WASHINGTON (Reuters) - The U.S. and India have agreed to terminate six outstanding disputes at the World Trade Organization, the U.S. Trade Representative's office said in a statement on Thursday after a meeting between President Joe Biden and Prime Minister Narendra Modi.

India also agreed to remove retaliatory tariffs on certain U.S. products including chickpeas, lentils, and other goods, the statement said.

By Leigh Thomas

PARIS (Reuters) -Zambia has clinched a deal to restructure more than $6 billion in debts owed to other governments, a French official said on Thursday, in a long-awaited breakthrough to ease pressure on the southern African country's strained public finances.

Zambia in 2020 became the first African country to default on its sovereign debt during the COVID-19 pandemic and has struggled since in protracted negotiations to agree a deal on the $12.8 billion of external debt it was trying to restructure.

"We have reached an agreement on the outline of a debt treatment, we've reached the end of the negotiation," the French official, who did not wish to be identified, told journalists.

Zambia's public sector creditors agreed to reschedule $6.3 billion, including $1.3 billion in arrears, and private sector creditors are expected to do the same on the $6.8 billion owed to them, the official said.

"We've already spoken to representatives of the private sector and they know what to expect, that they will have to restructure and make a comparable effort," the official added.

The agreement calls for Zambia's debt to be rescheduled over more than 20 years with a three-year grace period during which only payments on interest are due.

The restructuring agreement with official creditors paves the way for Zambia to receive another $188 million tranche of money from the International Monetary Fund, part of a $1.3 billion package approved in August 2022.

“This agreement paves the way for the completion of the first review of Zambia’s three-year Extended Credit Facility Arrangement, which is helping put Zambia on a path toward sustainable economic growth and poverty reduction," Kristalina Georgieva, managing director of the International Monetary Fund, said in a written statement.

The scale of the debt relief Zambia requires has been a concern for some of the country's main creditors.

Some Western officials have accused China - Zambia's largest bilateral creditor - of dragging its feet in restructuring talks, something Beijing denies.

Of the $6.3 billion in debt owed to government bodies, $4.1 billion was owed specifically to Export-Import Bank of China, the French official said.

"I am pleased that the international community has come together to support Zambia in its time of need," U.S. Treasury Secretary Janet Yellen said in a statement.

"I urge all official bilateral and private sector creditors to quickly finalize the debt restructuring process that will provide relief to Zambian families and encourage the private investment that is needed to jump start the economy."

Zambian President Hakainde Hichilema was one of about 40 leaders attending a summit in France on Thursday and Friday aimed at easing the debt burden on some of the world's most vulnerable countries while freeing up billions of dollars in new funds for climate finance.

Beijing was keen not to be seen further holding up debt relief for Zambia at the summit, the official said, adding that French President Emmanuel Macron's talks with Chinese authorities in Beijing in April also helped unblock the situation.

Zambia is viewed as a test case for a debt restructuring framework backed by the Group of 20 wealthy nations intended to streamline relief for countries caught in a developing world debt crisis sparked in part by the coronavirus pandemic.

However, the process has been achingly slow for Zambia, a fact that has discouraged all but a handful of other struggling governments from seeking help under the mechanism.

PARIS (Reuters) -U.S. Treasury Secretary Janet Yellen said on Thursday the World Bank should add disaster clauses to debt agreements with poorer countries, speaking ahead of a summit in Paris that will discuss how to boost crisis financing for low-income nations.

Such clauses could be part of a broader reform of the World Bank to free up more funds, Yellen told journalists in the French capital.

"We would also like to see the World Bank offer borrowers the option to add climate resilient debt clauses to their loan agreements. These clauses would help ease pressures on countries if a natural disaster strikes," she said.

Yellen, whose country is the World Bank's biggest shareholder, added multilateral development banks should be reformed to become more efficient before shareholders think of injecting more money into them.

"Even with the capital that the World Bank and the MDBs have there is clearly potential ...to increase financing capacity," she said, adding an additional 200 billion dollars could be unlocked over a decade.

"We are certainly not ruling out at some later stage a capital increase. But I think that these banks need to function better individually and as a system first, expand their mission to address global challenges, better utilize the capital they have."

BERLIN (Reuters) - Brexit has been an "economic disaster" for trade and investment ties between the United Kingdom and Germany, leading to a fall in German direct investment and seeing the UK decline in importance as a trading partner, German economists said.

Britain voted on June 23, 2016, to exit the European Union and it left the EU's single market at the start of 2021.

"Brexit is an economic disaster for both sides of the channel," Volker Treier, head of foreign trade at the German Chamber of Industry and Commerce (DIHK), told Reuters on Thursday.

Last year, Germany exported goods worth 73.8 billion euros ($80.57 billion) to the UK, 14.1% less than in 2016. The year of the referendum, the UK was Germany's third most important export market, but by 2022 the country had slipped to eighth place, Treier said.

As a trading partner - measuring combined exports and imports - the UK has lost even more importance since then, dropping from fifth to eleventh place, he added.

The volume of German direct investment in the UK has also declined. In 2021, it was around 140 billion euros, a decline of 16.1% compared with 2016.

According to the DIHK, some 2,163 German companies are now active in the UK, 5.2% fewer than in 2016.

Many British companies meanwhile have settled in Germany in recent years. Germany Trade and Invest (GTAI), an organisation that helps international companies set up business in Germany, has counted more than 1,000 new businesses from the UK since the Brexit vote.

Last year alone, there were 170 new businesses, a number surpassed only by companies from the U.S. and Germany's neighbour Switzerland.

"We expect inquiries from the UK to remain at a high level," said GTAI Managing Director Robert Hermann. "It is important for British companies to have a foothold in the EU."

Germany's size and central location are an advantage when it comes to attracting UK companies, he added.

"The UK's exit from the EU has made our close trade relations more difficult and there is still considerable planning and legal uncertainty in the UK business of German companies," said Treier.

($1 = 0.9160 euros)

By Wayne Cole

SYDNEY (Reuters) -The head of Australia's central bank will find out in July whether he will be reappointed to a second term, as customary, or be passed over for a new leader as part of the biggest shake-up of the institution in decades.

Treasurer Jim Chalmers told reporters on Thursday he would announce his decision on Reserve Bank of Australia (RBA) Governor Philip Lowe's (NYSE:LOW) future in coming weeks, but would not be drawn on whether Lowe would keep his job.

Lowe, a four-decade veteran at the bank, has been under a cloud since repeatedly saying in 2021 that interest rates would not rise until 2024, only to reverse course and hike in mid-2022 when inflation unexpectedly surged.

The RBA has since lifted rates by an eye-watering 400 basis points to an 11-year high of 4.1%, causing financial pain for mortgage holders who feel they were enticed into borrowing by Lowe's sanguine outlook.

In a testy appearance before lawmakers last November, Lowe took the unusual step of apologising for any harm done. "I’m certainly sorry if people listened to what we'd said and then acted on that," Lowe conceded at the time.

The clamour of criticism, particularly in the media, led Chalmers to launch an independent review of the central bank which recommended sweeping changes in its operation and the way policy was formed.

It has also led for calls for Lowe to be ousted when his current term ends in September, and perhaps be replaced by someone from outside the bank.

The previous two governors, both insiders, were reappointed to another seven-year term and chose to step down after serving three years.

Lowe has stated publicly that he would accept reappointment if offered, but Chalmers has been non-committal.

Speaking on Thursday, Chalmers said he held Lowe in high regard but stopped short of endorsing him.

"Obviously, the Reserve Bank Governor needs to be well placed to implement the recommendations of the review and to take the Reserve Bank into the future," said Chalmers.

"It's a key institution and obviously makes decisions which matter a great deal to the living standards of the Australian people."

Possible replacements being touted are the current deputy governor Michele Bullock, Treasury official Jenny Wilkinson and former Bank of Canada official Carolyn Wilkins, who also led the review into the RBA.

BUENOS AIRES (Reuters) - Argentina will make scheduled payments totaling some $1.9 billion to the International Monetary Fund (IMF) on Wednesday, an economy ministry source said.

The South American country is in talks with the IMF to revamp its $44 billion loan program with the lender as it battles with dwindling foreign currency reserves, a weak peso currency and annual inflation over 100%.

Argentina has $2.7 billion due to the fund this month alone.

The government hopes to bring forward over $10 billion in IMF disbursements this year, though has been reluctant to agree to tough austerity measures as the next general elections scheduled for October approach.

Economy Minister Sergio Massa is set to travel to Washington once an agreement to ease economic targets is drafted with IMF officials.

By David Milliken

LONDON (Reuters) - The Bank of England is set to raise interest rates for a 13th time in a row on Thursday, a day after inflation data came in higher than expected again, with investors split on just how big the new hike will be.

Economists polled by Reuters last week were unanimous that the BoE would raise rates to 4.75%, their highest since 2008, from 4.5%.

But after inflation held at 8.7% in May, financial markets priced in a nearly 50% chance that the BoE would opt for a bigger move and raise rates by half a percentage point.

"I think it's a very finely balanced decision," said Tomasz Wieladek, chief European economist at U.S investment firm T. Rowe Price, who predicts at least three of the Monetary Policy Committee's nine members will vote for a half-point hike.

Britain's economy, which has been hit by the shock of Brexit as well as the COVID-19 pandemic and the surge in gas prices caused by Russia's invasion of Ukraine, has dodged a widely expected recession so far in 2023 though growth looks set to be a minimal 0.25% this year, according to the BoE's forecasts.

Unlike most other big rich economies, output has barely recovered to pre-pandemic levels. However, two inflation readings since the BoE's last rate hike in May have both been higher than expected, raising fears that Britain faces a more persistent price growth problem than the United States or the euro zone.

Households are now also seeing their mortgage bills rise, with average new two-year fixed-rates rising to 6.15% on Wednesday in anticipation of further rate hikes.

Financial markets were estimating that the BoE would keep raising rates until they hit 6% - their highest since 2001 - more than the U.S. Federal Reserve which is seen tightening by just a quarter point more and the European Central Bank which investors expect may move twice more.

"The UK has a uniquely bad inflation problem," Krishna Guha, a vice chairman at U.S. investment banking advisory firm Evercore, said.

Prime Minister Rishi Sunak - who has pledged to halve inflation this year in an attempt to win back voter support ahead of a national election expected in 2024 - has said he fully backs the BoE's efforts to tame prices.

However, Sky News said on Wednesday that unnamed members of the government thought Governor Andrew Bailey was failing at his job.

FALLING FASTER?

The central bank last month forecast that consumer price inflation, which peaked at a 41-year high of 11.1% in October 2022, would fall to just over 5% by the end of this year and be below its 2% target in early 2025.

A significant inflation drop is almost inevitable as energy prices come down from last year's peaks.

But incoming BoE policymaker Megan Greene - who will join the MPC next month - said last week that getting inflation from 5% to 2% may prove a tougher task than the initial fall.

Core inflation - which strips out more volatile prices to show an underlying trend - rose to a 31-year high in May.

Wieladek, who worked at the BoE from 2008 to 2015, said wages looked set to keep on growing at an annual rate of around 6%, almost twice the level consistent with 2% inflation, given the shortage of workers available to many employers.

In previous decades, British wage growth has only slowed after a large rise in unemployment, and Wieladek estimated the BoE would need to engineer a recession that pushed unemployment up to 6.0%-6.5% from its current 3.8% to achieve this now.

"Unfortunately, the Bank of England is in a situation where they will have to hike until something breaks," he said.

Most economists are less gloomy and think rates are more likely to peak near 5% as recent falls in energy and raw material costs affect the price of other goods and services.

"Market pricing for a lot more rate hikes could reverse quite quickly - especially if weaker inflation is ultimately allied with easing wage pressures," strategists at Nomura wrote.

By John Irish

PARIS (Reuters) -Leaders meeting this week at a summit in Paris are set to back a push for multilateral development banks like the World Bank to put more capital at risk to boost lending, according to a draft summit statement seen by Reuters.

Multilateral development banks are expected to be at the centre of talks on Thursday and Friday in the French capital when nearly 40 heads of state and government meet to nail down a roadmap for easing the debt burdens on low-income countries and making more funds available for climate financing.

An expert panel review for G20 nations last year found that multilateral lenders' management, government shareholders and their credit rating agencies were too timid about their financial risks.

The panel suggested a greater risk tolerance could free up several hundreds of billions dollars over the medium term.

A summit statement on multilateral development banks, which as a draft is subject to change, calls for a new push to be made "to optimise the use of capital by MDBs and encourage them to pursue innovative measures".

"This should include exploring incorporating a prudent share of callable capital into MDB capital adequacy frameworks (and) diversifying their sources of funding (including by exploring issuance of hybrid capital)," the summit statement said.

Callable capital is the funds government shareholders would be expected to stump up if ever a major development bank suffered big losses depleting paid-in capital, which has so far never happened.

Hybrid capital is financial instruments that development banks could issue to investors to raise additional funds.

The statement said that capital hikes for some unspecified development banks could be considered, but left it up to the board of each one to determine if and when one was needed.

The leaders are also set to support plans for rich countries to re-channel some of their unused special drawing rights at the International Monetary Fund - a global reserve currency - to development banks, including the African Development Bank and the Inter-American Development Bank.

NEW YORK (Reuters) - The International Monetary Fund is encouraged by the progress in discussions between Zambia and its official creditors, and an agreement could be reached "within a few days," the fund said in a statement on Tuesday.

"We are very encouraged by the significant progress being made in discussions between official creditors and Zambia on a potential debt treatment," a spokesperson for the fund wrote.

"We expect an agreement could be reached within a few days, which would allow the Executive Board consider the first review of the Fund-supported program within a few weeks."

The IMF said in early April that the next $188 million payout from a $1.3 billion support loan to Zambia was contingent on the government's reaching an agreement with its creditors.

Zambia's hopes of restructuring about $12.8 billion of external debt have been hampered by the concerns of its main creditors about the required scale of relief.

LONDON (Reuters) - British Prime Minister Rishi Sunak will unveil a major package for Ukraine, including $3 billion of additional guarantees to unlock World Bank lending, on the first day of a summit aimed at spurring efforts to rebuild the country on Wednesday.

At the beginning of the two-day Ukraine recovery conference in London, Sunak will outline a package which will also include 240 million pounds ($306 million) of bilateral assistance and an expansion of British International Investment in Ukraine.

Britain has been one of the main backers of Ukraine since Russia launched its full-scale invasion in February last year, and Sunak hopes the conference will cement London's standing while encouraging the private sector to do more to help rebuild.

"So, together with our allies we will maintain our support for Ukraine's defence and for the counter offensive, and we'll stand with Ukraine for as long as it takes as they continue to win this war," Sunak will tell the conference, according to excerpts of his speech released by his office.

"I'm proud that today we're announcing a multi-year commitment to support Ukraine's economy, and over the next three years, we will provide loan guarantees worth $3 billion."

Ajay Banga, president of the World Bank Group, said the guarantees would allow it to continue to help "people rebuild their lives after devastation".

The United States is also expected to set out "a new, robust" assistance package for Ukraine on Wednesday.

After more than a year of war in Ukraine, Sunak hopes the conference will encourage the private sector to use its resources to help speed Ukraine's reconstruction, but officials will also have to wrestle with the issue of offering some kind of insurance against war damage and destruction.

His office said he would also launch the London Conference Framework for War Risk Insurance at the summit and that some major companies had already signed up to the so-called Ukraine Business Compact, a statement of support for Ukraine's recovery.

Ukraine is seeking up to $40 billion to fund the first part of a "Green Marshall Plan" to rebuild its economy, including developing a coal-free steel industry, a senior Ukrainian official said before the conference.

The total bill will be huge, with Ukraine, the World Bank, the European Commission and the United Nations estimating in March that the cost was at $411 billion for the first year of the war. It could easily reach more than $1 trillion.

($1 = 0.7851 pounds)