is expected to grow in the third quarter, after shrinking in the first six months of this year. But many economists lowered their forecasts after the spending report and now expect growth will be just 1 percent or so at an annual rate.

Americans are also saving less in order to keep up with higher prices. The US saving rate was just 3.5 percent in August, far below pre-pandemic levels of about 8 percent, Friday’s report said.

There have been other signs of consumer weakness recently, with used car seller Carmax reporting sharply lower sales in the three months ending in August. The company attributed the decline to “affordability challenges” for consumers amid high inflation and rising interest rates.

Rising prices

Compared with a year ago, prices jumped 6.2 percent, down from a 6.4 percent annual gain in July but not far from June’s four-decade high of 7 percent. The figure is lower than the more widely-known consumer price index, released earlier this month, which reported an 8.3 percent price gain in August from a year earlier.

The two indexes differ for several reasons. For example, the consumer price index puts much greater weight on rents and housing costs, which have been rising steadily, than the measure released Friday, known as the price index for personal consumption expenditures.

Excluding the volatile food and energy categories, core prices rose 0.6 percent, much faster than July’s flat reading. They increased 4.9 percent from a year earlier, up from July’s figure of 4.6 percent.

Those figures were higher than expected, and may make the Federal Reserve more likely to lift its benchmark interest rate by another hefty 0.75 percentage point at its next meeting in November. If so, that would be the fourth such rise in a row.

The inflation figures in Friday’s report echoed those released earlier this month, with core prices rising more quickly than headline inflation. Falling petrol prices have reduced overall inflation, while stubbornly high costs for housing, cars, and services such as healthcare and haircuts have pushed core prices higher.

Adjusted for inflation, consumer spending ticked up 0.1 percent last month, after falling slightly in July.

While they are spending more, Americans are saving less in order to keep up with higher prices [File: Andrew Kelly/Reuters]

Friday’s report also showed that personal income rose 0.3 percent in August for the second month in a row. Adjusted for price increases, disposable income — what is leftover after taxes — ticked up 0.1 percent, after a hefty 0.5 percent gain in July.

But over a longer timeframe, incomes are trailing inflation. In the April-June quarter, inflation-adjusted disposable income fell 1.5 percent at an annual rate.

Fed action

The Federal Reserve is seeking to wrestle inflation under control with its most rapid series of interest rate rises in four decades. It has pushed its benchmark short-term rate to a range of 3 percent to 3.25 percent, the highest since early 2008, up from nearly zero in March.

Fed Chair Jerome Powell and other officials have repeatedly underscored the Fed’s determination to bring prices down, even if their rate increases resulted in layoffs and a higher unemployment rate.

The Fed intended its interest rate increases to slow borrowing and spending, which should in turn reduce inflation pressures in the economy.

Inflation has spiked globally, contributing to economic and financial turmoil in the United Kingdom, Europe, and a slew of developing countries, from Turkey to Argentina.

Also Friday, the 19 countries that use the euro currency reported that inflation spiked 10 percent from a year earlier, as prices for natural gas and electricity soared. European countries are struggling with an energy crunch in the aftermath of Russia’s invasion of Ukraine, as Russia has reduced its supplies of natural gas to the European Union.

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Burkina Faso’s military leader Damiba deposed, army captain says | Politics News

BREAKING,

Burkina Faso’s military government dissolved and constitution suspended, army Captain Ibrahim Traore says.

Burkina Faso army Captain Ibrahim Traore has deposed military leader Paul-Henri Damiba and dissolved the government and suspended the constitution and transitional charter, he said in a statement read on national television.

Traore said on Friday evening that a group of officers had decided to remove Damiba due to his inability to deal with a worsening armed uprising in the country. He announced that borders were closed indefinitely and that all political and civil society activities were suspended.

It is the second takeover in eight months for the West African state. Damiba took power in a coup in January that overthrew former President Roch Kabore, also due in part to frustration over the worsening insecurity.

The Burkina Faso government had said earlier on Friday that an “internal crisis” within the army was behind troop deployments in key areas of the capital, adding that negotiations were underway after shots rang out before dawn.

Government spokesman Lionel Bilgo said talks were ongoing “to try to reach a settlement without trouble”.

The state television was cut for several hours, broadcasting just a blank screen with the message “no video signal”.

In Brussels, the EU voiced “concern” at the events unfolding in the Burkina capital.

“A military movement was observed from 04:30 this morning. The situation still remains particularly confused,” spokeswoman Nabila Massrali said.

Damiba had pledged to restore civilian rule within two years and to defeat armed factions stoking unrest in the country.

Attacks have increased since mid-March, despite the junta’s vow to make security its top priority.

More to follow.

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