## AGE Of ZERO Interest ## INFLATION ## POVERTY ##

Singapore’s

energy ‘trilemma’

Regulations and tiered pricing won’t be enough to help

Singapore control its energy usage, says Trade Minister Lim

WHY  did  Singapore  sell  SPC  to  ChinaPetrol    ? ? ? ?

$388 billion in Chinese loans at risk

BEIJING

The results of the investigation were published yesterday on the front page of the official

The probe is a first step in what the government has promised will be a thorough effort to clean up the mess left by a surge of stimulus spending to counter the global financial crisis last year.

Local governments, which are officially barred from borrowing, launched thousands of hybrid government company bodies as financing vehicles to get around the restrictions and fund their expenditures, much of which went to infrastructure.

According to the investigation, 24 per cent of the debt incurred by the local financing vehicles is fully backed by revenues from the projects that they have funded.

A second batch of loans, about 50 per cent of the total, will not be recoverable directly from the projects that they have funded. However, these will be covered by secondary sources, such as government revenues.

The third batch is the 26 per cent in serious trouble.

“With the third kind of loans, projects did not conform to regulations; fiscal guarantees did not conform to regulations and there will be serious risks in paying them back. For example, the loans have been embezzled or used as investment capital,” the

Large state-owned banks provided about 40 per cent of the loans to the financing vehicles, while smaller banks accounted for 26 per cent and government-controlled policy banks the remaining 30 per cent. — About a quarter of all loans to Chinese local government financing vehicles are at a serious risk of default, according to regulators, who estimate that 2 trillion yuan ($388.6 billion) of debt could turn sour.China Securities Journal.China Securities Journal reported.REUTERS

BOJ drops interest to zero — In a surprise move, Japan’s central bank yesterday lowered its benchmark overnight rate target to a range of 0 per cent to 0.1 per cent, a small absolute change from its previous target of 0.1 per cent but a large symbolic slide into an age of zero interest rates.

As strong yen hits outlook, bank sets up $79b fund to fight deflation

TOKYO

The Bank of Japan (BOJ) also said it would establish a ¥5 trillion ($79 billion) fund to buy Japanese government bonds, commercial paper and other asset-backed securities, stealing a march on the United States Federal Reserve in providing a fresh dose of economic stimulus. The BOJ also retained its soft loan facility worth ¥30 trillion for banks.

The yen weakened to almost 84 against the US dollar in a knee-jerk reaction to the BOJ news, but later rebounded to 83.40 on short-covering, slightly stronger than before the announcement.

Stock market sentiment was more positive, with the benchmark Nikkei 225 index jumping 1.5 per cent to close at 9,518.76 after having spent much of the day in the red.

For months, the central bank had eschewed government calls for more decisive action. But as concerns heightened about weakening growth in the Japanese economy — the world’s third-largest, after the US and China — the BOJ carried out what its governor Masaaki Shirakawa described as “comprehensive monetary easing”.