Calling in the firefighters

The line of hopefuls outside the Washington headquarters of the world’s financial firefighter is looking busy.Countries from multiple region [View in browser]( [Bloomberg]( Follow Us [Get the newsletter]( The line of hopefuls outside the Washington headquarters of the world’s financial firefighter is looking busy. Countries from multiple regions are again tapping the International Monetary Fund for loans as their economies teeter. Each case has its differences, but generally it’s a combination of high inflation, dwindling foreign exchange reserves, rising borrowing costs and stuttering growth. Often with a dose of political turmoil thrown on top. Key reading: - [Zambia Gets IMF Bailout, Marking Progress for G-20 Debt Plan]( - [Sri Lanka Reaches Initial Deal With IMF for $2.9 Billion Loan]( - [Pakistan Secures $1.1 Billion IMF Loan to Avert Default]( - [IMF Warns Faster Debt Relief Needed as More Nations Seek Help]( - [The Spiraling Debt Crunch Confronting Poor Nations]( The IMF, part of the framework set up in the dying days of World War II to create greater global stability, has at times been controversial, given conditions attached to its programs including big spending cuts. But alongside China the IMF is arguably a lender of last resort and, as a barometer of risk and frailty, it’s blinking red. Pakistan, facing political turmoil and now deadly floods, just secured a loan of about $1.1 billion to avert an imminent default. Sri Lanka is close to finalizing nearly $3 billion, while Zambia won IMF board approval yesterday for $1.3 billion. Egypt is in talks for a new loan as investors fret about a broader default. Six months after Russia invaded, Ukraine is desperate for IMF money and yet may not be able to get any, given the rule that any borrower must have a clear path for repayment. Soaring energy and food prices are adding to the woes for countries buried by debt incurred during the pandemic. So quick fixes are needed. There are concerns about contagion for more robust economies. But the world also finds itself in cycles of crisis in part because politicians with an eye on the electoral calendar lurch from one band-aid to another without undertaking the painful but necessary structural reforms that so many economies need in the longer term. And countries may want to be careful what they wish for: Having taken years to navigate a $44 billion program, Argentina is now in the bind of needing to slash spending and cut subsidies even as utility bills soar. — [Rosalind Mathieson]( People affected by the floods block the Indus Highway today demanding food and shelter in Sindh province, Pakistan. Photographer: Asim Hafeez/Bloomberg Click [here]( to listen to yesterday’s Twitter Space about how the next leader of the UK (chosen in just a few days) might approach ties with Europe, Russia, China and the US, and share this newsletter with others. They can sign up [here](. Global Headlines War games | Russia begins major [military]( drills today involving China and India as President Vladimir Putin pushes back against attempts by the US and its allies to isolate him over his invasion of Ukraine. More than 50,000 troops and 5,000 pieces of equipment from at least 14 countries are involved in the weeklong Vostok-2022 exercises in Russia’s far east. - Moscow is considering a plan to buy as much as $70 billion in yuan and other “friendly” [currencies]( this year to slow the ruble’s surge. Xinjiang abuses | United Nations High Commissioner for Human Rights Michelle Bachelet accused China of committing “serious human rights abuses” — and potentially crimes against humanity — in Xinjiang. The assessment, delivered just hours before her tenure expired, found “[patterns of torture]( or other forms of cruel, inhuman or degrading treatment or punishment” as part of a campaign that Beijing has defended as an effort to fight extremism. - The Chinese metropolis of Chengdu will [lock down]( its 21 million residents to contain a Covid-19 outbreak, a seismic move in the country’s vast Western region that has largely been untouched by the virus. European officials say this year is on track to be drier than any time in the past [five centuries](, with almost two-thirds of the region under a drought warning or alert. That’s wreaking havoc on broad sectors of the economy, from agriculture to energy to transportation. Fundamental argument | President Joe Biden’s White House wants voters headed into November’s midterm elections to think more about the threat he believes Republicans pose to US democracy, and less about the complicated state of the economy. The [shift in tone]( will be amplified when Biden makes a speech today from Independence Hall in Philadelphia, the birthplace of America’s constitution. - Former President Donald Trump accused the Justice Department of “criminalizing” his [possession]( of personal documents by investigating the presence of hundreds of highly classified White House records at his Mar-a-Lago estate. - Half of Americans, but fewer than 10% of Republicans, believe Trump should be [prosecuted]( over his handling of the classified documents, a new poll shows. Best of Bloomberg Opinion - [Putin Is Now Russia’s Deluder-in-Chief: Leonid Bershidsky]( - [Biden’s Economy Has the Best Growth Since Clinton: Justin Fox]( - [Sadr’s Failures May Topple Iraq’s Democracy: Hussein Ibish]( Taiwan escalation | Taiwan signaled it’s [pushing back]( against Beijing’s efforts to encroach on its territory by downing a civilian drone after weeks of complaints about incursions by unmanned aerial vehicles from China. The action followed incidents in the past two days in which Taiwan fired warning shots and flares at civilian drones that approached its offshore islands. Explainers you can use - [Why Fed Aim Is ‘Growth Recession,’ a Not-Soft Landing]( - [Russia Points Conspiracy-Theory Factory at New Audience]( - [What to Know About Trump Push for a ‘Special Master’]( Falling behind | A fresh round of polls in Brazil ahead of October’s presidential election suggest that the incumbent, Jair Bolsonaro, continues to [struggle]( in the face of a challenge by Luiz Inacio Lula da Silva. The results of yesterday’s three surveys show Bolsonaro trailing Lula, the former president, by between eight and 12 percentage points, even after government cash subsidies for the poor kicked in. Neither did their first televised debate move the needle. Bloomberg TV and Radio air Balance of Power with [David Westin]( weekdays from 12 to 1pm ET, with a second hour on Bloomberg Radio from 1 to 2pm ET. You can watch and listen on Bloomberg channels and online [here]( or check out prior episodes and guest clips [here](. News to Note - US Democrat Mary Peltola [flipped]( Alaska’s lone House seat in this month’s special election, boosting Democrats’ majority in the narrowly divided chamber and setting up a rematch against former Republican Governor Sarah Palin for the seat in November. - Myanmar’s military government says it will provide more than $200 million through the [foreign currency]( market to ease a surge in commodity prices driven by high fuel costs. - Hong Kong Chief Executive John Lee has secured Beijing’s preliminary nod for a “[reverse quarantine](” program where travelers isolate in the city and enter China quarantine-free to boost travel into the mainland, after two years of strict Covid controls throttled ties. - Eritrean and Ethiopian forces began an [offensive]( in Ethiopia’s northern Tigray region, a senior member of the dissident Tigray People’s Liberation Front said, signalling an escalation in the conflict, a week after clashes ended a five-month humanitarian cease-fire. - Malaysia’s High Court [sentenced]( Rosmah Mansor, the wife of ex-Prime Minister Najib Razak, to 10 years in prison and levied a fine of 970 million ringgit ($216 million) after finding her guilty on three counts of graft, days after he was jailed for corruption in the 1MDB scandal. And finally ... Unprecedented heat waves are melting snow and ice across the planet including in the iconic Himalayan range, where the mountains shelter the [largest reserve]( of frozen freshwater outside the North and South poles. As [Archana Chaudhary]( and [Aaron Clark]( write, the immediate impact has been on Pakistan, where floods have submerged farmland and cities, affecting more than 30 million people and killing upward of 1,000 since June. Floodwaters along the Indus Highway in Sindh province, Pakistan, yesterday. Photographer: Asim Hafeez/Bloomberg Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. [Unsubscribe]( | [Bloomberg.com]( | [Contact Us]( [Ads Powered By Liveintent]( | [Ad Choices]( Bloomberg L.P. 731 Lexington, New York, NY, 10022