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South Africa raises VAT for the first time in 25 years

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South African President Cyril Ramaphosa and Finance Minister Malusi Gigaba during a pre-World Economic Forum briefing on January 18, 2018, in Johannesburg, South Africa.

Moeletsi Mabe | Sunday Times | Gallo Images | Getty Images

South African President Cyril Ramaphosa and Finance Minister Malusi Gigaba during a pre-World Economic Forum briefing on January 18, 2018, in Johannesburg, South Africa.

South Africa is to increase its value added tax (VAT) for the first time in 25 years in order to help bridge a gap in the government’s budget.

The news came as part of Finance Minister Malusi Gigaba’s first annual budget in the South African Parliament in Cape Town. The speech also marked the first budget under new South African President Cyril Ramaphosa.

South Africa’s VAT, which has remained constant since 1993, will increase to 15 percent from 14 percent as of April 1 this year. This is part of the Treasury’s attempt to shrink its budget deficit, which stands at 4.3 percent of gross domestic product (GDP) in the 2017/18 fiscal year.

Last week saw momentous political change in Africa’s most developed economy as Ramaphosa took over as president following former President Jacob Zuma’s resignation. Ramaphosa is viewed favourably by the business community, not least for his pledge to fight the corruption that plagued Zuma’s administration — of which Zuma denies wrongdoing.

The U.S. dollar fell against the South African rand on news of the VAT hike, and was trading over 0.7 percent lower immediately after the news.

“This is a tough, but hopeful budget,” Gigaba said, as reported by Reuters.

“We decided that increasing VAT was unavoidable if we are to maintain the integrity of our public finances,” he added.

South Africa’s Treasury intends for its consolidated deficit to fall to 3.5 percent of GDP by the fiscal year of 2020/21. It also revised its projection of GDP growth for 2017 to 1 percent, up from the previous 0.7 percent figure.



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House passes $1.9 trillion coronavirus stimulus bill

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Speaker of the House Rep. Nancy Pelosi (D-CA) speaks at a weekly news conference at the U.S. Capitol on February 18, 2021 in Washington, DC.

Tasos Katopodis | Getty Images

The House passed its $1.9 trillion coronavirus relief bill early Saturday, sending the massive proposal to the Senate as Democrats rush to approve more aid before unemployment programs expire.

It is the first major legislative initiative for President Joe Biden. The House approved it in a 219-212 mostly party line vote, as two Democrats joined all Republicans in opposing it.

Senators will start considering the pandemic assistance plan next week. Lawmakers will offer amendments, and the chamber will likely pass a different version of the bill, meaning the House would have to pass the Senate’s plan or the chambers would have to craft a final proposal in a conference committee.

Democrats, who hold narrow majorities in the House and Senate, opted to approve the legislation alone through budget reconciliation rather than hammer out a smaller aid package with Republicans. The process enables a bill to pass with a simple majority in the Senate.

The House plan includes:

  • Payments of $1,400 to most individuals, along with the same amount for each dependent. Checks start to phase out at $75,000 in income and go to zero for individuals making $100,000
  • A $400 per week unemployment supplement through Aug. 29, along with an extension of programs making millions more people eligible for jobless benefits
  • An expansion of the child tax credit to give families up to $3,600 per child over a year
  • $20 billion for Covid-19 vaccine distribution and $50 billion for testing and tracing efforts
  • $350 billion in state, local and tribal government relief
  • $25 billion for assistance in covering rent payments
  • $170 billion for K-12 schools and higher education institutions to cover reopening costs and aid to students
  • A $15 per hour federal minimum wage, which the Senate parliamentarian will not allow in the reconciliation bill on the other side of the Capitol

Democrats have called the bill necessary to speed up vaccinations — a critical step to resuming some level of pre-pandemic life — and sustain households at a time when roughly 19 million people are receiving jobless benefits.

“The time for decisive action is long overdue,” House Speaker Nancy Pelosi, D-Calif., said Friday night before the vote. “President Biden’s American Rescue Plan is that decisive action.”

Republicans questioned the need for a proposal so large, criticizing in particular the scope of the direct payments, state and local government support and school funding. Earlier Friday, House Minority Leader Kevin McCarthy, R-Calif., contended the legislation “isn’t a relief bill” and “fails to deliver for American families.”

The Biden administration and Democratic leaders in Congress said the country faces a bigger risk of doing too little than injecting too much money into the response. Some economists have also questioned the scale of the bill.

Senate Democrats face more challenges in passing the legislation than the House did. While the party can approve the bill on its own, it will need every Democrat to support it in the Senate, which is split 50-50.

Democrats also have to decide how to proceed on minimum-wage policy without losing any support. After the Senate parliamentarian ruled the bill could not include a $15 pay floor under reconciliation rules, Senate Majority Leader Chuck Schumer, D-N.Y., and Sens. Ron Wyden, D-Ore., and Bernie Sanders, I-Vt., have looked for a workaround to impose a tax penalty on large corporations that do not pay workers at least $15 an hour.

It is unclear if the proposal would comply with the Senate’s budget restrictions.

Vice President Kamala Harris also appears set against trying to overrule parliamentarian Elizabeth MacDonough, which some progressives have suggested she should do.

Pelosi said earlier Friday that she believes the House will “absolutely” pass the relief bill if it comes back from the Senate without a minimum-wage increase in it. She told reporters that Democrats will try to pass the pay increase through a separate plan if needed.

“We will not rest until we pass the $15 minimum wage,” she said.

This story is developing. Please check back for updates.

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Saudi fund vulnerable after MBS actions in Khashoggi killing, ex-Obama official says

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The Saudi crown prince’s actions in the killing of journalist Jamal Khashoggi might have left the kingdom’s sovereign wealth fund vulnerable to consequences, according to a former leading diplomat in the Obama administration.

The Biden administration on Friday released a previously classified intelligence report that assessed Mohammed bin Salman of Saudi Arabia approved the plan to assassinate Khashoggi in 2018.

The Saudi sovereign wealth fund, known as the Public Investment Fund, is chaired by MBS. It appears to have played a role in purchasing the aircraft that ferried Khashoggi’s killers to Turkey, where the murder occurred.

“If this is the case, it could become a target for American human rights sanctions,” according to Joel Rubin, a former deputy assistant secretary of State. That could, in turn, “create an economic earthquake,” he said. 

“If the United States determines that the Khashoggi killing was a targeted human rights violation, then the perpetrators and backers of that killing could be sanctioned under the Magnitsky Act,” Rubin said. 

The Global Magnitsky Human Rights Accountability Act authorizes the president to impose economic sanctions, freeze any U.S. assets, and deny entry into the U.S. to any foreign person who has engaged in human rights abuse or corruption, while prohibiting Americans from doing business with him or her. The Magnitsky Act has been used against Russian President Vladimir Putin’s cronies. Putin called it, “A purely political, unfriendly act.”

Shortly after the release of Friday’s intelligence report, Secretary of State Antony Blinken announced that the U.S. banned 76 people from Saudi Arabia. He called it the “Khashoggi Ban.” Blinken added that the U.S. will not tolerate individuals who threaten or assault activists, dissidents and journalists on behalf of foreign governments. There was, however, no direct action taken against MBS.

The Saudi government rejected the findings of the U.S. report.

Sovereign wealth funds are prevalent among oil-rich countries. They provide a haven where countries can stockpile significant wealth, and store that money in a self-controlled coffer.

Funds like the MBS-chaired Public Investment Fund help buffer countries from oil price shocks that impact its annual fiscal position while also making the country resistant to external financial pressures. The Public Investment Fund has more than $360 billion in assets, and ranks as the eighth-largest sovereign wealth fund in the world, based on total assets.

“The Saudi fund, which is nearly five decades old, is massive and guarantees long term financial stability for the Kingdom,” Rubin said. “But it can also be a target for abuse, mismanagement, and corruption.”

In 2018, NBC News learned that the CIA concluded that MBS ordered the hit squad that lured Khashoggi into the Saudi consulate in Istanbul, killed him, and cut his body into pieces.

MBS is the heir apparent to the Saudi crown. Rubin told CNBC that his domestic political critics will see the exposure of the Public Investment Fund to potential sanction as another sign of his recklessness and willingness to both risk Saudi assets and put the country in international crosshairs for his personal agenda. 

“The international private sector, which initially shunned Saudi Arabia after the killing of Khashoggi, will also view this as another public relations setback for engagements with Saudi,” Rubin said. “It could also open up the fund to increased scrutiny, lawsuits, and legislative action against the fund’s activities, both from abroad and within Saudi.”

Brookings Institute senior fellow Michael O’Hanlon told CNBC’s “The News with Shepard Smith” that President Joe Biden will not make Saudi Arabia “a pariah” because it would imply cutting off the economic and military relationship that the U.S. has with the Saudis.

This, despite, Biden in 2019 saying, “We were going to in fact make them pay the price, and make them in fact the pariah that they are.”

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FDA panel unanimously recommends emergency use

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A key Food and Drug Administration advisory panel on Friday unanimously backed Johnson & Johnson‘s single-shot coronavirus vaccine for emergency use, a critical step paving the way to distribute a third preventative treatment in the U.S. next week.

The nonbinding decision, which was adopted 22-0, by the FDA’s Vaccines and Related Biological Products Advisory Committee comes as the Biden administration works to ramp up the supply of vaccine doses and get Americans vaccinated as quickly as possible. U.S. health officials are growing concerned about new, emerging variants of the virus, particularly the B.1.351 strain from South Africa, which has been shown to reduce the effectiveness of the vaccines that are both on the market and under development. 

The head of the Centers for Disease Control and Prevention, Dr. Rochelle Walensky, warned earlier Friday that the declines in Covid-19 cases reported in the U.S. since early January may now be flattening as variants continue to spread.

“Over the last few weeks, cases and hospital admissions in the United States have been coming down since early January and deaths have been declining in the past week,” Walensky said during a White House news briefing. “But the latest data suggest that these declines may be stalling, potentially levelling off at still a very high number.”

Scaling-up vaccinations could help blunt the impact of the highly contagious variants, Adam MacNeil, an epidemiologist at the CDC, said during a presentation Friday before the vote. He added that the U.S. “nowhere close” to herd immunity, but vaccinations could help in “moving us closer to filling the herd immunity gap.”

The FDA advisory committee plays a key role in approving flu and other vaccines in the U.S., verifying the shots are safe for public use. While the FDA doesn’t have to follow the advisory committee’s recommendation, it often does. During similar requests by Pfizer and Moderna, the FDA authorized those companies’ vaccinations a day after the committee backed emergency use authorization. If J&J’s follows the pattern, a third vaccine could be authorized on Saturday.

After the vote, Dr. Archana Chatterjee, an infectious disease expert at Chicago Medical School and a voting member of the committee, said J&J’s vaccine will help “meet the needs of the moment” as states complain there is not enough supply of Pfizer’s and Moderna’s vaccines.

“We need to get this vaccine out now,” Dr. Jay Portnoy, a professor UMKC School of Medicine and a voting member of the committee, said after the vote. He added, “we’re in a hurry” as the variants pose a threat to the nation’s progress on the pandemic.

Initially, doses would be limited. The U.S. plans to ship 3 million to 4 million doses of J&J’s vaccine to states, pharmacies and community health centers next week, pending FDA authorization, Jeff Zients, President Joe Biden’s Covid czar, told reporters on Wednesday. The company expects to deliver 20 million doses by the end of March, J&J’s vice president of U.S. medical affairs, Dr. Richard Nettles, told House lawmakers on Tuesday. J&J has a deal with the U.S. government to supply 100 million doses of its vaccine by the end of June.

Federal and state health officials have been eagerly awaiting the authorization of J&J’s vaccine. Unlike Pfizer’s and Moderna’s vaccines, which require two doses given three to four weeks apart, J&J’s requires only one dose, easing logistics for health-care providers. J&J’s vaccine can also be stored at refrigerator temperatures for months, unlike the two other vaccines that have to be stored at sub-zero temperatures.

J&J’s one-dose vaccine “makes it operationally easier in lots of contexts,” Dr. Nancy Messonnier, director of the CDC’s National Center for Immunization and Respiratory Diseases, told the Journal of the American Medical Association during a Q&A event on Friday. “I expect lots of considerations state health departments are having around these vaccines is more about the ease of use of the J&J vaccine and how it might be better suited for some populations.”

An EUA means the FDA will allow some people to receive the vaccine as the agency continues to evaluate data. It isn’t the same as full approval, which requires more data and can typically take several months longer. J&J, like Pfizer and Moderna, has submitted only two months of safety data, but the agency usually requires six months for full approval. The company is asking the FDA to approve the use of the vaccine in people age 18 and older.

J&J submitted its Covid vaccine data to the FDA on Feb. 4. The vaccine’s level of protection varied by region, J&J said, with the shot demonstrating 66% effectiveness overall, 72% in the United States, 66% in Latin America and 57% in South Africa, where the B.1.351 variant is rapidly spreading. However, FDA staff documents show the vaccine was 64% effective in South Africa after about a month. The company said the vaccine prevented 100% of hospitalizations and deaths.

The FDA has indicated it would authorize a Covid-19 vaccine that’s safe and at least 50% effective. The flu vaccine, by comparison, generally reduces people’s risk of getting influenza by 40% to 60% compared with people who aren’t inoculated, according to the CDC.

FDA staff endorsed J&J’s vaccine on Wednesday, saying in documents that the clinical trial results and safety data were “consistent with the recommendations set forth in FDA’s Guidance on Emergency Use Authorization for Vaccines to Prevent COVID-19.”

No specific safety concerns of the vaccine were identified when analyzed by age, race and comorbidities, according to the FDA report. Headaches, fatigue and muscle pain were some of the most common side effects among people who received the inoculation, the report said. There were also reports of nausea, fever and pain at the injection site. 

Macaya Douoguih, head of clinical development and medical affairs for J&J’s vaccines division Janssen, told the FDA panel on Friday that two people suffered severe allergic reactions shortly after getting the vaccine. One of the people was participating in an ongoing trial in South Africa and developed anaphylaxis, a severe and life-threatening allergic reaction.

The FDA report said there were some Bell’s palsy cases, a condition that causes half of your face to droop, but they were “balanced” with the number generally found in the overall population. The FDA had previously said the condition would be monitored among recipients of vaccines after it was flagged as a potential concern with Pfizer’s shots, noting that it’s not necessarily a side effect but is worth watching out for.

–CNBC’s Hannah Miao contributed to this report.

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