IMF: the financial arsonist

The International Monetary Fund was founded to promote international monetary cooperation, facilitate global trade and contribute to financial stability. Over time, however, its mandate was expanded to provide “support” to economies experiencing financial difficulties, and it has evolved into a tool at the service of neoliberal interests.

On 15-20 April, the annual spring meetings of the International Monetary Fund (IMF) and the World Bank are being held in Washington. The official purpose of these meetings is to bring together efforts to end extreme poverty and promote shared prosperity.

This international body was established in 1944 to promote monetary cooperation, facilitating international trade and contributing to financial stability. Since its founding, it has sought to eliminate restrictions that hinder the expansion of world trade and exchange rate stability and avoid competitive currency devaluations between countries.

With the end of fixed exchange rate systems after the gold standard was abolished during the 1970s, its role changed. The advent of neoliberalism in the US and Western European economic policies meant a new role for the IMF, which began to finance nations with trouble paying their debts and balancing their payments.

A lifeline that brings civil unrest and social misery

IMF financial assistance is not free, as is well known, loans are accompanied by strong austerity which disproportionately affects the poorest sectors of the population and often ends up benefiting the elites.

The IMF’s usual mechanism for this is the imposition of conditionalities, such as loan forgiveness for countries needing balance of payments support, or, as in the case of Pakistan, weapons transfers into Ukraine. In other words, the IMF is often used as yet another foreign policy tool of Western corporatocracies.

The conditions imposed on debtor countries open their economies to the introduction of foreign capital, corporations, and investors. This is done by privatising public services and selling off the crown jewels of the countries receiving this “aid”, especially their natural resources and land.

As a general rule, the IMF demands that governments reduce public spending, raise taxes and implement reforms to reduce their debt-to-GDP ratio. Cutting social subsidies on fuel and food or reducing public investment in hospitals, schools, and roads becomes the “new normal”.

These draconian austerity measures provoke demonstrations and revolts among the affected populations, known as “IMF riots”. A term coined to describe the waves of protests that took place in developing countries during the 1980s and 1990s, and which perfectly defines the consequences of the actions of a financial firefighter who starts fires.

The economic crises in Mexico and Greece and subsequent IMF bailouts highlighted the negative role the IMF has played in recent years, nonetheless, the widely documented record of its interventions over the last 50 years has been more than dismal. Although humanitarian organisations such as Oxfam and CAFOD never stop denouncing that the IMF’s “austerity campaigns” severely harm poor countries and that it has played a “devastating” role in the global debt crisis, the international lending agency shows little sign of changing its course.

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Freight transport continues to boom, driven by a globalised economic model. Supply chains have become more complex and greenhouse gas emissions have soared in recent years. Only a change in our consumption habits can reverse the trend.

Globalisation and the rise of trade has meant that billions of tonnes of freight are moved around the world every year by trucks, ships, trains and planes. The International Energy Agency (IEA) estimated in 2018 that this movement of goods generates 8% of global greenhouse gas emissions, and up to 11% if we include those produced in warehouses. If no action is taken, freight transport will become the most polluting sector by 2050.

Land transport, mainly by lorries and vans, accounts for 62% of these emissions. Although the fuel used in maritime transport is much more polluting, the fact that the carrying capacity per vehicle is much lower in land transport makes it much more inefficient from an environmental point of view. For the same amount of cargo and distance, road transport generates more than 100 times more CO₂ than maritime transport.

Moreover, road freight transport is a fast-growing sector, partly due to the rise of e-commerce and home delivery. And it is the most difficult transport segment to decarbonise, as the use of clean energy is much less developed than in passenger transport.

The law of the sea

Maritime transport is the backbone of world trade. In 2018, 11 billion tonnes of goods were transported by sea and related CO₂ emissions amounted to more than 700 million tonnes.

The importance of this sector is such that it was left out of the 2016 Paris Agreement and is projected to account for up to 10 % of global greenhouse gas emissions by 2050 if no action is taken. Demand for raw materials and container transport is growing all the time. 

Large ships run on highly polluting fossil fuels, especially heavy fuel oil, which contains high amounts of sulphur, ash, heavy metals and other toxic residues.

A problem called sulphur

Until 2020, the maximum limit for sulphur in marine fuels was 3.5%, while the EU limit for road fuels is 0.00001%. ‘The Guardian’ published a revealing statistic a few years ago: 15 of the world’s largest ships polluted as much as 760 million cars.

After years of consultation, the International Maritime Organisation (IMO) reduced the maximum allowed level of sulphur in ship fuel from 3.5 % to around 0.5 % in 2020. However, the expectation that maritime freight traffic will continue to increase to double 2005 levels by 2050 significantly reduces the scope of this measure.

More pollution

IMO reports published in recent years have revealed that, instead of decreasing, emissions from ships have increased by 10% since 2008 and will continue to do so. If all shipping were a country, it would be the sixth most polluting in the world, ahead of Germany. 

The Marine Environment Protection Committee of this organisation proposed in 2020 a partial reduction of CO₂ emissions for this decade and to extend the reduction to 50% in 2050. However, the organisation that regulates international maritime traffic ignored the recommendations and only agreed on short-term, non-binding measures. 

As a consequence of this, CO₂ emissions from cargo ships will continue to grow in the coming years. If the shipping industry does not implement green strategies, its greenhouse gas production will increase by 15% by 2030. And if it follows the IMO recommendations, this percentage will hardly change. 

In this context, the only solution to curb the impact of freight transport on the environment involves changes in our personal consumption habits: above all, reducing the volume and weight of our purchases, and prioritising local products.

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The Booksellers’ Guild predicts a record-breaking day for this Diada because there are more book stands than ever before. But among this sea of new books, which ones talk about the economy or address the current economic situation?

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The geopolitical tug-of-war between East and West in recent years has revealed a paradigm shift that is becoming increasingly evident. We have returned to a multipolar world where US hegemony is losing strength year by year. We analyse the causes and consequences of this rebalancing and sharing of global power.

The world is more interconnected than ever, but power is more distributed. The distribution of power in global geopolitics has historically varied between states. From the bipolar system established during the Cold War period, in which two great powers shared power, a unipolar world emerged after the collapse of the USSR and the communist bloc. This change in the world order established a substantive US hegemony based on two pillars: military and economic power.

Yet the scope and pre-eminence of American geopolitical influence was unique and went far beyond the definition of a traditional superpower. D. Hubert Vedrine, the French foreign minister, coined a new term, hyper-power, to describe a domain of power that not only dictated the global economic, technological or military realm, but also included the cultural imperialism sarcastically detailed by members of the German music group Rammstein in the well-known song Amerika.

That said, the international community was quick to plant the seeds to challenge this new status quo. Emerging economies, such as the BRICS bloc, began to position themselves in an organised way on the international stage, giving meaning to the concept of a multipolar world that defined the foundations of a new political and economic order.

The rise of Asia and the decline of the West

In 1988, the Chinese leader Deng Xiaoping told the then Indian prime minister Rajiv Gandhi

that the arrival of the ‘Asian century’ was far from a foregone conclusion until China, India, and neighbouring countries developed. Three decades later, very few doubt that we are living in a new golden age of Asia. Asia is the world’s fastest-growing region and the largest contributor to global GDP, with China as the world’s second-largest economy.

Economic cycles and financial markets are less and less focused on the United States. The use and abuse of economic sanctions against any corporation or country, even allied countries, that does not submit to the interests of the American giant only strengthen efforts by China, Russia, and other countries not aligned to the Western geopolitical bloc to create alternative economic systems.

Beijing, with its focus on gaining technological independence and linking other countries to the Belt and Road Initiative, invests its capital, helping to lift the regional economies of parts of the world forgotten by the West, or from which former colonial powers demand much more, often with the use of force, for little in return. A whole set of multiple alliances that further divide and distribute centres of power and influence.

While we are facing a necessary and inevitable rebalancing of the world order, ultimately, whether states can make good use of the resurgence of this new trend towards multipolarity will depend on their geostrategic location, demographics, energy resources, and, above all, their economic power, which will demarcate the limits of their autonomy relative to the established superpowers.

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The International Monetary Fund improves its growth forecasts for the Spanish economy this year and places it well above the eurozone average. Even so, it estimates that the unemployment rate will remain at 11.6%, three-tenths of a percentage point higher than it predicted in October.

The International Monetary Fund (IMF) announced on Tuesday that it is cutting its growth forecast for all the major eurozone economies for this year and next year, except for Spain, which it predicts will grow by more than double the eurozone average.

Specifically, it has adjusted its estimate for Spanish GDP growth upwards, aligning itself with the 1.9% forecast by the Bank of Spain for this year, while for 2025 it maintains its forecast of 2.1%, more optimistic than the 1.9% predicted by the Bank of Spain.

As for the rest of the eurozone, it lowers gross domestic product (GDP) growth to 0.8% in 2024, and to 1.5% in 2025, one and two-tenths of a percentage point less respectively than in the update published in January.

It also estimates that German GDP growth will be reduced by three-tenths of a percentage point in both years and will only grow by 0.2% and 1.3% respectively. France’s GDP is also expected to fall by three-tenths of a percentage point, to 0.7% this year and 1.4% in 2025. For Italy, the agency maintains its growth forecast at 0.7% for 2024 and revises downwards by four-tenths to 0.7% in 2025. For Italy, the organisation maintains its growth forecast at 0.7% for 2024 and revises downwards by four-tenths to 0.7% in 2025.

As for world GDP, it will advance somewhat more than expected, with a variation of 3.2% in 2024, one-tenth of a percentage point more than in the previous report, and 3.1% in 2025. This improvement is partly due to growth in the United States, which will grow to 2.7% this year, before slowing to 1.9% in 2025.

Stagnating public debt and unemployment

The IMF notes that “inflation could fall faster than expected if the rate of labour activity continues to rise, allowing central banks to advance their easing plans”.

In this context, he predicts that Spain will be the last major euro economy to overcome the inflationary episode. Specifically, it expects inflation in Spain to fall to 2.7% in 2024, down from 3.9% in its previous estimate.

Despite the optimism regarding Spanish GDP growth, the agency does not expect a substantial reduction in unemployment and debt levels until the end of the current decade and points out that the deficit will remain above 3% until 2029.

On the other hand, the IMF expects unemployment in Spain to fall to 11.6% this year and 11.3% next year, compared to 6.5% and 6.4% respectively estimated for the euro area, remaining at around 11% for the following years.

Likewise, public debt, which this year will stand at over 106% of GDP, will only fall slightly in 2025, to below 105%, and will remain so until 2028 and 2029, when it will fall to 104.6% and 104.2%, respectively.

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What is the SWIFT code and why is it so important in the financial world? What are the implications of expelling a country’s financial institutions from this banking messaging network? Iu Alemany, 11Onze’s Back Office and Customer Service Manager, reveals all the keys.

SWIFT stands for Society for World Interbank Financial Telecommunication, “a cooperative society based in Belgium that was founded in 1973”, as the 11Onze Back Office and Customer Service Director explains. Alemany points out that it is not a payment system, but a messaging system, which speeds up international transfers and “allows the parties involved to be identified in a standardised, secure and error-free manner”.

Some 12,000 institutions in more than 200 countries, both financial and non-financial, are connected through the SWIFT system, which facilitates “some 32 million messages on average” to be exchanged every day.

The SWIFT code normally consists of eleven characters, although sometimes it can be as few as eight. The first four letters identify the bank or institution. The next two letters indicate the country. The next two correspond to the location of the institution, for example, “BB would mean Barcelona”, as Alemany explains. And the last three digits identify the bank office or branch. In this case, “if three ‘Xs’ appear, it means that the branch carries out the settlement centrally”, explains the 11Onze’s Back Office and Customer Service Manager.

A tool for political pressure

Seven Russian banks were excluded from the SWIFT system in March to put pressure on Russia with its conflict with Ukraine. As Alemany explains, cutting off communication between a country’s banks and the rest of the global financial system makes it impossible for that country to carry out “most of its financial transactions around the world, blocking exports and imports”. Ultimately, the aim is to hinder “its ability to operate globally”.

Iran was excluded from the SWIFT system in 2012 as part of sanctions over its nuclear programme. As a result, it lost almost half of its oil export revenues and 30 per cent of its exports. And Russia had already been threatened with this measure in 2014, when it annexed Crimea.

Iu Alemany warns that this measure could be detrimental in both ways, not only for the sanctioned country: “If we are thinking of applying this measure to a strong economy, highly interconnected to the rest of the world and which has a series of basic products for the rest of the world, we must be careful”.

As we explained in the article “SWIFT: use and abuse of an alphanumeric code”, the exclusion of some Russian banks from the SWIFT system will be an incentive for China, Russia and even the European Union to look for alternative systems that can shield their economies from this political pressure measure.

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To find a job in the digital age, one needs more than just technical skills. Interpersonal qualities are critical to success in an increasingly complex and diverse work environment. Professionals who can master these competencies will be better prepared to thrive and face the challenges and opportunities presented by the labour market of the future.

The new technological revolution we are experiencing has brought about an accelerated digitisation and automation of many tasks, driven by artificial intelligence, which is radically transforming the labour market. This radical evolution of the nature of work requires new skills and personal competencies that will be critical for future jobs.

It is a paradigm shift that is enabling a reduction in workload without reducing productivity and could also make it feasible to reduce working hours to facilitate work-life balance, reducing stress and improving workers’ health and well-being. Even so, it may have a negative impact on people by replacing some jobs with automation or reducing available working hours.

In this context, while some jobs will become obsolete, others will emerge to replace those that will disappear. We expect this to happen in terms of both quantity and quality of employment, but at the very least it will require effort and investment in education and training.

Problem-solving, creativity and adaptability

Although there will continue to be many skilled jobs that will see little change, the labour market will increasingly require more dynamic and creative professionals who have a strong ability to adapt to change.

In fact, according to a study by the Skills and Occupations Barometer of Catalonia, promoted by the Universitat Oberta de Catalunya (UOC) and PIMEC, this skill is most highly valued by companies when hiring future professionals. Specifically, it was found that 51% of job offers published in Catalonia in 2023 required this skill, which is also in demand in most sectors (96%) and occupations (68%).

Likewise, the most valued qualities are the ability to assume responsibility, manage time, and accept criticism. These data are especially relevant in ICT occupations, which also concentrate the demand for people with the ability to “think creatively” and “solve problems” which, on the other hand, is significantly requested in 70% of the sectors and 40% of the occupations,

On the other hand, the barometer found that the importance of “teamwork” is particularly concentrated in professional, scientific and technical activities, where 24% of vacancies require this skill. In any case, and as Antoni Cañete, president of Pimec, emphasised, we are talking about “soft skills”, which can be applied to all professions and refer to “very human, transferable and transversal” skills.

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Most of the time we learn about economics on our own. Not enough financial concepts are taught at school. That is why, if you want your son or daughter to have knowledge in this field, we recommend five books to help them understand the value of money and saving.

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This April 2024, a bitcoin halving will halve the reward given to miners for each validated block. In previous halvings, bitcoin experienced triple-digit price hikes. Create a Bitvavo account through 11Onze Recommends, and we’ll give you €20 to start trading cryptocurrencies!

Bitcoin halving is a scheduled event in which the rewards for mining and verifying new blocks are reduced to 50%, or in other words, miners only earn half the amount of BTC per block mined.

One halving occurs every 210,000 blocks, or approximately every four years. Currently, about 19.5 million bitcoins are in circulation, so there are still 1.5 million bitcoins to be mined before the self-imposed issuance limit of 21 million BTC is reached.

This year’s halving will take place between 19 and 20 April, when the reward will drop from 6.25 BTC to 3.125 BTC per block. At the same time, it will reduce the inflation rate of the cryptocurrency and is expected to have a positive effect on the price of bitcoin.

The halving contagion effect

This enthusiasm for BTC halving may lead to more investment in altcoins because investors are more optimistic about the possible price growth of other cryptocurrencies.

The prices of other assets have already been dragged up by the recent Bitcoin price rise. The Solana and Avalanche blockchains have experienced a significant increase in value. As is the case of meme coins, which have reached the top 100 cryptocurrencies by market capitalisation.

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Are you preparing your tax return? Have you taken into account all the deductions you can take advantage of? From 11Onze we detail eleven deductions that allow some type of saving when it comes to sorting your accounts with the Tax Agency.

In the income tax return we can take advantage of various tax deductions depending on the type of taxpayer we are, whether we are an individual or a legal entity. It should be borne in mind that, as well as state deductions, there are also regional deductions, depending on the autonomous community where you live and work. In the case of Catalonia, the Tax Agency provides the relevant information on its website.

It is important to bear in mind that deductions are limited by age, income, and other circumstances. Therefore, we cannot forget to read the small print. Having said that, here are the main state and regional deductions that are in force:

1. For large families or disabled dependents.

As detailed by the Tax Agency, among the state deductions for families, there is the specific one for large families, which is 1,200 euros for three children, 1,800 euros for four children, and 2,400 euros for five children. Even so, in some cases, a deduction of 1,200 euros can be applied for each of the descendants or ascendants with a disability or a spouse who is not legally separated and has a disability. These last deductions are only applicable if the annual income does not exceed 8,000 euros.

2. For maternity, birth, or adoption

Working mothers can apply a deduction of 1,200 euros per year for each child under the age of three, provided that they live with them. Childcare expenses can increase this amount by up to 1,000 euros. For residents in Catalonia, a deduction for birth or adoption of 300 euros is recognised in the case of a joint declaration by the parents, or 150 euros for each of the parents if this is done individually.

3. For donations to foundations and associations declared to be of public utility

Donations to NGOs, foundations, and public research bodies dependent on the General State Administration have deductions ranging from 10% to 80% of the amounts paid. At the regional level, deductions are also available for donations to organisations that promote the use of the Catalan or Occitan language, as well as for entities that promote Y+D+Y and environmental conservation.

4. For membership fees and contributions to political parties

A deduction of 20% is applied for membership fees and contributions to political parties, federations, coalitions, or groups of voters, with a maximum limit of 600 euros per year. It should be borne in mind that contributions made once you have ceased to be a member do not form part of the base on which the aforementioned deduction has to be calculated.

5. For investment in new or recently created companies

It is possible to deduct 30% of the amounts paid for the subscription of shares in new or recently created companies. The maximum deduction base will be 60,000 euros per year and will be formed by the acquisition value of the shares or holdings subscribed.

6. For building work to improve the energy efficiency of housing.

There are three types of possible deductions:

• Deduction of 20%, with a maximum of 5,000 euros, for reforms to improve the energy efficiency of a property that reduces energy consumption by at least 7%.
• Deduction of 40%, with a maximum of 7,500 euros, for improvement works that reduce the consumption of non-renewable primary energy by 30%.
• Deduction of up to 60%, with a maximum of 15,000 euros, for home improvements that reduce the primary energy consumption of a residential building by at least 30%.

7. For renting the main residence

These are deductions under a transitional regime and are to be abolished, which only apply if you are the holder of a rental contract dated prior to 1 January 2015. We can deduct 10.05% of the amounts paid in the tax period, provided that the taxable base is less than 24,107.20 euros.

8. For investment in the main residence

As in the previous case, this is a deduction that was abolished in 2013, but which is maintained on a transitional basis for taxpayers who acquired or paid amounts for the construction of their main residence before 1 January 2013. We have to bear in mind that the maximum deduction base for investments in the acquisition, rehabilitation, or extension of the main residence is 9,040 euros per year.

9. For investment by a ‘business angel’ for the acquisition of shares or stock holdings

• Deduction of 30%, up to a maximum of 6,000 euros, on amounts invested during the year in the acquisition of shares or holdings in companies as a result of agreements for the incorporation of companies or capital increases in commercial companies.
• Deduction of 50%, up to a limit of 12,000 euros, in companies created or owned by universities or research centres.

10. For taxpayers who were widowed in 2020, 2021 or 2022

A general reduction of 150 euros can be obtained, and of 300 euros if the person who becomes a widow or widower has one or more descendants who qualify for the application of the minimum for descendants.

11. For income obtained in Ceuta and Melilla

Taxpayers can deduct 60% of the state and regional tax liability corresponding to income obtained in Ceuta and Melilla. This deduction is also applicable for periods of residence in these cities of no less than three years for income obtained outside Ceuta and Melilla if at least one-third of the net assets are located in the aforementioned cities.

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