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Category: Pandemic

  • MIL-OSI Banking: Charting the course: prudential regulation and supervision for smooth sailing

    Source: Bank for International Settlements

    Introduction

    Good afternoon, and thank you for inviting me to speak at this conference today.

    It is a privilege to be speaking today as the Chair of the Basel Committee, following my appointment by the Group of Governors and Heads of Supervision (GHOS) in May of this year.1 This is a position that has been previously enjoyed by only 11 people during the Committee’s 50 years. As a Reserve Officer in the Royal Swedish Navy, I would liken this honour as akin to taking the helm of a well steered vessel by seasoned captains. 

    As you know, the work of the Basel Committee since the Great Financial Crisis (GFC) – under the leadership of Nout Wellink, Stefan Ingves and, more recently, Pablo Hernández de Cos – has fundamentally reshaped the regulatory landscape for internationally active banks. The Basel Framework is the cornerstone of the international community’s response to the GFC. Since 2011, banks’ Common Equity Tier 1 (CET1) risk-based capital ratio has increased by over 70% and now stands at around 13.8%.2 Global banking system leverage has almost halved during this period, with an average Tier 1 leverage ratio of just over 6%.3 And banks’ holdings of high-quality liquid assets have more than doubled to over €12.5 trillion, with a corresponding Liquidity Coverage Ratio of over 135%.4

    The Basel III reforms have brought tangible benefits. In sailing, no matter how skilled you are, you can’t control the weather. However, you can prepare your boat with safety protocols and solid equipment. The Committee helps ensure that the global banking system is prepared for the unexpected. There is now an extensive empirical literature that suggests that the Basel III reforms have had an unambiguously positive net macroeconomic effect.5 The reforms have clearly strengthened bank resilience at both the bank and system-wide level, which in turn will help reduce the likelihood and impact of future banking crises. At the same time, banks, particularly strongly capitalised ones, have continued to meet the demand for lending from households and businesses.6

    Just as important as the effects of Basel III is the process by which the reforms were finalised. The Committee consulted extensively when developing Basel III – we do not operate in a vacuum or opaquely. It published no fewer than 10 consultation papers, which collectively spanned a consultation period of almost three years. It engaged extensively with a wide range of external stakeholders. Each consultation was accompanied by a rigorous quantitative impact study, which was supplemented by a half-yearly public Basel III monitoring exercise. So it is reassuring and appropriate to find that a recent academic study concluded that the Committee’s consultation approach is “one of the most procedurally sophisticated” processes among policymaking bodies.7 Moreover, member jurisdictions have undertaken their own rigorous domestic rule-making processes to transpose these standards.

    But the work to fix the banking system fault lines exposed by the GFC is not done. We need to lock in the financial stability benefits of implementing the outstanding Basel III standards in full and consistently, and as soon as possible. I take comfort in the recent unanimous reaffirmation by the GHOS to achieve such an outcome.8 The Committee has been actively monitoring and assessing the full and consistent implementation of Basel III and will continue to do so.

    As this is my maiden speech as Committee Chair, I will outline some high-level principles that I will be relying upon to help guide how I view the work of the Committee. I will also offer a few personal reflections on some topical issues. As a keen sailor, I should apologise in advance for my continued use of maritime language!

    Principle 1: Sail forward but always glance back

    My starting point is that we cannot afford to ignore, or forget, the lessons of history. This time is not different. There have been no fewer than 150 systemic banking crises since 1970.9 Just last year, we saw the most significant system-wide banking stress since the GFC, including the distress of five banks with total assets exceeding one trillion US dollars. While each banking crisis may have had its unique characteristics, the common thread throughout history is that we simply cannot predict when or from where the next crisis will emerge. We therefore need to ensure robust and durable resilience for the global banking system to withstand a range of potential shocks.    

    Banking crises have a profound impact on our economies and social welfare. In my home country of Sweden, the 1990s banking crisis and the GFC resulted in output losses of over 30% and 25%, respectively.10 These are not just numbers, but reflect economic hardships endured by citizens, including job losses and foregone growth potential. We must always remember this stark reality when regulating and supervising banks.

    And yet, despite the painful effects of banking crises, history suggests that the lessons from such events are often forgotten as part of a “regulatory cycle”.11 Memories fade over time, and a view takes hold that this time really is different. As the cycle turns, policymakers, supervisors and risk managers at banks sometimes become complacent and give in to pressures to dilute regulatory safeguards. Such a journey never ends well: it is only a matter of time until stormy waters reveal banks’ stress points and fractures.

    This is not a course that I intend to chart. The reality is that a banking system built upon leverage and maturity transformation will inevitably face episodes of distress. Misconduct, governance failures and imprudent risk management practices further increase the likelihood and impact of crises.

    To be clear, the first and most important source of resilience comes from banks’ own risk management practices and governance arrangements. The boards and management of banks should be the first port of call in managing and overseeing risks; they cannot outsource these functions to supervisors. Yet history suggests that some banks’ boards and senior management occasionally fail in their most elementary responsibilities. So it is critical that bankers, policymakers and supervisors do not forget the lessons from the past and take a medium-term perspective. Consider, for example, the recent growth in the use of so-called synthetic risk transfers (SRTs) by banks across several regions.12 Such transactions are intended to reduce banks’ capital requirements by “transferring” the risks associated with some exposures to a third party – often a non-bank financial intermediary (NBFI) – which provides credit protection or insurance. The Basel Framework allows for such transactions to take place subject to meeting certain criteria, and they may in instances be an effective risk management technique. However, I personally believe that we should not lose sight of the bigger picture and lessons from the GFC. In particular, we should ask ourselves: are there system-wide risks that warrant closer attention? For example, what are the risks if NBFI investors of SRTs are in turn borrowing from other banks? Is there sufficient transparency about the interconnections and potential spillover of risks between banks and NBFIs in these – and other – markets? A natural starting point to help answer these questions is to remind ourselves of the lessons from the GFC. 

    Just like a sailor needs steady winds, strong sails and safety gear for times of stress to ensure a smooth voyage, a bank requires strong prudential regulation and supervision to ensure stability. And its board and senior management should display the leadership and competency of a veteran captain. In addition, it is critical that the Committee remains vigilant and pursues a forward-looking approach to assessing risks and vulnerabilities to help reduce the risk of the global banking system being blown off course into financial storms.

    The Committee’s work should also continue to be anchored by rigorous empirical analysis and not succumb to short-term or specific interests of some external stakeholders. And the GHOS agreed to mark a clear end to the Basel III policy agenda in 2020 when it noted that any further potential adjustments to Basel III “will be limited in nature and consistent with the Committee’s evaluation work”.13 This is why the Committee is pursuing analytical work based on empirical evidence to assess whether specific features of the Basel Framework performed as intended during the 2023 banking turmoil, such as liquidity risk and interest rate risk in the banking book.14 On this note, we recently provided a progress report to the G20 which outlines the progress we have made in the area of liquidity risk.15 This is a good start, but there is still more work to be done. Structural changes affecting the financial system, such as the ongoing digitalisation of finance and role of social media, require policymakers and supervisors to remain alert and be open-minded as to whether any additional regulatory and supervisory measures are needed.

    Principle 2: All hands on deck

    My second guiding principle is the need for global and transparent engagement with a wide range of stakeholders.

    Financial stability is a global public good that requires cross-border cooperation. An open global financial system requires global prudential standards. Failure on this count could result in regulatory fragmentation, regulatory arbitrage and a potential “race to the bottom” leading to a dilution of banks’ resilience.16

    So I will strive to build on the strong track record of Committee members to cooperate and collaborate in tackling cross-border financial stability challenges and shoring up the resilience of the global banking system. We have witnessed the benefits of global cooperation throughout the Committee’s history, including with the Concordat, Basel I, II and III, and the Basel Core Principles, and of course more recently during the Covid-19 period and last year’s banking turmoil. And in a world facing major geopolitical uncertainty, and where the merits of multilateralism are sometimes questioned, it is even more critical for the Committee to remind all stakeholders of the necessity of cross-border cooperation.

    The need for cooperation is not just among Committee members themselves. Given the increasingly cross-sectoral and cross-cutting nature of developments affecting the global financial system – such as the ongoing digitalisation of finance, the growing role of NBFIs, the increasing nodes of interconnections among banks, central counterparties and NBFIs, or climate-related financial risks – the Committee will need to increasingly liaise with a wide range of authorities. This includes ongoing cooperation with central banks and supervisory authorities outside the Basel Committee’s membership, but also financial sector authorities in charge of overseeing conduct, resolution, deposit insurance, payment systems, securities and other NBFIs. In fact, for certain topics there may also be a need to go beyond the financial sector sphere and liaise with authorities with responsibility for accounting, competition, data privacy and security, just to mention a few.

    To this end, it is critical that the Committee continues to seek the views of a wide range of stakeholders, including academics, civil society, legislators, market participants and the general public. Even if we may have different views on specific elements of the Committee’s work, these engagements unquestionably enhance the Committee’s outputs by bringing in different perspectives.

    Principle 3: Keep your heading steady

    My third principle is the importance for the Committee to act as a lighthouse, cutting through the fog and stormy conditions.

    Bank regulation and financial supervision are an anchor to help prevent banks from drifting into risky waters that could endanger the entire economy. A resilient and healthy banking system is one that can best support households and businesses through the robust provision of key financial services across the financial cycle.17

    Let me give you an example from my home country. Before the pandemic, the initial set of Basel III standards were fully implemented in Sweden. These reforms significantly increased Swedish banks’ resilience to shocks. In addition, the Swedish authorities activated the Basel III countercyclical buffer and set it at 2.5%, with the aim to further enhance Swedish banks’ resilience. Doing so allowed us to release this buffer in response to the Covid-19 crisis, which in turn helped Swedish banks to absorb shocks and to lend to creditworthy households and companies throughout the pandemic. The releasability of this buffer facilitated its drawdown by banks in a way that made it genuinely usable.

    It may be tempting for some to argue that regulations should be watered down and that supervision should be less intrusive, in order to promote lending to specific sectors or to “unlock” economic growth. But, as with other areas of economic policymaking, any perceived short-term gains are usually more than offset by longer-term pain. Shaving off a few basis points of capital will not unlock a wave of new lending, but it will weaken your resilience. More generally, being well capitalised is a competitive advantage for banks and their shareholders, as it ensures that they can continue to grow and invest in profitable projects across the financial cycle. The Committee’s work should therefore continue to be centred around its mandate.

    To be clear, this is entirely compatible with stable and healthy earnings that are fundamental to banking and financial stability. So it is reassuring that the sample of banks for which we regularly collect data – many of which are represented here today – have over time been able to both meet new regulatory requirements, make healthy profits and pay out significant dividends. For example, in 2011 banks faced a CET1 capital shortfall from Basel III of about €485 billion. Since then, their profits have exceeded €4 trillion and banks have paid out over €1.3 trillion of common share dividends, while at the same time building capital and liquidity buffers to meet the new requirements.18

    More generally, the Committee will continue to focus its work on those prudential areas that require a global and coordinated response. Its outputs will continue to take the form of global minimum standards to provide a common financial stability baseline across jurisdictions. Jurisdictions are, of course, free to go beyond this baseline if the size and structure of their banking system and the associated risks warrant additional measures. Such measures only reinforce global financial stability. Just as importantly, we will continue to promote strong supervision, including by sharing supervisory experiences and, when needed, developing additional guidance to assist supervisors worldwide.

    In that regard, I am sure all of us can agree that it is in our collective best interest to have global standards. We may have different opinions about Basel III, but I think we can all agree that having a globally consistent level playing field is preferable to a patchwork of disparate regulations. A global compromise – however imperfect it may appear to some – is preferable to a free-for-all framework. Internationally active banks then have a common minimum regulatory baseline which they can manage their business around. Supervisors are able to better assess the relative resilience of their banks across jurisdictions. The scope for regulatory arbitrage is reduced. Level playing fields are enhanced. Now compare this with a fragmented bank regulatory world, where banks would have to comply with completely different rules across borders with no common minimum baseline. Such a scenario could also trigger a race to the bottom across jurisdictions, resulting in a frail regulatory framework that would threaten global financial stability and banks’ own viability. We would all be worse off in such a situation. It is therefore in your own interest to avoid such a scenario and to promote a common and consistent implementation of Basel III.

    Finally, we should keep the fundamentals of bank regulation and supervision in mind. While it may be tempting to focus on the “newest” trends affecting the banking system, we should not lose sight of the more traditional risks, such as credit risk and liquidity risk. Regarding the former, despite repeated headwinds over the past few years, the feared wave of financial problems for households and corporate defaults has yet to appear. Yet I am personally concerned about some stakeholders’ seeming complacency in assuming that the worst is over and that the seas are calm. It is a universal truth that a calm sea does not make a clever sailor.

    With continued uncertainty about interest rate trajectories and the economic outlook, hidden currents and unseen reefs could still pose a challenge. Banks and supervisors must remain vigilant to such risks.

    Principle 4: Sailing to simplicity

    My last principle is to ensure that the Committee continues to adequately balance risk sensitivity with simplicity and comparability. Finance and banking are complex activities, so there is perhaps an understandable temptation to match that complexity in the regulatory framework.

    Yet one does not always fight fire with fire. Undue complexity in prudential regulation can undermine the ability for a bank’s board and senior management to fully understand the risk profile of their bank. It can also impede supervisors’ ability to effectively assess the resilience of banks and create opaque opportunities for arbitrage. And while complex rules may sound conceptually appealing, they may also prove to be challenging to operationalise in practice.

    Banking is as much about risk as it is about uncertainty.19 In such a world, simpler approaches can sometimes be more robust and outperform more complex ones.20 So I personally think that policymaking initiatives should ensure that sufficient attention is placed at striking the right balance between risk sensitivity, simplicity and comparability.

    Conclusion

    In conclusion, the Committee will continue to be guided by its mandate of strengthening the regulation, supervision and practices of banks worldwide. In the near term, when it comes to Basel III, all GHOS members have unanimously reaffirmed their expectation of implementing all aspects of the framework in full, consistently and as soon as possible.21

    More generally, fulfilling our mandate requires us all to remember that:

    • Banks’ boards and senior management are the captains of their ships. You have both the primary and ultimate responsibility for overseeing and managing risks. Regulation and supervision can provide safeguards, but cannot and should not be a substitute for your role in managing your risks prudently.
    • Global bank prudential standards are a public good. We are collectively all better off in a world with global standards than in an autarkic one. Lobbying for deviations at a national level can perhaps provide short-term (private) gains but will ultimately threaten global financial stability. As internationally active banks, it is not in your interest to sail in such an environment.
    • We cannot forget the lessons from past banking crises to prepare effectively for the future. In a financial system undergoing profound structural transformations, such as the digitalisation of finance, the Committee should keep an open mind as to whether additional adjustments to the Basel Framework are warranted over the medium term. And we will focus on global financial stability issues that require a global response.

    As Chair, I am fully committed to leading the Committee in that direction.

    References

    Aikman, D, M Glaesic, G Gigerenzer, S Kapadia, K Kastikopoulos, A Kothiyal, E Murphy and T Neumann (2021): “Taking uncertainty seriously: simplicity versus complexity in financial regulation”, Industrial and Corporate Change, vol 30, no 2, April.

    Basel Committee on Banking Supervision (BCBS) (2020): “Governors and Heads of Supervision commit to ongoing coordinated approach to mitigate Covid-19 risks to the global banking system and endorse future direction of Basel Committee work”, press release, 30 November.

    — (2022a): Evaluation of the impact and efficacy of the Basel III reforms, December.

    — (2022b): Evaluation of the impact and efficacy of the Basel III reforms – Annex, December.

    — (2023): Report on the 2023 banking turmoil, October.

    — (2024a): “Erik Thedéen appointed as Chair of the Basel Committee on Banking Supervision”, press release, 13 May.

    — (2024b): “Governors and Heads of Supervision reiterate commitment to Basel III implementation and provide update on cryptoasset standard”, press release, 13 May.

    — (2024c): “BCBS dashboards”, September.

    — (2024d): The 2023 banking turmoil and liquidity risk: a progress report, October.

    Carstens, A (2019): “The role of regulation, implementation and research in promoting financial stability”, keynote address at the Bank of Spain and CEMFI Second Conference on Financial Stability, Madrid, 3 June.

    Hernández de Cos, P (2019): “The future path of the Basel Committee: some guiding principles”, keynote speech at the Institute for International Finance Annual Membership Meeting, Washington DC, 17 October.

    — (2022): “A resilient transition to net zero”, remarks at the International Economic Forum of the Americas, 28th edition of the Conference of Montreal, 11 July.

    — (2024): “Building on 50 years of global cooperation”, keynote speech at the 23rd International Conference of Banking Supervisors, Basel, 24 April.

    Knight, F (1921): Risk, uncertainty and profit, Houghton Mifflin.

    Laeven, L and F Valencia (2018): “Systemic banking crises revisited”, IMF Working Paper, no 18/206.

    S&P Global (2024): “Banks ramp up credit risk transfers to optimise regulatory capital”, 22 February.

    Viterbo, A (2019): “The European Union in the transnational financial regulatory arena: the case of the Basel Committee on Banking Supervision”, Journal of International Economic Law, vol 1, no 24, June.


    This speech and the views expressed are those of the individual and do not necessarily reflect the views and/or position of the BIS or CPMI.

    MIL OSI Global Banks –

    January 25, 2025
  • MIL-OSI: ChampionX Reports Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    • Revenue of $906.5 million
    • Net income attributable to ChampionX of $72.0 million
    • Adjusted net income of $85.9 million
    • Adjusted EBITDA of $197.5 million
    • Income before income taxes margin of 11.2%
    • Adjusted EBITDA margin of 21.8%
    • Cash from operating activities of $141.3 million and free cash flow of $108.1 million

    THE WOODLANDS, Texas, Oct. 23, 2024 (GLOBE NEWSWIRE) — ChampionX Corporation (NASDAQ: CHX) (“ChampionX” or the “Company”) today announced third quarter of 2024 results. Revenue was $906.5 million, net income attributable to ChampionX was $72.0 million, and adjusted EBITDA was $197.5 million. Income before income taxes margin was 11.2% and adjusted EBITDA margin was 21.8%. Cash from operating activities was $141.3 million and free cash flow was $108.1 million.

    CEO Commentary

    “The third quarter demonstrated the resiliency of our ChampionX portfolio as we delivered strong adjusted EBITDA and adjusted EBITDA margin, and generated robust free cash flow. These results were the direct result of our employees around the world remaining laser-focused on serving our customers well, and I am grateful to them for their dedication to our corporate purpose of improving lives,” ChampionX’s President and Chief Executive Officer Sivasankaran “Soma” Somasundaram said.

    “During the third quarter of 2024, we generated revenue of $907 million, which decreased 4% year-over-year, as growth in North America, Middle East & Africa, Europe, and Asia Pacific was offset by Latin America, which was impacted by lower sales in Mexico. Revenue from all areas other than Mexico increased 6% year-over-year. Our revenue increased 1% sequentially, with both North America and international revenues increasing slightly versus the second quarter. North America revenues were up 2% sequentially, driven primarily by higher sales volumes in our artificial lift business. International revenues were up 1% sequentially, driven, in part, by the contribution of RMSpumptools, which was acquired during the quarter. We generated net income attributable to ChampionX of $72 million, income before income taxes margin of 11.2%, and we delivered adjusted EBITDA of $198 million, representing a 21.8% adjusted EBITDA margin, our highest level as ChampionX, which speaks to the productivity and profitability focus of our team.

    “Cash flow from operating activities was $141 million during the third quarter, which represented 196% of net income attributable to ChampionX, and we generated strong free cash flow of $108 million, which represented 55% of our adjusted EBITDA for the period. We remain confident in achieving at least 50% adjusted EBITDA to free cash flow conversion for 2024. Our balance sheet and financial position remain strong, ending the third quarter with approximately $1.1 billion of liquidity, including $389 million of cash and $671 million of available capacity on our revolving credit facility.”

    Agreement to be Acquired by SLB

    On April 2, 2024, SLB (NYSE: SLB) and ChampionX jointly announced a definitive Agreement and Plan of Merger (the “Merger Agreement”) for SLB to purchase ChampionX in an all-stock transaction. The transaction was unanimously approved by the ChampionX board of directors and the transaction received the approval of the ChampionX stockholders at a special meeting held on June 18, 2024. The transaction is subject to regulatory approvals and other customary closing conditions. It is currently anticipated that the closing of the transaction will occur in the first quarter of 2025.

    ChampionX may continue to pay its regular quarterly cash dividends with customary record and payment dates, subject to certain limitations under the Merger Agreement. Given the pending acquisition of ChampionX by SLB, ChampionX has discontinued providing quarterly guidance and will not host a conference call or webcast to discuss its third quarter 2024 results.

    Production Chemical Technologies

    Production Chemical Technologies revenue in the third quarter of 2024 was $559.5 million, a decrease of $10.0 million, or 2%, sequentially, due primarily to lower international sales volumes.

    Segment operating profit was $87.3 million and adjusted segment EBITDA was $120.6 million. Segment operating profit margin was 15.6%, an increase of 60 basis points, sequentially, and adjusted segment EBITDA margin was 21.6%, an increase of 94 basis points, sequentially. The sequential increase in segment operating profit margin and adjusted segment EBITDA margin was driven by strong cost management, productivity improvements, and favorable product mix.

    Production & Automation Technologies

    Production & Automation Technologies revenue in the third quarter of 2024 was $275.7 million, an increase of $31.2 million, or 13%, sequentially, due primarily to higher artificial lift systems demand in North America, and the acquisition of RMSpumptools, which was completed during the quarter. Revenue from digital products was $57.9 million in the third quarter of 2024, an increase of 7% sequentially, driven by increased customer activity in North America.

    Segment operating profit was $34.1 million and adjusted segment EBITDA was $69.6 million. Segment operating profit margin was 12.4%, an increase of 330 basis points, sequentially, and adjusted segment EBITDA margin was 25.2%, an increase of 118 basis points, sequentially. The increase in segment operating profit margin and adjusted segment EBITDA margin was driven by higher sales volumes, productivity improvements, and favorable product mix.

    Drilling Technologies

    Drilling Technologies revenue in the third quarter of 2024 was $51.8 million, a decrease of $1.1 million, or 2%, sequentially, driven by lower sales volumes in the bearings product line associated with customers managing inventory levels.

    Segment operating profit was $11.5 million and adjusted segment EBITDA was $12.9 million. Segment operating profit margin was 22.2%, compared to 22.4% in the prior quarter, and adjusted segment EBITDA margin was 24.8%, a decrease of 2 basis points, sequentially, due primarily to lower volumes.

    Reservoir Chemical Technologies

    Reservoir Chemical Technologies revenue in the third quarter 2024 was $20.5 million, a decrease of $6.6 million, or 24%, sequentially, driven by lower sales volumes in the U.S. and internationally.

    Segment operating profit was $1.7 million and adjusted segment EBITDA was $3.3 million. Segment operating profit margin was 8.2%, a decrease of 793 basis points, sequentially, and adjusted segment EBITDA margin was 16.0%, a decrease of 592 basis points, sequentially. The decrease in segment operating profit margin and adjusted segment EBITDA margin was driven by lower volumes.

    Other Business Highlights

    • ChampionX won the Gulf Energy Information Excellence Award for best coating / corrosion advancement technology for its AnX coiled rod product line. The company was a finalist in four additional categories: SMARTEN™ XE ESP control system in the best controls, instrumentation, automation technology category; Pump Checker™ gas lift analysis module in the best digital transformation – upstream category; Chemical Technologies Decarbonization Program in the best HSE contribution category; and the ChampionX Diversity, Equality, and Inclusion programs in the DE&I in energy category.

    Other Business Highlights: Production Chemical Technologies and Reservoir Chemical Technologies

    • In the Asia Pacific region, ChampionX secured a significant new contract to provide both engineering services and the initial chemical supply for a new Floating Production Storage and Offloading (FPSO) unit, set to be deployed at a large gas condensate field in Australasia. Operations are scheduled to begin in the first half of 2025 and contribute significantly to regional Liquified Natural Gas (LNG) production capacity. This strategic win further strengthens our presence in the region and reinforces our commitment to delivering innovative, high-quality solutions to our upstream customers.
    • ChampionX was awarded a large first-fill contract to supply multiple production chemicals for corrosion inhibitors, scale inhibitors, and biocides for a major onshore oil and gas incremental project in Saudi Arabia.
    • ChampionX has secured a first-fill contract to supply production chemicals for a significant gas development program in Qatar.
    • ChampionX secured a multi-million-dollar order for a novel application of UltraFab in Carbon Capture, Utilization, and Storage (CCUS) for delivery in 2025.
    • ChampionX recently completed the pre-commission cleaning, chemical treatment, and readiness work for the 303-mile natural gas Mountain Valley Pipeline connecting Marcellus and Utica shale production to markets in the Mid- and South-Atlantic regions.
    • In the Canadian oil sands, ChampionX completed a steam additive first-fill program for a major technology development trial, leading to additional market interest.
    • ChampionX was awarded a three-year contract extension from a major producer in the San Juan Basin in California, recognizing our service, people, and commitment to helping the producer achieve their strategic goals as reasons for the extension.
    • As part of an initiative to expand our technology into adjacent markets, ChampionX Reservoir Chemical Technologies was awarded business with a premier supplier of local sand used for hydraulic fracturing in the Permian Basin. Our solution affords the supplier a significant savings on sand drying costs and is designed to increase operational throughput.

    Other Business Highlights: Production & Automation Technologies

    • In the third quarter, ChampionX completed the acquisition of RMSpumptools, a provider of advanced mechanical and electrical solutions for complex ESP systems. The acquisition expands ChampionX’s international footprint while providing greater opportunities for RMSpumptools in North America. Soon after the acquisition close, our Permian ESP team collaborated with RMSpumptools to deliver a sand control solution to a major oil company operating in the Permian basin.
    • ChampionX Artificial Lift expanded its Latin America footprint into Ecuador with a contract award for two 400HP multiplex surface pump systems for jet lift applications. This accomplishment is the result of a strengthening partnership with a Latin America independent operator that is expanding its operations from Colombia to Ecuador. Unlike typical systems, the surface pump and oil vessel required for jet lifted wells will be built on one skid with all the necessary piping, which reduces assembly time at the wellsite.
    • Building on the combined strengths of our XSPOC artificial lift software and the acquisition of Artificial Lift Performance Limited Pump Checker software, ChampionX introduced ALLY™ production optimization digital solutions, debuting a modern interface with user-friendly dashboards and intuitive workflows, paired with powerful performance—ingesting, processing, and displaying more data than ever before. It is a one-stop-shop for production teams to manage and optimize their producing assets, regardless of lift type or equipment provider. Building on the launch of this new digital solution, in the third quarter ChampionX secured seven new clients for our production optimization software solution.
    • ChampionX launched the PCS Ferguson new generation SMARTEN™ Unify control system, which is engineered to deliver sophisticated digital automation and optimization capabilities at a cost of ownership that fits within the narrow economic profile of plunger lifted wells. SMARTEN Unify provides enhanced visibility to what is happening “live” at any second in a plunger lift system, eliminating the need for operating based on calculated guesses.

    Other Business Highlights: Drilling Technologies

    • Drilling Technologies’ diamond bearings products continue to see positive test results in additional downhole drilling and completion tools applications.
    • Drilling Technologies’ diamond inserts business had significant new products launches with four major customers.

    About Non-GAAP Measures

    In addition to financial results determined in accordance with generally accepted accounting principles in the United States (“GAAP”), this news release presents non-GAAP financial measures. Management believes that adjusted EBITDA, adjusted EBITDA margin, adjusted net income attributable to ChampionX and adjusted diluted earnings per share attributable to ChampionX, provide useful information to investors regarding the Company’s financial condition and results of operations because they reflect the core operating results of our businesses and help facilitate comparisons of operating performance across periods. In addition, free cash flow, free cash flow to adjusted EBITDA ratio, and free cash flow to revenue ratio are used by management to measure our ability to generate positive cash flow for debt reduction and to support our strategic objectives. Although management believes the aforementioned non-GAAP financial measures are good tools for internal use and the investment community in evaluating ChampionX’s overall financial performance, the foregoing non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. A reconciliation of these non-GAAP measures to the most directly comparable GAAP measures is included in the accompanying financial tables.

    About ChampionX

    ChampionX is a global leader in chemistry solutions, artificial lift systems, and highly engineered equipment and technologies that help companies drill for and produce oil and gas safely, efficiently, and sustainably around the world. ChampionX’s expertise, innovative products, and digital technologies provide enhanced oil and gas production, transportation, and real-time emissions monitoring throughout the lifecycle of a well. To learn more about ChampionX, visit our website at www.ChampionX.com. 

    Forward-Looking Statements

    This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements relating to the proposed transaction between SLB and ChampionX, including statements regarding the benefits of the transaction and the anticipated timing of the transaction, and information regarding the businesses of SLB and ChampionX, including expectations regarding outlook and all underlying assumptions, SLB’s and ChampionX’s objectives, plans and strategies, information relating to operating trends in markets where SLB and ChampionX operate, statements that contain projections of results of operations or of financial condition and all other statements other than statements of historical fact that address activities, events or developments that SLB or ChampionX intends, expects, projects, believes or anticipates will or may occur in the future. Such statements are based on management’s beliefs and assumptions made based on information currently available to management. All statements in this communication, other than statements of historical fact, are forward-looking statements that may be identified by the use of the words “outlook,” “guidance,” “expects,” “believes,” “anticipates,” “should,” “estimates,” “intends,” “plans,” “seeks,” “targets,” “may,” “can,” “believe,” “predict,” “potential,” “projected,” “projections,” “precursor,” “forecast,” “ambition,” “goal,” “scheduled,” “think,” “could,” “would,” “will,” “see,” “likely,” and other similar expressions or variations, but not all forward-looking statements include such words. These forward-looking statements involve known and unknown risks and uncertainties, and which may cause SLB’s or ChampionX’s actual results and performance to be materially different from those expressed or implied in the forward-looking statements. Factors and risks that may impact future results and performance include, but are not limited to those factors and risks described in Part I, “Item 1. Business”, “Item 1A. Risk Factors”, and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in SLB’s Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on January 24, 2024 and Part 1, Item 1A, “Risk Factors” in ChampionX’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 6, 2024, and each of their respective, subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. These include, but are not limited to, and in each case as a possible result of the proposed transaction on each of SLB and ChampionX: the ultimate outcome of the proposed transaction between SLB and ChampionX, including the effect of the announcement of the proposed transaction; the ability to operate the SLB and ChampionX respective businesses, including business disruptions; difficulties in retaining and hiring key personnel and employees; the ability to maintain favorable business relationships with customers, suppliers and other business partners; the terms and timing of the proposed transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the proposed transaction; the anticipated or actual tax treatment of the proposed transaction; the ability to satisfy closing conditions to the completion of the proposed transaction (including the adoption of the merger agreement in respect of the proposed transaction by ChampionX stockholders); other risks related to the completion of the proposed transaction and actions related thereto; the ability of SLB and ChampionX to integrate the business successfully and to achieve anticipated synergies and value creation from the proposed transaction; changes in demand for SLB’s or ChampionX’s products and services; global market, political and economic conditions, including in the countries in which SLB and ChampionX operate; the ability to secure government regulatory approvals on the terms expected, at all or in a timely manner; the extent of growth of the oilfield services market generally, including for chemical solutions in production and midstream operations; the global macro-economic environment, including headwinds caused by inflation, rising interest rates, unfavorable currency exchange rates, and potential recessionary or depressionary conditions; the impact of shifts in prices or margins of the products that SLB or ChampionX sells or services that SLB or ChampionX provides, including due to a shift towards lower margin products or services; cyber-attacks, information security and data privacy; the impact of public health crises, such as pandemics (including COVID-19) and epidemics and any related company or government policies and actions to protect the health and safety of individuals or government policies or actions to maintain the functioning of national or global economies and markets; trends in crude oil and natural gas prices, including trends in chemical solutions across the oil and natural gas industries, that may affect the drilling and production activity, profitability and financial stability of SLB’s and ChampionX’s customers and therefore the demand for, and profitability of, their products and services; litigation and regulatory proceedings, including any proceedings that may be instituted against SLB or ChampionX related to the proposed transaction; failure to effectively and timely address energy transitions that could adversely affect the businesses of SLB or ChampionX, results of operations, and cash flows of SLB or ChampionX; and disruptions of SLB’s or ChampionX’s information technology systems.

    These risks, as well as other risks related to the proposed transaction, are included in the Form S-4 and proxy statement/prospectus that was filed with the SEC in connection with the proposed transaction. While the list of factors presented here is, and the list of factors presented in the registration statement on Form S-4 are, considered representative, no such list should be considered to be a complete statement of all potential risks and uncertainties. For additional information about other factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to SLB’s and ChampionX’s respective periodic reports and other filings with the SEC, including the risk factors identified in SLB’s and ChampionX’s Annual Reports on Form 10-K, respectively, and SLB’s and ChampionX’s subsequent Quarterly Reports on Form 10-Q. The forward-looking statements included in this communication are made only as of the date hereof. Neither SLB nor ChampionX undertakes any obligation to update any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

    Investor Contact: Byron Pope
    byron.pope@championx.com 
    281-602-0094

    Media Contact: John Breed
    john.breed@championx.com 
    281-403-5751

    CHAMPIONX CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
    (UNAUDITED)

      Three Months Ended   Nine Months Ended
      September 30,   June 30,   September 30,   September 30,
    (in thousands, except per share amounts)   2024       2024       2023       2024       2023  
    Revenue $ 906,533     $ 893,272     $ 939,783     $ 2,721,946     $ 2,814,730  
    Cost of goods and services   608,764       613,426       647,923       1,845,127       1,957,309  
    Gross profit   297,769       279,846       291,860       876,819       857,421  
    Costs and expenses:                  
    Selling, general and administrative expense   180,501       182,995       162,317       535,910       485,617  
    (Gain) loss on sale-leaseback transaction and disposal group   57       —       —       (29,826 )     12,965  
    Interest expense, net   14,137       15,421       13,744       43,493       40,754  
    Foreign currency transaction (gains) losses, net   3,505       (2,767 )     7,992       793       21,683  
    Other expense (income), net   (2,176 )     938       (1,994 )     1,689       (13,494 )
    Income before income taxes   101,745       83,259       109,801       324,760       309,896  
    Provision for income taxes   28,078       27,868       29,009       82,542       69,334  
    Net income   73,667       55,391       80,792       242,218       240,562  
    Net income attributable to noncontrolling interest   1,659       2,822       3,081       4,718       3,522  
    Net income attributable to ChampionX $ 72,008     $ 52,569     $ 77,711     $ 237,500     $ 237,040  
                       
    Earnings per share attributable to ChampionX:                  
    Basic $ 0.38     $ 0.28     $ 0.40     $ 1.25     $ 1.20  
    Diluted $ 0.37     $ 0.27     $ 0.39     $ 1.23     $ 1.18  
                       
    Weighted-average shares outstanding:                  
    Basic   190,496       190,426       195,881       190,575       197,058  
    Diluted   193,362       193,257       199,592       193,655       201,025  
                                           

    CHAMPIONX CORPORATION
    CONDENSED CONSOLIDATED BALANCE SHEETS
    (UNAUDITED)

    (in thousands) September 30, 2024   December 31, 2023
    ASSETS      
    Current Assets:      
    Cash and cash equivalents $ 389,109     $ 288,557  
    Receivables, net   434,107       534,534  
    Inventories, net   546,817       521,549  
    Prepaid expenses and other current assets   68,218       80,777  
    Total current assets   1,438,251       1,425,417  
           
    Property, plant and equipment, net   760,775       773,552  
    Goodwill   729,783       669,064  
    Intangible assets, net   270,361       243,553  
    Other non-current assets   178,490       130,116  
    Total assets $ 3,377,660     $ 3,241,702  
           
    LIABILITIES AND EQUITY      
    Current Liabilities:      
    Current portion of long-term debt $ 6,203     $ 6,203  
    Accounts payable   455,485       451,680  
    Other current liabilities   278,498       324,866  
    Total current liabilities   740,186       782,749  
           
    Long-term debt   592,161       594,283  
    Other long-term liabilities   246,296       203,639  
    Stockholders’ equity:      
    ChampionX stockholders’ equity   1,814,310       1,676,622  
    Noncontrolling interest   (15,293 )     (15,591 )
    Total liabilities and equity $ 3,377,660     $ 3,241,702  
                   

    CHAMPIONX CORPORATION
    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
    (UNAUDITED)

      Nine Months Ended September 30,
    (in thousands)   2024       2023  
    Cash flows from operating activities:      
    Net income $ 242,218     $ 240,562  
    Depreciation and amortization   183,291       177,226  
    (Gain) loss on sale-leaseback transaction and disposal group   (29,826 )     12,965  
    Loss on Argentina Blue Chip Swap transaction   7,086       —  
    Deferred income taxes   (16,810 )     (15,380 )
    Loss (gain) on disposal of fixed assets   868       (1,480 )
    Receivables   115,269       85,181  
    Inventories   (40,118 )     (50,011 )
    Accounts payable   (30,577 )     (7,018 )
    Other assets   6,665       17,470  
    Leased assets   (24,193 )     (38,597 )
    Other operating items, net   (31,442 )     (49,600 )
    Net cash flows provided by operating activities   382,431       371,318  
           
    Cash flows from investing activities:      
    Capital expenditures   (101,403 )     (110,965 )
    Proceeds from sale of fixed assets   9,323       12,328  
    Proceeds from sale-leaseback transaction   44,292       —  
    Purchase of investments   (31,526 )     —  
    Sale of investments   24,358       —  
    Acquisitions, net of cash acquired   (123,269 )     —  
    Net cash used for investing activities   (178,225 )     (98,637 )
           
    Cash flows from financing activities:      
    Proceeds from long-term debt   —       15,500  
    Repayment of long-term debt   (4,652 )     (43,625 )
    Repurchases of common stock   (49,399 )     (159,730 )
    Dividends paid   (52,430 )     (48,309 )
    Other   3,854       (384 )
    Net cash used for financing activities   (102,627 )     (236,548 )
           
    Effect of exchange rate changes on cash and cash equivalents   (1,027 )     (1,314 )
           
    Net increase in cash and cash equivalents   100,552       34,819  
    Cash and cash equivalents at beginning of period   288,557       250,187  
    Cash and cash equivalents at end of period $ 389,109     $ 285,006  
                   

    CHAMPIONX CORPORATION
    BUSINESS SEGMENT DATA
    (UNAUDITED)

      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Segment revenue:          
    Production Chemical Technologies $ 559,539     $ 569,577     $ 604,254  
    Production & Automation Technologies   275,700       244,487       256,148  
    Drilling Technologies   51,792       52,888       54,869  
    Reservoir Chemical Technologies   20,531       27,123       25,093  
    Corporate and other   (1,029 )     (803 )     (581 )
    Total revenue $ 906,533     $ 893,272     $ 939,783  
               
    Income before income taxes:        
    Segment operating profit (loss):          
    Production Chemical Technologies $ 87,260     $ 85,388     $ 94,560  
    Production & Automation Technologies   34,136       22,207       28,299  
    Drilling Technologies   11,501       11,863       12,255  
    Reservoir Chemical Technologies   1,675       4,363       2,461  
    Total segment operating profit   134,572       123,821       137,575  
    Corporate and other   18,690       25,141       14,030  
    Interest expense, net   14,137       15,421       13,744  
    Income before income taxes $ 101,745     $ 83,259     $ 109,801  
               
    Operating profit margin / income before income taxes margin:          
    Production Chemical Technologies   15.6 %     15.0 %     15.6 %
    Production & Automation Technologies   12.4 %     9.1 %     11.0 %
    Drilling Technologies   22.2 %     22.4 %     22.3 %
    Reservoir Chemical Technologies   8.2 %     16.1 %     9.8 %
    ChampionX Consolidated   11.2 %     9.3 %     11.7 %
               
    Adjusted EBITDA          
    Production Chemical Technologies $ 120,622     $ 117,421     $ 133,101  
    Production & Automation Technologies   69,604       58,848       59,288  
    Drilling Technologies   12,867       13,149       13,786  
    Reservoir Chemical Technologies   3,292       5,954       4,198  
    Corporate and other   (8,873 )     (12,139 )     (12,837 )
    Adjusted EBITDA $ 197,512     $ 183,233     $ 197,536  
               
    Adjusted EBITDA margin          
    Production Chemical Technologies   21.6 %     20.6 %     22.0 %
    Production & Automation Technologies   25.2 %     24.1 %     23.1 %
    Drilling Technologies   24.8 %     24.9 %     25.1 %
    Reservoir Chemical Technologies   16.0 %     22.0 %     16.7 %
    ChampionX Consolidated   21.8 %     20.5 %     21.0 %
                           

    CHAMPIONX CORPORATION
    RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES
    (UNAUDITED)

      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Net income attributable to ChampionX $ 72,008     $ 52,569     $ 77,711  
    Pre-tax adjustments:          
    (Gain) loss on sale leaseback transaction and disposal group(1)   57       —       —  
    Russia sanctions compliance and impacts(2)   109       32       95  
    Restructuring and other related charges   5,317       7,927       1,228  
    Merger transaction costs(3)   8,312       15,059       —  
    Acquisition costs and related adjustments(4)   753       574       —  
    Intellectual property defense   69       531       220  
    Merger-related indemnification responsibility   —       —       722  
    Tulsa, Oklahoma storm damage   —       —       1,895  
    Foreign currency transaction (gains) losses, net   3,505       (2,767 )     7,992  
    Loss on Argentina Blue Chip Swap transaction   —       2,994       —  
    Tax impact of adjustments   (4,259 )     (5,722 )     (2,702 )
    Adjusted net income attributable to ChampionX   85,871       71,197       87,161  
    Tax impact of adjustments   4,259       5,722       2,702  
    Net income attributable to noncontrolling interest   1,659       2,822       3,081  
    Depreciation and amortization   63,508       60,203       61,839  
    Provision for income taxes   28,078       27,868       29,009  
    Interest expense, net   14,137       15,421       13,744  
    Adjusted EBITDA $ 197,512     $ 183,233     $ 197,536  

    _______________________

    (1) Amount represents the gain on the sale and leaseback of certain buildings and land.
    (2) Includes charges incurred related to legal and professional fees to comply with, as well as additional foreign currency exchange losses associated with, the sanctions imposed in Russia.
    (3) Includes costs incurred in relation to the Merger Agreement with Schlumberger Limited, including third party legal and professional fees.
    (4) Includes costs incurred for the acquisition of businesses.
       
      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Diluted earnings per share attributable to ChampionX $ 0.37     $ 0.27     $ 0.39  
    Per share adjustments:          
    (Gain) loss on sale leaseback transaction and disposal group   —       —       —  
    Russia sanctions compliance and impacts   —       —       —  
    Restructuring and other related charges   0.03       0.04       0.01  
    Merger transaction costs   0.04       0.08       —  
    Acquisition costs and related adjustments   —       —       —  
    Intellectual property defense   —       —       —  
    Merger-related indemnification responsibility   —       —       0.01  
    Tulsa, Oklahoma storm damage   —       —       0.01  
    Foreign currency transaction (gains) losses, net   0.02       (0.01 )     0.04  
    Loss on Argentina Blue Chip Swap transaction   —       0.02       —  
    Tax impact of adjustments   (0.02 )     (0.03 )     (0.02 )
    Adjusted diluted earnings per share attributable to ChampionX $ 0.44     $ 0.37     $ 0.44  
                           

    CHAMPIONX CORPORATION
    RECONCILIATIONS OF GAAP TO NON-GAAP FINANCIAL MEASURES BY SEGMENT
    (UNAUDITED)

      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Production Chemical Technologies          
    Segment operating profit $ 87,260     $ 85,388     $ 94,560  
    Non-GAAP adjustments   7,073       5,851       9,079  
    Depreciation and amortization   26,289       26,182       29,462  
    Segment adjusted EBITDA $ 120,622     $ 117,421     $ 133,101  
               
    Production & Automation Technologies          
    Segment operating profit $ 34,136     $ 22,207     $ 28,299  
    Non-GAAP adjustments   1,656       6,000       2,089  
    Depreciation and amortization   33,812       30,641       28,900  
    Segment adjusted EBITDA $ 69,604     $ 58,848     $ 59,288  
               
    Drilling Technologies          
    Segment operating profit $ 11,501     $ 11,863     $ 12,255  
    Non-GAAP adjustments   54       —       (8 )
    Depreciation and amortization   1,312       1,286       1,539  
    Segment adjusted EBITDA $ 12,867     $ 13,149     $ 13,786  
               
    Reservoir Chemical Technologies          
    Segment operating profit $ 1,675     $ 4,363     $ 2,461  
    Non-GAAP adjustments   3       11       72  
    Depreciation and amortization   1,614       1,580       1,665  
    Segment adjusted EBITDA $ 3,292     $ 5,954     $ 4,198  
               
    Corporate and other          
    Segment operating profit $ (32,827 )   $ (40,562 )   $ (27,774 )
    Non-GAAP adjustments   9,336       12,488       920  
    Depreciation and amortization   481       514       273  
    Interest expense, net   14,137       15,421       13,744  
    Segment adjusted EBITDA $ (8,873 )   $ (12,139 )   $ (12,837 )
                           

    Free Cash Flow

      Three Months Ended
      September 30,   June 30,   September 30,
    (in thousands)   2024       2024       2023  
    Free Cash Flow          
    Cash flows from operating activities $ 141,298     $ 67,625     $ 163,030  
    Less: Capital expenditures, net of proceeds from sale of fixed assets   (33,248 )     (29,310 )     (48,469 )
    Free cash flow $ 108,050     $ 38,315     $ 114,561  
               
    Cash From Operating Activities to Revenue Ratio          
    Cash flows from operating activities $ 141,298     $ 67,625     $ 163,030  
    Revenue $ 906,533     $ 893,272     $ 939,783  
               
    Cash from operating activities to revenue ratio   16 %     8 %     17 %
               
    Free Cash Flow to Revenue Ratio          
    Free cash flow $ 108,050     $ 38,315     $ 114,561  
    Revenue $ 906,533     $ 893,272     $ 939,783  
               
    Free cash flow to revenue ratio   12 %     4 %     12 %
               
    Free Cash Flow to Adjusted EBITDA Ratio          
    Free cash flow $ 108,050     $ 38,315     $ 114,561  
    Adjusted EBITDA $ 197,512     $ 183,233     $ 197,536  
               
    Free cash flow to adjusted EBITDA ratio   55 %     21 %     58 %

    The MIL Network –

    January 25, 2025
  • MIL-OSI New Zealand: Attorney-General to deliver law lecture in Sydney

    Source: New Zealand Government

    Attorney-General Judith Collins is travelling to Sydney to speak at Western Sydney University on the constitutional and rule of law challenges in the current uncertain global environment.

    “It is timely to take the opportunity to discuss constitutional and rule of law challenges,” Ms Collins says.

    “We find ourselves in increasingly complex times due to such things as an increase in conflict throughout the world, climate change, the ongoing impact of the COVID-19 pandemic, and new technologies. This presents new challenges to the rule of law and demonstrates its importance.”

    Ms Collins will also speak to the ways New Zealand’s constitution has developed, and the differences in Australia and New Zealand’s constitutional structures.

    “There is significant value in New Zealand and Australia being aware of and learning from each other’s constitutional experience,” Ms Collins says.

    She will be joined by Western Sydney University Vice Chancellor Professor George Williams and Justice Michael Kirby, a former Justice of the High Court of Australia. 

    Ms Collins leaves New Zealand today and returns tomorrow.

    MIL OSI New Zealand News –

    January 25, 2025
  • MIL-OSI USA: Press Briefing by Press Secretary Karine Jean-Pierre and National Security Communications Adviser John  Kirby

    US Senate News:

    Source: The White House
    James S. Brady Press Briefing Room
    1:42 P.M. EDT
    MS. JEAN-PIERRE:  All right.  Good afternoon, everyone. 
    Q    Good afternoon.
    MS. JEAN-PIERRE:  I have just one thing at the top, and then I’ll hand it over.
    So, today, as part of the White House Initiative on Women’s Health Research, First Lady Jill Biden announced $110 million in awards from the Advanced Research Projects Agency for Health — for Health, ARPA-H, to accelerate transformative research and development in women’s health care.
    These new ARPA-H awardees will spur innovation and advance bold solutions to diseases and conditions that affect women uniquely, disproportionately, and differently.
    In less than a year since the president and the first lady launched the effort, the White House Initiative on Women’s Health Research has galvanized nearly one — nearly a billion dollars in funding for women’s health research.
    And now, I’m going to turn it over to my NSC colleague, Admiral John Kirby, who will talk to you more about the news of North Korea’s — Korean soldiers traveling to Russia, today’s historic announcement of the — of the use of frozen Russian sov- — sovereign assets to support Ukraine, and other foreign policy matters. 
    Admiral. 
    MR. KIRBY:  Thank you very much, Karine. 
    Good afternoon, everybody. 
    Q    Good afternoon.
    MR. KIRBY:  So, just before I kick off on those issues, I do want to start off by extending our thoughts to the victims of the horrible terrorist attack in Ankara, Turkey, this morning. 
    Our prayers are with all of those affected and their families and, of course, also the people of Turkey during this difficult time.
    Now, Turkish authorities, as they’ve said, are investigating this as a possible terrorist attack.  And while we don’t yet know the motive or who is exactly behind it, we strong — strongly condemn this — this act of violence.
    Now, I think, as you have all heard earlier this morning, we have seen the public reporting indicating that North Korean soldiers are traveling to Russia to fight against Ukraine.  We’re working closely with our allies and partners to gain a full understanding of this situation, but today, I’m prepared to share what we know at this stage.
    We assess that between early- to mid-October, North Korea moved at least 3,000 soldiers into eastern Russia.  We assessed that these soldiers traveled by ship from the Wonsan area in North Korea to Vladivostok, Russia.  These soldiers then traveled onward to multiple Russian military training sites in eastern Russia where they are currently undergoing training.
    We do not yet know whether these soldiers will en- — enter into combat alongside the Russian military, but this is a certain — certainly a highly concerning probability.
    After completing training, these soldiers could travel to western Russia and then engage in combat against the Ukrainian military.  We have briefed the Ukrainian government on our understanding of this situation, and we’re certainly consulting closely with other allies, partners, and countries in the region on the implications of such a dramatic mov- — move and on how we might respond. 
    I expect to have more to share on all of that in the coming days.
    For the time being, we will continue to monitor the situation closely.  But let’s be clear, if North Korean soldiers do enter into combat, this development would demonstrate Russia’s growing desperation in its war against Ukraine. 
    Russia is suffering extraordinary casualties on the battlefield every single day, but President Putin appears intent on continuing this war.  If Russia is indeed forced to turn to North Korea for manpower, this would be a sign of weakness, not strength, on the part of the Kremlin. 
    It would also demonstrate an unprecedented level of direct military cooperation between Russia and North Korea with security implications in Europe as well as the Indo-Pacific.
    As we have said before, Russia’s cooperation with the North Korean military is in violation of multiple U.N. Security Council resolutions which prohibit the procurement of arms from North Korea and military arms training.  This move is likewise a violation.
    At President Biden’s direction, the United States continues to surge security assistance to Ukraine.  In just the past week, which I think you’ve seen, the United States has announced more than $800 million in security assistance to meet Ukraine’s urgent battlefield needs.
    Now, looking ahead, the United States is on track to provide Ukraine with hundreds of additional air defense interceptors, dozens of tactical air defense systems, additional artillery, significant quantities of ammunition, hundreds of armored personnel can- — carriers and infantry fighting vehicles, and thousands of additional armored vehicles, all of which will help keep Ukraine effective on the battlefield.
    And in coming days, the United States will announce a significant sanctions tranche targeting the enablers of Russia’s war in Ukraine located outside of Russia.
    The Ukrainian military continues to fight bravely and effectively, and President Biden is determined to provide Ukraine with the support that it needs to prevail.  To that end, the president announced today that of the $50 billion that the G7 committed to loan Ukraine back in June, the United States will provide a loan of $20 mil- — $20 billion.  The other $30 billion in loans will come from a combination of our G7 partners, including the European Union, the United Kingdom, Canada, and Japan. 
    Now, this is unique.  Never before has a multilateral coalition frozen the assets of an aggressor country and then harnessed the value of those assets to fund the defense of the aggrieved party, all while respecting the rule of law and maintaining solidarity. 
    These loans will support the people of Ukraine as they defend and rebuild their country, and it’s another example of how Mr. Putin’s war of aggression has only unified and strengthened the resolve of G7 countries and our partners to defend shared values.
    And — yep, that’s it.  Thank you.  (Laughter.)  Sorry.  I had an extra page in there, and I wasn’t sure where it was going.  So —
    MS. JEAN-PIERRE:  Go ahead, Aamer.  
    Q    Does the pre- — is the assessment that the presence of North Korean troops can have a meaningful trajectory on thou- — the war?
    And then, secondly, you’ve said earlier even that it shows a sign of desperation on the Russians, but does it also demonstrate North Korea’s commitment to this burgeoning alliance with Russia?  And is that, in of itself, a broadening and discouraging concern for America?
    MR. KIRBY:  So, on your first question, too soon to tell, Aamer, what kind of an impact these troops can have on the battlefield, because we just don’t know enough about what the intention is in terms of using them.  So, I — I think that’s why I said at the top, we’re going to monitor this and watch it closely.
    To your second question: yeah, absolutely.  As we’ve also said, yes, I’ve called this a sign of desperation and a sign of weakness.  It’s not like Mr. Putin is being very honest with the Russian people about what he doing here.  I mean, Mr. Peskov, his spokesman, just the other day dec- — denied knowing anything about it.
    But — but we’ve also talked many, many times about the burgeoning and growing defense relationship between North Korea and Russia and how reckless and dangerous we think that is, not only for the people of Ukraine — and clearly we’ll watch to see what this development means for them — but also for the Indo-Pacific region.
    MS. JEAN-PIERRE:  Go ahead, Nadia.
    Q    Thank you.  With the U.S. diplomats in the region, Mr.  Hochstein in Lebanon and the Secretary of State in Saudi Arabia now before Israel, do you be- — do you believe there is a chance now for the ceasefire to be back on the table? 
    And do you believe that with the demise of Mr. Sinwar and Hassan Nasrallah, you have better chances or worse chances for somebody to negotiate with?
    MR. KIRBY:  The ceasefire you’re talking about, I’m assuming, is with Gaza.
    Q    Well, both.  I mean, you have Lebanon and you have Gaza —
    MR. KIRBY:  Yeah.
    Q    — implementation 1701 and in Gaza.
    MR. KIRBY:  I mean, look, the short answer to your question, Nadia, is — is yes.  And we wouldn’t be s- — we wouldn’t be engaged in this — these diplomatic efforts if we didn’t think there was still an opportunity here to get a ceasefire — a ceasefire for Gaza that brings the hostages home and increases humanitarian assistance, and certainly a ceasefire between Israel and — and Hezbollah. 
    And as for the — the implication that the — the deaths of the two leaders, Nasrallah and Sinwar, as President Biden said last week, that does open up — we believe opens up, should open up an opportunity to try to get there. 
    But I don’t want to sound too sanguine here.  I’ll let Secretary Blinken speak for his travels.  He’s still on the road.  He talked about it a little bit today that, you know, they had good, constructive conversations, specifically with respect to — to Gaza while he was in Israel.  But there’s still a lot of work before us.
    Q    Okay.  And one more, quickly.  The number of civilians killed in Gaza was 779 in the last 20 days, especially in Jabalia, and the total number is 100,000 between the dead and the wounded.  Ninety percent of Gaza is destroyed.  Does the U.S. still believe that Israel’s strategy in Gaza is working, and do you still support it?
    MR. KIRBY:  We still support Israel’s right and responsibility to defend itself against these threats, including the continued threat of Hamas.  And we still urge Israel to be mindful — ever mindful of civilian casualties and the damage to civilian infrastructure, and we’re going to continue to work with them to that end.
    Q    Has the U.S. made an assessment about the type of weapons training or what type of training the North Korean soldiers are undergoing in Russia that could potentially be used in Ukraine? 
    And does this represent a new type of an — an agreement, in terms of an information-sharing agreement between the North Koreans and the Russians?
    MR. KIRBY:  I don’t believe we have a very specific assessment at this time of the exact nature of all the training.  There’s — there’s three sites that we assess right now that the — this first tranche of about 3,000 are being trained. 
    I — I think I could go so far as to say that, at least in general terms, it’s — it’s basic kind of combat training and familiarization.  I think I’ll go — I could go as far as that and no further. 
    But, as I also said, we’re going to monitor this and watch this closely.  And obviously, if we have more information that we can share with you, we certainly will.
    To your second question about information-sharing, as I’ve said before, in answer to — to Aamer, we have been watching this relationship grow and deepen now for many, many months.  And the — the question that we’re asking ourselves — and we don’t have an answer for right now — is: What does Kim Jong Un think he’s getting out of this?
    And so, you talked about information-sharing.  I mean, they’re — maybe that’s part of this.  Maybe it’s technology.  Maybe it’s capabilities. 
    We don’t have a good sense of that.  But that’s what’s so concerning to us, is — is not only the concern for the impact on the war in Ukraine but the impact that this could have in the Indo-Pacific, with Kim Jong Un benefiting to some degree.
    Q    Can you talk about that just briefly?  Like, how significant is this for U.S. allies in the region and the U.S. as a whole?
    MR. KIRBY:  It could be significant.  Again, we don’t know enough right now. 
    So, when you say “region,” I think you mean Indo-Pacific.  Until we have a better sense of what the North Koreans at least believe they’re getting out of this, as opposed to what they actually get, it’s hard to know and to put a metric on exactly what the impact is in the Indo-Pacific.
    But it is concerning.  It’s been concerning.  Certainly, this development — this — this willingness of — of Kim to literally put skin in the game here, soldiers in Russia for the potential deployment — and we haven’t seen them deployed, but for the potential deployment — certainly would connote an expectation that he thinks he’s getting something out of this.
    MS. JEAN-PIERRE:  Go ahead, Selina.
    Q    You mentioned that the U.S. is discussing how we would possibly respond.  What are the possibilities for how the U.S. could respond to this?
    MR. KIRBY:  Well, for one thing, we’re going to continue to surge security assistance, as I just mentioned in my — my topper.  And you’re going to continue to see — the president has made it clear that we’re going to continue to provide security assistance all the way up to the end of his administration, for sure.  So, you’re going to see that continue to flow, and we’re talking to allies and partners about what the right next steps ought to be. 
    I’m not at liberty today to go through any specific options, but — but we’re going to — we’re going to have those conversations, and — and we have been.
    Q    And China is a critical trading partner to North Korea.  What’s the U.S. assessment for how China is looking at all of this?
    MR. KIRBY:  We don’t know how President Xi and the Chinese are looking at this.  One would think that — if you take their comments at face value about desiring stability and security in the region, particularly on the Korean Peninsula, one would think that they’re also deeply concerned by this development.
    But you can expect that we’ll be — we’ll be communicating with the — with the Chinese about this and certainly sharing our perspectives to the degree we can and — and gleaning theirs. 
    Q    And local South Korean press is reporting that, according to intelligence, these troops — North Korean troops lack understanding of modern warfare, such as drone attacks, and it’s anticipated there will be a high number of casualties when deployed to the front lines.
    MR. KIRBY:  I — too soon to know.  I mean, we — we don’t really know what they’re going to be used for or where they’re going to — if they’re going to — if they’re going to deploy, where they’re going to deploy and to what purpose. 
    I can tell you one thing, though.  If they do deploy to fight against Ukraine, they’re fair game.  They’re fair targets.  And the Ukrainian military will defend themselves against North Korean soldiers the same way they’re defending themselves against Russian soldiers. 
    And so, the — the possibility that there could be dead and wounded North Korean soldiers fighting against Ukraine is — is absolutely real if they get deployed. 
    MS. JEAN-PIERRE:  Go ahead, M.J.
    Q    Just to clarify something you said earlier about what Kim Jong Un possibly gets out of this.  As far as you know, has he gotten anything in return?
    MR. KIRBY:  Well, I mean, from this particular move, I can’t speak to that, M.J.  I — I don’t think we have seen any specific, you know, quid — quid pro quo with respect to this provision of troops. 
    But we know that — that he and Mr. Putin have, again, been growing in their defense relationship.  And we know Mr. Putin is — has been able to purchase North Korean artillery.  He’s been able to get North Korean ballistic missiles, which he has used against Ukraine.  And in return, we have seen, at the very least, some technology sharing with North Korea. 
    But what this particular development means going forward, we just don’t know.  We’re going to have to watch that. 
    Q    And do you know if this came about because Putin specifically first asked for help, or whether it’s that Kim Jong Un offered the help first? 
    MR. KIRBY:  Don’t know.  Don’t know what precipitated it, but I think it’s important to remember that in the three-plus years that he’s been fighting in — in and around Ukraine, Mr. Putin and — and his military has suffered 530,000 casualties.  And as we’re speaking today, he’s losing, casualties alone — and that’s killed and wounded — 1,200 — 1,000 to 1,200 per day. 
    Now, 530,000 is a lot.  I mean, there were — in the American Civil War, there were, like, 620,000 killed, just to put this into some perspective.  This is three years fighting in Ukraine.  Five hundred and thirty [thousand] casualties is — is a lot. 
    And he hasn’t been fully transparent with the Russian people about this.  And he hasn’t been transparent at all with the Russian people about this particular move, about br- — bringing in North Korean soldiers.  So, that he has to farm out the fighting to a foreign country, I think, speaks volumes about how much his military is suffering and — and how uncertain he believes, how untenable he believes his — his situation is. 
    Q    And I guess, just if you had to guess, how would the training — what would the training even look like, given the language barrier?  And once these North Korean soldiers are deployed, like, what would the command structure even look like, given —
    MR. KIRBY:  It’s a great question.  I — I wish we had an answer to it.  You’re — you’re not wrong to highlight the language barrier.  I mean, these are — these aren’t even similar languages.  They’re — and they are going to have to overcome that.  It’s not like they have a long, productive history of working together as two militaries, even at all.  So, that’s going to be a challenge. 
    Command and control is going to be a challenge.  And this is not a challenge that the Russians have even solved amongst themselves.  They’re still having command and control challenges: logistics and sustainment, getting things to the battlefield, keeping their troops in the field.  They haven’t solved that for their own soldiers.  So, they’re going to have to figure that out here too, if, in fact, they deploy.  We haven’t seen that. 
    So, there are — there are some pretty big challenges they’re — they’re going to have to overcome. 
    Q    And I have a non-Ukraine question.  Do you think that Donald Trump meets the definition of a fas- — fascist?
    MR. KIRBY:  That — I’m going to —
    MS. JEAN-PIERRE:  We got to move on.  (Laughs.)
    MR. KIRBY:  Yeah, I’m —
    MS. JEAN-PIERRE:  Go ahead, Michael.
    MR. KIRBY:  — I’m not going to talk about that stuff.
    Q    John, there — there’s concern among Democrats on the Hill that Donald Trump’s team has not entered into these critical transition agreements with the White House that could potentially, in their words, endanger national security.  Is that a concern of yours?
    MR. KIRBY:  Well, look, with a caveat that I’ll — I’m going to defer to Karine on anything to do with the election and — and the transition.  That’s really for her. 
    All I’ll say is that no matter how things play out in the election, the National Security Council, under Mr. Sullivan’s leadership, is and will make sure we’re ready for proper transition handover. 
    Q    And there are intelligence officials who have warned that foreign adversaries might be looking to stoke violence in the next 13 days ahead of the election.
    MR. KIRBY:  I saw the DNI assessment, yeah. 
    Q    What are you doing in preparation?
    MR. KIRBY:  Well, we’re working hard across the interagency, as you might expect we would, to share information not only inside the — at the federal level but working very hard to make sure we’ve got good handshakes and — and information sharing at state and local levels as well. 
    That’s the last thing we want, of course, is to see any violence or protest activity that — that leads to intimidation and that kind of thing.  So, we’re working hard, again, with local and state officials.
    MS. JEAN-PIERRE:  Need to start wrapping it up.  Go ahead, sir.  Yeah.
    Q    Thank you.  So, would North Korea’s possible engagement in combat in Ukraine trigger a bolder move from the White House, like decision to lift the restrictions on usage of American weapons?
    MR. KIRBY:  Yeah, again, number one, we’re monitoring this closely, and that’s where we are right now.  I came and gave you a very honest assessment of exactly where we are, and we just don’t know if these troops are going to be deployed against Ukraine in combat and, if so, where, when, and how. 
    So, number one, we’re monitoring this closely.  I don’t have any policy decisions or options to speak to today.  I can tell you the last thing I’ll say is that there’s been no change to the president’s policy when it comes to what we’re providing Ukraine and — and how they’re using it.
    MS. JEAN-PIERRE:  Go ahead, Jacqui.
    Q    Thank you, Karine.  John, why not?  Why not green-light the long-range missiles for Ukraine’s use, which is Zelenskyy’s number one ask, as you’re sounding the alarm about what could have far-reaching implications if North Korean soldiers go into Ukraine? 
    MR. KIRBY:  Well, for one thing, Jacqui, we don’t exactly know what these guys are going to do. 
    Q    What else could they be there for?
    MR. KIRBY:  We don’t know what they’re going to do.  We don’t know if they’re going to deploy into combat or not.  We don’t know, if they do, in what strength.  We certainly don’t have a sense of what capability they might be able to bring to the field with them.  Now —
    Q    Doesn’t this seem, though, like —
    MR. KIRBY:  Hang on, now.  Just a second.
    Q    — we were — a couple years ago, they were staged — you had Russian troops staged on the Ukrainian border, and this administration was saying, “We don’t know if they’re going to go in.  We don’t want to impose any sanctions.”  We didn’t do it ahead of time. 
    MR. KIRBY:  No, no, no, no, no, no.
    Q    Where — why is there not a consequence first?
    MR. KIRBY:  Well, first of all, let’s not rewrite history, Jacqui.  We — we were the first country to go out publicly and say, “Here’s what we think the Russians are going to do.  Here’s the timeline.”
    Q    But didn’t do anything about it. 
    MR. KIRBY:  That is not true, Jacqui. 
    Q    There was no preemptive sanction.  Nothing. 
    MR. KIRBY:  Jacqui, that is not true.  It is true we didn’t levy sanctions originally because we were hoping that the threat of sanctions might deter or dissuade Mr. Putin.  You lay sanctions on before the man makes a decision, then he might as well just go ahead and do it. 
    Q    Well, he did it anyway.
    MR. KIRBY:  And we — and we did levy sanctions on him — heavy sanctions — not just us but around the world. 
    Number two, we mobilized support for Ukraine even before Mr. Putin decided to step across that line.  And no country — no country has done more than the United States to make sure Ukraine is ready.  So —
    Q    Well, why not do something —
    MR. KIRBY:  — let’s not —
    Q    — to prevent —
    MR. KIRBY:  Wait, wait.  Jac- —
    Q    — this from happening? 
    MR. KIRBY:  Jacqui, let me finish the second question, and then we’ll get your third one. 
    So, let’s not rewrite history.  The United States didn’t sit idly by here.  We’ve been Ukraine’s staunchest and most prolific supporter in terms of security assistance.
    And as for the policy decision, the — the president remains and we all remain in direct contact with our Ukrainian counterparts.  We’re talking to them over what the — what they need.  As I said, we’ve just announced $800 million more, and there’ll be more coming in security assistance. 
    I just don’t have any policy changes to —
    Q    But why —
    MR. KIRBY:  — to speak to today. 
    Q    Why would you not u- — put a restriction on the type of target that can be hit, rather than the distance from a border that obviously Russia doesn’t recognize?  And you’ve got training happening with North Korean troops, I would assume, on the types of military installations that would be fair game if that decision was made. 
    MR. KIRBY:  Yeah, we’ll see —
    Q    That —
    MR. KIRBY:  We’ll see — we’ll see what the Russians and North Koreans decide to do here.  As I said earlier, if these North Korean soldiers decide to join the fight against Ukraine, they will become legitimate military targets. 
    MS. JEAN-PIERRE:  All right, Jacqui.  We got to go.
    Aurelia.
    Q    Yeah.  Thank you.  John, would you still describe the Israeli operation in Lebanon as targeted?
    MR. KIRBY:  I’m sorry, I do-
    Q    Yeah.  The Israeli strikes on Lebanon, would you still describe them as targeted?
    MR. KIRBY:  Again, I’m not going to get into scorecarding each and every strike that the Israelis take.  I’ll just say a couple of things.  They have a right to defend themselves.  There are legitimate threats that Hezbollah still poses to the Israeli people.  I mean, rockets and missiles are still being fired at Israeli cities. 
    So, let’s not forget what Hezbollah continues to be able to do.  That’s number one. 
    Number two, we have said many, many times that we don’t support daily, you know, strikes into heavily populated areas, and that remains the case today.  We still oppose, you know, daily strikes into densely populated areas —
    Q    But they still are coming — the strikes.
    MR. KIRBY:  — and we have had those conversations.  Secretary Blinken has had that exact conversation when he was in Israel for the last couple of days.  We’ll continue to press the Israelis on that. 
    MS. JEAN-PIERRE:  Go ahead.
    Q    Hi.  So, the interest from the frozen assets, does it apply only to the European Union or also the U.S. assets?
    MR. KIRBY:  It is — it’s for all the frozen assets.
    Q    Also in the U.S.?
    MR. KIRBY:  I believe so.  I believe so.
    Q    Because this morning, I heard Daleep Singh said just European Union, so I wasn’t sure. 
    MR. KIRBY:  Okay.  You know what?  Let me take the question.  When I — I can’t even balance my checkbook at home, so — (laughter).
    MS. JEAN-PIERRE:  Go ahead.
    Q    Thank you.  I wanted to ask about Kursk specifically with the North Korean troops in Russia.  Russia and North Korea have this mutual security pact.  If they were to use North Korean troops against Ukrainians in Kursk, would it be legitimate to try to reclaim sovereign territory, or would that be seen as an escalation in the war against Ukraine?
    MR. KIRBY:  Again, I don’t want to get ahead of where we are right now and hypothesize what these troops may or may not be doing and, if the Russians are going to deploy them, where they’re going to deploy them, whether it’ll be inside Russia or inside Ukraine. 
    Let me just please go back to what I said before.  If these North Korean troops are employed against Ukraine, they will become legitimate military targets. 
    MS. JEAN-PIERRE:  All right.  Janne, you have the last one. 
    Q    Thank you very much.  (Inaudible) questions. 
    MS. JEAN-PIERRE:  Well, you’re about to jump out of your seat, so —
    Q    Thank — thank you, John.
    MR. KIRBY:  This — this seems like a fair day for Janne.
    MS. JEAN-PIERRE:  That’s true.  Truly. 
    Q    On same — same topic, on North Korea.  The chairman of the House Intelligence Committee recently sent a letter to President Biden requesting a briefing regarding the seriousness of North Korea’s troops deployment and the neglect of the Korean Peninsula issue.  What is the White House’s response to this?
    MR. KIRBY:  Well, we’ll respond.  We’ll respond as — as appropriate to the chairman, and we won’t do that from the podium here in the briefing room.  We’ll do it appropriately with him and his staff.
    I’ll just say — and hopefully my being here today and the — my statement at the top should reflect how seriously we’re taking this issue and how closely we’re going to monitor it.  We recognize the potential danger here, and we’re going to be talking to allies and partners, including the Ukrainians, about what the proper next steps are going to be. 
    But as for our response to the chairman, I’ll let that stand in legislative channels.
    Q    Last quick one.  Your colleague said at the State Department briefing that the United States does not reflect other countries’ intelligence analyses.  So, what is your assessment of intelligence cooperation with allies at this —
    MR. KIRBY:  What — what did my colleague at the State Department say?
    Q    Said that — at the briefing that the United States does not reflect other countries’ intelligence analyses.
    MR. KIRBY:  About — about —
    Q    About the —
    MR. KIRBY:  — the North Korean troops?
    Q    Yeah, about the North Korean troops, so —
    MR. KIRBY:  I just shared with you — to- — today’s opening statement was a downgrade of U.S. intelligence of what — what we’re seeing.  And I think you can see similarities between what I said today and what our South Korean counterparts have — have said.  Ukrainian intelligence has — has released information very, very similar. 
    And again, we’re — you know, today isn’t the end of this conversation.  It’s — it’s, quite frankly, the beginning of the conversation that we’re going to be having with allies and partners, including through the intelligence community. 
    MS. JEAN-PIERRE:  All right.  Thank you so much, Admiral. 
    MR. KIRBY:  Thank you. 
    MS. JEAN-PIERRE:  Go ahead, Toluse.
    Q    Thanks, John.
    MR. KIRBY:  Thank you.
    MS. JEAN-PIERRE:  Thank you.  Sorry, guys.  Give me one second. 
    Let’s let Toluse take — I know he’s been waiting patiently on the sides- — sideline. 
    We don’t have much time because I have to be in the Oval in about 20 minutes, but go ahead.
    Q    Can I ask about the McDonald’s outbreak, the E. coli outbreak? 
    MS. JEAN-PIERRE:  Yeah.
    Q    And this follows a couple of big ones that we’ve seen over the summer, including Boar’s Head.  I think there’s another nationwide one.  Is the president tracking this?  And more importantly, how confident should Americans feel about the food supply right now?
    MS. JEAN-PIERRE:  So, what I would say is the administration’s top priority — its top priority is to make sure that Americans are safe.  And so, we are taking this very seriously.  We’re monitoring the situation. 
    CDC, as it relates to McDonald’s specifically, is working to determine the source of the outbreak, as we speak abou- — as you asked me about the E. cola — E. coli outbreak.  And so, what I would suggest is that families, they need to and they must follow the latest CDC guidance. 
    Obviously, we’re aware.  The president is — is also aware.  And going back to this particular outbreak with McDonald’s, I understand that the company has halted sales of product to protect customers, and CDC is certainly in touch with — with local authorities to — to prevent infection. 
    So, look, we’re always concerned when we hear these types of — these types of situations — right? — poten- — outbreaks.  And so — and the president wants to make sure that the American people are safe.  So, it is a — it is certainly a priority for us, and CDC is on top of this and looking into it.
    Q    And then just one more.  Any reaction to Jill Stein asserting the U.S. and the UK have blocked a peace agreement between Russia and Ukraine?
    MS. JEAN-PIERRE:  I have not seen those reporting.  I’m not going to respond to a — a political candidate in — for this — for this —
    Q    Well, it seems (inaudible) — it’s a factual thing that’s —
    MS. JEAN-PIERRE:  I — I have not even seen the — the comments that —
    Q    Okay.
    MS. JEAN-PIERRE:  — you are mentioning to me, so I — I can’t give you an honest response from here.
    So, go ahead, M.J.
    Q    Karine, what did the president mean when he said last night, about Donald Trump, “We got to lock him up”? 
    MS. JEAN-PIERRE:  So, look, and I — the president spoke to — about this very clearly as well in his statement, and he — and he said he meant, “lock him out” politically — politically lock him out.  That’s what he said, and that’s what we have to do.  That was the part of his quote that he said last night while he was in — in New Hampshire. 
    Look, let’s not forget, this is a president that has not –never shied away from being very clear and laying down what is at stake in this election. 
    I’m going to be really m- — mindful in not speaking about 2024 election that’s just a — less than two weeks away. 
    But this is just speaking to what the president said last night.  He made clear — he made very clear yesterday that he was referring to defeating — to defeating Donald Trump.  That is what he was talking about.  He said, politically — politically, lock him — lock him out.  That is what he was referring to. 
    Q    Well, he first said twice, “lock him up.”  So, you’re saying —
    MS. JEAN-PIERRE:  And then — and —
    Q    — when he said “lock him up,” he meant, defeat Donald Trump?
    MS. JEAN-PIERRE:  Well, it’s not what saying.  It’s what he said.  He said —
    Q    Well, when —
    MS. JEAN-PIERRE:  — to the au- —
    Q    — he clarified.
    MS. JEAN-PIERRE:  Wa- — wait. 
    Q    But he initially said —
    MS. JEAN-PIERRE:  He — he — right.  
    Q    — “lock him up.”
    MS. JEAN-PIERRE:  Exactly, he clarified himself.  He wanted to make sure that things were put into context.  He wanted to make sure that it — while we are — you know, while not just New Hampshire folks that were there were going to see it but also the Americans who are watching and pay attention to what the president is saying.  He wanted to put it into context.  And he, himself — this is not me; this is the president himself going back to explain — to explain — to say that he was talking about politically — politically locking him out. 
    Q    Is the president aware of John Kelly’s assertion that Donald Trump meets the definition of a fascist and that Trump wanted the kinds of generals Hitler had?
    MS. JEAN-PIERRE:  I mean, look, you have heard from this president over and over again about the threats to democracy, and the president has spoken about that.  You’ve heard from the former president himself saying that he is going to be a dictator on day one.  This is him, not us.  This is him. 
    And it’s not just all — it’s not just us, the White House, saying this.  You’ve heard it from officials — former officials that worked for the former president say this as well. 
    So, you know, do we agree — I know that the — the vice president just spoke about this.  Do we agree about that determination?  Yes, we do.  We do. 
    Let’s not forget — I will point you to January 6th.  What we saw on January 6th: 2,000 people were told to go to the Capitol to undo a free and fair election by the former president.  It was a dark, dark day in our democracy and a dangerous one.  We have people who died because of what happened on January 6th.  And, you know, we cannot forget that.  We cannot forget that.
    And so — and I will add — I will add this, that — and I can’t believe I even have to say this — but our nation’s veterans are heroes.  They are heroes.  They’re not losers or suckers; they are heroes. 
    And to be praising Adolf Hitler is dangerous, and it’s also disgusting. 
    Q    So, just to be clear, when you said, “we do” agree, President Biden believes that Donald Trump is a fascist?
    MS. JEAN-PIERRE:  I mean, yes, we have said — he said himself — the former president has said he is going to be a dictator on day one.  We cannot ignore that.  We cannot.
    And we cannot ignore or forget what happened on January 6th, 2021.  That is real.  Real people were affected by this — law enforcement who were trying to protect — protect the Capitol, protect law — elected officials in the Capitol, congressional members, senators, House members.  Their lives were ruined because of that day, because 2,000 people — again, 2,000 people were told by the former president to go there to find the former vice president to stop a free and fair election.  That is what — that is what happened. 
    Some of you — some of your colleagues were there, reported it, and saw it for yourself. 
    We cannot forget that. 
    Go ahead.
    Q    Karine, I mean, you talk about the context of the president’s comments yesterday.  I want to put them in the fuller context as well.  The president went to New Hampshire to make a policy argument against Republicans on the issue of prescription drugs, but the majority — more of his comments yesterday were really some of the most dire warnings we’ve heard from this president yet about a return to a Donald Trump presidency and what it would mean — could mean for this country.  He talked about world leaders pulling him aside, saying, “He can’t win.”  He talked about the concern — what it would mean for future generations of America. 
    How concerned is the president about — at this point, about the state of the race?  Is he worried that Trump is on a path to victory at this point?
    MS. JEAN-PIERRE:  So, look, I’m not going to talk about the state of the race.  You heard from the president.  You just laid out very clearly about what the president talked about yesterday in New Hampshire.  He laid out what his thoughts were.  He laid out what the stakes are for this country, and this is somebody who cares, clearly, very deeply about the future of this country.
    And so, I’m not going to get into what he thinks about this — the race in this current moment.  That is not something that I’m here to do.  I am not — I am no longer a political pundit.  I am the White House press secretary.  I speak for the president, but obviously I cannot speak to the 2024 election.
    And you did talk about something else — right? — when you talked about what he went to do on the official side.  And I would read you some quotes here — some headlines that we — that we saw in New Hampshire today from New Hampshire press, which I think is really important: “Biden, Sanders tout prescription drug cost-savings at New — New Hampshire event.”  Another one, “Biden and Bernie Sanders highlight lower prescription drug costs in New Hampshire stop.”  That is important. 
    The president wanted to go to New Hampshire to talk about what he and the vice president have been able to do in more than three and a half years: lowering prescription drugs, beating Big Pharma.  He talked about the Inflation Reduction Act.  By the way, no Republican voted for that.  Now it is popular with Democrats and Republicans, and this is something that is going to change people’s lives. 
    And so, that’s what he was there for.  He talked about — let’s not forget, what — what they’ve been — oth- — other things they’ve been able to do, whether it’s the bipartisan gun violence protection — being able to do that in a bipartisan way, and dealing with COVID that t- — put our economy in a downturn.  And this president has been able to empower — powering the economy, and we are now leading as a country in the world when it comes to the economy.
    So, I think he was able to do both things.  I think he was able to speak his mind on — on the political, you know, nature of where we are right now, which he can — obviously, he spoke to.  And I think people in New Hampshire got a sense of what the president is trying to do on behalf of them in talking about lowering costs.  We saw that in — in the New Hampshire papers.  So, it broke through, and I think that’s important. 
    Q    You were with the president last week in Germany —
    MS. JEAN-PIERRE:  Yes.
    Q    — when he says he had these conversations with world leaders expressing their dire concern about the election here.  What has been his response to those world leaders about that?
    MS. JEAN-PIERRE:  I — I’m not going to get into private diplomatic conversations, and I will just leave it there.
    Q    And then, I’ll ask you — we — NBC News is reporting that the vice president is likely to spend election night here in Washington, perhaps at her alma mater of Howard University.  Do we have an understanding yet of where the president will be —
    MS. JEAN-PIERRE:  (Laughs.)
    Q    — and when — how he plans to vote?
    MS. JEAN-PIERRE:  As soon as — you all know, we certainly will share that with all of you. 
    I will say is that the president is certainly looking forward to casting his ballot in Delaware.  And so, once we have the full information on what his day is going to look like or what the last couple of days leading up to November 5th will look like, we certainly will share that with all of you.
    Go ahead.
    Q    Since we’re talking about scheduling, it is traditional for the president to hold a press conference after —
    MS. JEAN-PIERRE:  Oh boy.  I knew that was coming.  (Laughter.)
    Q    Can’t stop.  Won’t stop.
    MS. JEAN-PIERRE:  You were- — you weren’t here for the — the drop-by.  Were you here for the drop-by?
    Q    Yes, I was. 
    MS. JEAN-PIERRE:  Oh.  It was great.
    Q    It was great.  We’d love to see him again.
    MS. JEAN-PIERRE:  Yeah.
    Q    So, the — and —
    MS. JEAN-PIERRE:  And you know what?  He had a really good time.  He enjoyed — he enjoyed it.
    Q    So, just an —
    Q    Come on back.  (Laughter.)
    Q    — open invitation for the president to follow tradition and do a press conference after the election, which I think —
    MS. JEAN-PIERRE:  I —
    Q    — is standard and important.
    MS. JEAN-PIERRE:  I — I totally hear that, Tam, and I know it is a tradition. 
    I — I don’t want to get ahead of what the schedule is going to look like.  As we know, in less than two weeks, we will have an important election.  Obviously, I’m not speaking about that election specifically, but we want to share — we will share more as we get closer.  And we — we certainly are tracking that tradition, and we’ll certainly have more to share. 
    Q    Are we going to see him with the vice president much in the next couple of weeks?
    MS. JEAN-PIERRE:  I mean, look, I — I know you all have asked this question of him.  You’ve asked this question of me.  They have, as you know, campaigned together.  They’ve done official events together in the past just couple of weeks. 
    They speak regularly.  And — and I would say the president — you’ve heard the president just, you know, tout how proud and how he thinks she will be a great leader on day one, which is –he also said in 2020, which is why he chose her as his running mate, and he has said as well, this was the best decision that he’s made.  And understands that she’s going to cut her own path.  Said this himself just last week when he was in — in Philadelphia. 
    Don’t have anything to share, again, on the schedule.  I know this is all part of a scheduling question, and we certainly will have more to share as the days — as the days — as you know, I mean, one day is like an eternity in — in this space, as you know.  (Laughs.)  And so, less than two weeks is — feels like so far away.  So, we will have more to share, for sure.
    Go ahead, Selina.
    Q    I just want to follow up on M.J.’s question. 
    MS. JEAN-PIERRE:  Yeah.
    Q    So, did the president actually read former Marine General Kelly’s comments or listen to them?  And did you —
    MS. JEAN-PIERRE:  So —
    Q    — do you know how he reacted after doing so?
    MS. JEAN-PIERRE:  So, look — I mean, look, I just gave a really good — I think a good sense of the — what the president has said about our reaction here from the White House.  The president is aware of John Kelly’s comments.  And I gave you a reaction as part of the — as — as the president’s White House press secretary.  And what I’m saying to you today is something that the president has said over and over and over again and repeated. 
    And let’s not forget the words that we have heard from the former president.  And it matters here, because we’re talking about our democracy.  We’re talking about what’s at stake here with our democracy.  And when you have a former president saying that they will be a dictator on day one, that is something that we cannot forget. 
    And so, you know, the president has spoke- — spoken about this and given speeches on this.  And that’s why I continue to point to January 6th, 2020 — -21 — 2021, because it was — it’s something that we cannot forget, a dark day on our democracy — a dark day on our democracy, because of what was — what — what occurred — what occurred.
    Q    Was the president surprised by any of the comments from Kelly?
    MS. JEAN-PIERRE:  No, not at all.  I mean, again, the president has made comments and spoken about this over and over again.  So, no.  I will say no. 
    Go ahead.
    Q    Thanks, Karine.  Elon Musk has been, you know, campaigning with former President Donald Trump, and he is offering $1 million to voters.  I just was wondering: Has the president expressed any concern to, you know, this interference by Elon Musk?  And I don’t know if he — you know, his — the administration maybe has any plans or has discussed maybe how to sort of maybe move forward with what’s El- — Elon Musk is doing with — with the $1 million.
    MS. JEAN-PIERRE:  So, on — on this particular question, I’m going to have to refer you to the FEC.  I just have to be — that one, I — I — that’s a place that I’m going to have to refer you.  I can’t speak to it beyond that. 
    Q    But has the president mentioned it at all, Elon Musk or —
    MS. JEAN-PIERRE:  He’s aware of it.  He’s aware of it.  That I can tell you.  I just can’t speak to it beyond that.  I have to refer you to the FEC.
    Go ahead, Jared. 
    Q    You talk and you’ve taken questions today, and obviously throughout the — the presidency, President Biden has talked a lot about democratic institutions.  I’m just curious if between now and Election Day, the president is going to speak sort of more broadly about the confidence in the votes being counted accurately.
    MS. JEAN-PIERRE:  Well, the president has talk — talked about this.  He believes in our institution.  He believes in — in — this will be a free and fair election.  He’s talked about this.  We have to give the American people, who some of them are voting right now — to make sure that they have the confidence in their vote and how important it is to cast their vote. 
    I’m not going to go beyond that, but I think the president has been very clear about that. 
    Q    But you don’t — should we talk about schedules or something?  (Laughs.)
    MS. JEAN-PIERRE:  Yeah.
    Q    Is there, like, a big sort of — because he’s done these types of addresses on issues like this before. 
    MS. JEAN-PIERRE:  Yeah, I —
    Q    So, I’m just curious if, like, this is a time that he would do that.
    MS. JEAN-PIERRE:  Oh, no, I hear you.  And I hear you’re talking about the moment that we’re in and if the president is going to speak about it in a more formal way — in remarks, in a speech. 
    I don’t have anything to share with you, but he’s been very clear about having the confidence in our institutions, and so I’ll leave it there.
    Go ahead.
    Q    I just want to ask you briefly about congressional outreach for the $10 billion that would be military aid.  Has the White House started that process, reaching out to members of Congress to get their buy-in to kind of help expedite this process?
    MS. JEAN-PIERRE:  I mean, we’re in regular touch with congressional members about any type of initiative that we’re trying to push through, especially if it involves Congress, obviously.
    I don’t have anything to read out to you at this time, but we are in regular conversation about a myriad of things when it comes to legislation, things that we’re trying to push forward.  Again, certainly that is important to the American people.  I just don’t have anything to share at this time.
    Q    Just a quick —
    MS. JEAN-PIERRE:  Yeah.
    Q    — 2024 question.  You said the president is going to vote.  It’s a scheduling question.
    MS. JEAN-PIERRE:  Yeah. 
    Q    Will he vote ear- —
    MS. JEAN-PIERRE:  You guys are very into schedules today.
    Q    Yeah, we’re — we’re into this.  We’re into this.
    MS. JEAN-PIERRE:  Yeah, I know.  Into th- —
    Q    Will he vote early?  Early voting —
    MS. JEAN-PIERRE:  — into the POTUS schedule.
    Q    Early voting starts in Delaware, obviously, this week, and will he go early, before Election Day?
    MS. JEAN-PIERRE:  I — as — as soon as we have something to share, I will certainly share that.
    Q    Final try.
    MS. JEAN-PIERRE:  I — I appreciate the effort here.  The president — I can say for sure the president is looking forward to casting his ballot.  And when we have more to share about his schedule — I mean, we’re not — we’re — the president can’t not just go vote and not tel- — for you guys not to know, right?  So, you guys follow him wherever he is, which is good —
    Q    Thanks.
    MS. JEAN-PIERRE:  — which is a good thing.  (Laughs.)
    Go ahead.
    Q    Thanks, Karine.  The former president described the vice president as “lazy as hell” yesterday.  She had a day when she was not on the campaign trail.  I was going to give you an opportunity to respond to that.
    MS. JEAN-PIERRE:  I would check the source.  Pay real close attention to who’s saying that.  That’s all I’ll say.
    Q    Okay.  Another question about the vice president’s interview with NBC.  She talked — she was asked about whether there should be any concessions on the issue of abortion and the situation — 
    MS. JEAN-PIERRE:  Wait, say that one more time.
    Q    She was asked whether or not there should be concessions on the issue of abortion — the scenario being a potential divided government like we have now — whether or not she would be willing to offer concessions, things like religious freedom, on the issue of abortion.  And I wanted to see if —
    MS. JEAN-PIERRE:  Meaning like on- — once she’s in office? 
    Q    Yes.
    MS. JEAN-PIERRE:  Oh, look, I’m not going to — I’m not going to get into hypotheticals.  It’s not — that is something that certainly, you know, when she be — when she is in office and becomes pre- — and all of the things happen — I’m not going to get into hypotheticals — she’s going to make her own decisions and decide what’s best for the American people.  I can’t speak to that at this time.  Not going to get into hypotheticals. 
    What you know and what you have seen from this president and this vice president is their commitment to continue to fight for women’s rights and continue to call on Congress to — to — you know, to reinstate Roe v. Wade, make sure that legislation is put out there, voted on.  And so, he would sign that, obviously, if that were to happen. 
    And so, that is what they — he — they both have asked for.  That is what we’ve been saying during this administration.  And she has been, obviously, a passionate fighter on that issue, understanding what this means to women, understanding what this means to people’s rights and freedoms, and so has this president. 
    And so that’s what we’re — you’re going to continue to see.  You just — you just heard us — I forget all the days — all the days come together — recently talk about how we’re expanding in the ACA for contraception, because understanding how that — how important that is to women and families, or — or women and Americans who are trying to make decisions on their family or how to move forward, and they should have that right — and so — and that freedom.
    And so, again, that action shows you the commitment from the — and I hope the American people — from the Biden-Harris administration.
    What she’s going to do next, how she’s going to govern, that’s not for me to say.
    Q    Another question from the interview.  She was asked whether or not sexism would come into play in this election.  She said, “I don’t think of it that way.”  Obviously, the former president, Barack Obama, said that he did believe that sexism was coming into play in this election.  What does the president think about (inaudible)?
    MS. JEAN-PIERRE:  Oh, I’ll say this.  Clearly, the vice president spoke to this, and this is her campaign, and she sees — she’s going to say how she sees things. 
    The president has always said and will continue to say that she is ready to lead on day one.  And you don’t have to just look at her record with him as a critical partner over the last more than three and a half years as vice president, but as senator, as attorney general, as district attorney, she is someone that has always fought for Americans, fought for people, whether it is citizens in California or more broadly, obviously. 
    And I think that’s what the American people — I know that’s what the American people want to see.  They want to see a fighter.  And that’s what the president sees in her.
    And, again, just look at what we’ve been able to do in the more than three and a half years when it comes to trying to beat back COVID and make sure that we all could come together in this room again without masks and make sure there was a strategy to deal with this pandemic; turn the economy around because of this pandemic; make sure that, you know, schools were open, businesses were open.  Now we have a record number of people applying to open up small businesses. 
    They’re doing that because they believe that the economy is working for them.  Nobody wants to open a small business if they don’t think the economy is working — is — is working for them. 
    Now, there’s always a lot more work to be done, and we’re going to continue to do that work.  You saw what the president did with Senator Bernie Sanders in New Hampshire — in Concord, New Hampshire, answering and lay- — and laying out what the — what the Inflation Reduction Act has been able to do, saving people a billion dollars because of that Inflation Reduction Act — which, I may add, Republicans did not vote for.  They did not vote for it. 
    I know I have to get — I’m getting the pull here. 
    Go ahead, Jon. 
    Q    Thanks a lot, Karine.  What’s the level of concern that the administration has about election interference, specifically from Russia? 
    MS. JEAN-PIERRE:  I mean, we spoke to that.  We’ve laid out — we made an — an announcement on what we were seeing from Russia on election interference.  We sent a very clear message on that just a couple of weeks ago.  So, obviously, that is something that continues to be a concern.  We will speak loud and clear about that, as we did just a couple of weeks ago.
    But we also want Americans to know th- — to trust the institution, and that’s what the president is going to continue to say and — and — and also continue to lay out the stakes — what’s at stakes.
    Okay.  Thanks, everybody.  Hopefully, see you on the road.
    2:30 P.M. EDT

    MIL OSI USA News –

    January 25, 2025
  • MIL-OSI New Zealand: Speech to Institute of Public Administration New Zealand

    Source: New Zealand Government

    Good morning, kia ora koutou. 

    Thank you, Liz, for your introduction, and to you all for the opportunity to speak to you today. 

    It’s a pleasure to be here. And it’s a particular pleasure to continue a tradition that was started by one of my predecessors Sir Bill English. I’m told the finance minister has presented this address every year since 2009. 

    I would like to acknowledge the role the institute plays in promoting excellence in the public sector. 

    I also want to take the opportunity to voice my appreciation for the work public servants do to keep New Zealanders safe and ensure people receive the public services on which they depend. 

    I respect your enduring commitment to public service and the integrity with which you approach your work, remaining focused on the New Zealanders we each serve, evolving and adapting as the political tides come and go.

    As a – still – proud Wellingtonian, I have had the pleasure of knowing and working with a broad spectrum of public servants throughout my career. I admire the thoughtfulness, tenacity, and earnestness I have seen in so many of you.

    I am grateful that while our Government is facing into a particularly challenging set of economic circumstances, we do so with wise and experienced public servants at our back and by our side.  

    This is not as easy time for our country.  A sustained cost of living crisis has left New Zealand with highly constrained government finances, recessionary conditions, rising unemployment and a range of new pressures for everyday Kiwis, both in their family and working lives.  

    That’s not a political observation, so much as a statement of reality.  

    Nor is it a reflection on the professionalism, skill or commitment of New Zealand’s public service. 

    The nation’s position today is a consequence of a global pandemic and of choices made by the previous Government.   

    This is not the forum for politics, and it is not my intention to make a political speech. The facts speak for themselves. In the past six years, there has been an 82 per cent increase in government spending and an additional $118 billion of debt added to the government books. As a country we have been living beyond our means. And now, we must correct course. 

    The good news is that there is light at the end of the tunnel. Inflation has returned to the Reserve Bank’s target range of 1 to 3 per cent for the first time in more than three years, interest rates are coming down and business and public confidence is increasing. 

    There is no escaping the reality, however, that many families and businesses are doing it tough. Inflation has increased household costs and squeezed business margins. 

    Partly for that reason, and also because it is good practice, our Government’s focus on fiscal discipline is going to continue. It is not a one-off, one-Budget affair. It is an ongoing state of mind. 

    As a government we are committed to getting the books back in order and bringing debt down, but our aspirations go far beyond changing the colour of the ink in the government’s accounts. We want to do more than simply deliver better value for money. And we are interested in far more than simply ticking off actions or delivering to targets.  

    We are intent on improving lives. 

    You and your colleagues in the public service have a critical role to play in this because, frankly, what we’ve been doing in recent years hasn’t worked for too many New Zealanders. Some of those who most need help haven’t been getting it. 

    That comes at an economic cost to the country, but more importantly it comes at a human cost. People are our greatest asset and delivering for people is our greatest purpose. In recent times, New Zealand has failed too many of its people: both economically and socially. Falling levels of educational achievement, poor housing, rising welfare dependency and an economy that is not growing quickly enough have denied opportunity to those who most need it. 

    I’ve said this a couple of times before to particular groups of public servants. Now, I’ll say it to a broader group. 

    Now is the time for your best and boldest ideas. As a government we are not interested in treading the same path that has denied opportunity to some of our most vulnerable. We want to make a difference to lives. 

    That’s the reason the Government has brought back public service targets: to focus the public sector on driving better results in health, education, law and order, work, housing and the environment. We understand targets aren’t a perfect mechanism, but past experience has shown they do help to focus attention on the things that make a difference.

    It’s also why this Government is determined to scale up the efforts that have gone into social investment so far.  

    The philosophy underlying social investment makes sense to everybody. 

    Given the choice, what New Zealander would choose to pay for an ambulance at the bottom of the cliff when we could instead build a fence to prevent the fall? They key is working out where the fences are needed and for who, ascertaining who is best placed to build those fences, and then rigorously testing whether they’re actually preventing the fall.

    This is a moral imperative, and it’s also a fiscal one.

    The difference to the taxpayer between a life in and out of the prison system and a life spent in productive activity is in excess of a million dollars. More importantly, for the individuals concerned, and their families, it can be the difference between a life of fulfilment and a life of misery. 

    Thanks to the work started by Bill English we now have a very good idea of where to direct our efforts.  

    For example, Stats NZ’s Integrated Data Infrastructure research database enables us to identify common factors in the lives of those who interact most frequently with state agencies. The factors themselves won’t come as a surprise to anyone. They include poor education, benefit dependency, multiple admissions to hospital emergency departments, being victims of violence and being perpetrators of violence. 

    But put the data together and you get a compelling case for targeted intervention. The IDI tells us that a 22-year-old with eight to 10 of these factors is, by the age of 27, 116 times more likely to have a child placed in care, 69 times more likely to have served a prison sentence, 22 times more likely to have been the victim of family violence and five-and-a-half times more likely to have been hospitalised for attempted suicide.       

    The data is not determinative. Many outstanding New Zealanders have emerged from extremely challenging circumstances and some of those who end up falling foul of our justice system and dependent on welfare come from privileged backgrounds. 

    But the data does give us a good sense of where to direct the scarce resources of the government. No country can afford to fund every good thing. Every dollar spent comes at the opportunity cost of a dollar spent elsewhere. We must always be working to focus funds where they can have the most profound and enduring impact. The prize for that effort is the most important prize of all: it is a child fulfilling the full human potential with which they entered this world. 

    There is no shortage of data in government. The challenge we must now address is how we use this this data to practically make a difference to lives.

    Social investment approach

    In July this year, the Government established the Social Investment Agency to lead, build, and demonstrate a social investment approach. 

    As a mark of the importance we attach to this work, the agency was established as a central agency. That is because the Government wants to see system change across the public service.

    To this end we are asking the public service to think about service delivery in a different way. We are asking for more purposeful thought about how we invest for the New Zealanders in most need. Going beyond the easy platitudes of good intentions and instead moving towards a world of far greater accountability for what results are delivered. 

    This demands us to think much more purposefully not just about what we want to change but how best to make it happen. We want to see more devolution of power, more clarity about what works for who, and much more space for innovation. In accountant-speak, our focus is shifting from outputs to outcomes. That means asking ourselves the right questions.

    First: what are the outcomes we want to achieve? That is a different question from the question that is often asked by governments – ‘what can we give people’. And it is a question that leads to different outcomes. 

    Second: who needs help? Not ‘how shall we distribute these services that we already have?’ That means putting the needs of the people who need help ahead of the needs of organisations providing services.

    Third: what services should be prioritised? Not ‘what shall we add to the service mix?’ That means identifying what is working and, just as importantly, what is not working. 

    This is one of the most challenging issues governments face because stopping programmes that are not performing well affects the people involved and can be interpreted as an admission of failure. 

    But, if we are serious about making a difference to the lives of our most vulnerable, we have to be rigorous about directing resources away from initiatives that are not making a difference towards initiatives that are. 

    Fourth: how do we enable providers to achieve the outcomes we want? Not, ‘how do we manage providers so they do what we want’ but how do we empower them to achieve the outcomes we all want to see?

    And fifth and finally: ‘How will we know if what we are doing is working?’ This is a question that is not asked often enough and the failure to do so is at the root of too much inefficiency in our social system.  

    Drawing on evidence and being clear about the answers to these questions, gives us the best chance of changing lives. It also ensures we get value for the money we spend.  

    Social outcomes contracts

    Another important aspect of social investment is recognising that not all the answers to the challenges we face can be found in Wellington office blocks, or the Beehive, for that matter. 

    Communities often know what the best solutions for their people are. We need and want to foster genuine partnership between the public service and proven community-based providers. 

    I’ve heard time and time again from those working with communities that the way the government contracts and commissions programmes is broken.

    I know that you too will have received feedback from service users, non-government organisations, iwi, and communities that current contracting arrangements fail to focus on the thing that really matters – whether the service makes a difference for people.

    When I talk to and visit providers, they tell me about the multiple overlapping contracts that they have with different agencies who do not seem to be talking to each other.

    They tell me about how government ties their hands by requiring specific outputs that prevent them from innovating to provide services more effectively. 

    They tell me about the time they waste producing reports that don’t seem to inform future conversations and contracting decisions, and the teams of people they have to employ to produce reports that aren’t read.

    They tell me about being forced to ‘contract farm’ to secure piecemeal funding across multiple contracts in order to ensure they can stay afloat and serve their communities.

    All of this is a drain on their resources which means they have less time to deliver outcomes for vulnerable New Zealanders. They have less time to think creatively and less ability to adapt and flex how they deliver. 

    Social investment suggests that one of the solutions to these problems is contracting with providers to deliver outcomes rather than outputs. 

    That means that once contracts have been negotiated, providers can choose how best to achieve the outcomes everyone wants. Outcomes-based contracts allow providers to flex their services around the needs of the people they are working with and to develop new solutions. To move away from a focus on serving the needs of a government department and instead take radical accountability for the results they deliver for the people they serve. 

    Outcomes-contracting also creates data-rich feedback loops to inform ongoing improvements to service delivery and future contracts. 

    It requires a conversation and agreement between funders and providers about data. What outcomes will be measured? How will those outcomes be measured? How will providers demonstrate that they are learning what works and doing more of it? How will funders use this data to inform decisions about future investments? 

    It’s not about elaborate evaluations and literature reviews – it’s about real-time insights into what’s working, what’s not working and what to do next to get the result that matter for the people we serve.  

    Changing the way that social services are commissioned will be a critical component of the social investment approach.

    Therefore, I have asked the Social Investment Agency to lead work with other agencies to develop prototype outcomes contracts to replace the current set of criss-crossing and overlapping outputs-focused contracts. This will provide a blueprint for other commissioners and providers of services to follow. 

    Contracting in this way has the potential to raise the bar for investment decisions across the public service. Not only does it require agencies to understand the needs of different groups, it requires them to assess the impact of the services they have delivered by measuring and comparing results.

    The Government is also progressing work to establish a Social Investment Fund that will directly commission outcomes for vulnerable New Zealanders and work with community, non-government organisations and iwi providers. 

    The fund will be managed by the Social Investment Agency and will serve as a testing ground for innovation which – when successful – can be applied more broadly to the social sector.

    Initially the fund will be small and targeted, but I anticipate it will grow over time and become an increasingly important vehicle for empowering innovation and testing new approaches. My ambition is that the fund will eventually be an effective vehicle not just for Government investment in changing people’s lives, but also as a home for funding from philanthropists, investors and anyone who wants to deploy their money in service of social good.  

    Not every initiative it funds will be successful, but that is the point of a testing ground, to identify what works and, just as importantly, what does not. Better to fail fast in a test environment and learn from the results than to keep doing the same thing that history has shown does not deliver results. 

    Conclusion

    In conclusion, this is a government that is intent on making a difference. We are not going to keep doing things simply because that is the way they have always been done. We want to make New Zealand a better place for everyone, particularly our most vulnerable citizens.

    We know change can be unsettling and we know we are asking a lot of you and your colleagues in the public service. 

    At the same time that we’re making savings across the public sector, we’re not just asking you to deliver business as usual, we’re challenging you to think and operate differently. For me, wrestling with that reality conjures up a phrase attributed to that great New Zealand pioneer, Ernest Rutherford: We haven’t got the money, so we’ll have to think.

    I am confident in your ability to rise to the challenge. 

    What I am hearing from many public servants is that you welcome the opportunity to think differently about how we tackle some of our biggest and most entrenched challenges. 

    That does not surprise me. I know the reason most, if not all of you, joined the public service is to serve your fellow New Zealanders and contribute to making New Zealand a better place. 

    I encourage you to be bold and put forward your best advice. I also encourage you to work as closely and openly as you can with those you are seeking to serve – local decision makers, iwi and Māori providers, as well as the private sector. Central government does not have a monopoly on good ideas. 

    Together, we have an opportunity to reduce welfare dependency, improve health, raise educational achievement, lower rates of offending and address increasing rates of inequality. Without adding to the spaghetti of bureaucracy.

    Let’s seize that opportunity with both hands. Thank you.

    MIL OSI New Zealand News –

    January 25, 2025
  • MIL-OSI: Northfield Bancorp, Inc. Announces Third Quarter 2024 Results

    Source: GlobeNewswire (MIL-OSI)

    NOTABLE ITEMS FOR THE QUARTER INCLUDE:

    • DILUTED EARNINGS PER SHARE WERE $0.16 FOR THE CURRENT QUARTER COMPARED TO $0.14 FOR THE TRAILING QUARTER, AND $0.19 FOR THE THIRD QUARTER OF 2023.
    • NET INTEREST MARGIN REMAINED RELATIVELY STABLE AT 2.08% FOR THE CURRENT QUARTER AS COMPARED TO 2.09% FOR THE TRAILING QUARTER.
    • AVERAGE YIELD ON INTEREST-EARNING ASSETS DECREASED ONE BASIS POINT TO 4.38%, WHILE THE AVERAGE COST OF INTEREST-BEARING LIABILITIES REMAINED STABLE AT 2.95% FOR THE CURRENT QUARTER AS COMPARED TO THE TRAILING QUARTER.
    • DEPOSITS (EXCLUDING BROKERED) DECREASED MODESTLY BY $5.1 MILLION, OR LESS THAN 1% ANNUALIZED, COMPARED TO JUNE 30, 2024, AND INCREASED $15.0 MILLION, OR 0.5% ANNUALIZED, FROM DECEMBER 31, 2023. COST OF DEPOSITS AT SEPTEMBER 30, 2024 WAS 2.07% AS COMPARED TO 2.10% AT JUNE 30, 2024.
    • LOAN BALANCES DECLINED BY $27.2 MILLION, OR 2.7% ANNUALIZED, FROM JUNE 30, 2024, WITH DECREASES IN COMMERCIAL, MULTIFAMILY AND RESIDENTIAL REAL ESTATE LOANS OFFSET BY INCREASES IN HOME EQUITY, CONSTRUCTION AND LAND, AND COMMERCIAL AND INDUSTRIAL LOANS.
    • ASSET QUALITY REMAINS STRONG DESPITE AN INCREASE IN NON-PERFORMING LOANS IN THE CURRENT QUARTER. NON-PERFORMING LOANS TO TOTAL LOANS WAS 0.75% AT SEPTEMBER 30, 2024 AND 0.42% AT JUNE 30, 2024.
    • THE COMPANY MAINTAINED STRONG LIQUIDITY WITH APPROXIMATELY $597 MILLION IN UNPLEDGED AVAILABLE-FOR-SALE SECURITIES AND LOANS READILY AVAILABLE-FOR-PLEDGE OF APPROXIMATELY $699 MILLION.
    • THE COMPANY REPURCHASED 560,683 SHARES FOR A COST OF $6.3 MILLION. THERE IS NO REMAINING CAPACITY UNDER THE CURRENT REPURCHASE PROGRAM.
    • CASH DIVIDEND DECLARED OF $0.13 PER SHARE OF COMMON STOCK, PAYABLE ON NOVEMBER 20, 2024, TO STOCKHOLDERS OF RECORD AS OF NOVEMBER 6, 2024.

    WOODBRIDGE, N.J., Oct. 23, 2024 (GLOBE NEWSWIRE) — NORTHFIELD BANCORP, INC. (Nasdaq:NFBK) (the “Company”), the holding company for Northfield Bank, reported net income of $6.5 million, or $0.16 per diluted share for the three months ended September 30, 2024, compared to $6.0 million, or $0.14 per diluted share, for the three months ended June 30, 2024, and $8.2 million, or $0.19 per diluted share, for the three months ended September 30, 2023. For the nine months ended September 30, 2024, net income totaled $18.7 million, or $0.45 per diluted share, compared to $29.4 million, or $0.67 per diluted share, for the nine months ended September 30, 2023. For the nine months ended September 30, 2024, net income reflected $795,000, or $0.02 per share, of additional tax expense related to options that expired in June 2024, and $683,000, or $0.01 per share, of severance expense related to staffing realignments. For the nine months ended September 30, 2023, net income reflected $440,000, or $0.01 per share of severance expense. The decrease in net income for the nine months ended September 30, 2024, compared to the comparable prior year period was primarily the result of a decrease in net interest income, which was negatively impacted by higher funding costs, partially offset by improved interest and non-interest income.

    Commenting on the quarter, Steven M. Klein, the Company’s Chairman, President and Chief Executive Officer stated, “In the third quarter, the Northfield team continued to focus on financial performance, serving the businesses and consumers in our marketplace, and improving upon our operating efficiencies.” Mr. Klein continued, “We delivered solid financial performance for the quarter, increasing our net income, and earnings per share, as we manage our strong capital levels, core deposit and loan relationships, asset quality, and operating expenses. While significant risks remain, the decrease in short-term market interest rates late in the third quarter should provide increased economic activity in our marketplace and opportunities for our Company.”

    Mr. Klein further noted, “I am pleased to announce that the Board of Directors has declared a cash dividend of $0.13 per common share, payable on November 20, 2024 to stockholders of record on November 6, 2024.”

    Results of Operations

    Comparison of Operating Results for the Nine Months Ended September 30, 2024 and 2023

    Net income was $18.7 million and $29.4 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. Significant variances from the comparable prior year period are as follows: a $10.9 million decrease in net interest income, a $1.3 million increase in the provision for credit losses on loans, a $1.5 million increase in non-interest income, a $3.2 million increase in non-interest expense, and a $3.1 million decrease in income tax expense.

    Net interest income for the nine months ended September 30, 2024, decreased $10.9 million, or 11.4%, to $84.8 million, from $95.7 million for the nine months ended September 30, 2023 due to a $34.8 million increase in interest expense, which was partially offset by a $23.9 million increase in interest income. The increase in interest expense was largely driven by the cost of interest-bearing liabilities, which increased by 96 basis points to 2.93% for the nine months ended September 30, 2024, from 1.97% for the nine months ended September 30, 2023, driven primarily by a 114 basis point increase in the cost of interest-bearing deposits from 1.42% to 2.56% for the nine months ended September 30, 2024, and a 31 basis point increase in the cost of borrowings from 3.58% to 3.89% due to rising market interest rates and a shift in the composition of the deposit portfolio towards higher-costing certificates of deposit and a greater reliance on borrowings. The increase in interest expense was also due to a $277.1 million, or 7.0%, increase in the average balance of interest-bearing liabilities, including an increase of $149.8 million in the average balance of borrowed funds and a $127.1 million increase in average interest-bearing deposits. The increase in interest income was primarily due to a $156.1 million, or 2.9%, increase in the average balance of interest-earning assets coupled with a 47 basis point increase in the yield on interest-earning assets, which increased to 4.35% for the nine months ended September 30, 2024, from 3.88% for the nine months ended September 30, 2023, due to the rising rate environment. The increase in the average balance of interest-earning assets was primarily due to increases in the average balance of interest-earning deposits in financial institutions of $111.7 million, the average balance of other securities of $91.6 million, and the average balance of mortgage-backed securities of $88.5 million, partially offset by a decrease in the average balance of loans of $133.4 million.

    Net interest margin decreased by 34 basis points to 2.07% for the nine months ended September 30, 2024, from 2.41% for the nine months ended September 30, 2023. The decrease in net interest margin was primarily due to interest-bearing liabilities repricing at a faster rate than interest-earning assets. The net interest margin was negatively affected by approximately 12 basis points due to a $300 million low risk leverage strategy implemented in the first quarter of 2024. In January 2024, the Company borrowed $300.0 million from the Federal Reserve Bank through the Bank Term Funding Program at favorable terms and conditions and invested the proceeds in interest-bearing deposits in other financial institutions and investment securities. The Company accreted interest income related to purchased credit-deteriorated (“PCD”) loans of $1.1 million for the nine months ended September 30, 2024, as compared to $1.0 million for the nine months ended September 30, 2023. Net interest income for the nine months ended September 30, 2024, included loan prepayment income of $648,000 as compared to $1.3 million for the nine months ended September 30, 2023.

    The provision for credit losses on loans increased by $1.3 million to $2.3 million for the nine months ended September 30, 2024, compared to $1.1 million for the nine months ended September 30, 2023, primarily due to an increase in the specific reserve component of the allowance for credit losses, which was partially offset by a decrease in the general reserve component of the allowance for credit losses. The increase in the specific reserve was related to a single commercial and industrial relationship totaling $12.5 million that experienced credit deterioration and was placed on non-accrual during the current quarter, which has a specific reserve of $1.3 million and incurred a charge-off of $878,000. The decline in the general reserve component of the allowance for credit losses resulted from a decline in loan balances and an improvement in the macroeconomic forecast for the current period within our Current Expected Credit Loss (“CECL”) model, partially offset by an increase in reserves related to changes in model assumptions, including the slowing of prepayment speeds, and an increase in reserves in the commercial and industrial and home equity and lines of credit portfolios related to an increase in non-performing loans in these portfolios and higher loan balances. Net charge-offs were $4.7 million for the nine months ended September 30, 2024, primarily due to $3.9 million in net charge-offs on small business unsecured commercial and industrial loans, as compared to net charge-offs of $5.2 million for the nine months ended September 30, 2023. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio, which totaled $31.0 million at September 30, 2024.

    Non-interest income increased by $1.5 million, or 18.7%, to $9.8 million for the nine months ended September 30, 2024, compared to $8.3 million for the nine months ended September 30, 2023. The increase was primarily due to increases of $790,000 in fees and service charges for customer services, related to an increase in overdraft fees and service charges on deposit accounts, $260,000 in income on bank owned life insurance, and $874,000 in gains on trading securities, net. Partially offsetting the increases was a $303,000 decrease in other income, primarily due to lower swap fee income. Gains on trading securities in the nine months ended September 30, 2024, were $1.6 million, as compared to $723,000 in the nine months ended September 30, 2023. The trading portfolio is utilized to fund the Company’s deferred compensation obligation to certain employees and directors of the plan. The participants of this plan, at their election, defer a portion of their compensation. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the plan.

    Non-interest expense increased $3.2 million, or 5.2%, to $65.7 million for the nine months ended September 30, 2024, compared to $62.5 million for the nine months ended September 30, 2023. The increase was primarily due to a $3.3 million increase in employee compensation and benefits, primarily attributable to higher salary expense, related to annual merit increases and higher medical expense, and an increase of $874,000 in deferred compensation expense, which is described above, and had no effect on net income. Employee compensation and benefits expense also includes severance expense of $683,000 for the nine months ended September 30, 2024, as compared to $440,000 for the nine months ended September 30, 2023. During the second quarter of 2024, due to current economic conditions, the Company implemented a workforce reduction plan which included modest layoffs and staffing realignments. The annual estimated cost savings of this plan is $2.0 million, pre-tax. Partially offsetting the increase was a $461,000 decrease in stock compensation expense related to performance stock awards not expected to vest. Additionally, non-interest expense included a $727,000 increase in credit loss expense/(benefit) for off-balance sheet exposure due to a provision of $337,000 recorded during the nine months ended September 30, 2024, as compared to a benefit of $390,000 for the comparative prior year period. The benefit in the prior year period was attributable to a decrease in the pipeline of loans committed and awaiting closing. Partially offsetting the increases was a $552,000 decrease in advertising expense due to a change in marketing strategy and the timing of specific deposit and lending campaigns.

    The Company recorded income tax expense of $7.9 million for the nine months ended September 30, 2024, compared to $11.0 million for the nine months ended September 30, 2023, with the decrease due to lower taxable income partially offset by a higher effective tax rate. The effective tax rate for the nine months ended September 30, 2024, was 29.7% compared to 27.2% for the nine months ended September 30, 2023. In June 2024, options granted in 2014 expired and resulted in additional tax expense of $795,000, contributing to the higher effective tax rate for the nine months ended September 30, 2024.

    Comparison of Operating Results for the Three Months Ended September 30, 2024 and 2023

    Net income was $6.5 million and $8.2 million for the quarters ended September 30, 2024 and September 30, 2023, respectively. Significant variances from the comparable prior year quarter are as follows: a $1.5 million decrease in net interest income, a $2.4 increase in the provision for credit losses on loans, a $1.5 million increase in non-interest income, a $189,000 decrease in non-interest expense, and a $513,000 decrease in income tax expense.

    Net interest income for the quarter ended September 30, 2024, decreased $1.5 million, or 4.9%, to $28.2 million, from $29.7 million for the quarter ended September 30, 2023, due to an $8.0 million increase in interest expense, partially offset by an $6.6 million increase in interest income. The increase in interest expense was largely driven by the impact of rising market interest rates and a $227.0 million, or 5.7%, increase in the average balance of interest-bearing liabilities, including increases of $158.4 million and $68.4 million in the average balance of interest-bearing deposits and borrowed funds, respectively. The increase in interest income was primarily due to a $155.1 million, or 3.0%, increase in the average balance of interest-earning assets coupled with a 38 basis point increase in yields on interest-earning assets due to the rising rate environment. The increase in the average balance of interest-earning assets was due to increases in the average balance of mortgage-backed securities of $240.3 million, the average balance of other securities of $64.0 million, and the average balance of interest-earning deposits in financial institutions of $26.8 million, partially offset by decreases in the average balance of loans outstanding of $172.8 million and the average balance of Federal Home Loan Bank of New York stock of $3.2 million.

    Net interest margin decreased by 17 basis points to 2.08% for the quarter ended September 30, 2024, from 2.25% for the quarter ended September 30, 2023, primarily due to the cost of interest-bearing liabilities increasing faster than the repricing of interest-earning assets. The cost of interest-bearing liabilities increased by 64 basis points to 2.95% for the quarter ended September 30, 2024, from 2.31% for the quarter ended September 30, 2023, driven primarily by a 77 basis point increase in the cost of interest-bearing deposits from 1.82% to 2.59%, and a 30 basis point increase in the cost of borrowings from 3.63% to 3.93%. The increase in the cost of interest-bearing liabilities was partially offset by an increase in the yield on interest-earning assets, which increased by 38 basis points to 4.38% for the quarter ended September 30, 2024, from 4.00% for the quarter ended September 30, 2023. Net interest income for the quarter ended September 30, 2024, included loan prepayment income of $87,000, as compared to $183,000 for the quarter ended September 30, 2023. The Company accreted interest income related to PCD loans of $327,000 for the quarter ended September 30, 2024, as compared to $325,000 for the quarter ended September 30, 2023.

    The provision for credit losses on loans increased by $2.4 million to $2.5 million for the quarter ended September 30, 2024, from a provision of $188,000 for the quarter ended September 30, 2023, primarily due to an increase in the specific reserve component of the allowance for credit losses, which was partially offset by a decrease in the general reserve component of the allowance for credit losses. The increase in the specific reserve was related to a single commercial and industrial relationship that experienced credit deterioration and was placed on non-accrual during the current quarter, which has a specific reserve of $1.3 million and incurred a charge-off of $878,000. The decline in the general reserve component of the allowance for credit losses resulted from a decline in loan balances and an improvement in the macroeconomic forecast for the current period within our CECL model, partially offset by an increase in reserves related to changes in model assumptions, including the slowing of prepayment speeds, and an increase in reserves in the commercial and industrial portfolio related to an increase in non-performing loans and higher loan balances. Net charge-offs were $2.1 million for the quarter ended September 30, 2024, and included $1.4 million in net charge-offs on small business unsecured loans, as compared to net charge-offs of $2.9 million for the quarter ended September 30, 2023.

    Non-interest income increased by $1.5 million, or 68.7%, to $3.6 million for the quarter ended September 30, 2024, from $2.1 million for the quarter ended September 30, 2023, primarily due to a $294,000 increase in fees and service charges, primarily related to higher overdraft fees, a $1.0 million increase in gains on trading securities, net, and a $185,000 increase in other income, primarily due to higher swap fee income. For the quarter ended September 30, 2024, gains on trading securities, net, were $710,000, compared to losses of $295,000 in the quarter ended September 30, 2023. Gains and losses on trading securities have no effect on net income since participants benefit from, and bear the full risk of, changes in the trading securities market values. Therefore, the Company records an equal and offsetting amount in compensation expense, reflecting the change in the Company’s obligations under the Plan.

    Non-interest expense decreased by $189,000, or 0.9%, to $20.4 million for the quarter ended September 30, 2024, from $20.6 million for the quarter ended September 30, 2023. The decrease was primarily due to decreases of $386,000 in occupancy expense, attributable to lower real estate taxes, common area maintenance and electricity costs, $214,000 in data processing costs, attributable to a decrease in ongoing core processing costs related to a prior technology-related contract renewed at favorable terms, and $132,000 in advertising expense. Partially offsetting the decreases was a $504,000 increase in compensation and employee benefits, which included a $1.0 million increase in expense related to the Company’s deferred compensation plan which is described above, and had no effect on net income, that was offset by lower medical expense.

    The Company recorded income tax expense of $2.4 million for the quarter ended September 30, 2024, compared to $2.9 million for the quarter ended September 30, 2023, with the decrease due to lower taxable income. The effective tax rate for the quarter ended September 30, 2024 was 26.6%, compared to 26.0% for the quarter ended September 30, 2023.

    Comparison of Operating Results for the Three Months Ended September 30, 2024 and June 30, 2024

    Net income was $6.5 million and $6.0 million for the quarters ended September 30, 2024, and June 30, 2024, respectively. Significant variances from the prior quarter are as follows: an $458,000 decrease in net interest income, a $3.2 million increase in the provision for credit losses on loans, a $719,000 increase in non-interest income, a $2.6 million decrease in non-interest expense, and an $850,000 decrease in income tax expense.

    Net interest income for the quarter ended September 30, 2024, decreased by $458,000, or 1.6%, primarily due to a $902,000 decrease in interest income, partially offset by a $444,000 decrease in interest expense on deposits and borrowings. The decrease in interest income was primarily due to a $124.4 million decrease in the average balance of interest-earning assets. The decrease in the average balance of interest-earning assets was primarily due to decreases in the average balance of interest-earning deposits in financial institutions of $91.6 million, the average balance of other securities of $60.5 million, and the average balance of loans outstanding of $48.1 million, partially offset by an increase in the average balance of mortgage-backed securities of $76.5 million. The decrease in interest expense on deposits and borrowings was primarily due to a $105.8 million, or 2.5%, decrease in the average balance of interest-bearing liabilities attributable to a $73.2 million decrease in the average balance of interest-bearing deposits and a $32.7 million decrease in the average balance of borrowed funds.

    Net interest margin decreased by one basis point to 2.08% from 2.09% for the quarter ended June 30, 2024, primarily due to a one basis point decrease in yields on interest-earning assets whereas the cost of interest-bearing liabilities remained level. Net interest income for the quarter ended September 30, 2024, included loan prepayment income of $87,000 as compared to $210,000 for the quarter ended June 30, 2024. The Company accreted interest income related to PCD loans of $327,000 for the quarter ended September 30, 2024, as compared to $321,000 for the quarter ended June 30, 2024.

    The provision for credit losses on loans increased by $3.2 million to $2.5 million for the quarter ended September 30, 2024, from a benefit of $618,000 for the quarter ended June 30, 2024. The increase in the provision for the current quarter was primarily due to an increase in the specific reserve component of the allowance for credit losses, attributable to a single commercial and industrial relationship that experienced credit deterioration and was placed on non-accrual during the current quarter, higher reserves related to changes in model assumptions during the current quarter, including the slowing of prepayment speeds and higher net-charge-offs. Net charge-offs were $2.1 million for the quarter ended September 30, 2024, as compared to net charge-offs of $1.6 million for the quarter ended June 30, 2024.

    Non-interest income increased by $719,000, or 25.1%, to $3.6 million for the quarter ended September 30, 2024, from $2.9 million for the quarter ended June 30, 2024. The increase was primarily due to a $522,000 increase in gains on sales of trading securities, net, and a $192,000 increase in other income, primarily due to higher swap fee income. For the quarter ended September 30, 2024, gains on trading securities, net, were $710,000, compared to gains of $188,000 for the quarter ended June 30, 2024.

    Non-interest expense decreased by $2.6 million, or 11.4%, to $20.4 million for the quarter ended September 30, 2024, from $23.0 million for the quarter ended June 30, 2024. The decrease was primarily due to a $2.0 million decrease in compensation and employee benefits, primarily attributable to a decrease in salaries and medical expense due to lower employee headcount, partially offset by a $522,000 increase in expense related to the Company’s deferred compensation plan which had no effect on net income. Also contributing to the decrease were decreases of $192,000 in occupancy expense, $397,000 in data processing costs, attributable to a decrease in ongoing core processing costs resulting from a prior technology-related contract renewed at favorable terms, $200,000 in advertising expense, and $122,000 in other non-interest expense. Partially offsetting the decreases was a $262,000 increase in professional fees, primarily due to an increase in outsourced audit services.

    The Company recorded income tax expense of $2.4 million for the quarter ended September 30, 2024, compared to $3.2 million for the quarter ended June 30, 2024. The effective tax rate for the quarter ended September 30, 2024 was 26.6%, compared to 35.0% for the quarter ended June 30, 2024. During the quarter ended June 30, 2024, options granted in 2014 expired and resulted in additional tax expense of $795,000, contributing to the higher effective tax rate for the quarter ended June 30, 2024.

    Financial Condition

    Total assets increased by $132.5 million, or 2.4%, to $5.73 billion at September 30, 2024, from $5.60 billion at December 31, 2023. The increase was primarily due to increases in available-for-sale debt securities of $268.0 million, or 33.7%, and cash and cash equivalents of $3.4 million, or 1.5%, partially offset by a decrease in loans receivable of $139.7 million, or 3.3%.

    Cash and cash equivalents increased by $3.4 million, or 1.5%, to $232.9 million at September 30, 2024, from $229.5 million at December 31, 2023. Balances fluctuate based on the timing of receipt of security and loan repayments and the redeployment of cash into higher-yielding assets such as loans and securities, or the funding of deposit outflows or borrowing maturities.

    Loans held-for-investment, net, decreased by $139.7 million, or 3.3%, to $4.06 billion at September 30, 2024 from $4.20 billion at December 31, 2023, primarily due to decreases in multifamily, commercial and one-to-four family residential real estate loans, partially offset by increases in home equity and lines of credit, construction and land, and commercial and industrial loans. The decrease in loan balances reflects the Company remaining strategically focused on both managing the concentration of its commercial and multifamily real estate loan portfolios and disciplined loan pricing, as well as lower customer demand in the recent elevated interest rate environment. Multifamily loans decreased $110.1 million, or 4.0%, to $2.64 billion at September 30, 2024 from $2.75 billion at December 31, 2023, commercial real estate loans decreased $51.4 million, or 5.5%, to $878.2 million at September 30, 2024 from $929.6 million at December 31, 2023, one-to-four family residential loans decreased $11.1 million, or 6.9%, to $149.7 million at September 30, 2024 from $160.8 million at December 31, 2023, and other loans decreased $925,000, or 35.8%, to $1.7 million at September 30, 2024 from $2.6 million at December 31, 2023. Partially offsetting these decreases were increases in commercial and industrial loans of $19.1 million, or 12.3%, to $174.4 million at September 30, 2024 from $155.3 million at December 31, 2023, home equity and lines of credit of $8.4 million, or 5.2%, to $171.9 million at September 30, 2024 from $163.5 million at December 31, 2023, and construction and land loans of $2.1 million, or 6.6%, to $33.0 million at September 30, 2024 from $31.0 million at December 31, 2023.

    As of September 30, 2024, non-owner occupied commercial real estate loans (as defined by regulatory guidance) to total risk-based capital was estimated at approximately 447%. Management believes that Northfield Bank (the “Bank”) maintains appropriate risk management practices including risk assessments, board-approved underwriting policies and related procedures, which include monitoring Bank portfolio performance, performing market analysis (economic and real estate), and stressing of the Bank’s commercial real estate portfolio under severe, adverse economic conditions. Although management believes the Bank has implemented appropriate policies and procedures to manage its commercial real estate concentration risk, the Bank’s regulators could require it to implement additional policies and procedures or could require it to maintain higher levels of regulatory capital, which might adversely affect its loan originations, the Company’s ability to pay dividends, and overall profitability.

    Our real estate portfolio includes credit risk exposure to loans collateralized by office buildings and multifamily properties in New York State subject to some form of rent regulation limiting rent increases for rent stabilized multifamily properties. At September 30, 2024, office-related loans represented $183.6 million, or 4.5% of our total loan portfolio, with an average balance of $1.7 million (although we have originated these type of loans in amounts substantially greater than this average) and a weighted average loan-to-value ratio of 59%. Approximately 41% were owner-occupied. The geographic locations of the properties collateralizing our office-related loans are: 50.7% in New York, 47.8% in New Jersey and 1.5% in Pennsylvania. At September 30, 2024, our largest office-related loan had a principal balance of $90.0 million (with a net active principal balance for the Bank of $29.9 million as we have a 33.3% participation interest), was secured by an office facility located in Staten Island, New York, and was performing in accordance with its original contractual terms. At September 30, 2024, multifamily loans that have some form of rent stabilization or rent control totaled approximately $447.5 million, or approximately 11% of our total loan portfolio, with an average balance of $1.7 million (although we have originated these type of loans in amounts substantially greater than this average) and a weighted average loan-to-value ratio of 51%. At September 30, 2024, our largest rent-regulated loan had a principal balance of $16.9 million, was secured by an apartment building located in Staten Island, New York, and was performing in accordance with its original contractual terms. Management continues to closely monitor its office and rent-regulated portfolios. For further details on our rent-regulated multifamily portfolio see “Asset Quality”.

    PCD loans totaled $9.3 million and $9.9 million at September 30, 2024 and December 31, 2023, respectively. The majority of the remaining PCD loan balance consists of loans acquired as part of a Federal Deposit Insurance Corporation-assisted transaction. The Company accreted interest income of $327,000 and $1.1 million attributable to PCD loans for the three and nine months ended September 30, 2024, respectively, as compared to $325,000 and $1.0 million for the three and nine months ended September 30, 2023, respectively. PCD loans had an allowance for credit losses of approximately $2.9 million at September 30, 2024.

    Loan balances are summarized as follows (dollars in thousands):

      September 30, 2024   June 30, 2024   December 31, 2023
    Real estate loans:          
    Multifamily $         2,640,944     $         2,665,202     $         2,750,996  
    Commercial mortgage           878,173               896,157               929,595  
    One-to-four family residential mortgage           149,682               151,948               160,824  
    Home equity and lines of credit           171,946               167,852               163,520  
    Construction and land           33,024               32,607               30,967  
    Total real estate loans           3,873,769               3,913,766               4,035,902  
    Commercial and industrial loans           174,253               165,586               154,984  
    PPP loans           160               202               284  
    Other loans           1,660               2,322               2,585  
    Total commercial and industrial, PPP, and other loans           176,073               168,110               157,853  
    Loans held-for-investment, net (excluding PCD)           4,049,842               4,081,876               4,193,755  
    PCD loans           9,264               9,344               9,899  
    Total loans held-for-investment, net $         4,059,106     $         4,091,220     $         4,203,654  

    The Company’s available-for-sale debt securities portfolio increased by $268.0 million, or 33.7%, to $1.06 billion at September 30, 2024, from $795.5 million at December 31, 2023. The increase was primarily attributable to purchases of securities, partially offset by paydowns, maturities and calls. At September 30, 2024, $869.4 million of the portfolio consisted of residential mortgage-backed securities issued or guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae. In addition, the Company held $74.9 million in U.S. Government agency securities, $118.5 million in corporate bonds, substantially all of which were investment grade, and $684,000 in municipal bonds at September 30, 2024. Unrealized losses, net of tax, on available-for-sale debt securities and held-to-maturity securities approximated $19.6 million and $219,000, respectively, at September 30, 2024, and $32.5 million and $279,000, respectively, at December 31, 2023.

    Equity securities were $10.7 million at September 30, 2024 and $10.6 million at December 31, 2023. Equity securities are primarily comprised of an investment in a Small Business Administration Loan Fund. This investment is utilized by the Bank as part of its Community Reinvestment Act program.

    Total liabilities increased $132.3 million, or 2.7%, to $5.03 billion at September 30, 2024, from $4.90 billion at December 31, 2023. The increase was primarily attributable to an increase in borrowings of $131.6 million, partially offset by a decrease in total deposits of $2.9 million. The Company routinely utilizes brokered deposits and borrowed funds to manage interest rate risk, the cost of interest-bearing liabilities, and funding needs related to loan originations and deposit activity.

    Deposits decreased $2.9 million, or 0.1%, to $3.88 billion at September 30, 2024 as compared to December 31, 2023. Brokered deposits decreased by $17.9 million, or 17.9%, due to maturities that were replaced by borrowings. Deposits, excluding brokered deposits, increased $15.0 million, or 0.4%. The increase in deposits, excluding brokered deposits, was primarily attributable to increases of $80.9 million in time deposits, partially offset by decreases of $14.9 million in transaction accounts, $14.7 million in savings accounts, and $36.3 million in money market accounts. Growth in time deposits was attributable to the current interest rate environment and offering competitive interest rates to attract deposits. Estimated gross uninsured deposits at September 30, 2024 were $1.71 billion. This total includes fully collateralized uninsured governmental deposits and intercompany deposits of $859.3 million, leaving estimated uninsured deposits of approximately $852.2 million, or 22.0%, of total deposits. At December 31, 2023, estimated uninsured deposits totaled $869.9 million, or 22.4% of total deposits.

    Deposit account balances are summarized as follows (dollars in thousands):

      September 30, 2024   June 30, 2024   December 31, 2023
    Transaction:          
    Non-interest bearing checking $         681,741     $         685,574     $         694,903  
    Negotiable orders of withdrawal and interest-bearing checking           1,230,176               1,251,342               1,231,943  
    Total transaction           1,911,917               1,936,916               1,926,846  
    Savings and money market:          
    Savings           911,067               916,598               925,744  
    Money market           265,800               255,550               302,122  
    Brokered money market           —               —               50,000  
    Total savings           1,176,867               1,172,148               1,277,866  
    Certificates of deposit:          
    $250,000 and under           585,606               568,809               525,454  
    Over $250,000           119,033               120,601               98,269  
    Brokered           82,146               —               50,000  
    Total certificates of deposit           786,785               689,410               673,723  
    Total deposits $         3,875,569     $         3,798,474     $         3,878,435  

    Included in the table above are business and municipal deposit account balances as follows (dollars in thousands):

      September 30, 2024   June 30, 2024   December 31, 2023
               
    Business customers $         869,990     $         866,403     $         893,296  
    Municipal (governmental) customers $         799,249     $         815,086     $         768,556  

    Borrowed funds increased to $1.05 billion at September 30, 2024, from $920.5 million at December 31, 2023. The increase in borrowings for the period was primarily due to a $205.5 million increase in borrowings under the Federal Reserve Bank Term Funding Program, which included favorable terms and conditions as compared to FHLB advances. Management utilizes borrowings to mitigate interest rate risk, for short-term liquidity, and to a lesser extent from time to time, as part of leverage strategies.

    The following table sets forth borrowing maturities (excluding overnight borrowings and subordinated debt) and the weighted average rate by year at September 30, 2024 (dollars in thousands):

    Year   Amount (1)   Weighted Average Rate
    2024   $25,000   4.71%
    2025   483,184   4.00%
    2026   148,000   4.36%
    2027   173,000   3.19%
    2028   154,288   3.96%
        $983,472   3.92%
             
    __________________________________________________
    (1) Borrowings maturing in 2025 include $300.0 million of FRB borrowings that can be repaid without any penalty.

    Total stockholders’ equity increased by $119,000 to $699.6 million at September 30, 2024, from $699.4 million at December 31, 2023. The increase was attributable to net income of $18.7 million for the nine months ended September 30, 2024, a $14.1 million increase in accumulated other comprehensive income, associated with an increase in the estimated fair value of our debt securities available-for-sale portfolio due to the increase in market interest rates, and a $1.9 million increase in equity award activity, partially offset by $18.1 million in stock repurchases and $16.5 million in dividend payments. On April 24, 2024, the Board of Directors of the Company approved a $5.0 million stock repurchase program, which was completed in May 2024, and on June 14, 2024, the Board of Directors of the Company approved a $10.0 million stock repurchase program. During the nine months ended September 30, 2024, the Company repurchased 1.8 million of its common stock outstanding at an average price of $10.03 for a total of $18.1 million pursuant to the approved stock repurchase programs. As of September 30, 2024, the Company had no remaining capacity under its current repurchase program.

    The Company’s most liquid assets are cash and cash equivalents, corporate bonds, and unpledged mortgage-related securities issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac, that we can either borrow against or sell. We also have the ability to surrender bank-owned life insurance contracts. The surrender of these contracts would subject the Company to income taxes and penalties for increases in the cash surrender values over the original premium payments. We also have the ability to obtain additional funding from the FHLB and Federal Reserve Bank of New York utilizing unencumbered and unpledged securities and multifamily loans. The Company expects to have sufficient funds available to meet current commitments in the normal course of business. The Company’s on-hand liquidity ratio as of September 30, 2024 was 16.4%.

    The Company had the following primary sources of liquidity at September 30, 2024 (dollars in thousands): 

    Cash and cash equivalents(1) $ 218,733
    Corporate bonds(2) $ 104,633
    Multifamily loans(2) $ 699,343
    Mortgage-backed securities (issued or guaranteed by the U.S. Government, Fannie Mae, or Freddie Mac)(2) $ 491,985
       
    __________________________________________________
    (1) Excludes $14.2 million of cash at Northfield Bank.
    (2) Represents estimated remaining borrowing potential.

    The Company and the Bank utilize the Community Bank Leverage Ratio (“CBLR”) framework. The CBLR replaces the risk-based and leverage capital requirements in the generally applicable capital rules. At September 30, 2024, the Company and the Bank’s estimated CBLR ratios were 12.03% and 12.26%, respectively, which exceeded the minimum requirement to be considered well-capitalized of 9%.

    Asset Quality

    The following table details total non-accrual loans (excluding PCD), non-performing assets, loans over 90 days delinquent on which interest is accruing, and accruing loans 30 to 89 days delinquent at September 30, 2024, June 30, 2024, and December 31, 2023 (dollars in thousands):

      September 30, 2024   June 30, 2024   December 31, 2023
    Non-accrual loans:          
    Held-for-investment          
    Real estate loans:          
    Multifamily $         2,651       $         2,691       $         2,709    
    Commercial           8,823                 10,244                 6,491    
    One-to-four family residential           66                 69                 104    
    Home equity and lines of credit           1,123                 1,124                 499    
    Commercial and industrial           15,117                 2,570                 305    
    Other           6                 6                 7    
    Total non-accrual loans           27,786                 16,704                 10,115    
    Loans delinquent 90 days or more and still accruing:          
    Held-for-investment          
    Real estate loans:          
    Multifamily           —                 —                 201    
    Commercial           1,161                 —                 —    
    One-to-four family residential           304                 136                 406    
    Home equity and lines of credit           343                 467                 711    
    Commercial and industrial           835                 —                 —    
    Total loans held-for-investment delinquent 90 days or more and still accruing           2,643                 603                 1,318    
    Total non-performing loans/assets $         30,429       $         17,307       $         11,433    
    Non-performing loans to total loans           0.75   %             0.42   %             0.27   %
    Non-performing assets to total assets           0.53   %             0.30   %             0.20   %
    Accruing loans 30 to 89 days delinquent $         16,057       $         6,265       $         8,683    

    The Company’s non-performing loans at September 30, 2024 totaled $30.4 million, or 0.75%, of total loans as compared to $11.4 million, or 0.27%, at December 31, 2023. The $19.0 million increase in non-performing loans was primarily attributable to an increase in non-performing commercial and industrial loans of $15.6 million and an increase of $3.5 million in non-performing commercial real estate loans. One commercial and industrial relationship with an outstanding balance of $12.5 million at September 30, 2024, experienced credit deterioration and was placed on non-accrual status during the third quarter of 2024. The loan is currently in the process of being restructured and we expect to receive a partial payment of $10.0 million on or before October 31, 2024, with the remaining $2.5 million to be repaid over three years. The loan was individually evaluated for impairment, we charged off $878,000 and provided a specific reserve of $1.3 million. Additionally, management evaluated the collateral from the Company and assets subject to personal guarantees and, based on current estimates, believes there is adequate collateral and assets to support the current value of the loan absent the expected repayment of $10.0 million. Another commercial and industrial relationship with an outstanding balance of $750,000 is in the process of maturity extension. Additionally, there was an increase in non-performing unsecured small business loans. Unsecured small business loans totaled $31.0 million and $37.4 million at September 30, 2024 and December 31, 2023, respectively. Management continues to closely monitor the small business unsecured commercial and industrial loan portfolio.

    The increase in non-performing commercial real estate loans was primarily attributable to one loan with a balance of $4.4 million, which was put on non-accrual status during the first quarter of 2024. Based on the results of the impairment analysis for this loan, no impairment reserve was necessary as the loan is adequately covered by collateral (a private residence and retail property, both located in New Jersey), with aggregate appraised values totaling $8.7 million.

    Accruing Loans 30 to 89 Days Delinquent

    Loans 30 to 89 days delinquent and on accrual status totaled $16.1 million, $6.3 million and $8.7 million at September 30, 2024, June 30, 2024, and December 31, 2023, respectively. The following table sets forth delinquencies for accruing loans by type and by amount at September 30, 2024, June 30, 2024, and December 31, 2023 (dollars in thousands):
      

      September 30, 2024   June 30, 2024   December 31, 2023
    Held-for-investment          
    Real estate loans:          
    Multifamily $         2,259     $         168     $         740  
    Commercial           5,689               1,557               1,010  
    One-to-four family residential           2,286               1,769               3,339  
    Home equity and lines of credit           1,369               786               817  
    Commercial and industrial loans           4,450               1,977               2,767  
    Other loans           4               8               10  
    Total delinquent accruing loans held-for-investment $         16,057     $         6,265     $         8,683  

    The increase in multifamily delinquent loans was primarily due to two relationships totaling $1.5 million that became current subsequent to September 30, 2024. The increase in commercial real estate delinquent loans was primarily due to two participation loans totaling $5.6 million that matured, and the lead bank is in the process of extending their maturity and should become current in the fourth quarter of 2024. The increase in commercial and industrial delinquent loans from December 31, 2023, was primarily due to two loans to one borrower totaling $1.5 million which we expect to become current in the fourth quarter of 2024, and, to a lesser extent, an increase in delinquencies in unsecured small business loans.

    Subsequent to the quarter end, $1.1 million of home equity and lines of credit loans, $1.5 million of one-to-four family residential loans, and $1.5 million of commercial and industrial loans became current.

    PCD Loans (Held-for-Investment)

    The Company accounts for PCD loans at estimated fair value using discounted expected future cash flows deemed to be collectible on the date acquired. Based on its detailed review of PCD loans and experience in loan workouts, management believes it has a reasonable expectation about the amount and timing of future cash flows and accordingly has classified PCD loans ($9.3 million at September 30, 2024 and $9.9 million at December 31, 2023, respectively) as accruing, even though they may be contractually past due. At September 30, 2024, 2.1% of PCD loans were past due 30 to 89 days, and 24.6% were past due 90 days or more, as compared to 2.9% and 27.1%, respectively, at December 31, 2023.

    Our multifamily loan portfolio at September 30, 2024 totaled $2.64 billion, or 65% of our total loan portfolio, of which $447.5 million, or 11%, included loans collateralized by properties in New York with units subject to some percentage of rent regulation. The table below sets forth details about our multifamily loan portfolio in New York (dollars in thousands).

    % Rent Regulated   Balance   % Portfolio Total NY Multifamily Portfolio   Average Balance   Largest Loan   LTV*   Debt Service Coverage Ratio (DSCR)*   30-89 Days Delinquent   Non-Accrual   Special Mention   Substandard
    0   $         286,728             39.1   %   $         1,166     $         16,603     51.0%   1.57x   $         1,709     $         534     $         782     $         874  
    >0-10             4,745             0.7                 1,582               2,128     51.4   1.46             —               —               —               —  
    >10-20             18,681             2.5                 1,437               2,865     49.2   1.59             —               —               —               —  
    >20-30             19,585             2.7                 2,176               5,512     54.1   1.64             —               —               —               —  
    >30-40             15,183             2.1                 1,265               3,088     48.3   1.63             —               —               —               —  
    >40-50             22,208             3.0                 1,306               2,740     48.2   1.84             —               —               —               —  
    >50-60             9,452             1.3                 1,575               2,341     39.9   2.03             —               —               —               —  
    >60-70             19,201             2.6                 3,200               11,339     53.0   1.46             —               —               —               —  
    >70-80             22,405             3.1                 2,489               4,914     48.0   1.53             —               —               —               —  
    >80-90             20,820             2.8                 1,157               3,148     46.6   1.71             —               —               —               —  
    >90-100             295,256             40.1                 1,779               16,909     52.6   1.65             —               2,117               1,204               4,482  
    Total   $         734,264     100.0   %   $         1,454     $         16,909     51.2%   1.62x   $         1,709     $         2,651     $         1,986     $         5,356  

    The table below sets forth our New York rent-regulated loans by county (dollars in thousands).

    County   Balance   LTV*   DSCR*
    Bronx   $         118,400     51.7%   1.64x
    Kings             191,745     51.5%   1.66
    Nassau             2,176     36.2%   1.88
    New York             49,871     47.3%   1.64
    Queens             38,864     44.3%   1.81
    Richmond             28,790     60.6%   1.64
    Westchester             17,689     61.8%   1.37
    Total   $         447,535     51.4%   1.65x
                 
    * Weighted Average

    None of the loans that are rent-regulated in New York are interest only. During the remainder of 2024, one loan with an aggregate principal balance of $1.8 million will re-price.

    About Northfield Bank

    Northfield Bank, founded in 1887, operates 38 full-service banking offices in Staten Island and Brooklyn, New York, and Hunterdon, Middlesex, Mercer, and Union counties, New Jersey. For more information about Northfield Bank, please visit www.eNorthfield.com.

    Forward-Looking Statements: This release may contain certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, and may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “should,” “plan,” “estimate,” “predict,” “continue,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Northfield Bancorp, Inc. Any or all of the forward-looking statements in this release and in any other public statements made by Northfield Bancorp, Inc. may turn out to be wrong. They can be affected by inaccurate assumptions Northfield Bancorp, Inc. might make or by known or unknown risks and uncertainties as described in our SEC filings, including, but not limited to, those related to general economic conditions, particularly in the market areas in which the Company operates, changes in liquidity, the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio, competition among depository and other financial institutions, including with respect to fees and interest rates, changes in laws or government regulations or policies affecting financial institutions, including changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System, changes in asset quality, prepayment speeds, charge-offs and/or credit loss provisions, our ability to access cost-effective funding, changes in the value of our goodwill or other intangible assets, changes in regulatory fees, assessments and capital requirements, inflation and changes in the interest rate environment that reduce our margins, reduce the fair value of financial instruments or reduce our ability to originate loans, cyber security and fraud risks against our information technology and those of our third-party providers and vendors, the effects of war, conflict, and acts of terrorism, our ability to successfully integrate acquired entities, adverse changes in the securities markets, and the effects of the COVID-19 pandemic. Consequently, no forward-looking statement can be guaranteed. Northfield Bancorp, Inc. does not intend to update any of the forward-looking statements after the date of this release, or conform these statements to actual events.

     
    (Tables follow)
     
    NORTHFIELD BANCORP, INC.
    SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
    (Dollars in thousands, except per share amounts) (unaudited)
                   
                  At or For the
      At or For the Three Months Ended   Nine Months Ended
      September 30,   June 30   September 30,
      2024   2023   2024   2024   2023
    Selected Financial Ratios:                  
    Performance Ratios (1)                  
    Return on assets (ratio of net income to average total assets)         0.46   %           0.59   %           0.41   %           0.43   %           0.71   %
    Return on equity (ratio of net income to average equity)         3.74               4.74               3.45               3.59               5.69    
    Average equity to average total assets         12.24               12.49               12.00               12.09               12.44    
    Interest rate spread         1.42               1.69               1.44               1.42               1.91    
    Net interest margin         2.08               2.25               2.09               2.07               2.41    
    Efficiency ratio (2)         64.07               64.65               72.89               69.44               60.06    
    Non-interest expense to average total assets         1.43               1.49               1.60               1.53               1.50    
    Non-interest expense to average total interest-earning assets         1.50               1.56               1.68               1.60               1.57    
    Average interest-earning assets to average interest-bearing liabilities         128.75               132.21               128.47               128.63               133.66    
    Asset Quality Ratios:                  
    Non-performing assets to total assets         0.53               0.19               0.30               0.53               0.19    
    Non-performing loans (3) to total loans (4)         0.75               0.24               0.42               0.75               0.24    
    Allowance for credit losses to non-performing loans         115.67               378.67               200.96               115.67               378.67    
    Allowance for credit losses to total loans held-for-investment, net (5)         0.87               0.91               0.85               0.87               0.91    
    (1) Annualized where appropriate.
    (2) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income.
    (3) Non-performing loans consist of non-accruing loans and loans 90 days or more past due and still accruing (excluding PCD loans), and are included in total loans held-for-investment, net.
    (4) Includes originated loans held-for-investment, PCD loans, acquired loans and loans held-for-sale.
    (5) Includes originated loans held-for-investment, PCD loans, and acquired loans.
     
    NORTHFIELD BANCORP, INC.
    CONSOLIDATED BALANCE SHEETS
    (Dollars in thousands, except share and per share amounts) (unaudited)
     
      September 30, 2024   June 30, 2024   December 31, 2023
    ASSETS:          
    Cash and due from banks $         14,193     $         14,575     $         13,889  
    Interest-bearing deposits in other financial institutions           218,733               138,914               215,617  
    Total cash and cash equivalents           232,926               153,489               229,506  
    Trading securities           13,759               12,939               12,549  
    Debt securities available-for-sale, at estimated fair value           1,063,486               1,119,439               795,464  
    Debt securities held-to-maturity, at amortized cost           9,681               9,749               9,866  
    Equity securities           10,699               13,964               10,629  
    Loans held-for-sale           4,897               —               —  
    Loans held-for-investment, net           4,059,106               4,091,220               4,203,654  
    Allowance for credit losses           (35,197 )             (34,780 )             (37,535 )
    Net loans held-for-investment           4,023,909               4,056,440               4,166,119  
    Accrued interest receivable           19,299               19,343               18,491  
    Bank-owned life insurance           174,482               173,483               171,543  
    Federal Home Loan Bank of New York stock, at cost           37,269               41,785               39,667  
    Operating lease right-of-use assets           28,943               29,305               30,202  
    Premises and equipment, net           22,973               23,628               24,771  
    Goodwill           41,012               41,012               41,012  
    Other assets           47,516               51,785               48,577  
    Total assets $         5,730,851     $         5,746,361     $         5,598,396  
               
    LIABILITIES AND STOCKHOLDERS’ EQUITY:          
    LIABILITIES:          
    Deposits $         3,875,569     $         3,798,474     $         3,878,435  
    Securities sold under agreements to repurchase           —               —               25,000  
    Federal Home Loan Bank advances and other borrowings           990,871               1,089,727               834,272  
    Subordinated debentures, net of issuance costs           61,386               61,331               61,219  
    Lease liabilities           33,529               34,035               35,205  
    Advance payments by borrowers for taxes and insurance           22,492               26,113               25,102  
    Accrued expenses and other liabilities           47,440               43,657               39,718  
    Total liabilities           5,031,287               5,053,337               4,898,951  
               
    STOCKHOLDERS’ EQUITY:          
    Total stockholders’ equity           699,564               693,024               699,445  
    Total liabilities and stockholders’ equity $         5,730,851     $         5,746,361     $         5,598,396  
               
    Total shares outstanding           42,904,342               43,466,961               44,524,929  
    Tangible book value per share (1) $         15.35     $         15.00     $         14.78  
    (1) Tangible book value per share is calculated based on total stockholders’ equity, excluding intangible assets (goodwill and core deposit intangibles), divided by total shares outstanding as of the balance sheet date. Core deposit intangibles were $90, $111, and $154 at September 30, 2024, June 30, 2024, and December 31, 2023, respectively, and are included in other assets.
     
    NORTHFIELD BANCORP, INC.
    CONSOLIDATED STATEMENTS OF INCOME
    (Dollars in thousands, except share and per share amounts) (unaudited)
     
      For the Three Months Ended   For the Nine Months Ended
      September 30,   June 30,   September 30,
        2024       2023       2024       2024       2023  
    Interest income:                  
    Loans $         46,016     $         46,213     $         45,967     $         138,030     $         135,220  
    Mortgage-backed securities           8,493               3,664               7,355               20,246               11,170  
    Other securities           2,684               1,095               3,506               10,031               3,593  
    Federal Home Loan Bank of New York dividends           914               933               935               2,819               2,125  
    Deposits in other financial institutions           1,211               831               2,457               7,060               2,225  
    Total interest income           59,318               52,736               60,220               178,186               154,333  
    Interest expense:                  
    Deposits           20,304               13,614               20,664               60,241               31,918  
    Borrowings           9,949               8,593               10,041               30,653               24,182  
    Subordinated debt           836               837               828               2,492               2,484  
    Total interest expense           31,089               23,044               31,533               93,386               58,584  
    Net interest income           28,229               29,692               28,687               84,800               95,749  
    Provision/(benefit) for credit losses           2,542               188               (618 )             2,339               1,082  
    Net interest income after (benefit)/provision for credit losses           25,687               29,504               29,305               82,461               94,667  
    Non-interest income:                  
    Fees and service charges for customer services           1,611               1,317               1,570               4,796               4,006  
    Income on bank-owned life insurance           999               920               976               2,939               2,679  
    (Losses)/gains on available-for-sale debt securities, net           (7 )             —               1               (6 )             (17 )
    Gains/(losses) on trading securities, net           710               (295 )             188               1,597               723  
    Gain on sale of loans           —               99               51               51               134  
    Other           265               80               73               441               744  
    Total non-interest income           3,578               2,121               2,859               9,818               8,269  
    Non-interest expense:                  
    Compensation and employee benefits           11,424               10,920               13,388               37,577               34,310  
    Occupancy           3,030               3,416               3,222               9,805               10,032  
    Furniture and equipment           450               479               477               1,411               1,393  
    Data processing           1,780               1,994               2,177               6,104               6,308  
    Professional fees           943               883               681               2,433               2,622  
    Advertising           282               414               482               1,282               1,834  
    Federal Deposit Insurance Corporation insurance           626               591               649               1,863               1,763  
    Credit loss expense/(benefit) for off-balance sheet exposures           151               160               103               337               (390 )
    Other           1,692               1,710               1,814               4,891               4,598  
    Total non-interest expense           20,378               20,567               22,993               65,703               62,470  
    Income before income tax expense           8,887               11,058               9,171               26,576               40,466  
    Income tax expense           2,364               2,877               3,214               7,882               11,019  
    Net income $         6,523     $         8,181     $         5,957     $         18,694     $         29,447  
    Net income per common share:                  
    Basic $         0.16     $         0.19     $         0.14     $         0.45     $         0.67  
    Diluted $         0.16     $         0.19     $         0.14     $         0.45     $         0.67  
    Basic average shares outstanding           41,028,213               42,866,246               41,999,541               41,794,149               43,848,873  
    Diluted average shares outstanding           41,088,637               42,918,174               42,002,650               41,829,230               43,927,350  
     
    NORTHFIELD BANCORP, INC.
    ANALYSIS OF NET INTEREST INCOME
    (Dollars in thousands) (unaudited)
     
      For the Three Months Ended
      September 30, 2024   June 30, 2024   September 30, 2023
      Average Outstanding Balance   Interest   Average Yield/ Rate (1)   Average Outstanding Balance   Interest   Average Yield/ Rate (1)   Average Outstanding Balance   Interest   Average Yield/ Rate (1)
    Interest-earning assets:                                  
    Loans (2) $         4,079,974     $         46,016             4.49   %   $         4,128,105     $         45,967             4.48   %   $         4,252,752     $         46,213             4.31   %
    Mortgage-backed securities (3)           901,042               8,493             3.75                 824,498               7,355             3.59                 660,753               3,664             2.20    
    Other securities (3)           273,312               2,684             3.91                 333,855               3,506             4.22                 209,341               1,095             2.08    
    Federal Home Loan Bank of New York stock           38,044               914             9.56                 38,707               935             9.72                 41,278               933             8.97    
    Interest-earning deposits in financial institutions           99,837               1,211             4.83                 191,470               2,457             5.16                 73,005               831             4.52    
    Total interest-earning assets           5,392,209               59,318             4.38                 5,516,635               60,220             4.39                 5,237,129               52,736             4.00    
    Non-interest-earning assets           275,342                       265,702                       248,315          
    Total assets $         5,667,551             $         5,782,337             $         5,485,444          
                                       
    Interest-bearing liabilities:                                  
    Savings, NOW, and money market accounts $         2,417,725     $         12,717             2.09   %   $         2,490,372     $         13,183             2.13   %   $         2,408,218     $         8,865             1.46   %
    Certificates of deposit           700,763               7,587             4.31                 701,272               7,481             4.29                 551,904               4,749             3.41    
    Total interest-bearing deposits           3,118,488               20,304             2.59                 3,191,644               20,664             2.60                 2,960,122               13,614             1.82    
    Borrowed funds           1,008,338               9,949             3.93                 1,041,035               10,041             3.88                 939,922               8,593             3.63    
    Subordinated debt           61,350               836             5.42                 61,294               828             5.43                 61,127               837             5.43    
    Total interest-bearing liabilities           4,188,176               31,089             2.95                 4,293,973               31,533             2.95                 3,961,171               23,044             2.31    
    Non-interest bearing deposits           683,283                       691,384                       739,266          
    Accrued expenses and other liabilities           102,233                       103,082                       100,103          
    Total liabilities           4,973,692                       5,088,439                       4,800,540          
    Stockholders’ equity           693,859                       693,898                       684,904          
    Total liabilities and stockholders’ equity $         5,667,551             $         5,782,337             $         5,485,444          
                                       
    Net interest income     $         28,229             $         28,687             $         29,692      
    Net interest rate spread (4)                 1.42   %                   1.44   %                   1.69   %
    Net interest-earning assets (5) $         1,204,033             $         1,222,662             $         1,275,958          
    Net interest margin (6)                 2.08   %                   2.09   %                   2.25   %
    Average interest-earning assets to interest-bearing liabilities                 128.75   %                   128.47   %                   132.21   %
    (1) Average yields and rates are annualized.
    (2) Includes non-accruing loans.
    (3) Securities available-for-sale and other securities are reported at amortized cost.
    (4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
    (5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
    (6) Net interest margin represents net interest income divided by average total interest-earning assets.
       
      For the Nine Months Ended
      September 30, 2024   September 30, 2023
      Average Outstanding Balance   Interest   Average Yield/ Rate (1)   Average Outstanding Balance   Interest   Average Yield/ Rate (1)
    Interest-earning assets:                      
    Loans (2) $         4,127,409     $         138,030             4.47   %   $         4,260,827     $         135,220             4.24   %
    Mortgage-backed securities (3)           791,850               20,246             3.42                 703,320               11,170             2.12    
    Other securities (3)           332,831               10,031             4.03                 241,280               3,593             1.99    
    Federal Home Loan Bank of New York stock           38,781               2,819             9.71                 41,093               2,125             6.91    
    Interest-earning deposits in financial institutions           184,420               7,060             5.11                 72,683               2,225             4.09    
    Total interest-earning assets           5,475,291               178,186             4.35                 5,319,203               154,333             3.88    
    Non-interest-earning assets           269,180                       244,319          
    Total assets $         5,744,471             $         5,563,522          
                           
    Interest-bearing liabilities:                      
    Savings, NOW, and money market accounts $         2,457,320     $         38,231             2.08   %   $         2,443,400     $         19,194             1.05   %
    Certificates of deposit           685,510               22,010             4.29                 572,283               12,724             2.97    
    Total interest-bearing deposits           3,142,830               60,241             2.56                 3,015,683               31,918             1.42    
    Borrowed funds           1,052,589               30,653             3.89                 902,802               24,182             3.58    
    Subordinated debt           61,294               2,492             5.43                 61,164               2,484             5.43    
    Total interest-bearing liabilities $         4,256,713               93,386             2.93       $         3,979,649               58,584             1.97    
    Non-interest bearing deposits           691,406                       788,991          
    Accrued expenses and other liabilities           101,639                       102,765          
    Total liabilities           5,049,758                       4,871,405          
    Stockholders’ equity           694,713                       692,117          
    Total liabilities and stockholders’ equity $         5,744,471             $         5,563,522          
                           
    Net interest income     $         84,800             $         95,749      
    Net interest rate spread (4)                 1.42   %                   1.91   %
    Net interest-earning assets (5) $         1,218,578             $         1,339,554          
    Net interest margin (6)                 2.07   %                   2.41   %
    Average interest-earning assets to interest-bearing liabilities                 128.63   %                   133.66   %
    (1) Average yields and rates are annualized. 
    (2) Includes non-accruing loans. 
    (3) Securities available-for-sale and other securities are reported at amortized cost.
    (4) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.
    (5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.
    (6) Net interest margin represents net interest income divided by average total interest-earning assets.

    Company Contact:
    William R. Jacobs
    Chief Financial Officer
    Tel: (732) 499-7200 ext. 2519

    The MIL Network –

    January 25, 2025
  • MIL-OSI Economics: Transcript of Fiscal Monitor October 2024 Press Briefing

    Source: International Monetary Fund

    October 23, 2024

    SPEAKERS:
    Vitor Gaspar, Director, Fiscal Affairs Department
    Era Dabla‑Norris, Deputy Director, Fiscal Affairs Department
    Davide Furceri, Division Chief, Fiscal Affairs Department
    Tatiana Mossot, Moderator, Senior Communications Officer

    The Moderator (Ms. Mossot): Good morning, good afternoon, and good evening to our viewers around the world. I am Tatiana Mossot, the IMF Communications Department, and I will be your host for today’s press briefing on the Annual Meetings 2024 Fiscal Monitor, “Putting a Lead on Public Debt.” I am pleased to introduce this morning the Director of the Fiscal Affairs Department, Vitor Gaspar. He is joined by Era Dabla‑Norris, Deputy Director of the Fiscal Affairs Department, and Davide Furceri, who is the Division Chief of the Fiscal Affairs Department. Good morning, Vitor, Era, Davide.

    Before taking your questions, let me kick‑start our briefing by turning to you, Vitor, for your opening remarks. Vitor, the floor is yours.

    Mr. Gaspar: Thank you so much, Tatiana. Good morning, everybody. Thank you all for your interest in the Fiscal Monitor, covering fiscal policies all around the world. Deficits are high and global public debt is very high, rising, and risky. Global public debt is projected to go above $100 trillion this year. At the current pace, the global debt‑to‑GDP ratio will approach 100 percent by the end of the decade, rising above the pandemic peak. But the message of high and rising debt masks considerable diversity across countries. I will distinguish three groups.

    Public debt is higher and projected to grow faster than pre‑pandemic in about one third of the countries. This includes not only the largest economies, China and the United States, but also other large countries such as Brazil, France, Italy, South Africa, and the United Kingdom, representing in total about 70 percent of global GDP.

    In another one third of the countries, public debt is higher but projected to grow slower or decline compared with pre‑pandemic.

    In the rest of the world, debt is lower than pre‑pandemic. The Fiscal Monitor makes the case that public debt risks are elevated, and prospects are worse than they look. The Fiscal Monitor presents a novel framework, debt at risk, that illustrates risks around the most likely debt projection at various time horizons. Here we concentrate on the next 3 years.

    Our analysis shows that risks to public debt projections are tilted to the upside. In a severe adverse scenario, public debt would be 20 percentage points of GDP above the baseline projection. In most countries, fiscal plans that governments have put in place are insufficient to deliver stable or declining public debt ratios with a high degree of confidence. Additional efforts are necessary. Delaying adjustment is costly and risky. Kicking the can down the road will not do. The time to act is now. The likelihood of a soft landing has increased. Monetary policy has already started to ease in major economies. Unemployment is low in many countries. And, therefore, given these circumstances, most economies are well‑positioned to deal with fiscal adjustment.

    But it does matter how it is done. While the specific circumstances depend on—while specifics depend on country circumstances, the Fiscal Monitor and earlier IMF work provide useful pointers. For example, countries should avoid cuts in public investment. This can have severe effects on growth. Good governance and transparency improve the prospects of public understanding and social acceptance of fiscal reforms.

    Countries that are sufficiently away from debt distress should adjust in a sustained and gradual way to contain debt vulnerabilities without unnecessary adverse effect on growth and employment. However, in countries in debt distress or at high risk of debt distress, timely and frontloaded decisive action to control public debt or even debt restructuring may be necessary. Everywhere, fiscal policy, as structural policy, can make a substantial contribution to growth and jobs.

    What is the bottom line? Public debt is very high, rising, and risky. The time is now to pivot towards a gradual, sustained, and people‑focused fiscal adjustment.

    My colleagues and I are ready to answer your questions. Thank you for your attention and interest.

    The Moderator (Ms. Mossot): Thank you, Vitor. So, we will open the floor for questions. Thank you.

    Question: Good morning, given your findings on the increasing trend of spending across the political spectrum, how do governments then plan to balance the urgent need, as you stated, for investment in critical areas like healthcare and climate adaptation with the risks of what you also stated, overly optimistic debt projections?

    Ms. Dabla‑Norris: Thank you, global debt is very high, 100 trillion this year and rising. And debt risks, all the ones you mentioned, are also very elevated. So, policymakers are now facing a fundamental policy trilemma, to maintain debt sustainability, amid very high levels of debt in some countries, to accommodate the spending pressures for climate adaptation, for development goals, for population aging, and at the same time to garner support that is needed for reforms. This is why we are calling for a strategic pivot in public finances for countries to put their public finances in order. And why is this important? Because this can help create room that is needed for the priority spending. It can create fiscal space to combat future shocks that will surely come. And it can also help sustain long‑term growth.

    What this means is that for some countries, a very decisive implementation of reforms is needed now, under current plans. For many others, an additional adjustment is required that needs to be gradual but sustained. And yet for others with very high debt levels that are rising, a more frontloaded adjustment will be needed.

    These efforts, these fiscal efforts need to be people‑focused, because you want to balance the trade‑off between these measures adversely impacting growth and inequality. So, here it is important to seek to preserve public spending. It is important to seek to preserve social spending. And improving the quality, the composition, the efficiency of government spending can ensure that every dollar that is spent has maximum impact. It creates room for other types of spending without adding to debt pressures.

    Mobilizing revenues, setting up broad‑based and fair tax systems can allow countries to collect revenues to meet their spending needs. And this is particularly important in the case of emerging market and developing economies, which have considerable untapped tax potential.

    But I think it is also important to note that policymakers need to build the trust that taxpayer’s resources that are being collected will be well‑spent. This is why we are emphasizing strengthening governance, improving fiscal frameworks to build that trust that is needed for reforms.

    Ms. Mossot: We will go to this side of the room. The gentleman in the fourth row.

    Question: Thank you for doing this. I was wondering if you could please drive us a bit further to the debt‑at‑risk framework. Thank you.

    Mr. Furceri: Thank you. The debt risk is a framework that links current macroeconomic, financial, and political conditions to the entire spectrum of the future debt outcomes. So, in some sense it goes beyond the point focus that we typically provide, and it enables economic policymakers to first quantify what are the risks surrounding the debt projections and, second, what are the sources of this risk.

    The current framework estimates that in a severely adverse scenario but plausible, debt to GDP could be 20 percentage points higher in the next 3 years than currently projected. Why is this the case? This is because there are risks related to weaker growth, tighter financial conditions, as well as economic and political uncertainty.

    Another point that the Fiscal Monitor makes is that beyond this global level, the debt to risk associated to the global level, there is significant heterogeneities across countries. For example, in the case of advanced economies, our estimates of data risk are about 135 percent to GDP by 2026. This is a high level. It is lower than what we observed during the peak of the pandemic, but it is high, and it indeed is even higher than what we observed during the Global Financial Crisis.

    In the case of emerging market economies, what we see is that debt risk is increasing even compared to the pandemic and our estimate is about 88 percentage points of GDP.

    Summarizing, we think that this is a framework that could be useful to quantify a risk, identify the sources, and then make a response to this risk.

    Ms. Mossot: We will take another question in the room before going online.

    Question: Thank very much. I would like to know, Vitor, how can fiscal governance be strengthened to ensure long‑term fiscal adjustments, and while at it, what are the risks if fiscal adjustments are delayed, and how would that affect global financial markets? My second question, what lessons can be learned from countries that have successfully managed high debt levels in the past and how can transparency and accountability in public finance be improved to build trust and ensure effective debt management?

    Mr. Gaspar: Thank you so much. I will start with the timing. So I have already emphasized that delaying adjustment is costly and risky. You come from Ghana. If you allow me to place your question in the context of the sub‑Saharan Africa more broadly. I would argue that building fiscal space is not only crucial to limit public debt risks, but in many countries in sub‑Saharan Africa, it is key to enable this state to play its full role in development, which is, of course, a very important priority in the region.

    You asked about lessons from experience. I would say that fiscal adjustment should be timely. It should be decisive. It should be well‑designed. And it should be effectively communicated. And you have pointers on all of this in the Fiscal Monitor.

    You asked a very important question on governance. I would put it together with transparency and accountability. Era has already commented on why it is so important from a political viewpoint, but we have been working in this area for many years. For example, the IMF has a code on fiscal transparency that is extremely interesting. Something that also came up in a seminar that I participated in yesterday is the opportunities afforded by technology to make progress on governance. One of the speakers from India introduced this idea of three Ts that I found very inspiring. The three Ts are technology that is used to promote transparency. And if you have technology and transparency, you should expect to gain trust. And if you have trust, you have the citizens behind the government and, therefore, even willing to pay taxes, not necessarily happily, but in a quasi-voluntary way.

    Ms. Mossot: Thank you, Vitor. We have a question from Forbes, Mexico.” I have a question in countries like Mexico where fiscal consolidation is necessary. What are the biggest risks of this consolidation and how could it boost economic growth?” This is a question for Era.

    Ms. Dabla‑Norris: So, as we have said more generally, the design of fiscal adjustment is what really matters. And there is a right way to do it, and there are many wrong ways to do it.

    In the Fiscal Monitor, we illustrate how countries can undertake fiscal adjustment in a way that is what we call people focused. By that I mean, we want to trade off the negative impacts of the adjustment on growth and on inequality. And we do this by looking at different types of fiscal instruments. And different instruments have very different impacts. So, for example, progressive taxes have a very different impact on consumption and incentives to work and save as compared to other types of taxation.

    Similarly, cutting public investment has both negative short‑run effects on growth and wages, as well as more medium‑term impacts on growth. Cutting regressive energy subsidies similarly have much less of a deleterious impact on income and the consumption of the poor.

    So depending upon the country context, depending upon whether there is scope to raise revenues in non‑distortionary ways, depending upon the nature and the composition of public spending, there are ways for countries to do fiscal adjustment in a manner that is growth‑friendly and people‑friendly.

    Ms. Mossot: So, the last one we have from online is for you, Davide. “The report suggests that low‑income development countries should build tax capacity and improve spending efficiency. Given the high levels of debt and limited resources in these countries, how realistic are these recommendations without substantial international financial support?”

    Mr. Furceri: Indeed, many developing countries face significant pressing spending needs. For sustained development goals, to achieve climate goals, our estimate in the previous Fiscal Monitor suggests that the envelope of these spending needs could be as much as high as 16 percent of GDP.

    So, in this context, one important policy action is to increase revenue through revenue mobilization. Now, it is important that this revenue mobilization strategy is guided by the principle that make the tax system more efficient, more equitable, and more progressive. So policies could be, for example, to reduce informalities, broaden the tax base, increase efficiency in revenue collections, as well as progressivity.

    In the report, we also make the point that improving fiscal institutions, as also Era mentioned, is key to garner public support and to make sure that the debt system is indeed efficient.

    There is also policy on the spending side, improving the quality, the composition, and the efficiency spending to make sure that each dollar spent is well spent, is spent on the key priority areas, and maximizing it.

    Now, there are countries that will need help. The IMF as in the past years and as always has provided significant advice to countries from policy support, policy advice but also financing support. Just to give a number, over the past 4 years, about $60 billion of funding has been provided to African economies to help their challenge. And important, the IMF is also providing a variety of capacity development to support, including exactly in this area, for example, increase Public Finance Management, improve taxation, revenue mobilization, as well as a new area that are developing that are becoming more and more important, such as climate change.

    The Moderator (Ms. Mossot): Thank you. The gentleman with his book in the hand.

    Question: Thank you. You mentioned in the report that developed economies, including the United Kingdom, face risks if they do not bring debt down. We have a budget next week. Perhaps you could tell us what are those risks if the U.K. does not address its debt position quickly?

    Mr. Gaspar: So, when we think about the United Kingdom, the United Kingdom is one of the countries that I listed where debt is substantially higher than it was projected pre‑pandemic. It is also one of the countries where debt is projected to increase over time, albeit at a declining pace.

    If I were to give you my concern about the U.K., I would use what Kristalina Georgieva, the Managing Director of the Fund, emphasizes a theme through these Annual Meetings, the combination of high debt and low growth. For the case of the United Kingdom, I would put it as follows. The United Kingdom is living with interest rates that are close to U.S. interest rates, but it is also living with growth rates that are not close to U.S. growth rates. And that leads to a theme that has been amply debated in the United Kingdom, which is the importance of public investment.

    In the United Kingdom, as in many other advanced economies, public investment as a percentage of GDP has been trending down. And given challenges associated with the energy transition, new technologies, technological innovation, and much else, public investment is badly needed. The Fiscal Monitor emphasizes that public investment should be protected in the framework of a set of rules and budgetary procedures that foster sound macroeconomic performance. The fact that that debate is very much at the center of the debate in the United Kingdom right now is very much welcome.

    Ms. Mossot: We will take another question on this side. The lady in green.

    Question: Thank you. After 3 years of consolidation, fiscal deficits are widening in the western Balkans. The public expenditures are increasing but more on social debt—more on social spendings than on capital spendings. How do you evaluate the economic situation in this region?

    Ms. Dabla‑Norris: So, in western Balkans as a whole, growth has picked up since 2023, although there are differences across countries. For example, in North Macedonia, growth is projected to be 2.2 percent in 2024, down from 2.7 percent in 2023. But for the region, the growth momentum is expected to continue in 2025.

    Now, when it comes to inflation, we see that headline inflation continues to ease throughout the region, but core inflation remains stubbornly high in some countries.

    In terms of fiscal and debt, the differential—the interest and growth differential for the region is projected to remain negative over the medium term. And this is a good thing because it is favorable to debt dynamics, but this gap is closing. It is narrowing over time.

    So, what is important at this juncture for these countries is to sustainably lift their growth prospects. And the IMF has spoken at length about the importance of structural and fiscal structural reforms that are needed to improve the composition of spending, to lift public investment sustainably and to undertake the labor and product market reforms that are required to sustainably boost productivity.

    Ms. Mossot: Thank you. Back to the center of the room.

    Question: Thanks for taking my question. I wanted to ask about France. Do you believe that the French government’s plans to return to a budget deficit of less than 3 percent by 2029 is realistic, given the size of the deficit you project for France this year?

    Mr. Gaspar: So, when it comes to France, we have a country that is also in the group of countries where debt is considerably higher than pre‑pandemic. At this point in time, in our projections, the debt‑to‑GDP ratio in France is projected to increase by about 2 percentage points every year. So, given this path, we recommend in the case of France not only fiscal adjustment but fiscal adjustment that is appropriately frontloaded to enable France to credibly put public debt under control and inside the European framework.

    That is completely in line with our general recommendation because the European framework allows for a country‑specific path. It allows for risks to be considered. It allows for the impact of the investment and structural reform to be internalized through an adjustment period that varies, according to cases, from 5 to 7 years.

    We do believe that the government in France has presented ideas, proposals that move in the right direction, but we are waiting for more clarity coming from actual enacted measures in France.

    Ms. Mossot: Another one here, the lady in blue there.

    Question: Thank you. May I have an insight about public debt in Tunisia and reasons beyond not mentioning it in your report? Thank you.

    Mr. Furceri: For the specific numbers for Tunisia, I would defer to the regional press briefs that is coming in the coming days. What I would like to point out, that one of the challenges that we see in many countries in North Africa, it also relates with the untargeted subsidies. And one point that we make in the report is that, also as Era mentioned, that when you think about how to recalibrate spending, it is important to preserve public investment. It is important to present targeted transfers for those that are most vulnerable, and to recalibrate the spending, for example, from away from high wage compensation when this is not the case, and untargeted subsidies.

    Ms. Mossot: Thank you. This side, second row, the gentleman.

    Question: I just had a question about the U.S. election. As you know, both candidates are offering many tax breaks, no taxes on tips, no tax on social security on the Trump side. These would add to the deficit of the U.S. on the Trump side as much as $7 and a half trillion over 10 years. Some estimates more than 10 trillion. Kamala Harris’ plans would call for less debt because she would raise taxes in some cases. But I am just wondering, the worse‑case scenario, how concerned are you about the amount of debt that the U.S. could be adding here? It seems to be the opposite of what the IMF has been recommending for a long time. Do you have concerns about financial markets taking matters into their own hands and imposing some discipline?

    Mr. Gaspar: Thanks, I am clearly not commenting on specific elections or political platforms, but I point to you that the Fiscal Monitor in the spring was dedicated to the great election year, and there we do make a number of comments about the relevance of politics for fiscal policy. And Era, has very interesting research where she documents that political platforms on the left and on the right all around the world have turned in favor of fiscal support and fiscal expansion. And that makes the job of the Ministers of Finance around the world and the Secretary of Treasury here in the United States a particularly demanding job, but Era may want to comment on that.

    When it comes to the United States, the United States is one of the largest economies where it is a fact that debt is considerably above what it was pre‑pandemic. It is growing at about 2 percentage points of GDP every year. And so from that viewpoint, this path of debt cannot continue forever. We do believe that the situation in the United States is sustainable because the policymakers in the United States have access to many combinations of policy instruments that enable them to put the path of public debt under control. And they will do that at a time and with the composition of their choosing. The decision lies with the U.S. political system.

    Now, it is very important to understand that the United States is now in a very favorable economic and financial situation. Financing conditions are easing in the United States. The Fed has already started its policy pivot. The growth in the United States has been outperforming that of other advanced economies. The labor market in the United States shows indicators that are the envy of many other countries. And so the prescription that the time to adjust is now applies to the United States. It turns out that the Fiscal Monitor also documents that the United States is very important for the determination of global financial conditions and, therefore, adjustment in the United States is not only good for the United States, it is good also for the rest of the world.

    Ms. Mossot: Back to the center of the room. The lady with the red shirt, please.

    Question: My question is, whether you can comment on China’s recent stimulus package and as you mentioned in the opening, it seems that the largest economies, including China and the United States, is projected to keep raising its public debt, so I wonder how you are going to comment on the fiscal implication of the stimulus package, and do you have any other specific fiscal policy for China? Thank you.

    Mr. Gaspar: Thank you for your question. China is very important. China is one of the largest economies that I listed. The other is the United States. For China and for the United States, we say the same. Debt is growing. Debt is growing rapidly. That process cannot continue forever, but China, as the United States, has ample policy space. And so it has the means to put public debt in China under control with the policy composition and the timing that will be the choice of the Chinese political system.

    If I were to say what is most important for me for China, I would say four things. The first one is that fiscal policy, as structural policy, should contribute to the rebalancing of the Chinese economy in the sense of changing the composition of demand from exports to domestic demand. It is very important that the very high savings ratio in China diminishes so that Chinese households will be able to consume more and feel safe doing that. Making the social safety net in China wider would be a structural way of doing exactly that.

    The second aspect is to act decisively to end financial misallocations associated with the property sector crisis, the real estate crisis. That is very important to stabilize the situation in China but also to build confidence, which would help with the first dimension that I pointed out as well.

    Now, third, very much in the province of public finances, this is very important to address public finance imbalances and vulnerabilities at the sub‑national level. And now, there are sub‑national governments in China that are struggling with financial conditions—financial constraints, and it is very important to remove those constraints, and, again, is linked to my second point.

    Fourth and last, it is very important that fiscal policy, as structural policy, promotes the transition to a new growth model in China, a model based on technological innovation, a model that supports the structural transformation towards a green economy. And my understanding is that this fourth element has been emphasized by the political authorities in China at the highest level.

    Ms. Mossot: Thank you. Back to this side of the room.

    Question: As already mentioned, a novel assessment framework debt that is at risk varies from country to country. Please, could you provide me details, which risks are more important and more dangerous for Ukrainian debt? And one more related question. It is that you give advice for emerging markets to increase indirect taxes for revenue mobilization. And in the case of Ukraine, when we recently already increased our taxes, for example, war tax and tax for banks’ profits, which recommendations you can give us in our situation and the worse circumstances, and maybe there are other instruments despite tax increasing.

    Ms. Dabla‑Norris: Thank you. The debt‑at‑risk framework that has been presented in the Fiscal Monitor includes 70 countries, but we do not identify or quantify the debt at risk for all individual countries. Now, that said, the framework, as Davide mentions, shows that factors such as weak growth, tighter financial conditions, geopolitical uncertainty, or policy uncertainty can all add to future debt risks. This applies to Ukraine as it does to many other countries. And in the case of Ukraine particularly, the outlook, as you know, remains exceptionally uncertain.

    So, in terms of priorities, we believe that the authorities need to continue to restore debt sustainability. And in this regard, there is two important aspects. The first is to complete the restructuring of external commercial debt in line with program commitments. And the second is to really redouble efforts on domestic revenue mobilization and to accelerate the implementation of their national revenue strategy. Now, what is important here is the strategy is not only about aiming to raise revenues, mobilize revenues, but to fundamentally change the tax system. The strategy aims to reduce tax evasion, tax avoidance, to improve tax compliance, and more broadly enhance the fairness and equity of the tax system. And the IMF has long advocated for countries that it is not about raising rates. It is about broadening the base and making tax systems as fair and equitable as possible.

    Ms. Mossot: Back to this side. The gentleman on the second row.

    Question: I just want to ask a couple of questions, blended into one. In July, the IMF released calculations showing that the U.K. budget balance, excluding interest payments, would need to improve by between .8 and 1.4 percentage points of GDP per year to get debt under control, an adjustment of 22 to 39 billion pounds. Since then, we know that the Treasury has carried out an audit and discovered over‑spends it was not aware of, and the government has made decisions on things like public sector pay. So my question to you is, how has that changed the calculations you made in July? You talked about the importance of people‑focused adjustments. Would an increase in employer national insurance contributions be people‑friendly and growth‑friendly in your view?

    Mr. Gaspar: Thank you so much. So, your questions are very detailed and very specific, and so I am not in a position to comment on them at this point in time. Concerning the U.K., we believe it is very important to bring public debt under control. It is very important to control for public debt risks. In the Fiscal Monitor, we actually make the point that the risks that one should take into account when conducting a prudent fiscal policy go beyond the reference to the baseline that you made. So we believe that it is possible to make a stronger case for fiscal prudence than what was implicit in your question.

    Still, it is important how the adjustment is made, and Era has emphasized very much the importance of being people‑friendly. And we, all of us, have emphasized the important contribution of public investment. And there you do have specific estimates for the U.K., impacts of public investment on economic activity and growth from the Office of Budget’s responsibility. I do not know if you want to add something.

    Ms. Dabla‑Norris: No. Just to say that there are important tradeoffs, not just for the U.K., but for many countries, and there may be certain short‑term measures that see or appear to be less people‑friendly but that they improve the sustainability of the system for future generations. So there is an intertemporal aspect of this, referring to fiscal policy, that we often forget. So, pension systems, health systems, the sustainability, the fiscal sustainability of the system also matters for people because it is going to impact different generations in a different way.

    Ms. Mossot: The very last question.

    Question: Thank you. I would like to ask, what are the prescriptions on how developing countries can put their public debt in order, especially sub‑Saharan Africa? And, for example, Nigeria now and many other countries in Africa, their public debt has ballooned because of exchange rates devaluation. So what are your prescriptions? You also mentioned the tax systems should be friendly. In Africa, we are not seeing tax systems as being friendly now because a lot of people, they say, okay, why did not the tax base broaden? How much can you broaden since you have a lot of poor people? So, what kinds of tradeoffs do you do when incomes and people are also squeezed?

    The last one is from the report. $100 trillion of global debt. How much of that is from developing economies? Thank you.

    Mr. Furceri: Thank you very much. The challenges that Nigeria faces, as well as many other countries in the region, there are two. One is very low revenue‑to‑GDP ratio. For example, I believe that in the case of Nigeria it is about 10 percentage points. The second, one trend that we have seen, that we are a bit concerned, is that the ratio—the debt service obligation to revenue has been increasing. So for the average low‑income country, it is about 15 percent. What does it mean? It means that basically a large part of revenue in these countries goes to just finance the debt. And this is something that we would recommend to improve, or we can improve as we mentioned revenue mobilization. We think that it is important. It is important to broaden the tax base. But at the same time, and especially in countries like Nigeria that have been severely affected by the drought, we have seen also higher food price, it is important to put in place ex ante system and mechanisms that are transfer resources from the government to those that are most affected and those that are poor.

    Ms. Mossot: Thank you very much. We have to close this session. Thank you again Era, Davide, and Vitor. You can find the full report of the Fiscal Monitor on the IMF website and also a reminder that there is tomorrow at 8:00 a.m. the Managing Director’s press conference. Thank you, all.

    IMF Communications Department
    MEDIA RELATIONS

    PRESS OFFICER:

    Phone: +1 202 623-7100Email: MEDIA@IMF.org

    @IMFSpokesperson

    MIL OSI Economics –

    January 25, 2025
  • MIL-OSI China: Chinese moviegoers return to Hogwarts as Harry Potter films make a comeback

    Source: China State Council Information Office 3

    A promotional poster advertises the rerelease of eight “Harry Potter” films in China. [Image courtesy of Warner Bros. Discovery]

    As the lights dimmed and the iconic music swelled, Harry Potter fans in China once again stepped onto Platform 9¾, boarded the Hogwarts Express, and entered the enchanting world of witches and wizards.

    “Hogwarts will always be there to welcome you home,” reads a post from the official Warner Bros. Pictures account on Weibo, China’s X-like social media platform, on Sept. 20, announcing that the eight-episode Harry Potter series would start its re-release across China from Oct. 11, one installment after another at intervals of a week.

    The post has cheered up the films’ Chinese fans, garnering more than 13,000 likes and 1,821 comments, and being reposted 7,971 times so far.

    Among the many viewers was 41-year-old Lan Lan, who brought her nine-year-old son to a cinema in south China’s Guangxi Zhuang Autonomous Region for “Harry Potter and the Chamber of Secrets,” the second installment of the series. She first watched the movie 20 years ago.

    “It felt like reliving the magic that had enthralled me when I was a teenager and read the first Harry Potter book,” Lan said after watching the film. “It brought me back to the old days when I shared the Harry Potter books with my classmates, watched the premieres of Harry Potter movies at midnight, went on shopping sprees for Harry Potter tie-ins, and discussed the series with other fans on the internet.”

    Lan’s son also enjoyed the movie and was immediately fascinated by the tricks and spells of the magical world.

    On Chinese social media, Lan’s passion has been echoed by many. “It was like reading the memoirs of my old friends, and I couldn’t hold back my tears when I watched the series again,” one Weibo user wrote.

    The first two movies in the iconic series have already been screened in Chinese theaters nationwide, with the most recent re-release — “Harry Potter and the Chamber of Secrets” — generating box office revenue of more than 37 million yuan (about 5.2 million U.S. dollars) in just five days.

    “The Harry Potter IP has a strong appeal for numerous viewers,” said Liu Yinan, duty manager of a movie theater in Beijing, adding that some would also buy tie-ins, such as mystery boxes, prepared by the cinema.

    While the Felix Felicis, “liquid luck” potion, works for about 12 hours in the Harry Potter universe, the charm of the re-released movies has an even more lasting effect, as indicated by the box office figures.

    The first film in the Harry Potter series was re-released in China four years ago and proved a hit, raking in 192 million yuan at the box office, according to data from ticketing platform Maoyan.

    “Behind the rerun of the fantasy series lies a huge and ever-growing fan base that spans different age groups,” said Wei Jiayue, a longtime Harry Potter fan. “They have been attracted by the imaginative magical world and the timeless themes that are related to human nature and real life.”

    For many, the relish of watching movies in theaters is alive and well for classics like the Harry Potter series, despite the allure of online streaming services. Some took these reruns as an opportunity to gather and share their feelings with like-minded people.

    Images of nearly 700 smiling fans, clad in black-hooded robes and holding wands or broomsticks, have been posted on Weibo, illustrating the enthusiasm of the series’ fan base.

    The Harry Potter movies are not the only films that have returned to Chinese cinemas. In recent years, a growing number of movies at home and abroad have been reissued in China, including the domestic sci-fi series “The Wandering Earth,” and the world-renowned tentpole movies “Titanic” and “Avatar.”

    One of the latest successful examples is “Your Name,” a Japanese anime film released eight years ago, which became a blockbuster again this July, earning nearly 38 million yuan on the first day of its re-release.

    The 4K restoration of the 1994 French thriller, “Leon: The Professional,” is also coming to China in November. It will be the first time for the film by director Luc Besson to hit the screens on the Chinese mainland.

    “The popularity of relaunched movies reflects profound changes in the movie market,” said Sun Yanbin, an expert at the Beijing Film Academy. “The film reruns can provide more options for viewers and meet their diverse demands.”

    From the perspective of theaters, re-releases are a cost-effective way to fill scheduling gaps and boost box office revenues as the movie industry is reeling from the COVID-19 pandemic, said Zhang Yiwu, a professor at Peking University.

    For fans like Lan, it is worthwhile to spend time and money on nostalgia. “The Harry Potter movies tell a story of love, friendship and strength, and they are definitely worth watching for both me and my son,” she said.

    This trip to the cinema was her son’s first glimpse into the magical world. “He said he wanted a wand and asked me to take him to the Wizarding World of Harry Potter at the Universal Beijing Resort,” said Lan.

    On the Chinese lifestyle-sharing platform Xiaohongshu, a fan writes: “Great works know no bounds, transcending time and ages of their viewers.”

    MIL OSI China News –

    January 25, 2025
  • MIL-OSI Economics: My Vision for ADB: Strive Together to Attain Sustainable and Inclusive Growth in the Region with Innovative and Tailored Solutions – Masato Kanda

    Source: Asia Development Bank

    ADB has played a vital role in the development of the Asia and Pacific region not only helping it become the engine room of global growth today but ensuring the region is resilient and inclusive. The many crises and challenges currently confronting us, from climate change to digitalization and gender equality, require continually striving for ADB to remain the most trusted partner for all members. Throughout my nearly four decades as a government official, I have had the tremendous opportunity to work with many dedicated professionals in the region committed to a shared vision of economic stability and prosperity, and poverty eradication.

    If I am afforded the immense privilege of being the next President of ADB, I will steadfastly commit to ensuring ADB can achieve its vision of delivering sustainable and inclusive growth to the region with innovative and tailored solutions, in alignment with the updated Strategy 2030. I can only do this by working with each and every member and delivering the New Operating Model so the ADB remains a client-first bank that maximizes its development impact, underpinned by talented and diverse staff.

    1. Background

    Since its inception in 1966, ADB has played a vital role in supporting developing member countries (DMCs) in Asia and the Pacific. Throughout its history, it has worked unflinchingly on the arduous tasks, including, most notably, facilitation of the recovery after the 1997 Asian financial crisis. Each time it faces a crisis, ADB has provided innovative solutions. The launch of the ADF (Asian Development Fund) and the bond issuance to enhance its support to DMCs after the oil shock in 1970s is a case in point. ADB also helped DMCs achieve a solid track record of growth through its financial and non-financial instruments. The real growth rate of Emerging and Developing Asia over the past 10 years was 5.6 percent, 2.5 percentage points higher than global growth.

    However, despite the clear progress toward sustainable and inclusive growth, significant challenges remain. The ongoing climate crisis and the risk of another pandemic as serious as COVID 19, indicate that ADB should be even bolder to address global public goods (GPGs) and regional public goods (RPGs). Moreover, while ADB needs to tackle these emerging tasks at a regional and global scale, it remains responsible for supporting DMCs address country-specific challenges, including not least poverty reduction. It is paramount that ADB remains the most trusted partner in the region.

    Over more than 60 years, Japan has been working with all member countries. As a former official at the Japanese Ministry of Finance, in particular during my time as Vice-Minister of Finance for International Affairs, I have had the privilege to work with inspiring leaders, dedicated professionals, and wonderful friends across Asia and the Pacific. Nothing could make me happier than the opportunity to continue to work with all of them to establish a clear pathway toward the ADB’s vision: to achieve a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty.

    The rest of this Vision Statement is organized as follows. In the next section, I describe the challenges and unique opportunities for the region. In section 3, I elaborate on my suggested direction that ADB should head toward. Section 4 concludes with my unwavering commitment to help champion sustainable growth in the region.

    2. Challenges and opportunities

    Climate change. The DMCs, in particular Small Island Developing States (SIDS) in the Pacific, are prone to natural disasters stemming from climate change, such as typhoons, cyclones, and rising sea levels. Moreover, Asia and the Pacific emits almost half of the world’s greenhouse gases, partly reflecting its high energy demand. However, its coal plants are relatively young, and its grid coverage is limited, complicating the transition to net-zero. Against this backdrop, ADB has spearheaded innovative climate change initiatives as the region’s climate bank. Nevertheless, bolder actions are still warranted, both on the mitigation and adaptation fronts.

    Infrastructure gap. Infrastructure lays a fundamental basis to eradicate poverty, boost potential growth and enhance regional connectivity. The region still faces a glaring gap in infrastructure. ADB has estimated that developing Asia will need $1.7 trillion annually to close the gap in infrastructure, and this figure could be larger given the modest growth over the past several years. At the same time, more actions are needed for boosting the quality of infrastructure investment, strengthening climate resilience, achieving high environmental and social standards, preserving biodiversity, and creating jobs. 

    Poverty. The number of people who are below the poverty line rose significantly after the COVID-19 crisis, setting back the fight against poverty in Asia and the Pacific by at least two years. Income poverty is often associated with poor health and lack of education, hampering human capital development and restraining growth. Rapid economic growth and a stable macroeconomic environment in the region would help address poverty across the region but this can only be achieved with certain policy actions such as those outlined below.

    Inequality. Economic growth in the region has come with widening inequality, in particular after the COVID-19 crisis. Inequality could damage social stability and cohesion and undermine economic dynamism. Also, while rapid urbanization has provided an increasing number of citizens with access to better public services (education, water and sanitary services, transportation), it can widen the gap with vulnerable people that do not have access to such basic services and the social safety net.

    Diversity. Asia and the Pacific boasts a wide variety of cultures and ethnicities. This has required, and will continue to require, ADB to tailor its supporting tools to country-specific circumstances, with due regard to size, income distribution, population dynamics, and social norms of each DMC. On procurement, while ADB remains committed to maintaining high environmental and social standards, it also needs to take country systems into account.

    Gender. ADB needs to further pursue gender equality in line with its vision. Our journey is yet to be completed: according to the United Nations, the participation of women in the labor force in Asia and the Pacific is below the global average, as is the promotion of women in leadership positions. ADB should continue to be the thought leader to transform the lives of women, by helping DMCs take decisive steps toward gender equality, while recognizing country-specific cultural and social circumstances.

    Private capital mobilization. One of the ADB’s New Operating Model (NOM)’s priorities is a shift toward the private sector. Yet, the amount of private capital mobilization has been significantly below the aspiration of various development agendas, including the Paris Agreement. Mobilizing private capital is easier said than done. The upcoming discussion on the ADB’s Private Sector Development Action Plan will lay a foundation for the ADB’s medium-term efforts to boost private capital mobilization and enable a stronger private sector in line with the ADB’s vision.

    Domestic resource mobilization. In many DMCs, tax revenues are still short of supporting their own sustainable development. The Asia Pacific Tax Hub, established in May 2021 under President Asakawa’s leadership, has helped DMCs modernize their tax systems through strategic policy dialogues, institutional capacity building, knowledge sharing, and collaboration with development partners. The potential benefits of domestic resource mobilization include more private capital mobilization through blended finance.

    Digitalization. Digital technologies can be an enabler that brings transformational impacts, allowing DMCs to leapfrog the development process that advanced economies took much longer to go through. At the same time, rapid progress in digitalization comes with costs and risks, including a digital divide and cyber threats. With the approval of its Strategy 2030 Midterm Review, ADB is pursuing a more active role on digital transformation as one of the new strategic focus areas.

    3. Ways forward

    I will now elaborate how I would work toward achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific if I were elected as President of ADB. I will maintain the “client-first” principle as the organization’s highest priority by tailoring the role of ADB to specific challenges faced by all DMCs. Moreover, ADB should fully utilize its well-established collaboration between the sovereign and non-sovereign sectors, which is one of the ADB’s great strengths. My vision below is also crafted with a clear purpose to augment the updated Strategy 2030 with the organizational vision statement and the new strategic focus areas (climate action; private sector development; regional cooperation and public goods; digital transformation; and resilience and empowerment). For this purpose, I would ensure that the Capital Utilization Plan will be ambitious and fully utilize different financial resources.

    Providing innovative financial climate solutions to DMCs. ADB has established its reputation as an innovator in climate and development finance, exemplified by IF-CAP (Innovative Finance Facility for Climate in Asia and the Pacific), which is expected to be officially launched soon. By focusing squarely on the development-climate nexus under the Climate Change Action Plan, ADB should continue to be the region’s climate bank, in line with climate as the first enhanced focus area. In the context of the ongoing MDB Evolution and the CAF (Capital Adequacy Framework) Review, ADB must be a role-model for other MDBs (Multilateral Development Banks) to foster climate mitigation and adaptation.

    Promoting private capital mobilization. With the new quantitative targets under Strategy 2030, ADB should pursue ambitious goals of mobilizing and enabling private capital, by taking concrete actions under the upcoming Private Sector Development Action Plan. Closer engagement with global and regional market participants and industry experts, as well as deepening of domestic capital markets, would help bring much needed private financial flows for sustainable growth.

    Supporting domestic resource mobilization. ADB should remain committed to helping DMCs strengthen their revenue base, paving the way for the achievement of self-sustained development over time. ADB should also make sure that this effort serves as a key ingredient for policy discussion in the context of policy-based loans (PBLs). The Asia Pacific Tax Hub should continue to play an instrumental role in this regard, by providing comprehensive diagnoses on and solutions to the underlying structural problems of revenue shortfalls.

    Fostering regional cooperation and integration. Trade and investment flows are increasingly interconnected within the region, and hence fostering regional cooperation will help garner needed development financial flows and create a favorable macroeconomic environment in the region. ADB should further promote cross-border connectivity, trade integration, and financial links, all of which are regional public goods. Regional procurement, which is being considered in line with the ADF14 agreement, is of particular importance.

    Striking the balance between GPG/RPG and country-specific demand. ADB must strategically calibrate its resource allocation so that it can help deliver GPGs/RPGs, such as air quality management, biodiversity, food and nutrition security, pandemic prevention, preparedness and response, and pollution prevention, while still paying due regard to country-specific circumstances. Enhanced policy dialogue with DMCs, along with in-house analyses on externalities in the region, should be made a priority. Staff incentive structures could be also fine-tuned in line with such an organization-wide ambition.

    Prioritizing digital transformation in a cross-cutting manner. ADB should be responsive to high client demand for digital solutions, including digital connectivity and digital literacy, among others. ADB should actively pursue policies to bring the maximum benefits from digitalization across all different sectors and pursue synergies with other development priorities, such as private capital mobilization, infrastructure development, and regional connectivity. Strengthening its support to social start-up companies with cutting-edge digital technologies could complement these efforts.

    Mainstreaming gender in overall ADB operations. A pathway to gender equality is not uniform, differing from one country to another. The new commitment following the Midterm Review of Strategy 2030 must be attained with all possible measures. ADB should continue to be a champion of gender equality in its operations to empower women in DMCs. To lead by example, ADB should also continue to promote gender equality across the organization.

    Maximizing development impact by tailoring ADB solutions to country-specific development and climate needs. The ADB’s clients widely differ in their size, level of development, development needs, and risks of vulnerabilities and fragility. ADB should fully employ its diagnosis provided by regional VPs/Departments, while ensuring that Country Partnership Strategies benefit from various analytical works by the Sector Group, Governance Thematic Group, Economic Research and Development Impact Department, and other departments. Also, outcome orientation remains a necessary condition to better achieve the organizational vision. The new window to address fragility under ADF14 could be a successful example to address immense challenges faced by fragile and conflict-affected situations (FCAS), as well as SIDS.

    Utilizing knowledge products for operations on the ground. As a regional knowledge bank, ADB has produced a wealth of analytical and knowledge products. While they are undoubtedly used by research institutes in the regions, ADB needs to be more aggressive in disseminating its analytical expertise to country and sector operations on the ground, including lending activities and policy dialogue.

    Fully operationalizing the NOM. Implementing the NOM requires continuous efforts on a multi-year basis. ADB needs to accelerate the transition to a more climate-focused and private sector-oriented business model, particularly to address global and regional challenges at scale. Staff incentive structures should be designed to establish a critical link with organization-wide priorities, such as GPGs/PRGs as well as decentralization. Also, diversity of the staff should remain one of the ADB’s core values.

    Enhancing partnerships with MDBs and DFIs. The development challenges in front of us cannot be solved by ADB alone. ADB should enhance its collaboration with other MDBs and venture into new types of cooperation, such as exposure exchange, beyond traditional co-financing and knowledge sharing. ADB could also strengthen ties with bilateral DFIs (Development Finance Institutions) in the region to create synergies and improve administrative efficiencies while maintaining high environmental and social standards.

    4. Closing remarks

    The socio-economic environment surrounding Asia and the Pacific has drastically changed since the ADB’s inception: now, the region is suffering from chronic natural disasters more often, with severer magnitude; inequality is widening despite increased national income per capita; and uncertainty is looming in the global economy and financial markets. Worse, all these complex problems are inter-connected. ADB is the only organization in the region that helps tackle these challenges, with its unparalleled financial firepower, highly motivated and dedicated staff, and regional convening power.

    More recently, ADB performed immensely in the context of the MDB Evolution over the past two years. The international community is striving hard to redefine the roles of MDBs and update their financial and operational models. Undoubtedly, ADB is, and will continue to be, a frontrunner in this global goal: it has created lending headroom of US$100 billion over the next ten years through its rigorous CAF review, launched innovative financial instruments, and aligned its tools and environmental and social standards with its peers. I am confident that the ADB’s support to DMCs in the region can be a role-model for other MDBs.

    I would also like to emphasize that throughout its history, ADB has built trust among all stakeholders inside and outside the region, including DMCs, donors, civil society, development partners, staff, and management. It is this trust that has enabled ADB to shine as a long-standing home doctor, provide the highest value-add to its clients, and connect leaders and professionals in the region.

    With these strengths, ADB has positioned itself as the most trusted and dedicated organization in Asia and the Pacific. I would like to devote all my expertise and knowledge to this great organization and work toward its vision, together with colleagues and friends from the region and beyond. I am more than ready to serve to all members.

    MIL OSI Economics –

    January 25, 2025
  • MIL-OSI USA: Remarks by APNSA Jake Sullivan at the Brookings  Institution

    US Senate News:

    Source: The White House
    Brookings InstitutionWashington, D.C.
    Good morning, everyone.  And thank you so much, David, for that introduction and for having me here today.  It’s great to be back at Brookings.
    As many of you know, I was here last year to lay out President Biden’s vision for renewing American economic leadership, a vision that responded to several converging challenges our country faced: the return of intense geopolitical competition; a rise in inequality and a squeeze on the middle class; a less vibrant American industrial base; an accelerating climate crisis; vulnerable supply chains; and rapid technological change.
    For the preceding three decades, the U.S. economy had enjoyed stronger topline aggregate growth than other advanced democracies, and had generated genuine innovation and technological progress, but our economic policies had not been adapted to deal effectively with these challenges.  That’s why President Biden implemented a modern industrial strategy, one premised on investing at home in ourselves and our national strength, and on shifting the energies of U.S. foreign policy to help our partners around the world do the same.
    In practice, that’s meant mobilizing public investment to unlock private sector investment to deliver on big challenges like the clean energy transition and artificial intelligence, revitalizing our capacity to innovate and to build, creating diversified and resilient global supply chains, setting high standards for everything from labor to the environment to technology.  Because on that level playing field, our logic goes, America can compete and win.  Preserving open markets and also protecting our national security and doing all of these things together with allies and partners.
    Since I laid this vision out in my speech at Brookings last year, I’ve listened with great interest to many thoughtful responses, because these are early days.  Meaningful shifts in policy require constant iteration and reflection.  That’s what will make our policy stronger and more sustainable. 
    So, today, I’m glad to be back here at Brookings to reengage in this conversation, because I really believe that the ideas I’m here to discuss and the policies that flow from them are among the most consequential elements of the administration’s foreign as well as domestic policy, and I believe they will constitute an important legacy of Joe Biden’s presidency. 
    I want to start by reflecting on some of the questions I’ve heard and then propose a few ways to consolidate our progress.
    One overarching question is at the core of many others: Does our new approach mean that we’re walking away from a positive-sum view of the world, that America is just in it for itself at the expense of everyone else? 
    In a word, no, it doesn’t.  In fact, we’re returning to a tradition that made American international leadership such a durable force, what Alexis de Tocqueville called “interest rightly understood.”  The notion that it’s in our own self-interest to strengthen our partners and sustain a fair economic system that helps all of us prosper.
    After World War Two, we built an international economic order in the context of a divided world, an order that helped free nations recover and avoid a return to the protectionist and nationalist mistakes of the 1930s, an order that also advanced American economic and geopolitical power.
    In the 1990s, after the collapse of the Soviet Union, we took that order global, embracing the old Eastern bloc, China, India, and many developing countries.  Suddenly, the major powers were no longer adversaries or competitors.  Capital flowed freely across borders.  Global supply chains became “just in time,” without anyone contemplating potential strategic risk.
    Each of these approaches was positive-sum, and each reflected the world as it was.
    Now, the world of the 1990s is over, and it’s not coming back, and it’s not a coherent plan or critique just to wish it so.
    We’re seeing the return of great power competition.  But unlike the Cold War era, our economies are closely intertwined.  We’re on the verge of revolutionary technological change with AI, with economic and geopolitical implications.  The pandemic laid bare the fragilities in global supply chains that have been growing for decades.  The climate crisis grows more urgent with every hurricane and heat wave. 
    So we need to articulate, once again, de Tocqueville’s notion of interest rightly understood.  To us, that means pursuing a strategy that is fundamentally positive-sum, calibrated to the geopolitical realities of today and rooted in what is good for America — for American workers, American communities, American businesses, and American national security and economic strength.
    We continue to believe deeply in the mutual benefits of international trade and investment, enhanced and enabled by bold public investment in key sectors; bounded in rare but essential cases by principled controls on key national security technologies; protected against harmful non-market practices, labor and environment abuses, and economic coercion; and critically coordinated with a broad range of partners. 
    The challenges we face are not uniquely our own and nor can we solve them alone.  We want and need our partners to join us.  And given the demand signal we hear back from them, we think that in the next decade, American leadership will be measured by our ability to help our partners pull off similar approaches and build alignment and complementarity across our policies and our investments. 
    If we get that right, we can show that international economic integration is compatible with democracy and national sovereignty.  And that is how we get out of Dani Rodrik’s trilemma.
    Now, what does that mean in practice?  What does this kind of positive-sum approach mean for trade policy?  Are we walking away from trade as a core pillar of international economic policy? 
    U.S. exports and imports have recovered from their dip during the pandemic, with the real value of U.S. trade well above 2019 levels in each of the last two years.  We’re also the largest outbound source of FDI in the world. 
    So, we are not walking away from international trade and investment.  What we are doing is moving away from specific policies that, frankly, didn’t contemplate the urgent challenges we face: The climate crisis.  Vulnerable, concentrated, critical mineral and semiconductor supply chains.  Persistent attacks on workers’ rights.  And not just more global competition, but more competition with a country that uses pervasive non-market policies and practices to distort and dominate global markets. 
    Ignoring or downplaying these realities will not help us chart a viable path forward.  Our approach to trade responds to these challenges. 
    Climate is a good example.  American manufacturers are global leaders in clean steel production, yet they’ve had to compete against companies that produce steel more cheaply but with higher emissions intensity.  That’s why, earlier this year, the White House stood up a Climate and Trade Task Force, and the task force has been developing the right tools to promote decarbonization and ensure our workers and businesses engaged in cleaner production aren’t disadvantaged by firms overseas engaged in dirtier, exploitative production.
    Critical minerals are another example.  That sector is marked by extreme price volatility, widespread corruption, weak labor and environmental protections, and heavy concentration in the PRC, which artificially drops prices to keep competitors out of the marketplace. 
    If we and our partners fail to invest, the PRC’s domination of these and other supply chains will only grow, and that will leave us increasingly dependent on a country that has demonstrated its willingness to weaponize such dependencies.  We can’t accept that, and neither can our partners. 
    That’s why we are working with them to create a high-standard, critical minerals marketplace, one that diversifies our supply chains, creates a level playing field for our producers, and promotes strong workers’ rights and environmental protections.  And we’re driving towards tangible progress on that idea in just the next few weeks.
    In multiple sectors that are important to our future, not just critical minerals, but solar cells, lithium-ion batteries, electric vehicles, we see a broad pattern emerging.  The PRC is producing far more than domestic demand, dumping excess onto global markets at artificially low prices, driving manufacturers around the world out of business, and creating a chokehold on supply chains.
    To prevent a second China shock, we’ve had to act. 
    That’s what drove the decisions about our 301 tariffs earlier this year.
    Now, we know that indiscriminate, broad-based tariffs will harm workers, consumers, and businesses, both in the United States and our partners.  The evidence on that is clear.  That’s why we chose, instead, to target tariffs at unfair practices in strategic sectors where we and our allies are investing hundreds of billions of dollars to rebuild our manufacturing and our resilience. 
    And crucially, we’re seeing partners in both advanced and emerging economies reach similar conclusions regarding overcapacity and take similar steps to ward off damage to their own industries, from the EU to Canada to Brazil to Thailand to Mexico to Türkiye and beyond.  That’s a big deal.
    And it brings me back to my earlier point: We’re pursuing this new trade approach in concert with our partners.  They also recognize we need modern trade tools to achieve our objectives.  That means considering sector-specific trade agreements.  It means creating markets based on standards when that’s more effective.  And it also means revitalizing international institutions to address today’s challenges, including genuinely reforming the WTO to deal with the challenges I’ve outlined. 
    And it means thinking more comprehensively about our economic partnerships.  That’s why we created the Indo-Pacific Economic Framework and the Americas Partnership for Economic Prosperity.  That’s why we also gave them such catchy names. 
    Within IPEF, we finalized three agreements with 13 partners to accelerate the clean energy transition, to promote high labor standards, to fight corruption, and to shore up supply chain vulnerabilities before they become widespread disruptions.  And within APEP, we’re working to make the Western Hemisphere a globally competitive supply chain hub for semiconductors, clean energy, and more. 
    And that leads to the next question I’ve often been asked in the last year and a half: Where does domestic investment fit into all of this?  How does our positive-sum approach square with our modern industrial strategy?
    The truth is that smart, targeted government investment has always been a crucial part of the American formula.  It’s essential to catalyzing private investment and growth in sectors where market failures or other barriers would lead to under-investment.
    Somehow, we forgot that along the way, or at least we stopped talking about it.  But there was no plausible version of answers on decarbonization or supply chain resilience without recovering this tradition.  And so we have.
    We’ve made the largest investment ever to diversify and accelerate clean energy deployment through the Inflation Reduction Act.  And investments are generating hundreds of billions of dollars in private investment all across the country; rapid growth in emerging climate technologies like sustainable aviation fuels, carbon management, clean hydrogen, with investments increasing 6- to 15-fold from pre-IRA levels. 
    This will help us meet our climate commitments.  This will advance our national security.  And this will ensure that American workers and communities can seize the vast economic opportunities of the clean energy transition and that those opportunities are broadly shared.  And that last part is crucial. 
    The fact is that many communities hard hit in decades past still haven’t bounced back, and the two-thirds of American adults who don’t have college degrees have seen unacceptably poor outcomes in terms of real wages, health, and other outcomes over the last four decades.
    For many years, people assumed that these distributional issues would be solved after the fact by domestic policies.  That has not worked. 
    Advancing fairness, creating high-quality jobs, and revitalizing American communities can’t be an afterthought, which is why we’ve made them central to our approach. 
    In fact, as a result of the incentives in the IRA to build in traditional energy communities, investment in those communities has doubled under President Joe Biden.
    Now, initially, when we rolled this all out, our foreign partners worried that it was designed to undercut them, that we were attempting to shift all the clean energy investment and production around the world to the United States.
    But that wasn’t the case, and it isn’t the case. 
    We know that our partners need to invest.  In fact, we want them to invest.  The whole world benefits from the spillover effects of advances in clean energy that these investments bring. 
    And we are nowhere near the saturation point of investment required to meet our clean energy deployment goals, nor will markets alone generate the resources necessary either. 
    So, we’ve encouraged our partners to invest in their own industrial strength.  We’ve steered U.S. foreign policy towards being a more helpful partner in this endeavor.  And our partners have begun to join us.  Look at Japan’s green transformation policy, India’s production-linked incentives, Canada’s clean energy tax credit, the European Union’s Green Deal.
    As more and more countries adopt this approach, we will continue to build out the cooperative mechanisms that we know will be necessary to ensure that we’re acting together to scale up total global investment, not competing with each other over where a fixed set of investments is located.
    The same goes for investing in our high-tech manufacturing strength.  We believe that a nation that loses the capacity to build, risks losing the capacity to innovate.  So, we’re building again.
    As a result of the CHIPS and Science Act, America is on track to have five leading-edge logic and memory chip manufacturers operating at scale.  No other economy has more than two.  And we’re continuing to nurture American leadership in artificial intelligence, including through actions we’re finalizing, as I speak, to ensure that the physical infrastructure needed to train the next generation of AI models is built right here in the United States. 
    But all of this high-tech investment and development hasn’t come at the expense of our partners.  We’ve done it alongside them. 
    We’re leveraging CHIPS Act funding to make complementary investments in the full semiconductor supply chain, from Costa Rica to Vietnam. 
    We’re building a network of AI safety institutes around the world, from Canada to Singapore to Japan, to harness the power of AI responsibly. 
    And we’ve launched a new Quantum Development Group to deepen cooperation in a field that will be pivotal in the decades ahead.
    Simply put, we’re thinking about how to manage this in concert with our allies and partners, and that will make all of us more competitive.
    Now, all this leads to another question that is frequently asked:  What about your technology protection policies?  How does that fit into a positive-sum approach?
    The United States and our allies and partners have long limited the export of dual-use technologies.  This is logical and uncontroversial.  It doesn’t make sense to allow companies to sell advanced technology to countries that could use them to gain military advantage over the United States and our friends. 
    Now, it would be a mistake to attempt to return to the Cold War paradigm of almost no trade, including technological trade, among geopolitical rivals.  But as I’ve noted, we’re in a fundamentally different geopolitical context, so we’ve got to meet somewhere in the middle. 
    That means being targeted in what we restrict, controlling only the most sensitive technologies that will define national security and strategic competition.  This is part of what we mean when we say: de-risking, not decoupling.
    To strike the right balance, to ensure we’re not imposing controls in an arbitrary or reflexive manner, we have a framework that informs our decision-making.  We ask ourselves at least four questions:
    One, which sensitive technologies are or will likely become foundational to U.S. national security? 
    Two, across those sensitive technologies, where do we have distinct advantages and are likely to see maximal effort by our competitors to close the gap?  Conversely, where are we behind and, therefore, most vulnerable to coercion?
    Three, to what extent do our competitors have immediate substitutes for U.S.-sensitive technology, either through indigenous development or from third countries, that would undercut the controls?
    Four, what is the breadth and depth of the coalition we could plausibly build and sustain around a given control?
    When it comes to a narrow set of sensitive technologies, yes, the fence is high, as it should be. 
    And in the context of broader commerce, the yard is small, and we’re not looking to expand it needlessly.
    Now, beyond the realm of export controls and investment screening, we will also take action to protect sensitive data and our critical infrastructure, such as our recent action on connected vehicles from countries of concern.
    I suspect almost no one here would argue that we should build out our telecommunications architecture or our data center infrastructure with Huawei. 
    Millions of cars on the road with technology from the PRC, getting daily software updates from the PRC, sending reams of information back to the PRC, similarly doesn’t make sense, especially when we’ve already seen evidence of a PRC cyber threat to our critical infrastructure.
    We have to anticipate systemic cyber and data risks in ways that, frankly, we didn’t in the past, including what that means for the future Internet of Things, and we have to take the thoughtful, targeted steps necessary in response.
    This leads to a final, kind of fundamental question: Does this approach reflect some kind of pessimism about the United States and our inherent interests? 
    Quite the contrary.  It reflects an abiding and ambitious optimism.  We believe deeply that we can act smartly and boldly, that we can compete and win, that we can meet the great challenges of our time, and that we can deliver for all of our people here in the United States. 
    And while it’s still very early, we have some evidence of that.  This includes the strongest post-pandemic recovery of any advanced economy in the world.  There’s more work to do, but inflation has come down.  And contrary to the predictions that the PRC would overtake the U.S. in GDP either in this decade or the next, since President Biden took office, the United States has more than doubled our lead.  And last year, the United States attracted more than five times more inbound foreign direct investment than the next highest country. 
    We are once again demonstrating our capacity for resilience and reinvention, and others are noticing.  The EU’s Draghi report, published last month, mirrors key aspects of our strategy. 
    Now, as we continue to implement this vision, we will need to stay rigorous.  We will need, for example, to be bold enough to make the needed investments without veering into unproductive subsidies that crowd-out the private sector or unduly compete with our partners.
    We’re clear-eyed that our policies will involve choices and trade-offs.  That’s the nature of policy.  But to paraphrase Sartre, not to choose is also a choice, and the trade-offs only get worse the longer we leave our challenges unchecked.
    Pointing out that it’s challenging to strike the right balance is not an argument to be satisfied with the status quo.
    We have tried to start making real a new positive-sum vision, and we have tried to start proving out its value.  But we still have our work cut out for us. 
    So I’d actually like to end today with a few questions of my own, where our answers will determine our shared success: 
    First, will we sustain the political will here at home to make the investments in our own national strength that will be required of us in the years ahead? 
    Strategic investments like these need to be a bipartisan priority, and I have to believe that we’ll rise to the occasion, that we won’t needlessly give up America’s position of economic and technological leadership because we can no longer generate the political consensus to invest in ourselves.
    There is more we can do now on a bipartisan basis. 
    For example, Congress still hasn’t appropriated the science part of CHIPS and Science, even while the PRC is increasing its science and technology budget by 10 percent year on year.
    Now, whether we’re talking about investments in fundamental research, or grants and loans for firms developing critical technologies, we also have to update our approach to risk.  Some research paths are dead ends.  Some startups won’t survive.  Our innovation base and our private sector are the envy of the world because they take risks.  The art of managing risk for the sake of innovation is critical to successful geostrategic competition. 
    So, we need to nurture a national comfort with, to paraphrase FDR, bold and persistent experimentation.  And when an investment falls short, as it will, we need to maintain our bipartisan will, dust ourselves off, and keep moving forward.  To put it bluntly, our competitors hope we’re not capable of that.  We need to prove them wrong.  We need to make patient, strategic investments in our capacity to compete, and we need to ensure fiscal sustainability in order to keep making those investments over the long term.
    The second question: Will we allocate sufficient resources for investments that are needed globally? 
    Last year, here at Brookings, I talked about the need to go from billions to trillions in investment to help emerging and developing countries tackle modern challenges, including massively accelerating the speed and scale of the clean energy transition. 
    We need a Marshall Plan-style effort, investing in partners around the world and supporting homegrown U.S. innovation in growing markets like storage, nuclear, and geothermal energy. 
    Now, trillions may sound lofty and unachievable, but there is a very clear path to get there without requiring anywhere near that level of taxpayer dollars, and that path is renewed American leadership and investment in international institutions. 
    For example, at the G20 this fall, we’re spearheading an effort that calls for the international financial institutions, the major creditors in the private sector, to step up their relief for countries facing high debt service burdens so they too can invest in their future. 
    Or consider the World Bank and the IMF.  We’ve been leading the charge to make these institutions bigger and more effective, to fully utilize their balance sheets and be more responsive to the developing and emerging economies they serve.  That has already unlocked hundreds of billions of dollars in new lending capacity, at no cost to the United States.  And we can generate further investment on the scale required with very modest U.S. public investments and legislative fixes.  That depends on Congress taking action. 
    For example, our administration requested $750 million — million — from Congress to boost the World Bank’s lending capacity by over $36 billion, which, if matched by our partners, could generate over $100 billion in new resources.  This would allow the World Bank to deploy $200 for every $1 the taxpayers provide.
    We’ve asked Congress to approve investments in a new trust fund at the IMF to help developing countries build resilience and sustainability.  Through a U.S. investment in the tens of millions, we could enable tens of billions in new IMF lending.
    And outside the World Bank and the IMF, we’re asking Congress to increase funding for the Partnership for Global Infrastructure and Investment, which we launched at the G7 a couple of years ago. 
    This partnership catalyzes and concentrates investment in key corridors, including Africa and Asia, to close the infrastructure gap in developing countries.  It strengthens countries’ economic growth.  It strengthens America’s supply chains and global trusted technology vendors.  And it strengthens our partnerships in critical regions. 
    The private sector has been enthusiastic.  Together with them and our G7 partners, we’ve already mobilized tens of billions of dollars, and we can lever that up and scale that up in the years ahead with help on a bipartisan basis from the Congress.
    We need to focus on the big picture.  Holding back small sums of money has the effect of pulling back large sums from the developing world — which also, by the way, effectively cedes the field to other countries like the PRC.  There are low-cost, commonsense solutions on the table, steps that should not be the ceiling of our ambitions, but the floor.  And we need Congress to provide us the authorities and the seed funding to take those steps now.
    Finally, will we empower our agencies and develop new muscle to meet this moment? 
    Simply put, we need to ensure that we have the resources and the capabilities in the U.S. government to implement this economic vision over the long haul.  This starts by significantly strengthening our bilateral tools, answering a critique that China has a checkbook and the U.S. has a checklist. 
    Next year, the United States is going to face a critical test of whether our country is up to the task.  The DFC, the Ex-Im Bank, and AGOA, the African Growth and Opportunity Act, are all up for renewal by Congress.  This provides a once-in-a-decade chance for America to strengthen some of its most important tools of economic statecraft. 
    And think about how they can work better with the high-leverage multilateral institutions I just mentioned.  The DFC, for example, is one of our most effective instruments to mobilize private sector investments in developing countries.
    But the DFC is too small compared to the scope of investment needed, and it lacks tools our partners want, like the ability to deploy more equity as well as debt, and it’s often unable to capitalize on fast-moving investment opportunities.  So, we put forward a proposal to expand the DFC’s toolkit and make it bigger, faster, nimbler. 
    Another gap we need to bridge is to make sure we attract, retain, and empower top-tier talent with expertise in priority areas.
    We’re asking Congress to approve the resources we’ve requested for the Commerce’s Bureau of Industry Security, Treasury’s Office of Investment Security, the Department of Justice’s National Security Division. 
    If Congress is serious about America competing and winning, we need to be able to draw on America’s very best.
    Let me close with this:
    Since the end of World War Two, the United States has stood for a fair and open international economy; for the power of global connection to fuel innovation; for the power of trade and investment done right to create good jobs; for the power, as Tocqueville put it, of interest rightly understood.
    Our task ahead is to harness that power to take on the realities of today’s geopolitical moment in a way that will not only preserve America’s enduring strengths, but extend them for generations to come.  It will take more conversations like this one and iteration after iteration to forge a new consensus and perfect a new set of policies and capabilities to match the moment. 
    I hope it’s a project we can all work on together.  We can’t afford not to. 
    So, thank you.  And I look forward to continuing the conversation, including hearing some of your questions this morning. 

    MIL OSI USA News –

    January 25, 2025
  • MIL-OSI: Euronet Worldwide Reports Third Quarter 2024 Financial Results

    Source: GlobeNewswire (MIL-OSI)

    LEAWOOD, Kan., Oct. 23, 2024 (GLOBE NEWSWIRE) — Euronet Worldwide, Inc. (“Euronet” or the “Company”) (NASDAQ: EEFT), a leading global financial technology solutions and payments provider, reports third quarter 2024 financial results.

    Euronet reports the following consolidated results for the third quarter 2024 compared with the same period of 2023:

    • Revenues of $1,099.3 million, a 9% increase from $1,004.0 million (9% increase on a constant currency1 basis).
    • Operating income of $182.2 million, a 9% increase from $167.0 million (9% increase on a constant currency basis).
    • Adjusted EBITDA2 of $225.7 million, a 6% increase from $212.5 million (6% increase on a constant currency basis).
    • Net income attributable to Euronet of $151.5 million, or $3.21 diluted earnings per share, compared with $104.2 million, or $2.05 diluted earnings per share.
    • Adjusted earnings per share3 of $3.03, an 11% increase from $2.72.
    • Euronet’s cash and cash equivalents were $1,524.1 million and ATM cash was $805.4 million, totaling $2,329.5 million as of September 30, 2024, and availability under its revolving credit facilities was approximately $669.8 million.

    See the reconciliation of non-GAAP items in the attached financial schedules.  

    “I am pleased that we achieved a third quarter adjusted EPS of $3.03, an 11% increase over the prior year’s $2.72. I also point out that we did not include in our adjusted EPS approximately $0.28 per share related to an investment gain. Had we done so, adjusted EPS would have been $3.31. This year’s third quarter is a great reminder of how our product and geographic diversity helps to provide consistency in our earnings. Moreover, with our 17% nine months year to date adjusted EPS growth, we are well on track to be at the top end of the range with good prospects to exceed the range,” stated Michael J. Brown, Euronet’s Chairman and Chief Executive Officer. 

    “Money Transfer produced strong third quarter results compared to the prior year across all financial metrics. EFT produced solid results across all metrics with double digit growth in operating income and adjusted EBITDA. epay delivered double-digit revenue and transaction growth.”

    Taking into consideration recent trends in the business and the global economy, continued double-digit quarterly earnings growth, and historical seasonal patterns, the Company remains confident in its previously announced expectations that its 2024 adjusted EPS will grow 10-15% year-over-year, consistent with its 10 and 20 year compounded annualized growth rates. Moreover, the Company expects that in 2025 it will again produce adjusted EPS growth in the 10-15% range. This outlook does not include any changes that may develop in foreign exchange rates, interest rates or other unforeseen factors.

    Segment and Other Results

    The EFT Processing Segment reports the following results for the third quarter 2024 compared with the same period or date in 2023:

    • Revenues of $373.0 million, an 8% increase from $345.8 million (7% increase on a constant currency basis).
    • Operating income of $117.3 million, a 12% increase from $104.8 million (12% increase on a constant currency basis).
    • Adjusted EBITDA of $142.1 million, a 10% increase from $128.7 million (10% increase on a constant currency basis).
    • Transactions of 2,982 million, a 34% increase from 2,231 million.
    • Total of 55,292 installed ATMs as of September 30, 2024, a 4% increase from 53,272. We operated 54,020 active ATMs as of September 30, 2024, a 5% increase from 51,496 as of September 30, 2023.

    Constant currency revenue, operating income, and adjusted EBITDA growth in the third quarter 2024 was driven by travel, growth in the merchant services business and growth within recent market expansion. Operating margins benefited from transactions driven by continued travel recovery together with effective expense management.

    The increase in active ATMs includes the acquisition of 800 ATMs in Malaysia together with the addition of approximately 800 outsourcing ATMs, and the impact of winterizing 500 more ATMs in the prior year at September 30, 2023, compared to September 30, 2024.

    Transaction growth outpaced revenue growth due to continued growth in high-volume low-value transactions in India. 

    The epay Segment reports the following results for the third quarter 2024 compared with the same period or date in 2023:

    • Revenues of $290.3 million, a 10% increase from $264.5 million (10% increase on a constant currency basis).
    • Operating income of $29.1 million, a 3% increase from $28.3 million (2%  increase on a constant currency basis).
    • Adjusted EBITDA of $31.0 million, a 3% increase from $30.1 million (3% increase on a constant currency basis).
    • Transactions of 1,126 million, a 22% increase from 925 million.
    • POS terminals of approximately 766,000 as of September 30, 2024, a 5% decrease from approximately 810,000.
    • Retailer locations of approximately 348,000 as of September 30, 2024, unchanged from prior year.

    Double-digit revenue and transaction growth was driven by continued digital media and mobile growth. Operating income and adjusted EBITDA growth did not keep pace with the overall growth in revenue due to inflationary pressures in the business and expenses incurred to launch new proprietary product offerings.

    The Money Transfer Segment reports the following results for the third quarter 2024 compared with the same period or date in 2023:

    • Revenues of $438.2 million, an 11% increase from $395.9 million (10% increase on a constant currency basis).
    • Operating income of $58.1 million, an 8% increase from $53.7 million (7% increase on a constant currency basis).
    • Adjusted EBITDA of $64.1 million, a 6% increase from $60.7 million (4% increase on a constant currency basis).
    • Total transactions of 45.1 million, an 11% increase from 40.6 million.
    • Network locations of approximately 595,000 as of September 30, 2024, a 10% increase from approximately 540,000.

    Constant currency revenue growth was primarily driven by near double-digit growth in cross-border transactions, offset by a decrease in intra-US transactions. Direct-to-consumer digital transactions grew by 30%, reflecting strong consumer demand for digital products, which represents 19% of total digital transactions. The constant currency operating income increase of 7% was influenced by an additional $2 million year-over-year digital customer marketing spend during the quarter versus last year. Excluding the incremental digital customer marketing spend, constant currency operating income growth would have exceeded 10%, producing operating margins consistent with prior year. Money Transfer’s revenue and gross profit per transaction were consistent with the prior year.

    Corporate and Other reports $22.3 million of expense for the third quarter 2024 compared with $19.8 million for the third quarter 2023. The increase in corporate expenses is largely from increased salaries, performance-based compensation and other management expenses.

    Balance Sheet and Financial Position
    Unrestricted cash and cash equivalents on hand was $1,524.1 million as of September 30, 2024, compared to $1,271.8 million as of June 30, 2024.  The net increase in unrestricted cash and cash equivalents is the net result of the generation of cash from operations and working capital fluctuations partially offset by share repurchases.

    Total indebtedness was $2,278.8 million as of September 30, 2024, compared to $2,270.2 million as of June 30, 2024. Availability under the Company’s revolving credit facilities was approximately $669.8 million as of September 30, 2024.

    The Company repurchased 1 million shares for $101.3 million during the third quarter, which will improve earnings per share by 2% for future periods.

    Non-GAAP Measures
    In addition to the results presented in accordance with U.S. GAAP, the Company presents non-GAAP financial measures, such as constant currency financial measures, operating income, adjusted EBITDA, and adjusted earnings per share. These measures should be used in addition to, and not a substitute for, revenues, operating income, net income and earnings per share computed in accordance with U.S. GAAP. We believe that these non-GAAP measures provide useful information to investors regarding the Company’s performance and overall results of operations. These non-GAAP measures are also an integral part of the Company’s internal reporting and performance assessment for executives and senior management. The non-GAAP measures used by the Company may not be comparable to similarly titled non-GAAP measures used by other companies. The attached schedules provide a full reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measure.

    The Company does not provide a reconciliation of its forward-looking non-GAAP measures to GAAP due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for GAAP and the related GAAP and non-GAAP reconciliation, including adjustments that would be necessary for foreign currency exchange rate fluctuations and other charges reflected in the Company’s reconciliation of historic numbers, the amount of which, based on historical experience, could be significant.  

    (1) Constant currency financial measures are computed as if foreign currency exchange rates did not change from the prior period. This information is provided to illustrate the impact of changes in foreign currency exchange rates on the Company’s results when compared to the prior period.

    (2) Adjusted EBITDA is defined as net income excluding, to the extent incurred in the period, interest expense, income tax expense, depreciation, amortization, share-based compensation and other non-operating or non-recurring items that are considered expenses or income under U.S. GAAP. Adjusted EBITDA represents a performance measure and is not intended to represent a liquidity measure.

    (3) Adjusted earnings per share is defined as diluted U.S. GAAP earnings per share excluding, to the extent incurred in the period, the tax-effected impacts of: a) foreign currency exchange gains or losses, b) share-based compensation, c) acquired intangible asset amortization, d) non-cash income tax expense, e) non-cash investment gain f) other non-operating or non-recurring items and g) dilutive shares relate to the Company’s convertible bonds. Adjusted earnings per share represents a performance measure and is not intended to represent a liquidity measure. 

    Conference Call and Slide Presentation
    Euronet Worldwide will host an analyst conference call on October 24, 2024, at 9:00 a.m. Eastern Time to discuss these results. The call may also include discussion of Company developments on the Company’s operations, forward-looking information, and other material information about business and financial matters. To listen to the call via telephone please register at Euronet Worldwide Third Quarter 2024 Earnings Call. The conference call will also be available via webcast at http://ir.euronetworldwide.com. Participants should register at least five minutes prior to the scheduled start time of the event. A slideshow will be included in the webcast. 

    A webcast replay will be available beginning approximately one hour after the event at  http://ir.euronetworldwide.com and will remain available for one year.

    About Euronet Worldwide, Inc.
    Starting in Central Europe in 1994 and growing to a global real-time digital and cash payments network with millions of touchpoints today, Euronet now moves money in all the ways consumers and businesses depend upon. This includes money transfers, credit/debit card processing, ATMs, POS services, branded payments, foreign currency exchange and more. With products and services in more than 200 countries and territories provided through its own brand and branded business segments, Euronet and its financial technologies and networks make participation in the global economy easier, faster and more secure for everyone. 

    A leading global financial technology solutions and payments provider, Euronet has developed an extensive global payments network that includes 55,292 installed ATMs, approximately 949,000 EFT POS terminals and a growing portfolio of outsourced debit and credit card services which are under management in 113 countries; card software solutions; a prepaid processing network of approximately 766,000 POS terminals at approximately 348,000 retailer locations in 64 countries; and a global money transfer network of approximately 595,000 locations serving 205 countries and territories. Euronet serves clients from its corporate headquarters in Leawood, Kansas, USA, and 67 worldwide offices. For more information, please visit the Company’s website at www.euronetworldwide.com.

    Statements contained in this news release that concern Euronet’s or its management’s intentions, expectations, or predictions of future performance, are forward-looking statements. Euronet’s actual results may vary materially from those anticipated in such forward-looking statements as a result of a number of factors, including: conditions in world financial markets and general economic conditions, including impacts from the COVID-19 or other pandemics; inflation; the war in the Ukraine and the related economic sanctions; military conflicts in the Middle East; our ability to successfully integrate any acquired operations; economic conditions in specific countries and regions; technological developments affecting the market for our products and services; our ability to successfully introduce new products and services; foreign currency exchange rate fluctuations; the effects of any breach of our computer systems or those of our customers or vendors, including our financial processing networks or those of other third parties; interruptions in any of our systems or those of our vendors or other third parties; our ability to renew existing contracts at profitable rates; changes in fees payable for transactions performed for cards bearing international logos or over switching networks such as card transactions on ATMs; our ability to comply with increasingly stringent regulatory requirements, including anti-money laundering, anti-terrorism, anti-bribery, consumer and data protection and privacy; changes in laws and regulations affecting our business, including tax and immigration laws and any laws regulating payments, including dynamic currency conversion transactions; changes in our relationships with, or in fees charged by, our business partners; competition; the outcome of claims and other loss contingencies affecting Euronet; the cost of borrowing (including fluctuations in interest rates), availability of credit and terms of and compliance with debt covenants; and renewal of sources of funding as they expire and the availability of replacement funding. These risks and other risks are described in the Company’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Copies of these filings may be obtained via the SEC’s Edgar website or by contacting the Company. Any forward-looking statements made in this release speak only as of the date of this release. Except as may be required by law, Euronet does not intend to update these forward-looking statements and undertakes no duty to any person to provide any such update under any circumstances. The Company regularly posts important information to the investor relations section of its website.  

     EURONET WORLDWIDE, INC.
     Condensed Consolidated Balance Sheets
     (in millions)
           
      As of    
      September 30,   As of
      2024   December 31,
      (unaudited)   2023
    ASSETS      
    Current assets:      
    Cash and cash equivalents $ 1,524.1   $ 1,254.2
    ATM cash 805.4   525.2
    Restricted cash 18.9   15.2
    Settlement assets 1,461.0   1,681.5
    Trade accounts receivable, net 273.2   370.6
    Prepaid expenses and other current assets 303.2   316.0
    Total current assets 4,385.8   4,162.7
           
    Property and equipment, net 340.3   332.1
    Right of use lease asset, net 142.9   142.6
    Goodwill and acquired intangible assets, net 1,118.9   1,015.1
    Other assets, net 301.2   241.9
    Total assets $ 6,289.1   $ 5,894.4
           
    LIABILITIES AND EQUITY      
    Current liabilities:      
    Settlement obligations $ 1,461.0   $ 1,681.5
    Accounts payable and other current liabilities 877.4   816.9
    Current portion of operating lease liabilities 51.4   50.3
    Short-term debt obligations 1,081.4   151.9
    Total current liabilities 3,471.2   2,700.6
           
    Debt obligations, net of current portion 1,195.5   1,715.4
    Operating lease liabilities, net of current portion 95.4   95.8
    Capital lease obligations, net of current portion 1.9   2.3
    Deferred income taxes 77.6   47.0
    Other long-term liabilities 85.5   83.6
    Total liabilities 4,927.1   4,644.7
    Equity 1,362.0   1,249.7
    Total liabilities and equity $ 6,289.1   $ 5,894.4
     EURONET WORLDWIDE, INC.
     Consolidated Statements of Operations
     (unaudited – in millions, except share and per share data)
           
      Three Months Ended
      September 30,
      2024   2023
           
    Revenues $ 1,099.3     $ 1,004.0  
           
    Operating expenses:      
    Direct operating costs 634.0     576.7  
    Salaries and benefits 169.6     153.6  
    Selling, general and administrative 80.6     73.9  
    Depreciation and amortization 32.9     32.8  
    Total operating expenses 917.1     837.0  
    Operating income 182.2     167.0  
           
    Other income (expense):      
    Interest income 6.5     4.0  
    Interest expense (24.2 )   (15.0 )
    Foreign currency exchange gain (loss) 27.4     (8.8 )
    Other income 16.5     —  
    Total other income (expense), net 26.2     (19.8 )
    Income before income taxes 208.4     147.2  
           
    Income tax expense (56.8 )   (43.0 )
           
    Net income 151.6     104.2  
    Net loss attributable to non-controlling interests (0.1 )   —  
    Net income attributable to Euronet Worldwide, Inc. $ 151.5     $ 104.2  
    Add: Interest expense from assumed conversion of convertible notes, net of tax   1.1       1.1  
    Net income for diluted earnings per share calculation $ 152.6     $ 105.3  
    Earnings per share attributable to Euronet Worldwide, Inc. stockholders – diluted $ 3.21     $ 2.05  
           
    Diluted weighted average shares outstanding 47,554,606     51,470,603  
           
     EURONET WORLDWIDE, INC.
    Reconciliation of Net Income to Operating Income (Expense) and Adjusted EBITDA
     (unaudited – in millions)
                       
      Three months ended September 30, 2024
                       
      EFT Processing   epay   Money Transfer   Corporate Services   Consolidated
                       
    Net income                 $ 151.6  
                       
    Add: Income tax expense                 56.8  
    Less: Total other income, net                 (26.2 )
                       
    Operating income (expense) $ 117.3     $ 29.1     $ 58.1     $ (22.3 )   $ 182.2  
    Add: Depreciation and amortization 24.8     1.9     6.0     0.2     32.9  
    Add: Share-based compensation —     —     —     10.6     10.6  
    Earnings before interest, taxes, depreciation, amortization, share-based compensation (Adjusted EBITDA) (1) $ 142.1     $ 31.0     $ 64.1     $ (11.5 )   $ 225.7  
                       
      Three months ended September 30, 2023
                       
      EFT Processing   epay   Money Transfer   Corporate Services   Consolidated
                       
    Net income                 $ 104.2  
                       
    Add: Income tax expense                 43.0  
    Add: Total other expense, net                 19.8  
                       
    Operating income (expense) $ 104.8     $ 28.3     $ 53.7     $ (19.8 )   $ 167.0  
    Add: Depreciation and amortization 23.9     1.8     7.0     0.1     32.8  
    Add: Share-based compensation —     —     —     12.7     12.7  
    Earnings before interest, taxes, depreciation, amortization and share-based compensation (Adjusted EBITDA) $ 128.7     $ 30.1     $ 60.7     $ (7.0 )   $ 212.5  
    EURONET WORLDWIDE, INC.
    Reconciliation of Adjusted Earnings per Share
    (unaudited – in millions, except share and per share data)
           
      Three Months Ended
      September 30,
      2024   2023
           
    Net income attributable to Euronet Worldwide, Inc. $ 151.5     $ 104.2  
           
    Foreign currency exchange (loss) gain (27.4 )   8.8  
    Intangible asset amortization(1) 5.1     5.5  
    Share-based compensation(2) 10.6     12.7  
    Income tax effect of above adjustments(3) 4.9     (4.7 )
    Non-cash investment gain(4) (16.9 )   —  
    Non-cash GAAP tax expense(5) 8.8     6.2  
           
    Adjusted earnings(6) $ 136.6     $ 132.7  
           
    Adjusted earnings per share – diluted(6) $ 3.03     $ 2.72  
           
    Diluted weighted average shares outstanding (GAAP)   47,554,606     51,470,603  
    Effect of adjusted EPS dilution of convertible notes   (2,781,818 )     (2,781,818 )
    Effect of unrecognized share-based compensation on diluted shares outstanding   320,885     185,073  
    Adjusted diluted weighted average shares outstanding   45,093,673     48,873,858  
     

    (1) Intangible asset amortization of $5.1 million and $5.5 million are included in depreciation and amortization expense of $32.9 million and $32.8 million for both the three months ended September 30, 2024, and September 30, 2023, in the consolidated statements of operations.

    (2) Share-based compensation of $10.6 million and $12.7 million are included in salaries and benefits expense of $169.6 million and $153.6 million for the three months ended September 30, 2024, and September 30, 2023, respectively, in the consolidated statements of operations.

    (3) Adjustment is the aggregate U.S. GAAP income tax effect on the preceding adjustments determined by applying the applicable statutory U.S. federal, state and/or foreign income tax rates. 

    (4) Non-cash investment gain of $16.9 million is included in other income in the consolidated statement of operations.

    (5) Adjustment is the non-cash GAAP tax impact recognized on certain items such as the utilization of certain material net deferred tax assets and amortization of indefinite-lived intangible assets.

    (6) Adjusted earnings and adjusted earnings per share are non-GAAP measures that should be considered in addition to, and not as a substitute for, net income and earnings per share computed in accordance with U.S. GAAP. 

    The MIL Network –

    January 25, 2025
  • MIL-OSI New Zealand: Tourism – Crown Princess Kicks Off 2024/2025 Cruise Season in Picton

    Source: Port Marlborough

    The Crown Princess arrived at Port Marlborough in Picton this week as the first cruise ship of the 2024/2025 season, marking the beginning of what is expected to be another strong season for cruise tourism in Marlborough.
    The ship’s arrival was celebrated with a formal ceremony, where Mayor Nadine Taylor and members of Port Marlborough’s Port & Marine team presented the ship’s captain with a locally made plaque and a gift of Marlborough wine. The plaque is specially designed and handcrafted in Picton from local timber with paua shell inlay, and the Marlborough wine was presented in a locally crafted box. Both gifts are specially chosen to represent the community’s involvement in creating a memorable visitor experience and to showcase the pride we take in sharing the best of Marlborough with our international guests.
    Cruise tourism plays a significant role in Marlborough’s economy, contributing around $500,000 to the local economy per day during each cruise visit. This season, we are expecting a steady flow of visitors, with the total number of ships set to match pre-pandemic levels, supporting local businesses and the wider community. 
    Port Marlborough’s ongoing investment in infrastructure has ensured we can continue to provide exceptional service to cruise lines. Recent improvements include a $50,000 upgrade to the passenger marshalling area for improved safety and efficiency, and a $120,000 investment in an additional gangway setup to enhance the passenger experience during peak times.
    Port Marlborough CEO Rhys Welbourn commented: “The Crown Princess’s maiden call visit is a wonderful way to open the season, and we are honoured to have welcomed the captain and crew to Picton for the first time. Our region is ready for another strong cruise season, with both local businesses and the wider community set to benefit. The economic impact of cruise tourism is undeniable, and it is great to see Marlborough once again thriving as a key destination.
    Environmental sustainability remains a key focus for Port Marlborough, and we are working closely with the cruise industry to balance economic benefits with environmental and community outcomes. This includes working with necessary agencies to ensure that all visiting ships adhere to the highest international maritime environmental standards.”
    Port Marlborough continues to invest in the region’s long-term infrastructure. Alongside cruise-specific improvements, the port has introduced a new $11.5m tugboat, Kaiana, to boost resilience and environmental efficiencies in the marine fleet. Other projects include sealing the remaining unsealed areas of the Shakespeare Bay log yard and installing a water truck for dust suppression, an investment aimed at improving environmental outcomes. Upgrades to the wharf fendering system on Waimahara Wharf, valued at $2 million, are also underway to enhance the port’s resilience and capacity.
    With 48 total berth side calls, including nine maiden visits scheduled for the season, Port Marlborough expects that despite the slight global downturn in Cruise tourism, Picton will maintain its position as a preferred destination for international cruise tourism.
    To enable this important regional trade, and its positive impact for local businesses and community, Port Marlborough is committed to delivering excellent customer service to cruise lines, supporting seamless logistics support, towage, pilotage through the Marlborough Sounds, berthing, and passenger disembarkation. The port also collaborates with shipping agents, tourism operators, New Zealand Customs Service, and MPI to ensure each visit runs smoothly, to support Marlborough’s reputation as a world-class cruise destination.

    MIL OSI New Zealand News –

    January 25, 2025
  • MIL-OSI United Kingdom: The Maldives WTO Trade Policy Review: UK Statement, October 2024

    Source: United Kingdom – Executive Government & Departments

    The UK’s Permanent Representative to the World Trade Organization (WTO) and UN in Geneva, Simon Manley, gave a statement during The Maldives Trade Policy Review.

    Location:
    Geneva
    Delivered on:
    23 October 2024 (Transcript of the speech, exactly as it was delivered)

    Chair, let me offer a warm welcome to the delegation from the Maldives led by the Minister of State. Let me also express my gratitude, both to him and his team for their report and to the WTO Secretariat, for their report. I also thank you Chair, for your very good introduction and let me also pay tribute to our Discussant, my very good friend, Ambassador Murdoch, for an intervention. If I may say, for those of us that are of a cricketing bent, Ambassador, combined the elegance and power of your good friend Sir Viv Richards with the intellectual rigour of my own hero Mike Brearley.

    Reports analysis

    1. Chair, the Maldives experience exemplifies the benefits of open trade to sustainable development. You spoke of it as a shining example, I would agree with that. That openness has clearly been a factor in enabling significant infrastructure development, an increasingly diverse tourism sector (in which so many of us aspire to be customers) and a highly sustainable fishing industry – to which both the Minister and Ambassador Murdoch paid tribute.

    2. While the COVID-19 pandemic had a severe impact on the Maldives’ economy, as it did on ours and so many around this organisation, the tourism industry clearly drove forward a strong recovery. A tourism industry which is deeply appreciated by Brits, who come in such droves that the UK consistently features in the top four nationalities visiting your country. You may detect a theme here, Minister.

    3. The reports also demonstrate the continued strength in the Maldives’ trade in services sector, which increased by 47% from 2017 to 2022, driven by a 64% increase in travel service exports. If I may say, yet another example of how trade in services can drive sustainable development in developing countries, which I think is a wider point for this organisation.

    4. Redistribution of that revenue from trade has allowed Maldives, as others have said, to transform from an LDC to an upper middle-income country, classed as a high human development country according to the Human Development Index. So congratulations Minister, congratulations to you, your government and your team here.

    Bilateral trade

    1. Chair, as a fellow Commonwealth member, indeed you, the Maldives, and Ambassador Murdoch, we are coming together in Samoa for the Commonwealth Heads of Government meeting (CHOGM), the UK – Maldives relationship is marked by rich, historical and contemporary ties that are woven into every facet of the enduring friendship between our Governments, our businesses and our people.

    2. We collaborate closely on governance, security, counter terrorism, climate change, environmental protection. And if I may venture out of this building for a second, also on Human Rights, where if I may say, Maldives has played such an important role here in Geneva, punching well above its weight, particularly in its support to fellow SIDS and LDCs, through its role as the co-chair of the Contact Group on HRC membership. And, of course, trade are key areas of collaboration between our two nations. And they are areas of partnership which we will both be seeking to strengthen in Samoa this week.

    3. Protecting the Maldives’ thriving marine biodiversity, is a key objective in our relationship – not just for the enjoyment of the British tourists but also for the future and preservation of our planet. We have a shared interest in the entry to force of Fish I and the early conclusion of Fish II.

    4. Our ties extend to our businesses as well. Total trade in goods and services between the UK and Maldives was worth over half a billion pounds in the four quarters to the end of Q1 2024, and we are proud to be the third largest market for the Maldives’ merchandise exports, those fisheries that Ambassador Murdoch referred to.

    5. A British Business Group was launched in May 2024, as an opportunity to promote trade, and foster business and commercial partnerships and other links between our two nations.

    Business environment and women in trade

    1. Chair, let me encourage Maldives to continue its work to promote a business-friendly environment that supports economic diversification. And if I may add, with two hats, both as UK PR and co-chair on the working group on trade and gender we value its efforts in advancing women’s economic empowerment and its engagement on trade and gender equality at the WTO.

    2. Equally, let me highlight the SME Development Financing Corporation, established by the Maldives in 2019 to support financial inclusion for MSMEs, women and youth, again very admirable initiatives.

    UK support programmes [the Maldives Development Partnership]

    1. As I previously alluded to, a key area of partnership between our two nations is through our mutual environmental objectives. Under the Blue Planet Fund, the Ocean Country Partnership Programme focuses extensive work on Marine Pollution and Biodiversity. Meanwhile the Climate Action for a Resilient Asia programme is funding a Climate Finance Network programme on transforming the Blue Economy with Maldives MSME Empowerment and Blended Finance.

    2. This year, in these few weeks ahead of us, when we have the three Rio Convention COPs meeting in quick succession, it is essential that we work together to deliver on our commitments across all issues of environmental sustainability, an issue of such critical importance to the Maldives, as the Minister reminded us at the start.

    WTO and multilateral institutions

    1. The continued commitment Maldives has shown to the Multilateral Trading System, as a founding member of the WTO, and, more recently, Maldives’ engagement with discussions on environmentally sustainable trade practices is welcome. Others have suggested other areas where we could increase that participation here.

    2. We have also been pleased to see the progress that Maldives have made on the ratification of the Trade Facilitation Agreement, supported, I might add by the UK’s Accelerate Trade Facilitation programme. Just this month British colleagues were in Maldives for the validation of their National Trade Facilitation roadmap. We look forward to working with the Maldives to implement further measures.

    3. Fisheries, as we’ve reflected, is a huge pillar of the Maldivian economy, and the practice of pole and line fishing is one of the most sustainable methods for fishing. We urge Maldives to ratify Fish I, which will help us to deliver on SDG mandate 14.6. The UK is fully behind Maldives, and others, not least our distinguished permanent representative from Iceland, in securing agreement on the second phase of negotiations on Fisheries Subsidies at the very earliest possible opportunity.

    Conclusion

    1. In conclusion, Chair, let me thank you, the Discussant, and the whole delegation from the Maldives for your work on this Review and the accompanying Reports.

    2. Chair, Maldives is known as a beautiful holiday destination – many newlyweds travel from far and wide to see the rare white sands beaches and diverse sea life. The story these reports tell of the Maldives’ trade and its coupling with the WTO, show a match made in heaven – a true case study for the story of free, fair and open trade that the multilateral system allows us to see.

    Thank you very much indeed.

    Updates to this page

    Published 24 October 2024

    MIL OSI United Kingdom –

    January 25, 2025
  • MIL-OSI: BE Semiconductor Industries N.V. Announces Q3-24 Results

    Source: GlobeNewswire (MIL-OSI)

    Q3-24 Revenue of € 156.6 Million and Net Income of € 46.8 Million Up 27.0% and 33.7%, Respectively, vs. Q3-23
    Orders of € 151.8 Million Up 19.2% vs. Q3-23. Hybrid Bonding Adoption Continues

    YTD-24 Revenue of € 454.1 Million and Net Income of € 122.7 Million
    Orders of € 464.8 Million Up 21.7% vs. YTD-23

    DUIVEN, the Netherlands, Oct. 24, 2024 (GLOBE NEWSWIRE) — BE Semiconductor Industries N.V. (the “Company” or “Besi”) (Euronext Amsterdam: BESI; OTC markets: BESIY), a leading manufacturer of assembly equipment for the semiconductor industry, today announced its results for the third quarter and nine months ended September 30, 2024.

    Key Highlights Q3-24

    • Revenue of € 156.6 million up 3.6% vs. Q2-24 and 27.0% vs. Q3-23 due to increased demand by computing end user markets for hybrid bonding, photonics and other AI applications partially offset by ongoing weakness in automotive and Chinese end user markets
    • Orders of € 151.8 million up 19.2% vs. Q3-23 due to increased hybrid bonding orders. Down 18.0% vs. Q2-24 due primarily to fluctuations in hybrid bonding order patterns by customers
    • Gross margin of 64.7% decreased by 0.3 points vs. Q2-24 but was up 0.1 point vs. Q3-23. Gross margin development in the comparable periods was adversely affected by net forex influences
    • Net income of € 46.8 million increased 11.7% vs. Q2-24 and 33.7% vs. Q3-23 primarily due to higher revenue levels and cost control efforts which limited baseline operating expense growth. Q3-24 net margin rose to 29.9% vs. 27.7% in Q2-24 and 28.4% reported in Q3-23
    • Net cash of € 110.7 million at quarter-end increased by € 36.3 million (48.8%) vs. Q2-24 and € 20.5 million (22.7%) vs. Q3-23

    Key Highlights YTD-24

    • Revenue of € 454.1 million increased 8.3% vs. YTD-23 principally due to higher demand by computing end user markets, particularly for hybrid bonding and photonics applications and by Taiwanese and Korean subcontractors partially offset by weakness in mobile and automotive markets
    • Orders of € 464.8 million increased 21.7% vs. YTD-23 due to increased demand for hybrid bonding and photonics applications partially offset by lower bookings for automotive and, to a lesser extent, mobile applications and ongoing weakness in Chinese end user markets
    • Gross margin of 65.6% increased by 0.8 points vs. YTD-23 due to more favorable AI advanced packaging product mix
    • Net income of € 122.7 million was approximately equal to YTD-23 as higher revenue and gross margins were offset by higher R&D spending and share-based compensation expense. Besi’s net margin decreased to 27.0% vs. 29.1% in YTD-23

    Q4-24 Outlook

    • Revenue expected to be flat plus or minus 10% vs. the € 156.6 million reported in Q3-24 partially due to shipment delays by a customer for certain hybrid bonding systems scheduled for delivery in Q4-24
    • Gross margin expected to range between 63-65% vs. the 64.7% realized in Q3-24
    • Operating expenses expected to be flat to up 5% vs. the € 46.2 million reported in Q3-24
    (€ millions, except EPS) Q3-
    2024
    Q2-
    2024
    Δ Q3-
    2023
    Δ YTD-
    2024
    YTD-
    2023
    Δ
    Revenue 156.6 151.2 +3.6% 123.3 +27.0% 454.1 419.2 +8.3%
    Orders 151.8 185.2 -18.0% 127.3 +19.2% 464.8 381.9 +21.7%
    Gross Margin 64.7% 65.0% -0.3 64.6% +0.1 65.6% 64.8% +0.8
    Operating Income 55.1 49.3 +11.8% 42.7 +29.0% 145.0 147.3 -1.6%
    EBITDA 62.4 56.2 +11.0% 48.9 +27.6% 166.2 166.4 -0.1%
    Net Income* 46.8 41.9 +11.7% 35.0 +33.7% 122.7 122.2 +0.4%
    Net Margin* 29.9% 27.7% +2.2 28.4% +1.5 27.0% 29.1% -2.1
    EPS (basic) 0.59 0.53 +11.3% 0.45 +31.1% 1.56 1.57 -0.6%
    EPS (diluted) 0.59 0.53 +11.3% 0.45 +31.1% 1.55 1.54 +0.6%
    Net Cash and Deposits 110.7 74.4 +48.8% 90.2 +22.7% 110.7 90.2 +22.7%

    * Excluding share-based compensation expense, net income (net margin) would have been € 50.2 million (32.1%), € 48.5 million (32.1%) and € 36.6 million (29.7%) in Q3-24, Q2-24 and Q3-23, respectively and € 148.8 million (32.8%) in YTD-24 vs. € 137.6 million (32.8%) in YTD-23

    Richard W. Blickman, President and Chief Executive Officer of Besi, commented:

    “Besi reported significant growth in revenue, orders and net income in Q3-24 versus the comparable quarter of last year as we continue to benefit from strength in our advanced packaging product portfolio for AI applications despite continued headwinds in mainstream and Chinese assembly equipment markets. For the quarter, revenue of € 156.6 million and orders of € 151.8 million grew by 27.0% and 19.2%, respectively, versus Q3-23 due primarily to strong growth by computing end user markets including hybrid bonding, photonics and other AI applications. Such growth was partially offset by weakness in automotive and Chinese end user markets continuing trends we have experienced this year. Net income of € 46.8 million grew by € 11.8 million, or 33.7%, reflecting a number of favorable trends including increased advanced packaging system revenue, increased gross margins related thereto and better than forecast operating expense levels despite continued growth in R&D spending for next generation hybrid bonding and TCB systems.

    For the first nine months of 2024, revenue of € 454.1 million and orders of € 464.8 million increased by 8.3% and 21.7%, respectively. Growth was due to significantly higher demand by computing end user markets, particularly for AI-related hybrid bonding and photonics applications and from Taiwanese and Korean subcontractors. Net income of € 122.7 million was approximately equal to YTD-23 as higher revenue and gross margins this year were offset by higher R&D spending in support of wafer level assembly development and share-based compensation expense.

    Our financial position improved as well in Q3-24 with net cash increasing to € 110.7 million at quarter-end, an improvement of € 36.3 million (+48.8%) versus Q2-24 and € 20.5 million (+22.7%) versus Q3-23 despite increased share buy-back activity. Total cash and deposits at quarter end grew to € 637.4 million including net proceeds from our Senior Note offering in July 2024 which positions us favorably for anticipated growth in the next market upcycle.

    During Q3-24, Besi continued to receive substantial orders for hybrid bonding systems from existing and new customers. At quarter-end, total revenue producing hybrid bonding orders since 2021 exceeded 100 systems highlighting the importance of this new technology for 3-D AI-related assembly applications. We anticipate additional orders in Q4-24 from a variety of customers as adoption continues to expand globally. We have also received increased interest for Besi’s TCB Next system from leading logic and memory customers which positions us favorably for anticipated growth in next generation 2.5D and HBM applications.

    As such, we have taken steps recently to expand our advanced packaging production capacity in anticipation of future growth. In 2025, we intend to approximately double the cleanroom capacity of our Malaysian production facilities and increase R&D and process development for our hybrid bonding and thermo compression bonding capabilities and customer support at our Singapore facility.

    Looking forward to Q4-24, we expect expanded adoption for hybrid bonding applications to be mitigated by ongoing weakness in mainstream assembly markets. For Q4-24, we forecast that revenue will be flat plus or minus 10% versus Q3-24 partially due to shipment delays by a customer for certain hybrid bonding systems scheduled for delivery in Q4-24. In addition, gross margins are anticipated to range between 63-65% based on our projected product mix. Aggregate operating expenses are forecast to be flat to up 5% versus Q3-24.”

    Share Repurchase Activity

    During the quarter, Besi repurchased approximately 230,000 of its ordinary shares at an average price of € 120.45 per share or a total of € 27.8 million. In August 2024, Besi completed its prior € 60 million share repurchase program and initiated a new € 100 million share repurchase program with an anticipated completion date of October 2025. Cumulatively, as of September 30, 2024, a total of € 7.0 million has been purchased under the new share repurchase program at an average price of € 110.55 per share. As of September 30, 2024, Besi held approximately 1.6 million shares in treasury equal to 2.0% of its shares outstanding.

    Investor and media conference call
    A conference call and webcast for investors and media will be held today at 4:00 pm CET (10:00 am EDT). To register for the conference call and/or to access the audio webcast and webinar slides, please visit www.besi.com.
       
    Important Dates  
    •  Publication Q4/Full year 2024 results February 20, 2025
    •  Publication Q1-2025 results April 23, 2025
    •  Besi’s 2025 AGM April 23, 2025
       

    Basis of Presentation

    The accompanying Consolidated Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union. Reference is made to the Summary of Significant Accounting Policies to the Notes to the Consolidated Financial Statements as included in our 2023 Annual Report, which is available on www.besi.com.

    Contacts:

    Richard W. Blickman, President & CEO
    Andrea Kopp-Battaglia, Senior Vice President Finance        
    Claudia Vissers, Executive Secretary/IR coordinator
    Edmond Franco, VP Corporate Development/US IR coordinator

    Tel. (31) 26 319 4500                
    investor.relations@besi.com   

    About Besi

    Besi is a leading supplier of semiconductor assembly equipment for the global semiconductor and electronics industries offering high levels of accuracy, productivity and reliability at a low cost of ownership. The Company develops leading edge assembly processes and equipment for leadframe, substrate and wafer level packaging applications in a wide range of end-user markets including electronics, mobile internet, cloud server, computing, automotive, industrial, LED and solar energy. Customers are primarily leading semiconductor manufacturers, assembly subcontractors and electronics and industrial companies. Besi’s ordinary shares are listed on Euronext Amsterdam (symbol: BESI). Its Level 1 ADRs are listed on the OTC markets (symbol: BESIY) and its headquarters are located in Duiven, the Netherlands. For more information, please visit our website at www.besi.com.

    Caution Concerning Forward-Looking Statements

    This press release contains statements about management’s future expectations, plans and prospects of our business that constitute forward-looking statements, which are found in various places throughout the press release, including, but not limited to, statements relating to expectations of orders, net sales, product shipments, expenses, timing of purchases of assembly equipment by customers, gross margins, operating results and capital expenditures. The use of words such as “anticipate”, “estimate”, “expect”, “can”, “intend”, “believes”, “may”, “plan”, “predict”, “project”, “forecast”, “will”, “would”, and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The financial guidance set forth under the heading “Outlook” contains such forward-looking statements. While these forward-looking statements represent our judgments and expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from those contained in forward-looking statements, including any inability to maintain continued demand for our products; failure of anticipated orders to materialize or postponement or cancellation of orders, generally without charges; the volatility in the demand for semiconductors and our products and services; the extent and duration of the COVID-19 and other global pandemics and the associated adverse impacts on the global economy, financial markets, global supply chains and our operations as well as those of our customers and suppliers; failure to develop new and enhanced products and introduce them at competitive price levels; failure to adequately decrease costs and expenses as revenues decline; loss of significant customers, including through industry consolidation or the emergence of industry alliances; lengthening of the sales cycle; acts of terrorism and violence; disruption or failure of our information technology systems; consolidation activity and industry alliances in the semiconductor industry that may result in further increased customer concentration, inability to forecast demand and inventory levels for our products; the integrity of product pricing and protection of our intellectual property in foreign jurisdictions; risks, such as changes in trade regulations, conflict minerals regulations, currency fluctuations, political instability and war, associated with substantial foreign customers, suppliers and foreign manufacturing operations, particularly to the extent occurring in the Asia Pacific region where we have a substantial portion of our production facilities; potential instability in foreign capital markets; the risk of failure to successfully manage our diverse operations; any inability to attract and retain skilled personnel, including as a result of restrictions on immigration, travel or the availability of visas for skilled technology workers; those additional risk factors set forth in Besi’s annual report for the year ended December 31, 2023 and other key factors that could adversely affect our businesses and financial performance contained in our filings and reports, including our statutory consolidated statements. We expressly disclaim any obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise.

    Consolidated Statements of Operations

    (€ thousands, except share and per share data) Three Months Ended
    September 30,
    (unaudited)
    Nine Months Ended
    September 30,
    (unaudited)
      2024 2023 2024 2023
             
    Revenue 156,570 123,320 454,060 419,227
    Cost of sales 55,325 43,709 156,276 147,374
             
    Gross profit 101,245 79,611 297,784 271,853
             
    Selling, general and administrative expenses 27,318 23,310 97,473 81,679
    Research and development expenses 18,874 13,614 55,296 42,907
             
    Total operating expenses 46,192 36,924 152,769 124,586
             
    Operating income 55,053 42,687 145,015 147,267
             
    Financial expense, net 1,560 1,758 3,194 4,974
             
    Income before taxes 53,493 40,929 141,821 142,293
             
    Income tax expense 6,719 5,889 19,123 20,104
             
    Net income 46,774 35,040 122,698 122,189
             
    Net income per share – basic 0.59 0.45 1.56 1.57
    Net income per share – diluted 0.59 0.45 1.55 1.54
             
    Number of shares used in computing per share amounts:        
    – basic 79,630,787 77,374,933 78,701,287 77,656,542
    – diluted1 81,876,505 82,444,358 81,978,112 83,038,212

    ______________________
    1) The calculation of diluted income per share assumes the exercise of equity settled share based payments and the conversion of all Convertible Notes outstanding

    Consolidated Balance Sheets

    (€ thousands) September
    30, 2024

    (unaudited)
    June
    30, 2024
    (unaudited)
    March
    31, 2024
    (unaudited)
    December
    31, 2023
    (audited)
    ASSETS        
             
    Cash and cash equivalents 307,448 127,234 232,053 188,477
    Deposits 330,000 130,000 215,000 225,000
    Trade receivables 169,266 174,601 150,192 143,218
    Inventories 104,103 99,291 99,384 92,505
    Other current assets 44,731 36,346 34,756 39,092
             
    Total current assets 955,548 567,472 731,385 688,292
             
    Property, plant and equipment 44,220 43,571 41,328 37,516
    Right of use assets 16,419 16,821 16,901 18,242
    Goodwill 45,278 45,710 45,613 45,402
    Other intangible assets 94,855 92,627 90,241 93,668
    Deferred tax assets 8,610 9,517 11,444 12,217
    Other non-current assets 1,316 1,239 1,252 1,216
             
    Total non-current assets 210,698 209,485 206,779 208,261
             
    Total assets 1,166,246 776,957 938,164 896,553
             
             
    Current portion of long-term debt 2,241 3,033 984 3,144
    Trade payables 49,211 51,620 52,382 46,889
    Other current liabilities 87,739 73,023 100,606 87,200
             
    Total current liabilities 139,191 127,676 153,972 137,233
             
    Long-term debt 524,527 179,801 265,142 297,353
    Lease liabilities 13,033 13,448 13,625 14,924
    Deferred tax liabilities 11,619 10,396 12,136 12,959
    Other non-current liabilities 12,449 11,352 12,914 12,671
             
    Total non-current liabilities 561,628 214,997 303,817 337,907
             
    Total equity 465,427 434,284 480,375 421,413
             
    Total liabilities and equity 1,166,246 776,957 938,164 896,553

     

    Consolidated Cash Flow Statements

    (€ thousands) Three Months Ended
    September 30,
    (unaudited)
    Nine Months Ended
    September 30,
    (unaudited)
      2024 2023 2024 2023
             
    Cash flows from operating activities:        
    Income before income tax 53,493 40,929 141,821 142,293
             
    Depreciation and amortization 7,388 6,248 21,181 19,155
    Share based payment expense 3,400 1,575 27,216 16,300
    Financial expense, net 1,560 1,758 3,194 4,974
             
    Changes in working capital 6,031 15,697 (43,914) (2,581)
    Interest (paid) received (1,996) (2,649) (19,513) (27,948)
    Income tax paid 2,156 1,582 7,218 3,075
             
    Net cash provided by operating activities 72,032 65,140 137,203 155,268
             
    Cash flows from investing activities:        
    Capital expenditures (2,099) (1,990) (10,965) (5,448)
    Capitalized development expenses (4,415) (4,700) (13,990) (15,341)
    Repayments of (investments in) deposits (200,000) – (105,000) (5,268)
             
    Net cash provided by (used in) investing activities (206,514) (6,690) (129,955) (26,057)
             
    Cash flows from financing activities:        
    Proceeds from notes 350,000 – 350,000 –
    Transaction costs related to notes (6,395) – (6,395) –
    Payments of lease liabilities (1,080) (995) (3,186) (3,207)
    Purchase of treasury shares (27,829) (45,537) (57,418) (190,264)
    Dividends paid to shareholders – – (171,534) (222,109)
             
    Net cash used in financing activities 314,696 (46,532) 111,467 (415,580)
             
    Net increase (decrease) in cash and cash equivalents 180,214 11,918 118,715 (286,369)
    Effect of changes in exchange rates on cash and
    cash equivalents
    – 130 256 (292)
    Cash and cash equivalents at beginning of the
    period
    127,234 192,977 188,477 491,686
             
    Cash and cash equivalents at end of the period 307,448 205,025 307,448 205,025

      

    Supplemental Information (unaudited)
    (€ millions, unless stated otherwise)

    REVENUE Q3-2024 Q2-2024 Q1-2024 Q4-2023 Q3-2023 Q2-2023 Q1-2023
                                 
    Per geography:                            
    China 45.5 29% 57.5 38% 58.5 40% 62.0 39% 40.8 33% 64.9 40% 37.6 28%
    Asia Pacific (excl. China) 51.6 33% 54.1 36% 43.6 30% 57.9 36% 42.3 34% 59.2 36% 58.2 44%
    EU / USA / Other 59.5 38% 39.6 26% 44.2 30% 39.7 25% 40.2 33% 38.4 24% 37.6 28%
                                 
    Total 156.6 100% 151.2 100% 146.3 100% 159.6 100% 123.3 100% 162.5 100% 133.4 100%
                                 
    ORDERS Q3-2024 Q2-2024 Q1-2024 Q4-2023 Q3-2023 Q2-2023 Q1-2023
                                 
    Per geography:                            
    China 45.4 30% 43.3 23% 51.1 40% 71.1 43% 46.0 36% 51.4 46% 35.5 25%
    Asia Pacific (excl. China) 69.3 46% 72.0 39% 45.0 35% 36.6 22% 40.9 32% 33.2 29% 71.3 50%
    EU / USA / Other 37.1 24% 69.9 38% 31.6 25% 58.7 35% 40.4 32% 28.0 25% 35.2 25%
                                 
    Total 151.8 100% 185.2 100% 127.7 100% 166.4 100% 127.3 100% 112.6 100% 142.0 100%
                                 
    Per customer type:                            
    IDM 84.5 56% 122.4 66% 53.5 42% 82.7 50% 70.5 55% 60.5 54% 74.0 52%
    Subcontractors 67.3 44% 62.8 34% 74.2 58% 83.7 50% 56.8 45% 52.1 46% 68.0 48%
                                 
    Total 151.8 100% 185.2 100% 127.7 100% 166.4 100% 127.3 100% 112.6 100% 142.0 100%
                                 
    HEADCOUNT Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023
                                 
    Fixed staff (FTE) 1,807 87% 1,783 86% 1,760 88% 1,736 93% 1,725 87% 1,689 86% 1,682 84%
    Temporary staff (FTE) 271 13% 279 14% 236 12% 134 7% 248 13% 279 14% 312 16%
                                 
    Total 2,078 100% 2,062 100% 1,996 100% 1,870 100% 1,973 100% 1,968 100% 1,994 100%
                                 
    OTHER FINANCIAL DATA Q3-2024 Q2-2024 Q1-2024 Q4-2023 Q3-2023 Q2-2023 Q1-2023
                                 
    Gross profit 101.2 64.7% 98.3 65.0% 98.3 67.2% 103.9 65.1% 79.6 64.6% 106.6 65.6% 85.7 64.2%
                                 
                                 
    Selling, general and admin expenses:                            
    As reported 27.3 17.4% 30.5 20.2% 39.6 27.1% 24.3 15.2% 23.3 18.9% 29.4 18.1% 29.0 21.7%
    Share-based compensation expense (3.4) -2.1% (6.9) -4.6% (16.9) -11.6% (2.8) -1.7% (1.6) -1.3% (5.5) -3.4% (9.3) -7.0%
                                 
    SG&A expenses as adjusted 23.9 15.3% 23.6 15.6% 22.7 15.5% 21.5 13.5% 21.7 17.6% 23.9 14.7% 19.7 14.8%
                                 
                                 
    Research and development expenses:                            
    As reported 18.9 12.1% 18.5 12.2% 17.9 12.2% 13.5 8.5% 13.6 11.0% 14.3 8.8% 15.0 11.2%
    Capitalization of R&D charges 4.4 2.8% 4.9 3.2% 4.7 3.2% 5.7 3.6% 4.7 3.8% 5.3 3.3% 5.4 4.0%
    Amortization of intangibles (3.9) -2.5% (3.6) -2.3% (3.6) -2.4% (3.3) -2.1% (3.3) -2.6% (3.5) -2.2% (3.5) -2.6%
                                 
    R&D expenses as adjusted 19.4 12.4% 19.8 13.1% 19.0 13.0% 15.9 10.0% 15.0 12.2% 16.1 9.9% 16.9 12.7%
                                 
                                 
    Financial expense (income), net:                            
    Interest income (5.2)   (3.0)   (4.0)   (3.6)   (2.9)   (3.1)   (2.6)  
    Interest expense 5.7   2.1   2.8   3.0   2.8   2.9   2.9  
    Net cost of hedging 1.9   1.4   1.6   1.7   1.7   2.0   1.6  
    Foreign exchange effects, net (0.8)   0.5   0.2   (0.4)   0.2   (0.1)   (0.4)  
                                 
    Total 1.6   1.0   0.6   0.7   1.8   1.7   1.5  
                                 
    Gross cash 637.4   257.2   447.1   413.5   391.2   378.3   644.9  
                                 
                                 
    Operating income (as % of net sales) 55.1 35.2% 49.3 32.6% 40.7 27.8% 66.1 41.4% 42.7 34.6% 62.9 38.7% 41.7 31.3%
                                 
    EBITDA (as % of net sales) 62.4 39.8% 56.2 37.2% 47.5 32.5% 72.7 45.6% 48.9 39.7% 69.3 42.6% 48.2 36.1%
                                 
    Net income (as % of net sales) 46.8 29.9% 41.9 27.7% 34.0 23.2% 54.9 34.4% 35.0 28.4% 52.6 32.4% 34.5 25.9%
                                 
    Effective tax rate 12.6%   13.0%   15.3%   16.1%   14.4%   14.0%   14.0%  
                                 
                                 
    Income per share                            
    Basic 0.59   0.53   0.44   0.71   0.45   0.68   0.44  
    Diluted 0.59   0.53   0.44   0.68   0.45   0.66   0.44  
                                 
    Average shares outstanding (basic) 79,630,787 79,281,533 77,181,326 77,070,082 77,374,933 77,634,197 77,946,873
                                 
    Shares repurchased                            
    Amount 27.8   14.8   14.8   23.1   45.5   66.9   77.7  
    Number of shares 230,807 105,042 101,049 226,572 447,829 761,937 1,120,327
                                 

    The MIL Network –

    January 25, 2025
  • MIL-OSI: Prospera Energy Inc. Corporate Update: Three Years of Strategic Restructuring, Recovery, and Future Growth

    Source: GlobeNewswire (MIL-OSI)

    CALGARY, Alberta, Oct. 24, 2024 (GLOBE NEWSWIRE) — Prospera Energy Inc. (“PEI”) (TSX.V: PEI, OTC: GXRFF, FRA: OF6B)

    The 2024 Prospera corporate update outlines the company’s restructuring efforts since 2021, highlighting key milestones achieved, challenges faced, and the strategic path forward to achieve production stability and profitability.

    Preamble:
    By the end of 2020 Prospera faced a litany of financial challenges, including low production, high operating costs, and the global impacts of the Covid pandemic. The company’s liability was in excess of $24MM ($12MM ARO, $11MM AP arrears, & $1.5MM in Credit Facilities) mainly towards secured mezzanine capital, CRA, mineral royalties, municipality property tax, landowners lease payments, numerous local service providers, and high asset retirement obligations. Adding to the problems, Prospera had in excess of 400+ non-compliance infractions with spills, dysfunctional monitoring devices, and facilities that had been neglected and orphaned. Consequently, Prospera Energy Inc. was in a terminal position. In Q1 2021, the municipality and secured debt holder exercised their rights, taking control of payments from the limited revenue and production that remained. The then-CEO and directors were fleeing from the company’s obligations, especially to the CRA.

    Towards the end of 2020, PEI’s continuing operations had become difficult due to high and long-term liabilities, a situation further amplified by the pandemic and drastic reduction in produced volumes (less than 200 bpd Gross).

    At the time, Mr. Samuel David was leading a private company developing medium-light oil around the Brooks area and as a result of his association with the late Burkhart Franz, founder of Prospera Energy Inc. (formerly Georox Resources), Mr. David accepted a role as an advisor to help rescue the company from entering into CCA.

    Prospera Energy Restructure:
    Prospera Energy Inc’s restructuring commenced in Q1, 2021, with the appointment of Mr. David as President, CEO & Director. Mr. David observed legacy heavy (13-17API) oil fields were developed with numerous vertical wells on reduced spacing. These wells were in primary depletion without any patterned pressure support. Produced water was randomly disposed resulting in water recycling. Reserves were estimated on the decline of the small number of low producing wells and their economies were burdened by high surface lease costs and their high number of standing wells. Unprocessed 3-D seismic coverage was available over the entire reservoir of each asset, each of which has a facility processing capacity to handle large volumes of produced fluid, and the wells were tied into these central facilities. Clean oils were trucked out to a nearby terminal. Produced water was reinjected by central pumps at the facility to injectors throughout the field. These infrastructures had previously been neglected and not maintained.

    Mr. David recognized the recovery to date was low with respect to volumetric estimation of oil in place, and a significant amount of oil remains within adequate infrastructure. The recovery has been from an under pressured solution gas drive reservoir with low active edge water and exploited by vertical well technology only. However, high AP arrears, ARO and neglected infrastructure were significant obstacles. Overcoming poor technical conduct and neglect required sufficient capital to exploit the remaining reserves effectively and profitably. To rectify these issues, Samuel devised a development plan in phases to capture the significant remaining reserves.

    The Prospera development plan is comprised of three phases:

    1. Phase one was to bring operations to safe operating conditions and optimize low hanging opportunities to increase production.
    2. Phase two was to transition to horizontal wells and abandon depleted vertical wells along the path. This reduces the environmental footprint and the corresponding fixed operating cost. It would also diversify product mix by adding higher API oil assets.
    3. The third and final phase is to implement improved and enhanced recovery methods tailored to the reservoir conditions, aiming to reduce decline for sustained long-term production. This approach, combined with a reduced footprint and lower operating costs, is designed to yield higher margins.

    At the time, the minimum allowed for a private placement was five cents, while PEI stock was trading at one cent and at risk of being halted. Fortunately, a one-time, two-cents private placement offering opportunity, that was only offered during extraordinary circumstances such as the pandemic, was permitted. Utilizing this opportunity and the proposed engineering solutions, capital was raised with the assistance of Kurt Soost, who played a key role in connecting credible investors such as Peter Lacey, Dave Richardson, and others to the seed capital provided by the management group, which included Mr. David and Jaz Dhaliwal. They participated in the initial and subsequent private placement offerings, helping Prospera secure a financial lifeline.

    This realigned the PEI board, which requested Mr. David amalgamate his private company assets into Prospera at an equal interest, to avoid any perception of bias towards his assets and to ensure focus on Prospera’s asset development going forward. As a result, Prospera acquired a 50% working interest in a medium-light oil property with operatorship from Mr. David on favorable terms, with no upfront cash consideration and delayed consideration on a success basis. These terms were released on December 7th, 2022, and the transaction consideration was based on third-party evaluations, TSX approval, and independent scrutiny and approval resolution by the directors.

    Restructuring Efforts Resulted In:
    Oil in Place Validated – Prospera Oil in place and remaining reserves were authenticated by geological delineation, well control & production performance, 3D seismic confirmation, and by 3rd party evaluation

    • Total OOIP = 396.7 MMbbl
    • Produced = 34.2 MMbbl
    • Recovered = 8.6%

    NPV Appreciation – Net Present value of the reserves was steadily substantiated by PEI’s optimization and development. As a result:

    • Before Tax PDP reserves increased 508% from $4.4MM$ to $27.1MM$ in 2023 at a 10% discount rate
    • Before tax 2P reserves increased by $60.8m from $72.5m to $133.3MM$ in 2023 at a 10% discount rate
    • Total proved and probable reserves increased by 25% from 4,306 to 5,403 Mboe
    • Reserve life index increased by 6% from 28.4 to 30.0 years

    Increased Ownership – In the three core heavy oil properties from an average of 35% to 95% by settling out joint venture receivables.

    Regulator License Liability Rating – Asset to liability ratio was elevated by PEI restructured efforts

    • The Saskatchewan regulator assessed the company’s asset value 18MM$ higher due to the changes implemented
    • The asset to liability ratio has increased from 0.47 to 1.44 in Saskatchewan
    • The asset to liability ratio has increased from 0.90 to 2.60 in Alberta

    Diversify Production Mix – Acquired a 50% interest in Medium-oil development play and successfully perforated two existing wells with favorable results. In 2023, the first well was drilled, with initial production (IP) rates exceeding expectations. This led to attractive investment returns, with a payout achieved in just seven months.

    In 2024, four development wells were drilled, encountering pay, structure, and oil shows as anticipated. The first medium-oil horizontal well encountered 800 meters of porous reservoirs with oil shown in the lateral section. The well test demonstrated strong inflow, producing over 50 m³/d of fluid at 50% oil cuts. The oil quality is 26–30-degrees API. This well is now online and delivering consistent rates as it is stabilizing.

    Financial Position Appreciation – Netbook value (Total assets) has increased from $5.5 million in 2020 to approximately $59.0 million by the end of Q3 2024. This growth was driven by capital raised ($35MM) and cash flow from operations ($7MM), both of which were deployed for optimization and development. Additional value appreciation resulted from an impairment reversal, supported by the substantiation of remaining reserve value ($8 million) and the capitalization of a working interest acquisition ($3 million). Since 2021, the total asset value has been appreciated by $53+ million. 

    Due to capital deployed for optimization, non-compliance elimination, infrastructure upgrades and development aimed at increasing production and recoveries, the company is beginning to see operational profitability. 2022 saw production increased and, if not for the lower commodity prices in 2023, the company would have been profitable in 2022. Nonetheless, 2022 was a rebound year, generating $2.3 million in operating income compared to a substantial loss the previous year. With ongoing production optimization and development, Prospera has achieved approximately $2.6 million in cash operating income as of Q3, 2024.

    The restructuring efforts have transformed the company into cash-flow-positive operation. Prospera’s bare bones break-even operating expenses are $1.1 million per month (500 boe/d @ $75/boe CAD). Any cash flow above this break-even amount is allocated to servicing debt, addressing legacy arrears and further funding, optimization and development initiatives.

    With current production levels around 900 boe/d, the company has generated $2.6 million year to date Q3, 2024.

    Production Appreciation & Challenges – PEI’s restructuring efforts successfully optimized production from 80 boepd to 800 boepd during the phase one execution. By the end of 2023, peak production rates reach 1,800 boepd driven by horizontal development and medium oil development.

    While the restructuring yielded positive results, Prospera production progress and forecast were impacted by operational set-back and by severe cold weather conditions. These issues hindered expected production rates, preventing the company from achieving its short-term production and financial targets.

    PEI has continually implemented measures to address operational constraints, and restore and maintain peak production rates. These include failure analysis, calibrated equipment, revised operational procedures, and accountability for accurate and timely data to maximize run time with experienced personnel. As a result, Cuthbert operations are starting to stabilize while challenges are being addressed. Approximately 70+ m3/d of production is currently behind pipe at Cuthbert, and PEI is focused on capturing this additional volume.

    Revised 2024 Prospera Forecast
    Following a challenging recalibration, Prospera has expressed optimism going forward, however, PEI has faced a series of challenges including cold weather conditions, infrastructure breakdown, water recycling issues, legacy arrears, non-participating JV partners, and lower commodity prices. These factors have unexpectedly delayed the company’s timeline for attaining the initially projected targets.

    The legacy reservoirs are now in the final stages of primary pressure depletion and require additional energy in-situ to increase the mobility of the viscous oil. Enhanced recovery methods suited to the specific reservoir conditions must be applied gradually and methodically to maximize oil recovery, which will take time. PEI has initiated horizontal transformation while testing the recovery methods to be applied to the future horizontal wells while modifying necessary infrastructure adjustments. With the benefit of new information, extensive data, and a revised plan, Prospera has reassessed and incorporated the challenges and setback into the company’s updated forecast moving forward.

    Prospera has achieved many technical and financial successes, these accomplishments have been overshadowed by production shortfalls set out by optimistic early targets. Moving forward, PEI’s primary focus is on efficient operations to ensure sustained, stable production and production growth.  

    Conclusion
    Prospera Energy Inc. has come a long way since the brink of bankruptcy in Q1, 2021. Through a successful restructuring, PEI has eliminated the risk of insolvency, addressed critical regulatory non-compliances, and raised regulator license liability ratings by increasing production through optimization and development. The company has also substantiated the large amount of remaining reserves and substantially increased the proven asset value of the company. By improving cash flow from operations well above break-even, PEI has remained operational while deploying capital to address legacy accounts payable arrears and implement proven technical applications. Additionally, the acquisition of medium-oil assets has reduced dependency on heavy-oil differentials.

    In short, Prospera have made significant progress in positioning the company for future growth. However, PEI achievements have been overshadowed by production short fall set out by optimistic targets by optimization and drilling success. Prospera acknowledges these challenges encountered and has incorporated them into the revised 2024 forecast, to allocate sufficient time and resources to improve operational efficiencies, optimize well run times, and implement reservoir management applications while adhering to safety & regulatory guidelines. These proactive measures are being implemented in Q4 2024 and Q1 2025 to stabilize and support robust, sustained growth throughout Q2 and Q3 of 2025.

    While the company is revising the year-end production target down to 1,250 barrels, it is important to emphasize that the fundamentals of Prospera Energy’s assets remain strong. The significant recovery potential remains within reach, and PEI continues to execute on our long-term development plan to capitalize on these opportunities. The reduction in short-term targets does not diminish the company’s confidence in the strategic path forward. Prospera remains focused on optimizing production, improving efficiency, and unlocking the full value of PEI’s resources. As Prospera moves ahead, the company is committed to increasing production through optimization, horizontal transformation, and enhanced oil recovery.

    About Prospera
    Prospera is a publicly traded energy company based in Western Canada, specializing in the exploration, development, and production of crude oil and natural gas. Prospera is primarily focused on optimizing hydrocarbon recovery from legacy fields through environmentally safe and efficient reservoir development methods and production practices. Prospera was restructured in the first quarter of 2021 to become profitable and in compliance with regulatory, environmental, municipal, landowner, and service stakeholders.

    The company is in the midst of a three-stage restructuring process aimed at prioritizing cost effective operations while appreciating production capacity and reducing liabilities. Prospera has completed the first phase by optimizing low hanging opportunities, attaining free cash flow, while bringing operation to safe operating condition, all while remaining compliant. Currently, Prospera is executing phase II of the restructuring process, the horizontal transformation intended to accelerate growth and capture the significant oil in place (400 million bbls). These horizontal wells allow PEI to reduce its environmental and surface footprint by eliminating the numerous vertical well leases along the lateral path. Phase III of Prospera’s corporate redevelopment strategy is to optimize recovery through EOR applications. Furthermore, Prospera will pursue its acquisition strategy to diversify its product mix and expand its core area. Its goal is to attain 50% light oil, 40% heavy oil and 10% gas.

    The Corporation continues to apply efforts to minimize its environmental footprint. Also, efforts to reduce and eventually eliminate emissions, alongside pursuing innovative ESG methods to enhance API quality, thereby achieving higher margins and eliminating the need for diluents.

    For Further Information:
    Shawn Mehler, PR
    Email: investors@prosperaenergy.com
    Website: www.prosperaenergy.com

    FORWARD-LOOKING STATEMENTS
    This news release contains forward-looking statements relating to the future operations of the Corporation and other statements that are not historical facts. Forward-looking statements are often identified by terms such as “will,” “may,” “should,” “anticipate,” “expects” and similar expressions. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding future plans and objectives of the Corporation, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements.

    Although Prospera believes that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because Prospera can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to, risks associated with the oil and gas industry in general (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), commodity price and exchange rate fluctuations and uncertainties resulting from potential delays or changes in plans with respect to exploration or development projects or capital expenditures.

    The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of Prospera. As a result, Prospera cannot guarantee that any forward-looking statement will materialize, and the reader is cautioned not to place undue reliance on any forward- looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement. The forward-looking statements contained in this news release are made as of the date of this news release, and Prospera does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by Canadian securities law.

    Neither TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

    Photos accompanying this announcement are available at:
    https://www.globenewswire.com/NewsRoom/AttachmentNg/0b193b58-7798-4139-b69d-1f8aec58a8f7
    https://www.globenewswire.com/NewsRoom/AttachmentNg/46e266dc-9f3f-43b1-a3f7-1f71bb526cce
    https://www.globenewswire.com/NewsRoom/AttachmentNg/2d404ae6-c38e-40c3-910a-403f9376549f
    https://www.globenewswire.com/NewsRoom/AttachmentNg/506b134d-3ce3-4639-9a61-f0caa42b633e
    https://www.globenewswire.com/NewsRoom/AttachmentNg/b0ac6d1d-5ea5-4c86-b5b4-d49a72936f7b
    https://www.globenewswire.com/NewsRoom/AttachmentNg/e14fb81b-462a-456d-99fa-e4a54a549e7d
    https://www.globenewswire.com/NewsRoom/AttachmentNg/100176cb-60ba-45e8-9311-e94604dcd117
    https://www.globenewswire.com/NewsRoom/AttachmentNg/8fc83e60-6686-4b8f-93e8-84598ec586a0
    https://www.globenewswire.com/NewsRoom/AttachmentNg/6c20cd2d-ef07-41b7-9149-5d80f7288b16
    https://www.globenewswire.com/NewsRoom/AttachmentNg/fb37dc99-2c7f-4db1-bcab-a3807af55016

    The MIL Network –

    January 25, 2025
  • MIL-OSI Economics: Alwyn Jordan: Monitoring and assessing risks to financial stability in the Caribbean

    Source: Bank for International Settlements

    On behalf of the Central Bank of Barbados, it is my great pleasure to welcome you to this peer-to-peer exchange seminar. I’d like to extend a special welcome to Dr. Petr Jakubik from CARTAC, whose initiative has brought us together for this important event.

    This is not just another training seminar – it is a dynamic platform for the exchange of ideas, the sharing of expertise and the building of frameworks for future collaboration. In today’s rapidly evolving global landscape, where financial stability and economic resilience are increasingly intertwined with central bank regulation, peer exchanges like this are vital. They help us remain agile, informed and equip us with the latest knowledge and best practices to meet the challenges we face as central bankers and regulators.

    It is therefore a pleasure to be here today to discuss this issue with you, which is at the heart of economic development in the Caribbean. We all know that at first glance, financial stability may seem like a dry, technical topic, but for us in the Caribbean, it is central to safeguarding our economic well-being. As the global financial system becomes more interconnected, our economies are exposed to a variety of risks – both natural and man-made. Today, I want to highlight why financial stability is crucial for our region, with particular emphasis on challenges such as climate change, external shocks, and the evolving financial landscape. I will also shed some light on the difficulties faced by Caribbean central banks and other regulators in preparing comprehensive Financial Stability Reports.

    We all know that financial stability is about ensuring that various entities such as banks, insurance companies, financial markets, and payment systems operate smoothly without triggering major disruptions. When financial stability is maintained, businesses can secure credit, households can borrow and save, and governments can finance development. It is therefore the backbone of economic resilience.

    For the Caribbean, the stakes are particularly high. We are a region of small, open economies that are highly dependent on external trade, tourism, and foreign investment. Our economic structure makes us extremely vulnerable to external shocks, whether they are related to global financial conditions, natural disasters, or geopolitical events. Any significant disruption to the financial system, whether from internal weaknesses or external shocks can therefore quickly lead to a financial crisis. The resulting economic hardship can take years, or even decades, from which to recover. A very good example of this phenomenon was seen during and after the Global Financial Crisis. 

    Vulnerability to Climate Change

    But let me start by addressing one of the major external risks to Caribbean economies, namely the climate crisis. Our region is one of the most vulnerable to the impact of climate change. Indeed, when we refer to climate vulnerable economies, Caribbean countries are always the highest ranked by any measure. Rising sea levels, more intense storms such as hurricane Beryl, which caused significant damage to a number of Caribbean islands in late June, prolonged droughts, and flooding have become our unfortunate reality. These climate-related risks have a direct bearing on financial stability, as these systems don’t just devastate homes and infrastructure, they can also have adverse effects on the financial system.

    For example, the destruction of infrastructure can lead to loans becoming non-performing, as businesses and households may default on their debt. Banks and other large financial entities in turn, may face liquidity problems, which can trigger a systemic crisis. Furthermore, as governments attempt to rebuild after the event, this often leads to an increase in public debt, which puts further strain on their ability to finance essential services and infrastructure. Imagine the strain on our resources that would have occurred had any of our islands been hit by the back-to-back hurricanes that recently devastated Florida and other states along the US South coast. 

    Climate-related risks are particularly challenging to manage because of their unpredictable nature and the difficulty in quantifying their economic impact. Caribbean regulators must therefore continuously monitor these risks and implement forward-looking policies to mitigate their effects on the financial system.

    The Impact of Global Economic Shocks

    In addition to climate change, external economic shocks pose another serious risk to financial stability in the Caribbean. Our economies are heavily reliant on global trade, tourism, and remittances. Any disturbance in the global economy such as a recessions in our major trading partners or sudden changes in commodity prices can ripple through our financial systems. Take, for instance, the fallout from the COVID-19 pandemic, which brought the world to a standstill in 2020. It was an economic shock of unprecedented proportions for the Caribbean. Indeed, our tourism sector, a lifeline for many economies, came to a grinding halt, leaving governments and businesses scrambling to stay afloat.

    Central banks in the region had to take swift action to ensure liquidity in the financial system, lower interest rates, and support government stimulus efforts. But the pandemic highlighted an ongoing challenge: our financial systems are vulnerable to global crises, and the lack of diversified economies in the region makes recovery more difficult. Regulators must therefore constantly balance the need to maintain stability, while responding to these shocks in an agile and effective manner.

    Navigating the New Financial Landscape

    But this is not the only challenge facing us as regulators, as the financial landscape is also evolving rapidly. The rise of fintech, digital currencies, and shadow banking, has created new opportunities for financial inclusion and innovation. However, it also presents new risks. Digital currencies, while offering the potential for greater financial inclusion, bring concerns about regulatory oversight, cybersecurity, and monetary policy transmission. Caribbean countries have been the pioneers in developing digital currency frameworks, but it still requires careful consideration of the impact on financial stability.

    Shadow banks – non-bank financial intermediaries that provide similar services as traditional banks – such as payday lenders or firms offering “buy now, pay later” options for buyers, are another concern. Given that these entities generally operate outside the regular regulatory framework, they are often opaque, and central banks may lack the tools to properly oversee their activities. They can, therefore, pose systemic risks without the safeguards that apply to the formal financial sector. If these institutions fail, the resulting financial contagion could spread quickly throughout the economy. Developing effective regulatory frameworks for shadow banks is therefore critical to ensuring financial stability in our region. 

    The Value of Financial Stability Reports

    It is against this backdrop that Caribbean central banks face the herculean task of monitoring, assessing, and mitigating these risks. One of the key tools at their disposal is macroprudential policy, which is still in its initial stage of implementation in most Caribbean economies. However, central banks have made significant improvements in communicating the risks to the public via their Financial Stability Reports (FSR). These FSRs, as you all know, provide a comprehensive assessment of the financial system’s health and highlight any emerging vulnerabilities. However, preparing a comprehensive FSR is a very challenging exercise, especially in the Caribbean context.

    One of the most significant challenges is the lack of comprehensive and timely data. Many countries in the region struggle with collecting and analysing the necessary data to fully assess financial risks. Without high-quality data, it is difficult for central banks to make accurate forecasts or take pre-emptive action. Improving data collection and our analytical capabilities must therefore be a priority for the region, if we are to produce meaningful and effective reports.

    Moreover, we know that preparing a high-quality FSR requires specialised knowledge in areas such as macroprudential policy, risk modelling, and scenario analysis. Given the complexity of financial systems and the fast-paced evolution of risks, Caribbean regulators must therefore invest in training and development, to ensure that they have the expertise required to produce comprehensive reports. 

    In our context, the Financial Stability Report of Barbados has evolved over the years, reflecting the growing complexity of the financial landscape in the country. I’d like to highlight some of the key milestones that have shaped this journey, all of which have been implemented as a result of our partnership with our sister regulator, the Financial Services Commission (FSC) and our collaboration with CARTAC (Caribbean Regional Technical Assistance Centre).

    A major accomplishment was the introduction of stress testing in 2016, as this allowed us to simulate how our banking sector would perform under adverse shocks. This tool gave the Bank, as a policymaker and regulator, a clearer understanding of the vulnerabilities that might emerge during a financial crisis, helping us better prepare for potential disruptions. This was a crucial step in ensuring that our banks and financial institutions remain resilient, even in the face of global uncertainties.

    As our financial system grew more diverse, it became essential to extend our focus beyond traditional banks. In 2018, the FSR began to include a detailed analysis of non-bank financial institutions (NBFIs) such as insurance companies, pension funds, and credit unions, though our collaboration with the FSC. This was a key milestone because non-bank financial institutions are integral to our economy, and their health is equally as important as that of the banking sector. By broadening the scope of the FSR, we now have a more comprehensive picture of the overall financial system.

    The next significant development occurred four years later in 2020, when we made an important breakthrough in acknowledging the significant risk that climate change poses to our financial system. With the inclusion of climate-related financial risk analysis, the Central Bank aligned Barbados with the global efforts to manage climate-related financial risks, underscoring our commitment to resilience.

    The results of this work, led by Dr. Saida Teleu and her team, were incorporated in Barbados’ 2023 FSR. With the invaluable assistance of the Coastal Zone Management Unit, we’ve implemented a climate stress test, focusing on projecting damage to the accommodation sector, which is deeply intertwined with our tourism industry. This collaboration has allowed us to assess the potential impacts of climate-related risks on financial stability in a more data-driven and precise manner.

    In the most recent FSR, the Bank has also successfully undertaken a significant revamp of its publication, with improvements that underscore our commitment to both innovation and comprehensive risk management. One of the key upgrades has been the introduction of a dynamic balance sheet approach to stress testing. Unlike traditional methods, this approach allows us to incorporate explicit macroeconomic scenarios and extend our stress testing over a longer horizon. This dynamic perspective offers us deeper insights into how our financial system would respond to shocks in a changing economic environment. Additionally, we’ve developed a non-performing loan satellite model, giving us a more accurate assessment of credit risk in our financial system. 

    We also recognised the growing importance of the real estate sector, and so we’ve enhanced our analysis of this sector. Real estate is not only a critical component of household wealth, but also a significant driver of lending and investment activity, making it essential to the stability of our financial system. 

    As the financial landscape changes, so too must our approach to assessing risks. In this regard, the 2023 FSR also incorporated the risks posed by digital financial services, fintech, and cybersecurity and issued a survey to the industry to gather vital data. This addition was particularly important given the rapid rise of cyber-crime and the increasing use of online financial services, and the recent publicised cyber-related breaches at the Barbados Revenue Authority and one of our credit unions give testament to this fact. As a country, we are keen to embrace innovation, but it is equally important that we understand and manage the risks that come with these technological advancements.

    These most recent advancements significantly upgraded our report. Indeed, the Bank’s FSR has now become, in our humble opinion, the regional benchmark for integrating climate change into financial stability assessments. However, we are keen to share our insights with our regional colleagues and we thank CARTAC for sponsoring two peer-to-peer missions, including this one, which serve to further strengthen financial stability efforts throughout the Caribbean. 

    Each of these milestones reflects our Bank’s commitment to ensuring a resilient financial system. From stress testing and climate risk analysis to the inclusion of cyber risks and more robust data analytics, we are continuously improving the tools and strategies we use to safeguard financial stability.

    But our work doesn’t end here. The financial system is always evolving, and we must stay ahead of the curve. By building on these achievements and addressing new challenges, we will continue to protect the financial well-being of Barbados, ensuring that we are resilient in the face of both local and global uncertainties.

    I am honoured to also explore some of the significant milestones achieved by two of our regional counterparts – the Financial Services Commission of Turks and Caicos and the Central Bank of Aruba – in their efforts to enhance their financial stability reporting. 

    Let me begin with Turks and Caicos. Your financial system plays a vital role in your country’s economy, particularly in your banking and offshore sectors. In collaboration with CARTAC, the FSC made great strides in developing its stress testing framework, which is very similar to the one we recently implemented, as a multi-factor and multi-period macroeconomic-stress test that can account for both domestic economic shocks such as a downturn in tourism and external shocks like global financial market volatility. By extending the horizon and refining the scenarios, the FSC is now better equipped to gauge the potential vulnerabilities within its financial system.

    We know that the Central Bank of Aruba does not currently publish a Financial Stability Report. However, the Bank does perform stress tests on its banking sector, the results of which are usually discussed with the banks individually via bilateral meetings. In 2023, the Bank conducted a stress test on the banking sector, with a key focus on concentration risk. This scenario analysis was driven by the developments in the US banking system that took place that year. 

    We will hear directly from these two institutions about their journey to enhance and assess financial stability in their respective jurisdictions. Over the next few days, you will participate in a diverse and robust line-up of sessions that promise to deepen our understanding and sharpen our capabilities. 

    I encourage all of you to actively participate in these discussions, as the true power of peer-to-peer learning lies in the collective wisdom and shared experiences of those in this room. Each of us brings a wealth of knowledge and experience, and together, we have the opportunity to generate innovative solutions that can strengthen the financial stability of our institutions and economies.

    I commend CARTAC, and Petr specifically, for hosting these peer-to-peer exchanges, which provide unique value to our professional growth. While we are all experts in our respective areas, there is tremendous strength in collaboration. This seminar is therefore a perfect opportunity to foster connections, engage in thought-provoking discussions, and together, to drive the innovation and progress that our institutions and economies need to thrive.

    I would like to take a moment to recognise and thank the organising team, especially the Financial Stability Unit led by Saida, who have worked tirelessly to put together this exceptional event, as well as Karen, who has done an excellent job in coordinating this event. Your dedication and efforts are deeply appreciated.

    I would also like to extend a special thank you to our speakers, including those from our sister regulator, the FSC, and our colleagues from the Turks & Caicos and Aruba, who have prepared valuable content for us. We look forward to the knowledge and insights you will bring to the table.

    In closing, I urge each of you to take full advantage of the opportunities this seminar provides. Whether through the formal sessions or during informal conversations during the coffee breaks, I encourage you to use this time to build stronger networks, exchange ideas, and learn from one another. Once again, thank you all for being here. I look forward to the meaningful discussions and practical takeaways that will undoubtedly emerge over the next few days and I wish everyone a productive and successful seminar.

    Thank you.

    MIL OSI Economics –

    January 25, 2025
  • MIL-OSI: Usio to Host Third Quarter Fiscal 2024 Conference Call to Discuss Results and Provide Company Update on November 6, 2024

    Source: GlobeNewswire (MIL-OSI)

    SAN ANTONIO, Oct. 23, 2024 (GLOBE NEWSWIRE) — Usio, Inc. (Nasdaq:USIO), a leading FinTech that operates a full stack of integrated, cloud-based electronic payment and embedded financial solutions, today announced it will release third quarter fiscal 2024 financial results for the period ended September 30, 2024, after the market closes on Wednesday, November 6, 2024.

    Usio’s management will host a conference call the same day, November 6, 2024, beginning at 4:30 p.m. Eastern time to review financial results and provide a business update. Following management’s formal remarks, there will be a question-and-answer session.

    To listen to the conference call, interested parties within the U.S. should call 1-844-883-3890. International callers should call 1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the company’s website at https://usio.com/events-2/.

    A replay of the call will be available approximately one hour after the end of the call through November 20, 2024. The replay can be accessed via the Company’s website or by dialing 1-877-344-7529 (U.S.) or 1-412-317-0088 (international). The replay conference playback code is: 7062327.

    About Usio, Inc.

    Usio, Inc. (Nasdaq: USIO), a leading, cloud-based, integrated FinTech electronic payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, integrated software vendors and card issuers. The Company operates credit, debit/prepaid, and ACH payment processing platforms to deliver convenient, world-class payment solutions and services clients through its unique payment facilitation platform as a service. The company, through its Usio Output Solutions division offers services relating to electronic bill presentment, document composition, document decomposition and printing and mailing services. The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the card issuing sector. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas.

    Websites: www.usio.com, www.payfacinabox.com, www.akimbocard.com and www.usiooutput.com. Find us on Facebook® and Twitter.

    FORWARD-LOOKING STATEMENTS DISCLAIMER
    Except for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management’s intent, belief, and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as “believe,” “intend,” “look forward,” “anticipate,” “schedule,” and “expect” among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company’s business that could cause actual results to vary, including such risks related to an economic downturn as a result of the COVID-19 pandemic, the realization of opportunities from the IMS acquisition, the management of the Company’s growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new tax legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2023. One or more of these factors have affected, and in the future, could affect the Company’s businesses and financial results in the future and could cause actual results to differ materially from plans and projections. The Company believes that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.

    Contact

    Paul Manley
    Senior Vice President, Investor Relations
    paul.manley@usio.com
    612-834-1804

    The MIL Network –

    January 25, 2025
  • MIL-OSI: Pay still drives employee attraction and retention, but current pay programs fall short

    Source: GlobeNewswire (MIL-OSI)

    NEW YORK, Oct. 23, 2024 (GLOBE NEWSWIRE) — About half of global employers report they are effectively delivering on each of the six individual core objectives of pay programs, despite pay being the most commonly cited reason employees join and stay with an employer. This is according to the 2024 Pay Effectiveness and Design Survey by WTW (NASDAQ: WTW), a leading global advisory, broking and solutions company.

    The survey found that of the six core objectives related to pay program effectiveness — driving employee attraction, driving employee retention, promoting fair compensation among employees, promoting competitive compensation compared to employees at other organizations, aligning with business strategy, and rewarding employees for current-year performance — about half of employers report that they are effective at two of these objectives and fewer than half are effective at each of the other four.

    Yet, related research shows that 48% of employees cite pay as one of the main drivers for attraction and retention — the most commonly cited factor for both, and more than half of employees (56%) would consider another job offer for better pay.

    This disconnect is likely in part due to changes that have affected the nature of work over the past several years. Labor market conditions, such as talent shortages, generational shifts, and new work models, have contributed as well as socio-economic trends like the global pandemic and high inflation.

    In addition to these external factors, lack of communication internally impacts overall pay effectiveness. Fewer than one in four say they are effective at communicating how employee pay is determined. Moreover, over half of employers (58%) think that salary compression is an issue and a similar percentage think it will be a problem in the next few years.

    “Organizations likely haven’t been able to focus on the factors that drive pay program effectiveness for the past few years given the recent dynamics of the labor market,” said Lori Wisper, Managing Director and Work & Rewards Global Solutions Leader, WTW. “As current economic conditions have eased the labor market pressures, companies should take the opportunity to make the necessary changes to address those factors. Companies should start with updating their compensation philosophy, because it is critical for pay program effectiveness and can contribute to improved retention of key talent, employee productivity, and financial performance.”

    Among companies that have updated their compensation philosophy in the last five years, the most commonly cited reasons for those changes are to enhance attraction or retention (69%) and to enhance the employee experience (51%). Other reasons include ongoing or regularly scheduled review and refresh (47%), building employee understanding (45%), and enhancing pay transparency (44%).

    “With salary-increase season approaching, it’s an ideal time for companies to assess how their pay programs support values, ensure they align with the business strategy, and start improving the effectiveness of these programs to future-proof their workforce,” added Wisper.

    About the survey

    The 2024 Pay Effectiveness and Design Survey was conducted from May to June of 2024. Nearly 1,900 companies, representing more than 30 million employees across 65 countries, responded. In the U.S., 332 organizations responded.

    About WTW

    At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance.

    Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you. Learn more at wtwco.com.

    Media contacts:

    Ileana Feoli
    Ileana.feoli@wtwco.com

    Stacy Bronstein
    stacy.bronstein@wtwco.com

    The MIL Network –

    January 25, 2025
  • MIL-OSI Africa: IMF isn’t doing enough to support Africa: billions could be made available through special drawing rights

    Source: The Conversation – Africa – By Kevin P. Gallagher, Professor of Global Development Policy and Director, Global Development Policy Center, Boston University

    At the 2021 UN Climate Summit, Barbados prime minister Mia Mottley called for more and better use of special drawing rights (SDRs), the International Monetary Fund’s reserve asset.

    The special drawing right is an international reserve asset created by the IMF. It is not a currency – its value is based on a basket of five currencies, the biggest chunk of which is the US dollar, followed by the euro. It is a potential claim on the freely usable currencies of IMF members. Special drawing rights can provide a country with liquidity.

    Countries can use their special drawing rights to pay back IMF loans, or they can exchange them for foreign currencies.

    As Mottley is the newest president of the Climate Vulnerable Forum and Vulnerable Group of 20 (V20) finance ministers, which represents 68 climate-vulnerable countries that are among those with the most dire liquidity needs, including 32 African countries, her call would be directly beneficial to African countries.

    In August 2021, as the shock from the COVID-19 pandemic battered their economies, African countries received a lifeline of US$33 billion from special drawing rights. This amounts to more than all the climate finance Africa receives each year, and more than half of all annual official development assistance to Africa.

    This US$33 billion did not add to African countries’ debt burden, it did not come with any conditions, and it did not cost donors a single cent to provide.

    IMF members can vote to create new issuances of special drawing rights. They are then distributed to countries in proportion to their quotas in the IMF. Quotas are denominated in special drawing rights, the IMF’s unit of account.

    Quotas are the building blocks of the IMF’s financial and governance structure. An individual member country’s quota broadly reflects its relative position in the world economy. Thus, by design, the poorest and most vulnerable countries receive the least when it comes to quotas and voting shares.

    Special drawing rights cannot solve all of Africa’s economic challenges. And their highly technical nature means they are not always well understood. But at a time when African countries are facing chronic liquidity challenges – most countries in the region are spending more on debt service payments than they are on health, education, or climate change – our new research shows that special drawing rights can play an important role in establishing financial stability and enabling investments for development.

    Financial stability includes macroeconomic stability (such as low inflation, healthy balance of payments, sufficient foreign reserves), a strong financial system and resilience to shocks.

    African leaders are approaching a critical year-long opportunity: in November, the first Group of 20 (G20) summit will convene (with the African Union in attendance as a member for the first time). Then in December South Africa assumes the G20 presidency.


    Read more: South Africa will be president of the G20 in 2025: two much-needed reforms it should drive


    As African leaders advocate for reforms to the international financial architecture, maximising the potential of special drawing rights should be a central component of their agenda.

    The problem

    African countries’ finances are facing tough times. External debt in sub-Saharan Africa has tripled since 2008. The average government is now spending 12% of its revenue on external debt service. The COVID-19 pandemic, Russia’s war in Ukraine, and rises in interest rates and the prices of commodities, like food and fertiliser, have all contributed to this trend.

    Debt restructuring mechanisms have also proved inadequate. Countries like Zambia and Ghana got stuck in lengthy restructurings. Weak institutional capacity and poor governance also impede efficient use of public resources.

    At the same time, African economies need to increase investment to advance development, support a young and growing population, develop climate resilience and take advantage of the opportunity presented by the energy transition.

    To meet the resources for a just energy transition and the attainment of the UN 2030 Sustainable Development Goals, investment in climate and development will have to increase from around 24% of GDP (the average for Africa in 2022) to 37%.

    Special drawing rights have proved to be an important tool in addressing these challenges. Research by the IMF and others shows that African countries significantly benefited from the special drawing rights they received in 2021 to stabilise their economies. And this happened without worsening debt burdens or costing advanced economies any money, particularly as they cut development aid.

    However, advanced economies exercise significant control over the availability of special drawing rights. The IMF’s quota system determines both voting power and their distribution. Advanced economies control most of the IMF’s quotas.

    The advanced economies made the right decision in 2021 and in 2009 to issue new special drawing rights and the time has come again.

    The solution

    African and other global south leaders need to make a strong case for another issuance of special drawing rights at the IMF and World Bank meetings in Washington.

    In addition to a new issuance of special drawing rights, advanced economies still need to be pressured to re-channel the hundreds of billions of special drawing rights sitting idle on their balance sheets into productive purposes.

    The 2021 allocation of special drawing rights amounted to US$650 billion in total. But only US$33 billion went to African countries due to the IMF’s unequal quota distribution. Meanwhile advanced economies with powerful currencies and no need for special drawing rights received the lion’s share.

    The African Development Bank has spearheaded one such proposal alongside the Inter-American Development Bank. Under this plan, countries with unused special drawing rights could re-channel them to the African Development Bank as hybrid capital, allowing the bank to lend around $4 for each $1 of special drawing rights it receives.

    The IMF approved the use of special drawing rights as hybrid capital for multilateral development banks in May. But it set an excessively low limit of 15 billion special drawing rights across all multilateral development banks.

    Even so, advanced economies have been slow to re-channel special drawing rights. The close to $100 billion that have been re-channelled – mostly to IMF trust funds – is meaningful.

    But it still falls short of what should have been re-channelled.

    In the long term, IMF governance reforms are needed to avoid a repeat of the inefficient distribution of special drawing rights.


    Read more: The World Bank and the IMF need to keep reforming to become fit for purpose


    As African countries rightly push to change shortcomings of the international financial architecture, new special drawing rights issuances should be at the centre of such a strategy. The IMF’s 2021 special drawing rights issuance showed the tool’s scale and importance. And special drawing rights re-channelling has had positive effects in easing debt burdens and freeing up financing to recover from the COVID-19 pandemic.

    With 2030 approaching and the window shrinking for climate action, global leaders should be using all the tools at their disposal, including special drawing rights, to build a more resilient future.

    – IMF isn’t doing enough to support Africa: billions could be made available through special drawing rights
    – https://theconversation.com/imf-isnt-doing-enough-to-support-africa-billions-could-be-made-available-through-special-drawing-rights-241428

    MIL OSI Africa –

    January 25, 2025
  • MIL-OSI Global: IMF isn’t doing enough to support Africa: billions could be made available through special drawing rights

    Source: The Conversation – Africa – By Kevin P. Gallagher, Professor of Global Development Policy and Director, Global Development Policy Center, Boston University

    At the 2021 UN Climate Summit, Barbados prime minister Mia Mottley called for more and better use of special drawing rights (SDRs), the International Monetary Fund’s reserve asset.

    The special drawing right is an international reserve asset created by the IMF. It is not a currency – its value is based on a basket of five currencies, the biggest chunk of which is the US dollar, followed by the euro. It is a potential claim on the freely usable currencies of IMF members. Special drawing rights can provide a country with liquidity.

    Countries can use their special drawing rights to pay back IMF loans, or they can exchange them for foreign currencies.

    As Mottley is the newest president of the Climate Vulnerable Forum and Vulnerable Group of 20 (V20) finance ministers, which represents 68 climate-vulnerable countries that are among those with the most dire liquidity needs, including 32 African countries, her call would be directly beneficial to African countries.

    In August 2021, as the shock from the COVID-19 pandemic battered their economies, African countries received a lifeline of US$33 billion from special drawing rights. This amounts to more than all the climate finance Africa receives each year, and more than half of all annual official development assistance to Africa.

    This US$33 billion did not add to African countries’ debt burden, it did not come with any conditions, and it did not cost donors a single cent to provide.

    IMF members can vote to create new issuances of special drawing rights. They are then distributed to countries in proportion to their quotas in the IMF. Quotas are denominated in special drawing rights, the IMF’s unit of account.

    Quotas are the building blocks of the IMF’s financial and governance structure. An individual member country’s quota broadly reflects its relative position in the world economy. Thus, by design, the poorest and most vulnerable countries receive the least when it comes to quotas and voting shares.

    Special drawing rights cannot solve all of Africa’s economic challenges. And their highly technical nature means they are not always well understood. But at a time when African countries are facing chronic liquidity challenges – most countries in the region are spending more on debt service payments than they are on health, education, or climate change – our new research shows that special drawing rights can play an important role in establishing financial stability and enabling investments for development.

    Financial stability includes macroeconomic stability (such as low inflation, healthy balance of payments, sufficient foreign reserves), a strong financial system and resilience to shocks.

    African leaders are approaching a critical year-long opportunity: in November, the first Group of 20 (G20) summit will convene (with the African Union in attendance as a member for the first time). Then in December South Africa assumes the G20 presidency.




    Read more:
    South Africa will be president of the G20 in 2025: two much-needed reforms it should drive


    As African leaders advocate for reforms to the international financial architecture, maximising the potential of special drawing rights should be a central component of their agenda.

    The problem

    African countries’ finances are facing tough times. External debt in sub-Saharan Africa has tripled since 2008. The average government is now spending 12% of its revenue on external debt service. The COVID-19 pandemic, Russia’s war in Ukraine, and rises in interest rates and the prices of commodities, like food and fertiliser, have all contributed to this trend.

    Debt restructuring mechanisms have also proved inadequate. Countries like Zambia and Ghana got stuck in lengthy restructurings. Weak institutional capacity and poor governance also impede efficient use of public resources.

    At the same time, African economies need to increase investment to advance development, support a young and growing population, develop climate resilience and take advantage of the opportunity presented by the energy transition.

    To meet the resources for a just energy transition and the attainment of the UN 2030 Sustainable Development Goals, investment in climate and development will have to increase from around 24% of GDP (the average for Africa in 2022) to 37%.

    Special drawing rights have proved to be an important tool in addressing these challenges. Research by the IMF and others shows that African countries significantly benefited from the special drawing rights they received in 2021 to stabilise their economies. And this happened without worsening debt burdens or costing advanced economies any money, particularly as they cut development aid.

    However, advanced economies exercise significant control over the availability of special drawing rights. The IMF’s quota system determines both voting power and their distribution. Advanced economies control most of the IMF’s quotas.

    The advanced economies made the right decision in 2021 and in 2009 to issue new special drawing rights and the time has come again.

    The solution

    African and other global south leaders need to make a strong case for another issuance of special drawing rights at the IMF and World Bank meetings in Washington.

    In addition to a new issuance of special drawing rights, advanced economies still need to be pressured to re-channel the hundreds of billions of special drawing rights sitting idle on their balance sheets into productive purposes.

    The 2021 allocation of special drawing rights amounted to US$650 billion in total. But only US$33 billion went to African countries due to the IMF’s unequal quota distribution. Meanwhile advanced economies with powerful currencies and no need for special drawing rights received the lion’s share.

    The African Development Bank has spearheaded one such proposal alongside the Inter-American Development Bank. Under this plan, countries with unused special drawing rights could re-channel them to the African Development Bank as hybrid capital, allowing the bank to lend around $4 for each $1 of special drawing rights it receives.

    The IMF approved the use of special drawing rights as hybrid capital for multilateral development banks in May. But it set an excessively low limit of 15 billion special drawing rights across all multilateral development banks.

    Even so, advanced economies have been slow to re-channel special drawing rights. The close to $100 billion that have been re-channelled – mostly to IMF trust funds – is meaningful.

    But it still falls short of what should have been re-channelled.

    In the long term, IMF governance reforms are needed to avoid a repeat of the inefficient distribution of special drawing rights.




    Read more:
    The World Bank and the IMF need to keep reforming to become fit for purpose


    As African countries rightly push to change shortcomings of the international financial architecture, new special drawing rights issuances should be at the centre of such a strategy. The IMF’s 2021 special drawing rights issuance showed the tool’s scale and importance. And special drawing rights re-channelling has had positive effects in easing debt burdens and freeing up financing to recover from the COVID-19 pandemic.

    With 2030 approaching and the window shrinking for climate action, global leaders should be using all the tools at their disposal, including special drawing rights, to build a more resilient future.

    Abebe Shimeles received funding from African Economic Research Consortium. He is affiliated with Institute of Labor Studies, IZA

    Kevin P. Gallagher does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    – ref. IMF isn’t doing enough to support Africa: billions could be made available through special drawing rights – https://theconversation.com/imf-isnt-doing-enough-to-support-africa-billions-could-be-made-available-through-special-drawing-rights-241428

    MIL OSI – Global Reports –

    January 25, 2025
  • MIL-OSI United Kingdom: Forum for Regeneration revived

    Source: City of Plymouth

    Plymouth Regeneration Forum has been re-formed and revitalised after a hiatus of five years to help the city work together to face development challenges and opportunities.

    The forum was set up in the early 2000s off the back of the Mackay Vision and in recognition of the role partners play in turning that vision for the city into a reality.

    The forum has been revived by the Council and legal firm Womble Bond Dickinson as a way to catch up with key investors, landowners and other development stakeholders and to discuss planning issues affecting the city.  It comprises architects, surveyors, developers, funders and planners active in and committed to Plymouth.

    The intent is to facilitate better relationships between the Council and the development industry through genuine partnership and collaborative approaches to deliver service excellence within the city.

    The last meeting was in 2019 and in the intervening years there has been a pandemic, lockdowns, Brexit, several prime ministers, a change of government as well as huge and enduring pressures on developers due to massive increases in construction costs and a skills shortage.

    The forum is about a two-way exchange of ideas and information. It is a chance to discuss relevant planning issues affecting the city and to act as an opportunity to be kept informed of the work that the Council is doing as well as hearing from the development industry about issues that are relevant to the Council.

    Councillor Mark Coker, Cabinet Member with responsibility for planning said: “So much has happened in the last few years and there are so many bold, exciting and taunting challenges for councils and developers with the new Government setting out its intentions to speed up the delivery of much needed homes

    “This can only be a good thing for the city. We are all committed to a better Plymouth and this will help strengthen relationships to provide a better business and investment climate in Plymouth.”

    The knowledge and know-how of forum members will help the Council develop workable planning, regeneration, design, transport and net zero policies that will help deliver the much-needed increase in pace of development activity in Plymouth, but ensuring quality is also at the heart of progress.

    At the first revived meeting, Paul Barnard, Service Director for Strategic Planning and Infrastructure at the Council, gave progress updates on public realm and transport projects, Plan for Homes 4 and planning application trends and performance. Paul said: “With the massive pressure for new homes, further planning reforms on the horizon and acute challenges in development capacity and viability, the need for collaboration has never been greater. I think is a great move for the city.”

    Christopher Stephens, Managing Associate at Womble Bond Dickinson said: “We are thrilled to have been able to support the Council in bringing the highly regarded Regeneration Forum back to the Plymouth business landscape.

    “This provides the Council with an opportunity to present their vision of, and priorities for, the city and for the delegates there is an opportunity to stress test those principles and to talk about possible constraints to delivery. I felt we had a very good first session with excellent content delivery and robust discussion. We look forward to supporting Plymouth City Council in future and on a regular basis.”

    MIL OSI United Kingdom –

    January 25, 2025
  • MIL-OSI Security: Orange County Supervisor Agrees to Plead Guilty to Bribery Conspiracy Involving $10 Million in COVID Relief Funds

    Source: Federal Bureau of Investigation (FBI) State Crime Alerts (b)

    OC Supervisor Andrew Do Admits Receiving More Than $550,000 in Bribe Payments from Funds Meant to Be Used to Provide Meals to Elderly

    SANTA ANA, California – The District One Supervisor on the Orange County Board of Supervisors has agreed to plead guilty to a felony federal charge for accepting more than $550,000 in bribes for directing and voting in favor of more than $10 million in COVID funds to a charity affiliated with one of his daughters, Rhiannon Do, the Justice Department announced today. 

    Andrew Hoang Do, 62, agreed to plead guilty to one count of conspiracy to commit bribery concerning programs receiving federal funds. His plea agreement and information were filed today. He is expected to make his initial appearance in United States District Court in Santa Ana later this month.

    Do is one of five supervisors on the Orange County Board of Supervisors, which is responsible for the county’s $9 billion annual budget. As a county supervisor, Do represents the cities of Cypress, Fountain Valley, Garden Grove, Huntington Beach, La Palma, Los Alamitos, Midway City, Rossmoor, Seal Beach, and Westminster. He has served as a county supervisor since February 2015.

    As part of his plea agreement, Do admitted that in exchange for more than $550,000 in bribes, beginning in 2020, he voted in favor of and directed millions of dollars in COVID-related funds to Viet America Society (VAS), a charity affiliated with his daughter. Do directed and worked together with other county employees to approve contracts with – and payments to – VAS. Do further admitted he acted corruptly and abused his position of trust as a county supervisor.

    “By putting his own interests over those of his constituents, the defendant sold his high office and betrayed the public’s trust,” said United States Attorney Martin Estrada.  “Even worse, the money he misappropriated and accepted as bribe payments was taken from those most in need – older adults and disabled residents. Our community deserved much better. Corruption has no place in our politics and my office will continue to hold accountable officials who cheat the public.”

    “While millions of Americans were dying from COVID-19, Orange County Supervisor Andrew Do was the fox in the hen house personified, raiding millions in federal pandemic relief funds and orchestrating the money intended to feed elderly and ailing residents to instead fill the pockets of insiders, himself and his loved ones all while portraying a public persona of a hometown hero guiding his constituents through the uncertainty and fear of a global pandemic,” said Orange County District Attorney Todd Spitzer. “No one is above the law in Orange County and these charges should serve as a powerful warning to elected officials everywhere that actions have consequences and justice will be swift and it will be decisive.”  

    “Elected officials have a responsibility to implement programs and policy that will benefit all the people they serve.  Their role is not to squander money, solicit bribes, or to steer funds to organizations or persons, wherein a coordinated effort allows those funds to make their way to family members or friends,” said Akil Davis, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Today’s plea is another exclamation point to the FBI’s commitment to ensuring that all local, state, or federal elected and appointed public officials perform their duties with honesty, integrity, and commitment to all the constituents they serve.”

    Shortly after receiving the COVID-related public funds from the county government – funds that were intended to provide meals to the elderly – VAS from April 2021 to February 2024 paid a business identified in court documents as “Company #1” $100,000 or more per month, which totaled approximately $3,804,000. In September 2021, VAS increased its payments to Company #1 from $100,000 to $108,000 per month. Company #1 then began paying Rhiannon Do – Do’s daughter – $8,000 per month, totaling by February 2024 approximately $224,000.

    In his plea agreement, Do admitted that in addition to the $8,000 monthly payments that Company #1 had made to Do’s daughter, in July 2023, Company #1 also transferred a total of $381,500 from the funds it had received from VAS to an escrow company. In July 2023, Do’s daughter used the escrow account funds to purchase a home, in her name, in Tustin for $1,035,000. As part of that transaction, a mortgage for more than $600,000 was obtained by a loan application that contained false information and with fabricated documents. In her related diversion agreement attached as an exhibit to Do’s plea agreement, Do’s daughter admitted her conduct was criminal and violated federal and state law.

    Do also admitted that the $381,500 from Company #1 that his daughter had used to purchase the Tustin house in 2023 was a disguised bribe to him. He also admitted that an additional $100,000 in payments sent to his other daughter, including three $25,000 checks from Company #2 – an air conditioning company that had been paid by VAS – also were bribes to him.

    Some of the bribe funds that had been funneled to his daughters were spent for his direct benefit. For example, during 2022, a total of $14,849 of funds that had been funneled to Do’s daughters was used to make property tax payments for properties in Orange County owned by Do and his wife. Approximately $15,000 was used to pay for one of Do’s credit card bills.

    Do knew that VAS was not providing all the meals for which the county had paid VAS. Instead, much of the funds were used for the benefit of insiders, including to buy real estate in the name of both Do’s daughter and Company #1, bribe payments to both of Do’s daughters, payments to other conspirators, payments to other companies affiliated with VAS’s listed officers, and through hundreds of thousands of dollars in cash withdrawals.

    “Mr. Do had a duty to act in the best interest of the citizens of Orange County. He neglected that duty and misused the financial system to enrich himself,” said Special Agent in Charge Ryan Korner with the Federal Deposit Insurance Corp. Office of Inspector General. “Public corruption degrades the public’s confidence in our political system, and FDIC OIG is proud to work alongside our law enforcement partners to identify and hold accountable individuals who abuse public service for private gain.”

    “Andrew Do was entrusted to ensure taxpayer dollars were used responsibly and for the purposes intended,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation, Los Angeles Field Office. “Instead, when his constituents depended on COVID relief programs, Mr. Do exploited his position on the Orange County Board of Supervisors not only to influence channeling of funds to the Viet America Society, but also to accept bribes that were used to purchase a home, pay property taxes, and even to pay fictitious incomes to family members. Combating public corruption is one of the most important roles federal law enforcement agencies play in our local communities, and we are proud to be a partner during this investigation.” 

    “Today’s actions shows that this elected official used his position of trust for personal gain. He didn’t think he would get caught. He was wrong,” said Adam Shanedling, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Western Regional Office. “The OIG is proud to have been a part of the task force that investigated this matter and we’ll continue to work with our law enforcement partners to help safeguard the integrity of federal funds.” 

    The plea agreement requires Do to forfeit any assets connected to the bribery scheme, including the Tustin property his daughter purchased in 2023. As part of his daughter’s related diversion agreement, she also agreed to forfeit the Tustin property. The plea agreement requires Do to pay full restitution by paying back the bribe money he and his daughters received, which he has agreed to pay in full before he is sentenced. In August 2022, the government seized more than $2.4 million from VAS’s and Company #1’s bank accounts.

    In a related agreement with the Orange County District Attorney’s Office (OCDA), attached as an exhibit to Do’s plea agreement, Do has agreed to immediately resign from the Orange County Board of Supervisors and to forfeit any pension credit for the time where he participated in the bribery conspiracy.

    Once Do enters his guilty plea, he will face a statutory maximum sentence of five years in federal prison.

    The FBI; the Orange County District Attorney’s Office Bureau of Investigation; the Federal Deposit Insurance Corp. Office of the Inspector General; IRS Criminal Investigation; and the United States Department of Education Office of the Inspector General investigated this matter.

    This matter is being jointly prosecuted by the United States Attorney’s Office and OCDA. The prosecution is being led by Assistant United States Attorneys Charles E. Pell, Bradley E. Marrett, and Tara Vavere of the United States Attorney’s Office and Senior Deputy District Attorney Avery T. Harrison and Deputy District Attorneys Anthony J. Schlehner and L.J. Berger of the OCDA.  

    Any member of the public who has information related to this or any other public corruption matter in Orange County is encouraged to send information to the FBI’s email tip line at https://tips.fbi.gov and/or to contact the FBI’s Los Angeles Field Office at (310) 477-6565.

    MIL Security OSI –

    January 25, 2025
  • MIL-OSI Global: Cuba’s power grid collapse reveals the depth of the country’s economic crisis

    Source: The Conversation – UK – By Nicolas Forsans, Professor of Management and Co-director of the Centre for Latin American & Caribbean Studies, University of Essex

    Cuba’s national grid collapsed four times in as many days last week, after the island’s largest power plant, Antonio Guiteras, failed. Millions of Cubans are still without power, with food rotting in powerless fridges and many lacking access to clean water.

    The Communist government closed schools on October 18 and ordered non-essential public sector activities to stop as work began on restoring the grid. But this was hindered by the arrival of Hurricane Oscar on Sunday night, which unleashed heavy rain and strong winds across eastern Cuba.

    Antonio Guiteras is now back online, and Cuban energy officials say electricity has been restored in most of the capital city, Havana, and some outlying areas. But they have warned against too much optimism.

    Cuba’s five thermoelectric power plants are obsolete and crumbling. And with oil products accounting for over 80% of power generation, the island depends on Venezuela for fuel shipments. But shipments have been cut in half this year as Venezuela struggles to ensure its own supply, forcing the Cuban government to seek far more expensive fuel on the spot market.

    The problem is that the Cuban government is running out of money as it grapples with the island’s worst economic crisis in 30 years, so power cuts of up to 20 hours a day are now common. Indeed, Lazaro Guerra, Cuba’s top electricity official, has said that Cubans “should not expect that when the system comes back online the blackouts will end”.

    How did Cuba get here?

    The roots of this crisis can be traced back to the cold war when Fidel Castro overthrew the US-backed government of Fulgencio Batista in January 1959. Convinced that the Cuban revolution was the most advanced among all far-left movements in Latin America, the former Soviet Union sided with the island and provided it with industrial goods and technical assistance.

    Cuba’s relations with the US worsened dramatically, and by July 1960 it had announced the expropriation of US industrial, banking and commercial operations on the island. Within a few months, the Cuban state had taken over all sugar mills, most industry and trade, half of the land, and every bank and communication network in the country.

    Retaliation swiftly followed. The US introduced its first embargo on all exports to Cuba in 1960, with exceptions for food and medicine. And this was followed in 1962 by a ban on all trade and financial transactions with the island. In 1964, the then US president, Lyndon B. Johnson, ordered a multilateral policy of “economic denial”, severely inhibited Cuba’s efforts to foster economic relations with other countries.

    The island would receive considerable amounts of aid from the Soviet bloc over the next 30 years. But this only deepened Havana’s dependence on a single export product: sugar, which was purchased at an inflated price as part of the aid programme. In return, Cuba purchased the crude oil it needed to operate its electricity plants.

    But, by the time the Soviet Union disintegrated in 1991, Cuba had failed to diversify its industrial structure and move away from its low productivity, monocultural economy. The country enjoyed limited self-sufficiency even in the production of food, with all means of production in the state’s hands.

    With the disappearance of its main oil supplier, Cuba was also forced to increase its domestic oil production and turn to Venezuela to meet its energy needs. The US embargo, which has been in place for 62 years, has cost Cuba an estimated US$130 billion (£100 billion), and has limited its access to basic goods and services.

    During Barack Obama’s second term as US president, there was a step change in relations between the two countries. Diplomatic relations resumed from 2014 and the embargo was eased, including restrictions on the ability of Cuban-Americans to travel back to the island and send remittances.

    In March 2016, Barack Obama became the first US president to visit Cuba since Calvin Coolidge in 1928.
    Kimberly Shavender / Shutterstock

    This kicked off a boom in private sector activities in Cuba and prompted reforms by the Cuban government aimed at restructuring the economy. However, the government was unwilling to reduce its grip on the centrally planned economy, and the reforms moved too slowly to produce any meaningful improvement.

    Then, in his final week in office in 2021, Donald Trump reimposed trade restrictions targeting tourism, remittances, and energy supplies, as well as adding Cuba to the list of “state sponsors of terrorism”. The move led to severe shortages and inflation, both of which were worsened by the pandemic.

    Logistical bottlenecks disrupted supplies and inflated shipping costs further. Heavily dependent on tourism, Cuba suffered a severe depletion of its foreign currency reserves.

    Patience is running out

    The economic situation has continued to decline. Export earnings in 2023 were still US$3 billion short of their pre-pandemic level, and Cuba’s economic output is not expected to return to its level before the pandemic until after 2025.

    Half a million people – most of whom were young – left the country for the US between 2021 and 2022. And thousands more have made their way to Brazil, Russia, Uruguay and elsewhere in an exodus that is unprecedented in the history of the island.

    The future outlook looks bleak, yet the government is keen to quash dissent. Speaking during the latest blackouts, Cuba’s current president, Miguel Díaz-Canel, said: “We will not accept or allow anyone to act by provoking acts of vandalism, and much less disturbing the civil tranquillity of our people … And that is a principle of our revolution.”

    Díaz-Canel was reelected by lawmakers in April 2023 for a second and final term. But the weak state of Cuba’s economy will pose significant challenges for his government, testing its strength and the legitimacy of its hold on power.

    Cuba’s relations with the US are also likely to remain strained. In an attempt to curb Cuba’s outreach to Russia and China for predominantly economic assistance, the US president, Joe Biden, has loosened some sanctions. But this could all change with a Republican victory in the upcoming US election.

    Nicolas Forsans does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    – ref. Cuba’s power grid collapse reveals the depth of the country’s economic crisis – https://theconversation.com/cubas-power-grid-collapse-reveals-the-depth-of-the-countrys-economic-crisis-241819

    MIL OSI – Global Reports –

    January 25, 2025
  • MIL-OSI Global: DIY musicians: how digital ‘bedroom pop’ has transformed the music industry

    Source: The Conversation – UK – By Paul G. Oliver, Lecturer in Digital Innovation and Entrepreneurship, Edinburgh Napier University

    The ever-advancing technologies of our digital age have transformed many industries, including – and perhaps especially – music. One of the most significant shifts has been the rise of DIY artists. These independent musicians take on roles traditionally held by record labels and managers, such as producing, recording, promoting and distributing their music.

    The ubiquitous nature of digital platforms has enabled artists to reach their audiences more directly. According to a study by MIDiA Research, independent artists generated over US$1.2 billion (£900 million) in 2020, accounting for 5.1% of the global recorded music market, reflecting how digital transformations continue to reshape the music industry.

    The COVID pandemic further accelerated this process, forcing artists to find new ways to connect with their audiences when live performances were no longer possible. Many independent musicians turned to digital platforms as crucial tools to engage with their fans and generate income.

    Platforms such as TikTok, Twitch, Instagram Live, YouTube, Patreon and Bandcamp saw a surge in usage as artists adapted to the new reality, showcasing their music to a global audience and attracting new fans who might have never discovered them otherwise. These platforms became lifelines for visibility and growth when traditional avenues were shut down.

    As a lecturer in digital innovation and entrepreneurship, my work looks at the relationship between digital transformation and DIY culture in the music industry and how it is changing the game for fledgling musicians and the business end of music too.

    DIY and artistic integrity

    The DIY ethos, rooted in independence and resistance to mainstream commercialisation, has evolved very successfully in the digital domain. Historically associated underground cultures, this ethos emphasises creativity, self-management and sustainability.

    DIY artists are often inspired by the punk movement, which championed autonomy and a do-it-yourself approach to music production and distribution. This ethos is now applied digitally, where artists use online platforms to stay independent while reaching a global audience, that in more analogue times would just not have been possible.

    One of the significant challenges DIY artists face is balancing artistic integrity with the ability to make a living. While digital platforms offer unprecedented opportunities for exposure and direct-to-fan (D2F) engagement, they also introduce new pressures and dependencies.

    For example, the algorithms that govern visibility on platforms like YouTube and Spotify can also be unpredictable, often favouring more commercial content over niche or experimental works, forcing artists to compromise their creative vision to achieve financial viability.

    While DIY artists are known for their self-sufficiency, some commercial artists have also adopted elements of the DIY approach, particularly in their use of digital platforms to bypass traditional industry structures.

    Being discovered and making money

    There are numerous success stories of DIY artists who have used digital platforms to build their careers commercially. For example, the British singer-songwriter Arlo Parks has gained significant recognition by blending personal experiences with broader social themes.

    Her success is a testament to the power of authenticity and the ability to connect with a diverse audience through digital platforms. Similarly, artists like Billie Eilish and (her brother) Finneas have shown how bedroom pop can achieve mainstream success, showing the potential of DIY approaches in the digital age.

    Social media platforms play a vital role in the success of DIY artists by helping audiences discover new talent. Platforms like Instagram and TikTok are particularly effective for reaching younger audiences and creating viral content. TikTok, for example, has over 1 billion active users worldwide, and its algorithm can propel a song to viral status overnight – significantly boosting an artist’s visibility and reach.

    Subscription platforms like Patreon, Bandcamp and YouTube enable artists to make money from their work directly. These platforms allow fans to financially support their favourite artists, offering exclusive content, early access to new releases and other perks in exchange for a subscription fee. This D2F model helps artists generate a steady income, enabling them to focus more on their creative endeavours while maintaining a direct connection with their audience.

    Despite the vast opportunities digital platforms create, DIY artists face big challenges, for example, in terms of financial instability. A recent report by Help Musicians revealed that 98% of musicians are worried about rising costs in the UK. An inability to make a proper living has led many artists to seek alternative income sources, such as crowdfunding and exclusive content through subscription services like Patreon.

    However, the pressure to maintain a consistent online presence can also affect mental health – as One Direction’s Liam Payne spoke about in the months before his death – making it essential for artists to balance D2F engagement and personal wellbeing.

    DIY artists like Clairo, who rose to fame through her self-produced online content, have also spoken of her struggles with the pressures of maintaining a public persona and the toll it can take on mental health.

    DIY communities operating within the digital domain thrive on mutual support and collaboration because artists support each other with production, promotion and distribution. This sense of community is crucial for maintaining the DIY ethos and managing the complexities of the digital domain.

    The future of music looks promising, with this intersection between DIY culture, creativity and digital platforms continuing to evolve and offer new opportunities for artists. The DIY music market grew by 7.6% between 2021 and 2024.

    However, for this growth to continue, these platforms must remain artist-friendly and provide fair compensation for creators. Independent musicians can thrive in the digital domain by embracing the DIY ethos and using digital platforms with the potential for global reach, D2F engagement, and diversified income streams, providing a robust foundation for sustainable careers.



    Looking for something good? Cut through the noise with a carefully curated selection of the latest releases, live events and exhibitions, straight to your inbox every fortnight, on Fridays. Sign up here.


    Paul G. Oliver does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    – ref. DIY musicians: how digital ‘bedroom pop’ has transformed the music industry – https://theconversation.com/diy-musicians-how-digital-bedroom-pop-has-transformed-the-music-industry-233364

    MIL OSI – Global Reports –

    January 25, 2025
  • MIL-OSI Canada: Deputy Prime Minister to attend G7 and G20 Finance Ministers’ Meetings and Annual Meetings of the IMF and World Bank

    Source: Government of Canada News

    News release

    This week, from October 23 to 25, the Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland, will attend the Fall Meetings of G7 and G20 Finance Ministers and the Annual Meetings of the International Monetary Fund (IMF) and World Bank in Washington D.C.

    October 23, 2024 – Ottawa, Canada – Department of Finance Canada

    This week, from October 23 to 25, the Deputy Prime Minister and Minister of Finance, the Honourable Chrystia Freeland, will attend the Fall Meetings of G7 and G20 Finance Ministers and the Annual Meetings of the International Monetary Fund (IMF) and World Bank in Washington D.C.

    At these meetings, the Deputy Prime Minister will advance work with Canada’s allies to strengthen supply chains with trusted trading partners to create jobs and economic growth that is shared by all Canadians.

    While in Washington, the Deputy Prime Minister will discuss with allies further efforts to support Ukraine through to victory and into reconstruction. Canada was an early champion of G7 efforts to make full use of frozen Russian sovereign assets, and provided a CA$5 billion (US$3.7 billion) contribution to the G7’s CA$68 billion (US$50 billion) Extraordinary Revenue Acceleration Loans for Ukraine. 

    The Deputy Prime Minister will further Canada’s work to build resilient economies and reduce economic inequalities—as demonstrated by the government’s historic investments in early learning and child care, national dental care coverage, and free contraception and diabetes medication. The Deputy Prime Minister will also advance Canada’s work on international tax cooperation.

    An itinerary of events will be released in advance of the meetings.

    Quotes

    “Canada is leading the G7 in cutting interest rates four times this year and reducing inflation to target for all of this year. The wages of Canadian workers have outpaced inflation for 20 months. And, the IMF expects Canada’s economic growth to be the best in the G7 next year. Together, Canada and our allies are working to ensure recent economic gains are not unwound, but rather built upon, so we can create more good-paying jobs, help people get ahead, and build a fairer future for every generation.”

    – The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

    Quick facts

    • Canada is leading the G7 in:

      • Cutting interest rates; the first to cut rates twice, the first to cut rates a third time, and now the first to cut rates a fourth time;
      • Economic growth expectations, with the IMF predicting that Canada’s GDP will be the fastest growing in 2025;
      • Maintaining the lowest net debt-to-GDP ratio—by a significant margin—in the G7; and,
      • Securing AAA credit ratings from at least two of the world’s three major credit rating agencies, along with only Germany.
    • Inflation has been within the target range of 1 per cent to 3 per cent for all of 2024, with inflation in Canada falling to 1.6 per cent in September—a 43 month low. 

    • Wages in Canada have outpaced inflation for 20 months in a row, which means Canadian workers today on average have larger pay cheques, even accounting for inflation, than they did before the pandemic.

    • The Annual Meetings of the IMF and World Bank, which generally take place in October, have customarily been held in Washington for two consecutive years and in another member country in the third year.

    Contacts

    Media may contact:

    Katherine Cuplinskas
    Deputy Director of Communications
    Office of the Deputy Prime Minister and Minister of Finance
    Katherine.Cuplinskas@fin.gc.ca

    Media Relations
    Department of Finance Canada
    mediare@fin.gc.ca
    613-369-4000

    General enquiries

    Phone: 1-833-712-2292
    TTY: 613-369-3230
    E-mail: financepublic-financepublique@fin.gc.ca

    Stay Connected

    MIL OSI Canada News –

    January 25, 2025
  • MIL-OSI Security: New Bern Man Pleads Guilty for Posing as Landlord to Fraudulently Collect Nearly $150,000 in COVID-19 Rental Assistance

    Source: Office of United States Attorneys

    RALEIGH, N.C. – New Bern resident Anthony Lynch, 35, pled guilty to charges that he defrauded a program designed to help struggling North Carolina residents stay in their homes during the COVID-19 pandemic.

    “Mr. Lynch exploited a taxpayer-funded program meant to support struggling families and individuals trying to stay in their homes during an unprecedented global pandemic,” said U.S. Attorney Michael Easley. “Lynch sought nearly $400,000 in emergency federal funds in 25 separate relief applications. His ill-gotten profits have now landed him a federal conviction.”

    According to court documents and other information presented in court, Lynch pled guilty to one count of mail fraud for falsely claiming to be the landlord of properties in Craven, Pamlico and Onslow Counties with renters who were unable to pay rent due to the COVID-19 pandemic.  Lynch submitted 25 applications to the North Carolina Housing Opportunities and Prevention of Evictions Program (NC HOPE), which was established during the pandemic to provide emergency rental assistance to tenants who struggled to pay rent and therefore faced eviction due to financial difficulties caused by the pandemic.

    Despite having no ownership or management responsibilities for any of the properties listed in the 25 applications he submitted, Lynch requested nearly $400,000 in emergency federal funding.  His fraudulent applications resulted in 11 checks, totaling $144,000 being mailed to Lynch at his home in New Bern.  He faces up to 27 months in prison, if convicted.     

    The NC HOPE Program administered federal COVID-19 relief funds and provided emergency rental assistance to North Carolina renters who faced eviction and homelessness during the pandemic.  The program allowed renters to submit an online application to apply for rental assistance.  If approved, the program paid the tenant’s rent, in checks sent directly to the landlord, for up to 15 months of overdue or future rent payments.

    Michael F. Easley, Jr., U.S. Attorney for the Eastern District of North Carolina, made the announcement after the guilty plea was accepted by Chief United States District Judge Richard E. Myers.  The United States Department of Housing and Urban Development, Office of Inspector General; the United States Department of Treasury, Office of Inspector General; and the North Carolina State Bureau of Investigation investigated the case and it is being prosecuted by Assistant U.S. Attorney Karen Haughton.

    Related court documents and information are located on the website of the U.S. District Court for the Eastern District of North Carolina or on PACER by searching for Case No. 4:24-cr-00061.

    MIL Security OSI –

    January 25, 2025
  • MIL-OSI USA: Wyden, Colleagues Slam McDonald’s for Squeezing Customers with Excessive Price Increases

    US Senate News:

    Source: United States Senator Ron Wyden (D-Ore)
    October 23, 2024
    “Corporate profits must not come at the expense of people’s ability to put food on the table.”
    Washington, D.C. – U.S. Senator Ron Wyden, D-Ore., said today he has joined with Senators Elizabeth Warren, D-Mass., and Bob Casey, D-Pa. to press McDonald’s for more information on the company’s pricing decisions as fast food prices continue to increase, outpacing inflation and squeezing customers. 
    “While McDonald’s is not the only fast food restaurant that has increased prices significantly in recent years, its dominant market position as the largest fast food chain in the United States has an outsize impact on American consumers. While working families are trying to make ends meet, McDonald’s and its corporate counterparts have continued to grow their profits,” the senators wrote to McDonald’s President and Chief Executive Officer Chris Kempczinski .
    Earlier this year, McDonald’s USA President Joe Erlinger tried to blame the company’s menu price increases on inflationary pressures and input costs, but the data tells another story. Since the COVID-19 pandemic, fast food prices have consistently outpaced inflation, and since 2020, overall inflation has increased by 20 percent, while McDonald’s has increased its menu prices for several items substantially more. McDonald’s net annual income rose by over 79 percent – nearly $8.5 billion, from 2020 to 2023.
    While McDonald’s raised prices, the company also spent nearly $4 billion on stock buybacks in 2022 and $3 billion in 2023. The company also benefits from a tax loophole that favors buybacks. This prioritizes Wall Street shareholders over investments in McDonald’s own business and workers. 
    “Corporate profits must not come at the expense of people’s ability to put food on the table,” concluded the senators. “As we seek to investigate and understand the increased consumer costs in the economy, we hope McDonald’s will help us to understand why its prices have risen so high.”
    The text of the letter is here.

    MIL OSI USA News –

    January 25, 2025
  • MIL-OSI Canada: Canada, the United States and Mexico release the North American Preparedness for Animal and Human Pandemics Initiative (NAPAHPI)

    Source: Government of Canada News

    News release

    Today, the Public Health Agency of Canada, in collaboration with the Canadian Food Inspection Agency, Public Safety Canada and Global Affairs Canada, and their respective counterparts in the United States and Mexico, released the North American Preparedness for Animal and Human Pandemics Initiative (NAPAHPI).

    An initiative between Canada and partner countries to strengthen our ability to prepare for and respond to public health threats

    October 23, 2024 | Ottawa, Ontario | Public Health Agency of Canada

    Canada, the United States and Mexico have a strong and longstanding partnership, and are connected across many areas, including health, business and social relationships. This interconnectedness means that disruptions, such as the COVID-19 pandemic or other threats to health security, can have impacts across all three countries. Through continued coordination and cooperation, we can support the health and well-being of our populations.

    Today, the Public Health Agency of Canada, in collaboration with the Canadian Food Inspection Agency, Public Safety Canada and Global Affairs Canada, and their respective counterparts in the United States and Mexico, released the North American Preparedness for Animal and Human Pandemics Initiative (NAPAHPI).

    NAPAHPI fulfills commitments made during the 2021 and 2023 North American Leaders’ Summits to strengthen North America’s regional health security by working together to mitigate and respond to public health threats. It also provides a flexible framework that will help North American partners collaborate to address the challenges of potential future pandemics or other public health threats that require a coordinated response.

    The NAPAHPI complements the International Health Regulations (IHR) (2005) and other international mechanisms which seek to strengthen and protect global health security, and supports a One Health approach that considers the relationships between the health of humans, animals, and the environment.

    Together, Canada, the United States and Mexico will advance NAPAHPI’s goals by working on key areas for collaboration:

    • animal diseases with zoonotic potential;
    • epidemiological surveillance and laboratory diagnostics;
    • medical countermeasures;
    • public health measures;
    • medical supply chains;
    • health systems;
    • risk communications;
    • border health measures;
    • critical infrastructure;
    • risk assessment and foresight risk analyses;
    • joint exercises and training; and
    • sustainable financing.

    Quotes

    “Canada, the United States and Mexico have a long-standing friendship and history of collaboration. The North American Preparedness for Animal and Human Pandemics Initiative demonstrates what can be achieved when our three countries work together on a common vision. Through more effective coordination and collaboration, we can identify and implement actions that seek to protect the health and safety of our populations, while minimizing economic and social impacts.”

    — The Honourable Mark Holland, Minister of Health

    “The United States is committed to strengthening health security and preparing for future threats. To be successful we must coordinate closely across governments, as well as with industry and community leaders – which is what this platform makes possible. Our nations cannot be strong unless they are healthy. That’s why we will continue to work together on a sustained, durable strategy that improves health security for all.”

    — Xavier Becerra, Secretary of Health and Human Services

    “This new framework for collaboration between Mexico, Canada and the United States on preparedness for animal and human pandemics is an example of the close cooperation between the three countries. The framework will help us address the challenges of One Health and adopt new technologies and practices in the North American region. Additionally, it will promote a shared vision for surveillance, early identification of risk factors, and the planning and implementation of cooperative and sustainable responses to health emergencies. This trinational effort will translate into more efficient protection strategies for our populations.”

    — David Kershenobich, Minister of Health

    Quick facts

    • NAPAHPI replaces the 2007 North American Plan for Avian and Pandemic Influenza, and the 2012 North American Plan for Animal and Pandemic Influenza.

    • NAPAHPI builds on the history of this tripartite collaboration, as well as on lessons learned from the COVID-19 pandemic and other public health events over the past decade.

    • For nearly two decades, the three partner countries have met regularly to discuss, prepare for and respond to public health threats such as H1N1, MERS-CoV, Ebola, Zika, the Fukushima nuclear disaster, the COVID-19 pandemic, and more recently H5N1 avian influenza outbreaks.

    • NAPAHPI is led by a Senior Coordinating Body as a key decision-making forum and a Health Security Working Group as its technical arm, with members from the human health, animal health/agriculture, security and foreign affairs sectors.

    • The principal agencies in the governance structure are:

      • Canada: Public Health Agency of Canada, Canadian Food Inspection Agency, Public Safety Canada and Global Affairs Canada.
      • United States: Department of Health and Human Services, Department of Agriculture, Department of Homeland Security and Department of State.
    • Mexico: Secretariat of Health/Secretaría de Salud, Secretariat of Agriculture and Rural Development/Secretaría de Agricultura y Desarrollo Rural, Secretariat of Security and Citizen Protection/Secretaría de Seguridad y Protección Ciudadana, and Secretariat of Foreign Affairs/Secretaría de Relaciones Exteriores.

    Associated links

    Contacts

    Matthew Kronberg
    Press Secretary
    Office of the Honourable Mark Holland
    Minister of Health
    343-552-5654

    Media Relations
    Public Health Agency of Canada
    613-957-2983
    media@hc-sc.gc.ca

    Public Inquiries:
    613-957-2991
    1-866-225-0709

    MIL OSI Canada News –

    January 25, 2025
  • MIL-OSI Global: Harris and Trump differ widely on gun rights, death penalty and other civil liberties questions

    Source: The Conversation – USA – By Donovan A. Watts, Assistant Professor of Political Science, Auburn University

    The Bill of Rights secures key liberties for U.S. citizens against the government’s power. U.S. Congress via Wikimedia Commons

    As the election nears, voters are considering the two leading presidential candidates’ records on a wide range of issues, including civil liberties – a broad term used to describe the constitutionally protected freedoms that protect citizens from excessive government power. These key freedoms are contained in the Bill of Rights, the first 10 amendments to the U.S. Constitution. For example, the protection for free speech under the First Amendment and the right to bear arms under the Second Amendment define people’s abilities to criticize the government and own weapons for private use.

    In turn, as a scholar of American politics, I have seen that Kamala Harris and Donald Trump have very different records on these crucial American rights.

    First Amendment freedoms of speech and press

    As California’s attorney general, Harris indirectly found herself in a battle with the First Amendment. For many years, state law required nonprofit organizations registered in California to report names and addresses of donors of amounts over US$5,000 in a single year. In 2010, the year before Harris became attorney general, her predecessor began actually enforcing that law, which Harris continued when she took office in 2011. In 2014, several conservative groups sued Harris, saying her office’s enforcement of the law was violating their First Amendment right to give money anonymously.

    Part of Harris’ job was to oversee the defense of the law in court, arguing that soliciting donor names did not bar donor disclosure requirements like California’s. The case lasted beyond her term as California’s top law enforcement officer: The U.S. Supreme Court declared parts of the law unconstitutional in 2021, after Harris had become vice president.

    While he was president, Trump’s First Amendment record was more about the media than free speech. He repeatedly declared the press “the enemy of the people.” He has suggested that media outlets who provide coverage he dislikes lose their broadcasting licenses and has pressed to change laws about libel in ways that would make it easier for public figures to file suit against unfavorable coverage.

    As California’s attorney general, Kamala Harris worked to reduce gun violence in the state.
    Kevork Djansezian/Getty Images

    Second Amendment right to bear arms

    Dating back to her tenure as a district attorney in San Francisco and as California’s attorney general, Harris has been an advocate for stricter gun control laws. However, she is not seeking to take away Americans’ guns – and recently revealed that she herself is a gun owner.

    When serving as district attorney in San Francisco, Harris worked with the city’s mayor at the time, Gavin Newsom, to develop some of the strictest local gun regulations in the country. In December 2004, Proposition H was placed on the ballot and passed by majority vote in November 2005. Proposition H banned possessing a handgun within San Francisco, with a few exceptions, and banned purchasing, possession, distribution and manufacturing of all firearms in the city. However, the proposition was overruled by the San Francisco Superior Court, which said gun ownership should be regulated at the state level.

    And in 2008, as the U.S. Supreme Court was preparing to hear a key gun control case, Harris led 18 elected prosecutors who urged the justices that a broad right to gun ownership could endanger local and state firearm laws. In a 5-4 decision, the Supreme Court held that the Second Amendment guarantees an individual the right to possess firearms.

    However, the Supreme Court’s ruling did not stop Harris in her continued fight for gun regulation. She pushed for additional funding to confiscate guns from thousands of people whom California law said were banned from having them. Later as a U.S. senator from 2017 to 2021, Harris continued to advocate for gun regulation by sponsoring bills that would have enacted universal background checks and ban assault rifles.

    During Harris’ term as vice president, she oversaw the White House Office of Gun Violence Prevention, which seeks to focus government attention on a wide range of policies to reduce gun violence, including restrictions on firearms, increased mental health services and new powers for prosecutors to use against people who use firearms when committing a crime.

    In 2019, while he was president, Donald Trump spoke to a National Rifle Association meeting and expressed support for the organization.
    AP Photo/Michael Conroy

    Trump’s record on firearms, meanwhile, has been mixed. As president, he signed legislation in 2017 that softened background check requirements for gun buyers with particular mental illness diagnoses. And during the COVID-19 pandemic, he objected to the fact that many local orders to close businesses to protect public health included shutting gun shops.

    Yet in 2018, he also moved to ban bump stocks – a device attached to a semiautomatic firearm that enables it to fire more rapidly. His ban was overturned by the Supreme Court in June 2024.

    Trump also supported and signed the Fix NICS Act, a bipartisan law that strengthened reporting to the federal gun background checks system by requiring federal agencies to submit semiannual certification reports to the attorney general on their compliance with recordkeeping and transmission requirements.

    Eighth Amendment protections against ‘cruel and unusual punishments’

    The Eighth Amendment’s protection against “cruel and unusual punishments” has often been used by the Supreme Court to evaluate uses of the death penalty.

    Harris has consistently pledged to refuse to seek the death penalty in criminal cases, noting a multitude of systemic flaws that result in its disproportional application based on defendants’ race and income. She also noted the cost to taxpayers of keeping prisoners on death row. Harris’ position was tested just months into her service as district attorney when a police officer was shot and killed in the line of duty in 2004. Harris declined to seek the death penalty for the shooter, who was convicted of murder and is serving a life sentence without the possibility of parole.

    While attorney general of California, however, she defended in court the state’s power to impose the death penalty. But when, in March 2024, the state’s governor – Newsom – declared a halt to executions, sparing all 737 people on California’s death row, Harris praised the action.

    Trump’s record on capital punishment dates back long before his political career. In 1989, he took out full-page newspaper ads calling for the return of the death penalty in New York. He specifically wanted it to be applied to the Central Park Five, five young Black and Hispanic men who were wrongly accused of raping and beating a woman. They pleaded not guilty but served years in prison before being exonerated by DNA evidence and the actual criminal’s confession.

    During his term as president, Trump resumed federal executions after a 17-year hiatus, executing 13 people in the last six months of his presidency, the last of which was just four days before his term ended.

    All in all, as voters decide who to vote for in the upcoming election, analyzing both candidates’ record on civil liberties is a good step in making an informed decision.

    Donovan A. Watts does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

    – ref. Harris and Trump differ widely on gun rights, death penalty and other civil liberties questions – https://theconversation.com/harris-and-trump-differ-widely-on-gun-rights-death-penalty-and-other-civil-liberties-questions-240762

    MIL OSI – Global Reports –

    January 25, 2025
  • MIL-OSI USA: Governor Cooper Proposes $3.9 Billion in State Funding to Spur Hurricane Helene Relief and Recovery

    Source: US State of North Carolina

    Headline: Governor Cooper Proposes $3.9 Billion in State Funding to Spur Hurricane Helene Relief and Recovery

    Governor Cooper Proposes $3.9 Billion in State Funding to Spur Hurricane Helene Relief and Recovery
    mseets
    Wed, 10/23/2024 – 14:58

    Less than a month after Hurricane Helene hit Western North Carolina, Governor Roy Cooper today shared a state budget recommendation to help rebuild stronger to withstand future storms. Governor Cooper recommends an initial $3.9 billion package to begin rebuilding critical infrastructure, homes, businesses, schools, and farms damaged during the storm.

    “Helene is the deadliest and most damaging storm ever to hit North Carolina,“ said Governor Cooper. “This storm left a trail of destruction in our beautiful mountains that we will not soon forget, but I know the people of Western North Carolina are determined to build back better than ever. These initial funds are a good start, but the staggering amount of damage shows we are very much on the front end of this recovery effort.”

    Initial damage estimates are $53 billion, roughly three times Hurricane Florence estimates in 2018 and the largest in state history. A strong recovery will require significant investments by private insurers as well as the federal, state and local governments. Large scale disasters fueled by climate change in recent years have shown the challenges and enormous costs of recovery as well as the need to ensure structures are hardened are they are rebuilt to withstand future storms. Successful recoveries require significant early investments to ensure communities have the tools to fully rebuild.

    Economy

    The economic devastation from Hurricane Helene is unparalleled. Thousands of businesses in the region suffered damages leaving business owners and workers suffering. The Governor’s funding package includes $650 million to address economic losses and physical damage for non-agricultural businesses and non-profit organizations. This would include a revival of the pandemic-era Business Recovery Grant Program, which helped North Carolina’s economy recover faster than the national average. Governor Cooper has already increased unemployment insurance benefits through an executive order with a bipartisan and unanimous vote of the Council of State.

    Housing

    The Governor’s budget recommendation includes $650 million to address physical damage to residential structures and cost of housing assistance. These investments would jumpstart permanent housing construction in advance of potential federal funds, which can take months or years to be approved.

    Utilities and Natural Resources

    Critical and high-risk infrastructure was damaged across the region, including water and sewer systems in multiple communities and power generation facilities. Much of this infrastructure is in geographically isolated locations and challenging to reach, slowing restoration of services to communities. The Governor’s funding package includes $578 million to address the physical damage and cleanup of energy, water, waste clean-up, telecommunications, dams and other infrastructure.

    Transportation

    Hurricane Helene severely impacted approximately 5,000 miles of state-maintained roads across the affected area in Western North Carolina, including several major national interstates and critical transportation corridors. The proposed funding package includes $55 million to address physical damage and state revenue implications of the transportation infrastructure damage.

    Agriculture

    The funding package includes $422 million to address physical damage and business disruption for agricultural enterprises. This storm caused significant damage to hundreds of thousands of acres of agricultural land and hundreds of structures.

    Recovering From Additional Recent Disasters

    As North Carolina is still recovering from other recent natural disasters, Governor Cooper’s proposed budget includes $420 million for needs related to PTC-8, Tropical Storm Debby, and funds to complete homeowner assistance for Hurricanes Florence and Matthew.

    The full Budget Recommendation can be found here.

    ###

    Oct 23, 2024

    MIL OSI USA News –

    January 25, 2025
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