Portfolio flows to emerging markets are estimated to have moderated to $16 billion in March, somewhat below the monthly average of $22 billion in recent years. Equity inflows rose to $10 billion, while debt inflows declined to $6 billion. On a regional basis, EM Asia was the largest recipient of inflows, followed by Latin America. Flows to EM Europe turned positive after 3 months of outflows.
The 2015 budget stepped away from the previous countercyclical fiscal approach and introduced measures to address the structural deficit and stabilize the government debt-to-GDP ratio. Personal income tax rates were raised for the first time in the post-Apartheid era, the expenditure ceiling was lowered, and headcount was frozen for the next two years. Successful consolidation will depend on the government’s ability to hold the line in upcoming wage negotiations with the public sector unions. Although the tighter fiscal stance should take some pressure off the Reserve Bank, we still expect monetary policy to be tightened later this year.
The IIF, GFMA, the International Swaps and Derivatives Association (ISDA), and The Commercial Real Estate Finance Council (CREFC) provide comment to the Basel Committee on Banking Supervision (BCBS) on their December 2014 Consultative Document, “Capital Floors: the design of a framework based on standardized approaches”
The Associations support the work of the Committee and specifically of the Task Force for Simplicity and Comparability (TFSC) aimed at conducting a comprehensive review of the capital framework and its overall calibration and taking stock of the multiple changes thereto in the course of the past 5 years. The Associations are equally supportive of the Committee’s goal to remove undue complexity and improve the comparability of banks’ capital requirements. The Joint Associations welcome the opportunity to contribute to the discussion on capital floors.