Economic crisis – GUWIV http://guwiv.com/ Wed, 31 Aug 2022 02:43:50 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://guwiv.com/wp-content/uploads/2021/11/guw-150x150.png Economic crisis – GUWIV http://guwiv.com/ 32 32 Economic crisis: Imran vows to take ‘unprecedented’ decisions if elected to power again – Pakistan https://guwiv.com/economic-crisis-imran-vows-to-take-unprecedented-decisions-if-elected-to-power-again-pakistan/ Wed, 31 Aug 2022 01:47:27 +0000 https://guwiv.com/economic-crisis-imran-vows-to-take-unprecedented-decisions-if-elected-to-power-again-pakistan/ ISLAMABAD: President and ex-Prime Minister of Pakistan Tehreek-e-Insaf (PTI), Imran Khan, said on Tuesday that he would take unprecedented decisions to pull the country out of the economic crisis if his party is elected again in the power. Speaking at a seminar on Pakistan’s economy, organized by his party, he said “now is the time, […]]]>

ISLAMABAD: President and ex-Prime Minister of Pakistan Tehreek-e-Insaf (PTI), Imran Khan, said on Tuesday that he would take unprecedented decisions to pull the country out of the economic crisis if his party is elected again in the power.

Speaking at a seminar on Pakistan’s economy, organized by his party, he said “now is the time, we must come up with creative solutions to govern the country like no one has ever done”.

“We need to take concrete action and something no one has ever taken before so that we can face the challenge of the devastation from the recent floods,” he added.

Khan admitted his administration was not ready to lead the country when he came to power in 2018, saying he spoke to Shaukat Tarin, his party’s former finance minister, that the PTI should be well prepared to face the challenges. time around when it comes to power.

He said his party’s top priority would be to protect the vulnerable from soaring inflation, especially following the recent devastation caused by monsoon floods across the country.

Referring to his party’s international telethon a day ago, through which he raised more than Rs. business must have realized that it was foreign funding through which his party had collected donations to help people in the country like he did yesterday”.

“This is what they call foreign funding,” he told leaders who questioned the party’s foreign funding, saying that “expatriate Pakistanis are the assets of the country and we must recognize their contribution which is always there whenever we needed them”.

“The imported regime must have seen our ‘foreign funding’ yesterday through which we raised Rs 5 billion for the flood victims…this is how we get foreign funding,” Khan said referring to the critics. of his political rivals on the financing of his party by overseas Pakistanis. .

He said overseas Pakistanis will play an important role in stabilizing the country’s economy, adding that “we are developing a strategy to help overseas Pakistanis invest in the country.”

Khan recalled that during his last term in office he was unable to resolve many problems facing the country due to political instability as the opposition from day one wanted to overthrow his party’s government .

He said he knew about the plot against his government from day one, first adding that Nawaz Sharif, who had been convicted by the country’s highest court, fled to the UK under the pretext of sick, then Shehbaz Sharif came back. from London while putting on a mask as if he were a “Covid-19 specialist”.

He also accused the ruling PML-N of playing politics as the country grapples with the coronavirus pandemic, saying Shahid Khaqan Abbasi and other party leaders expected hospitals to be full and that the economy would get out of hand, but we managed everything is good enough and has earned accolades around the world.

He said he launched two major projects – Ravi City and Bundal Island – which he said had the potential to attract billions of dollars worth of foreign investment.

He lamented that the Sindh provincial government canceled the No Objection Certificate (NOC) for the Bundal Island project and that the builder mafia got a restraining order which halted work on the Bundal project. Ravi City for 11 months.

Slamming the incumbent rulers, he said they had taken no action to improve the lives of the masses as their only aim was to seek redress in cases of corruption.

“They laughed at me when I started the Billion Tree Tsunami Project…they [the political opponents] made no long-term plan to protect the country from climate change,” he added.

Taimur Khan Jhagra, the provincial finance minister of Khyber-Pakhtunkhwa, said that “the incumbent regime has generated 1.7 billion rupees in profit after one year, and you have set a record by raising 5 billion rupees in three hours “.

Speaking on the occasion, former energy minister Omar Ayub Khan said finance minister Miftah Ismail “is lying; he does not lie between his teeth, he lies blatantly”.

Through “a declaration of integrity on the floor of the National Assembly, he added, “Finance Minister Miftah admitted that the agreements signed under the government of his party were wrong, costly because they included advance payments”.

He said the fixed capacity payment for power plants will reach 1.455 billion rupees by 2023, adding that the electricity tariff will be higher than 45 rupees per unit due to the faulty policies of the incumbent regime.

Copyright Business Recorder, 2022

]]>
Last handful of fish: crisis pushes more Sri Lankans into poverty https://guwiv.com/last-handful-of-fish-crisis-pushes-more-sri-lankans-into-poverty/ Mon, 29 Aug 2022 23:22:00 +0000 https://guwiv.com/last-handful-of-fish-crisis-pushes-more-sri-lankans-into-poverty/ COLOMBO, Aug 30 (Reuters) – In her outstretched palms, Nilanthi Gunasekera, 49, holds her family’s last handful of dried fish – a reminder of Sri Lanka’s worst economic crisis in decades. She is just one of millions of Sri Lankans who are battling a catastrophic decline in their standard of living, as they find themselves […]]]>

COLOMBO, Aug 30 (Reuters) – In her outstretched palms, Nilanthi Gunasekera, 49, holds her family’s last handful of dried fish – a reminder of Sri Lanka’s worst economic crisis in decades.

She is just one of millions of Sri Lankans who are battling a catastrophic decline in their standard of living, as they find themselves forced to skip meals, ration medicines and turn to firewood instead. cooking gas.

“Now the fish is out of our family’s reach, just like the meat,” Gunasekera said, grabbing the fish shards. “For two weeks we couldn’t afford meat or fish. It’s our last protein.”

Join now for FREE unlimited access to Reuters.com

Hit hard by the COVID-19 pandemic, rising oil prices and economic mismanagement under previous governments, the island nation is in the grip of its most severe crisis since gaining independence from Britain in 1948.

Rampant inflation, fuel queues and shortages of essentials such as food and medicine have pushed many Sri Lankans into poverty, while months of street protests have toppled the former president , Gotabaya Rajapaksa, in July.

(For a photo report, please click on https://reut.rs/3Ao35B4)

More than a quarter of the population of 22 million now struggle to get adequate and nutritious food, according to the United Nations.

“We really can’t afford to buy a gas cylinder or a stove,” said Gunasekera, after thieves broke into her home and stole the family’s stove and gas cylinder a few months ago. . “So now we are forced to cook with firewood.”

As desperation grows, President Ranil Wickremesinghe’s government is seeking a multi-billion dollar bailout in talks with the International Monetary Fund and appealing to major allies from India and Japan to the United States.

But major financial aid is still months away, making harsh austerity measures likely, so few Sri Lankans will see conditions improve soon.

“Now I bathe more often in a public well to save money,” said rickshaw driver Sivaraja Sanjeewan, 31, adding that rising food prices made it very difficult for him to bathe. payment of water and electricity bills.

SHORTAGES PERSIST

As depleted supplies have dried up supplies of petrol, diesel and gas, long fuel queues, sometimes persisting for days, have become a daily feature this year.

The shortages led to a boom in demand for firewood.

Krishan Darshana said he joined his father in breaking logs to sell as kindling after he was made redundant from a construction job during the crisis.

“It’s very hard work,” said the 25-year-old, who now makes do with a cup of tea and some biscuits as his only meal of the day. “But what else can I do when there is no work for us?”

Times are also tough for those with health issues.

“Government hospitals are running out of drugs, so they are asking us to buy some from pharmacies – but we have no money,” said Krishan’s mother, Gamage Rupawathi, 60.

She suffers from asthma, cholesterol and arthritis, but now finds that she has only three days left of medication.

“After it’s over, what do I do?” she asked tearfully, pointing to an inhaler she uses twice a day to help her breathe.

CHILDREN SUFFER

With education already disrupted by the pandemic, children have been among the hardest hit by the ensuing economic crisis, as parents rush for supplies and authorities worry about growing risks of malnutrition.

“Our main concern is the education of our children,” Gunasekera said. “But we are not even able to buy exercise books.”

Her husband has to beg his employers for money to buy them, she added.

Some parents find it difficult to collect fares for children’s school trips, while others cannot afford to buy them even simple treats, such as ice cream or sweets.

Oshada Fernando played with a homemade kite made by his uncle from bamboo scraps and shopping bags. His parents couldn’t afford a present for his birthday last month.

“I wanted a racing car,” said the 11-year-old. “I hope at least for my next birthday that I get this as a present.”

Join now for FREE unlimited access to Reuters.com

Reporting by Kim Kyung-Hoon and Santhush Fernando in Colombo; Written by Alasdair Pal; Editing by Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

]]>
Europe has little choice but to save consumers from the energy crisis | Larry Elliot https://guwiv.com/europe-has-little-choice-but-to-save-consumers-from-the-energy-crisis-larry-elliot/ Sun, 28 Aug 2022 18:51:00 +0000 https://guwiv.com/europe-has-little-choice-but-to-save-consumers-from-the-energy-crisis-larry-elliot/ EAny energy clash has its winners and losers. Countries that export more oil and gas than they import do well while those that import more than they export suffer. This was the case when the price of oil jumped at the end of 1973 and it is the case today. Saudi Arabia is one country […]]]>

EAny energy clash has its winners and losers. Countries that export more oil and gas than they import do well while those that import more than they export suffer. This was the case when the price of oil jumped at the end of 1973 and it is the case today.

Saudi Arabia is one country that benefits from rising fossil fuel prices, and Russia is another. Kremlin gas revenues were two to three times higher than normal in the first half of this year, increasing the country’s ability to withstand a long economic siege.

According to consultancy firm Capital Economics, if gas prices remain at current levels, Vladimir Putin could keep exports to Europe at 20% of normal levels for the next two to three years, and could completely cut off supply for a year without adverse effects on Russia. economy.

Europe, as it was in the 1970s, is a net importer of gas and oil and therefore finds itself at the heart of the energy crisis. Oil prices have more than quadrupled at the end of 1973, while gas prices have increased fivefold since the start of 2022. Import costs are rising much faster than the value of exports, which is deteriorating the terms of l ‘exchange.

Even on the cautious assumption of lower gas prices in the coming months, the blow to some European countries, including Germany and Italy, will be more severe than it was in the oil shocks of the 1970s.

Europe is about to experience an extremely harsh winter. The question is not whether there will be a recession, but how deep it will be and how long it will last. Britain, despite its North Sea oil and gas production and growing renewable energy sector, will be hit by rising global energy costs.

As in 1973, rising energy prices took European governments by surprise. They were quick to impose sanctions on Russia after its invasion of Ukraine, but slower to consider the economic consequences. There does not appear to be any immediate prospect of economic collapse forcing the Kremlin to end the war.

History suggests that Russia can endure a lot of pain over long periods of time, and probably longer than the West. The siege of Leningrad between 1941 and 1944 is an example of extraordinary stoicism in the face of a blockade that lasted almost 900 days.

So, six months into the war, what are Europe’s options?

One possibility – at least in theory – would be to do nothing. Europe could accept that rising energy costs would impoverish it for a while and simply suck it in. Eventually, the loss of production caused by exorbitant prices would lead to a drop in demand for oil and gas, and prices would fall sharply.

The problem with allowing the market mechanism to work is that it would cause immense hardship for citizens of European countries, especially those from poorer households. Even the most ardent free marketers agree to help those who are already struggling to pay their gas and electric bills.

A second option would be to seize the opportunity offered by Putin’s weaponization of gas to accelerate the transition away from fossil fuels. It’s the “never let a good crisis go to waste” approach, and it clearly has merits.

Western governments have signed on to net zero carbon goals and here’s a way to accelerate progress. Instead of relying on Russian gas, Western countries should develop their own cleaner and greener forms of energy. This process is ongoing. Europe is trying to wean itself off Russian gas, but it won’t succeed this winter. Prices rose sharply last week when Russian state-owned Gazprom announced an unscheduled shutdown for maintenance of its Nord Stream 1 pipeline. The fear is that gas supplies to meet European demand may be insufficient.

Before resigning as Italian Prime Minister, Mario Draghi suggested another way out of the Western dilemma: a cartel of buyers. It would involve energy buyers telling producers what they were willing to pay, and was originally floated by Draghi in May as a way to respond to high oil prices. It has not been heard from since, and there is a good reason for that: it would require a certain international solidarity on the part of the consuming nations, which is conspicuous by its absence. Draghi could not even achieve unanimity within the European Union, let alone with China and India.

One obvious way to lower energy prices would be to find a way to end the war. Prices are expected to remain high through 2023 as markets see no early end to a dispute in which neither side appears capable of delivering a killing blow. This seems a reasonable assumption given that both parties seem to be well grounded. No serious attempt is being made diplomatically to end the standoff, not least because the West believes that anything other than a complete defeat of Russia would simply incite future aggression.

This approach comes at an economic cost, as Boris Johnson admitted last week when he warned the UK of tough times ahead. But if doing nothing is not an option, a cartel of buyers is a fantasy, the war is about to drag on and renewables will take time to make a difference, European governments have no no choice but to offer bailouts for consumers. There are different ways to do this. Governments could target cash payments to the less well off. They could introduce permanently lower social tariffs. They could do like France and freeze the bills. What is certain is that they will have to continue to offer support on a large scale.

]]>
Unions threaten ‘waves of industrial action’ over UK cost of living crisis https://guwiv.com/unions-threaten-waves-of-industrial-action-over-uk-cost-of-living-crisis/ Sun, 28 Aug 2022 07:03:00 +0000 https://guwiv.com/unions-threaten-waves-of-industrial-action-over-uk-cost-of-living-crisis/ UK unions are threatening a wave of coordinated industrial strikes in the coming weeks to help millions of low-wage workers struggling with the cost of living crisis. The move, which includes the two biggest unions, Unison and Unite, comes as the UK government fails to agree a detailed package of family support as average gas […]]]>

UK unions are threatening a wave of coordinated industrial strikes in the coming weeks to help millions of low-wage workers struggling with the cost of living crisis.

The move, which includes the two biggest unions, Unison and Unite, comes as the UK government fails to agree a detailed package of family support as average gas and electricity bills will rise by 80% .

On Friday, the Office for Gas and Electricity Markets (Ofgem) revealed a worrying 80% rise in electricity and gas bills, reflecting the deepening cost of living crisis in the country .

UK energy bills are expected to climb to an average of £3,549 ($4,188) a year from October, Ofgem said.

Ofgem warned that the “crisis” must be tackled with urgent and decisive government action.

Noting that rising prices would have a “massive impact” on households across the country, Ofgem CEO Jonathan Brearley warned of a further rise likely in January, reflecting significant price pressure on energy markets.

Brearley said the ongoing conflict in Ukraine is behind the turmoil in Britain’s energy market and soaring gas prices.

Meanwhile, Unison demanded that the minimum wage be increased “at least in line with inflation” which is now 10.1%.

The Trades Union Congress (TUC) has also said Britain’s minimum wage should be set at £15 an hour to help millions of low-wage workers cope with soaring energy bills and of the cost of living.

The minimum wage is now set at £9.50 for people aged 23 and over, with lower rates for younger people.

As inflation hits its highest level in 40 years, the union organization is insisting that the government draw up plans to raise wages.

Frances O’Gady, General Secretary of the TUC, said: ‘Millions of low-paid workers are living on paycheck to paycheck, struggling to get by – and they are now being pushed to the brink by sky-high bills and soaring wages. price. .”

Additionally, football league clubs have also said rising energy prices will force some clubs out of business. Forest Green Rovers owner Dale Vince has called on the government to act as rising energy costs will have a serious impact on the EFL and non-League clubs.

Government sources have revealed that the likely winner of the Tory leadership race, Liz Truss, will hold an emergency budget while prioritizing tax cuts to help individuals and businesses cope with the surge energy costs.

Soaring energy prices coupled with runaway inflation have put Europeans’ livelihoods under severe strain after Europeans severed their energy ties with Russia, Europe’s main natural gas supplier, in the aftermath of the Ukrainian conflict, triggering a serious economic crisis on the continent.

]]>
UK food shoppers drop as cost of living crisis deepens https://guwiv.com/uk-food-shoppers-drop-as-cost-of-living-crisis-deepens/ Sat, 27 Aug 2022 11:00:11 +0000 https://guwiv.com/uk-food-shoppers-drop-as-cost-of-living-crisis-deepens/ A loaf of branded white sliced ​​bread costs around £1.20 at Tesco. The retailer’s own-brand equivalent costs 70p, or 42% less. It’s no surprise that Tesco chief executive Ken Murphy recently flagged bread as one of the categories where customers are starting to turn to cheaper alternatives. This trend is already being felt by companies […]]]>

A loaf of branded white sliced ​​bread costs around £1.20 at Tesco. The retailer’s own-brand equivalent costs 70p, or 42% less. It’s no surprise that Tesco chief executive Ken Murphy recently flagged bread as one of the categories where customers are starting to turn to cheaper alternatives.

This trend is already being felt by companies that make own-brand products – and they expect it to accelerate. “We are seeing an increase in our private label volumes, particularly in bread where the price-quality ratio gap is very clear,” said the general manager of a bakery products group.

“The increase in the energy price cap is likely to focus minds even more,” he added, noting that soaring energy costs in the UK meant that this slowdown “was evolving to a much faster pace” than the previous ones and that “many households will have to batten down the hatches”.

During the pandemic and before inflation took off, people sought reassurance from branded products. But Mike Watkins, head of retail and business intelligence at consultancy NielsenIQ, said habits were changing again, with own-brand sales outpacing brand sales in recent months amid the UK’s biggest wage squeeze. United for two decades.

Last month Unilever, one of the world’s biggest producers of branded goods, warned that sales had been hurt by consumers choosing cheaper versions as prices for its products rose.

Fraser McKevitt, head of retail and consumer insights at fellow consultancy Kantar, said own-brand products now account for 51.6% of grocery sales by value, the highest level high never recorded.

Its figures show own-label sales rose 7% in the 12 weeks to August 7, while a recent survey by consultancy Retail Economics suggested half of all shoppers planned to buy more own-brand products.

Much of private label growth over the past decade has been driven by the expansion of discounters Aldi and Lidl, which together hold an 18% market share, up from 8% in 2011. Both sell almost entirely own-brand products. under names such as Village Bakery for Baresa bread and pasta.

Some own-brand products are made by larger companies that also make branded products. Hovis and Kingsmill, for example, both make bread under their own brand. But the sector is dominated by relatively small and usually private companies. Some are major producers in particular categories, such as Veetee for rice and Lovering Foods for canned fish.

The move to own branding goes beyond mere commodity trading.

The growth of Tesco’s Finest, J Sainsbury’s Taste the Difference and other ready-meal offerings as a cheaper alternative to restaurants and takeaways has been a big factor in above-average branded food sales of distributor in the United Kingdom compared to Europe and the United States. .

Loaves of white bread in a Tesco store in Northwich, Cheshire
Loaves of white bread in a Tesco store in Northwich, Cheshire. Own label sales have outpaced branded sales in recent months amid the UK’s biggest wage squeeze for two decades © Christopher Furlong/Getty Images

“This is where own branding really comes into its own,” said Lydia Gerratt, consultant and former buyer at a major supermarket chain. “These products aren’t developed to be the cheapest, but to give your core customers something they want and can’t get elsewhere.”

However, the increased demand for own-brand products is unlikely to translate into higher profits for manufacturers, as they are already operating on thin margins and facing runaway inflation.

The baked goods maker said the rise in sales “doesn’t outweigh the rising prices of almost everything we touch.”

“Wheat is up, but the big problem is gas,” he added.

Examples of price differences between the brand and its own label

James Logan, UK commercial director at Refresco, which supplies water, juice and soft drinks to supermarkets across Europe, agreed that cost increases were widespread. “In the past, you may have had a spike in a particular commodity because of something like El Niño affecting the crops,” he said.

“This time there is no respite, costs are rising all over the supply chain.”

The question of how additional costs are shared has led to high-profile clashes between retailers and suppliers of branded goods, such as a recent dispute between Tesco and Heinz which temporarily pulled some products from shelves. Disagreements with own brand suppliers are less likely overall.

“A good own-brand supplier will have close contact with the retailer and keep them informed of any developments that might require a difficult conversation,” Logan said.

Clive Black, head of research at Shore Capital, said asking vendors to pick up the price was no longer an easy option. Previous pressure from retailers had led to consolidation, he added, meaning there were fewer alternatives, while switching suppliers is not as easy as before.

Plan for grocery spending cuts, including lowering prices

The bakery executive said he was having a ‘sense and constructive dialogue’ with customers while McBride, a listed supplier of own brand household cleaning products, recently said he had secured price increases “meaningful” to help offset higher chemical and energy costs.

Tesco and Sainsbury’s have indicated they will sacrifice some profits this year to absorb supplier price hikes.

Logan said media coverage of the cost-of-living crisis helped kick-start pricing talks. “No one can claim that he was unaware of what was going on.”

]]>
Live updates: Gas prices in Europe hit record high as energy crisis deepens https://guwiv.com/live-updates-gas-prices-in-europe-hit-record-high-as-energy-crisis-deepens/ Fri, 26 Aug 2022 15:12:11 +0000 https://guwiv.com/live-updates-gas-prices-in-europe-hit-record-high-as-energy-crisis-deepens/ © AFP via Getty Images U.S. consumer confidence rebounded more than expected in August from all-time lows as lower inflation improved consumer prospects and price expectations fell to their lowest level in eight month. The widely tracked consumer confidence index in a University of Michigan survey reached a final reading of 58.2 in August. That […]]]>
© AFP via Getty Images

U.S. consumer confidence rebounded more than expected in August from all-time lows as lower inflation improved consumer prospects and price expectations fell to their lowest level in eight month.

The widely tracked consumer confidence index in a University of Michigan survey reached a final reading of 58.2 in August. That was up from the preliminary reading of 55.1 and beat economists’ expectations for a revision to 55.2, according to the Refinitiv poll.

The median inflation rate expected for the coming year fell to 4.8% from 5.2% in July, marking its lowest level in eight months.

“Sentiment gains were observed across age, education, income, region and political affiliation, and can be attributed to the recent deceleration in inflation,” Joanne said. Hsu, an economist at the University of Michigan, in a statement Friday.

While August showed improvement, sentiment is still historically low and down 17% from a year ago when the reading was 70.3.

The Michigan survey’s Consumer Expectations Index also jumped to 58 from 47.3 in July.

Personal financial expectations rose 12% from July as low-income consumers saw strong gains. “Their sentiment is now even overtaking that of high-income consumers, when it generally lags behind,” Hsu said.

While falling gasoline prices have helped dampen inflation expectations, further recovery is always difficult.

“Price pressures and economic uncertainty remain elevated, making any sustained recovery in sentiment unlikely,” said Matthew Martin, US economist at Oxford Economics.

]]>
Pakistan cannot afford another political crisis https://guwiv.com/pakistan-cannot-afford-another-political-crisis/ Thu, 25 Aug 2022 02:45:39 +0000 https://guwiv.com/pakistan-cannot-afford-another-political-crisis/ Comment this story Comment In Pakistani politics, nothing is done by halves. A few months ago, one of ex-Prime Minister Imran Khan’s former cabinet ministers, Shahbaz Gill, warned lower-ranking military officers against “unlawful orders” from their superiors. The remarks were taken as an attempt to divide the country’s all-powerful military and Gill was quickly arrested. […]]]>

Comment

In Pakistani politics, nothing is done by halves. A few months ago, one of ex-Prime Minister Imran Khan’s former cabinet ministers, Shahbaz Gill, warned lower-ranking military officers against “unlawful orders” from their superiors. The remarks were taken as an attempt to divide the country’s all-powerful military and Gill was quickly arrested.

This, and Gill’s subsequent claims about his treatment in prison, infuriated Khan, who last week warned various police officers and judges that they would face consequences for their involvement in the case. A magistrate in Islamabad complained that Khan’s statements were seen as threats and police filed a complaint against him under draconian anti-terrorism laws.

Khan’s conspiratorial supporters fully believe that a junior US diplomat orchestrated their leader’s removal as prime minister. They have no doubt that Prime Minister Shehbaz Sharif and army chief General Qamar Javed Bajwa are behind this attempt to overthrow a dangerous political rival. In fact, the real problem – and the reason why you hear the phrase “political crisis in Pakistan” too often – is probably more mundane.

In general, Pakistan’s repeated cycles of confrontation and overreaction only benefit populists like Khan, who thrive on grievances and the theater of street protest. His followers are so dedicated that they imagine his every action brings glory to Pakistan. Sometimes it reaches the level of farce: Social media is teeming with Khan’s party men reposting headlines from around the world about his possible arrest, arguing that it proves he is a leader of truly global stature.

In this particular case too, the government and military have more to lose from a standoff than Khan. Pakistan is still close to economic collapse, elections are not far away and recent by-election victories in the country’s largest province suggest that Khan’s party has regained much of its electoral appeal. Arresting Khan on such flimsy grounds will make him a martyr, encourage even more disruptive protests and elevate his popularity to stratospheric levels. It could also cause the economy to fall further.

In Pakistan, however, as in other countries ruled by a shadowy “establishment” of political and military elites, the top leadership is not necessarily behind such events. After a power shift, mid-level officials rush to demonstrate their absolute devotion to the permanent establishment by taking on the political faction that was recently driven out.

When these actors – officials, police, judges – attempt to outdo each other in displays of loyalty, they end up performing counterproductive stunts such as threatening to arrest a popular ex-prime minister on flimsy charges.

Khan’s party has taken to calling current army leaders “neutrals”, to mock the army’s alleged conversion to political impartiality. In fact, when you hold the power of the Pakistani military, you can rarely be truly neutral. To put it in terms that generals might understand, establishment foot soldiers are prone to planting aggressive forward positions that must then be defended or evacuated.

This time, the generals will have to exercise caution. There’s a good chance Khan’s appeal is, in fact, big enough to split the army itself. Bajwa’s term is due to end in November and he has already secured – or granted himself – an extension. A sufficient number of members of the oligarchy of corps commanders who control the nation might be inclined to retain Bajwa’s policy. But others, and particularly lower-level officers, might be more drawn to Khan’s mild anti-Western and Islamist rhetoric.

Pakistan’s military has long modeled itself on that of modern Turkey, envisioning itself as the resolute defender of national identity and Western alliances. It is worth looking at what happened when the Turkish army came up against a real populist with a taste for confrontation. If the current stalemate does not end up reducing the power of uniforms over Pakistani politics, it could well lead to a dangerous new axis between illiberal populism, Islamism and militarism.

More other writers at Bloomberg Opinion:

• Modi’s India may argue for partition: Nisid Hajari

• What if India and Pakistan really got along? : Tyler Cowen

• Pakistan’s political crisis is an energy crisis: David Fickling

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Mihir Sharma is a Bloomberg Opinion columnist. A senior researcher at the Observer Research Foundation in New Delhi, he is the author of “Restart: The Last Chance for the Indian Economy”.

More stories like this are available at bloomberg.com/opinion

]]>
IMF team to hold talks with crisis-hit Sri Lanka on debt restructuring https://guwiv.com/imf-team-to-hold-talks-with-crisis-hit-sri-lanka-on-debt-restructuring/ Wed, 24 Aug 2022 07:15:00 +0000 https://guwiv.com/imf-team-to-hold-talks-with-crisis-hit-sri-lanka-on-debt-restructuring/ People, including farmers, queue outside a petrol station, amid the country’s worst economic crisis, in Kilinochchi district, Sri Lanka, July 28, 2022. REUTERS/ Devjyot Ghoshal Join now for FREE unlimited access to Reuters.com Register COLOMBO/LONDON, Aug 24 (Reuters) – A team from the International Monetary Fund (IMF) will meet the Sri Lankan president on Wednesday […]]]>

People, including farmers, queue outside a petrol station, amid the country’s worst economic crisis, in Kilinochchi district, Sri Lanka, July 28, 2022. REUTERS/ Devjyot Ghoshal

Join now for FREE unlimited access to Reuters.com

COLOMBO/LONDON, Aug 24 (Reuters) – A team from the International Monetary Fund (IMF) will meet the Sri Lankan president on Wednesday for talks aimed at finalizing a bailout package, including debt restructuring of about $29 billion. dollars, amid the country’s worst financial crisis in more than seven decades.

The IMF’s second such visit in three months comes as the Indian Ocean island seeks to strike a staff-level pact with the global lender for a possible $3 billion exit program. crisis.

“The IMF team will meet with the president and a delegation from the finance ministry later today,” an official from the presidential secretariat told Reuters, declining to be identified because he was not authorized to speak to the media.

Join now for FREE unlimited access to Reuters.com

The team will also meet with the central bank governor and other officials, including representatives of Sri Lanka’s financial and legal advisers, Lazard’s and Clifford Chance.

The main stumbling block in the talks is how to find a sustainable path to Sri Lanka’s heavy debt, which stood at 114% of GDP at the end of last year, in order to reach a deal at the level of the staff in September. Read more

Sri Lanka has $9.6 billion in bilateral debt and its private credit, which includes international sovereign bonds, stands at $19.8 billion, according to finance ministry data.

Japan and China are the main holders of bilateral debt, the latter representing approximately $3.5 billion. Overall, if commercial debt is added, China holds about one-fifth of Sri Lanka’s debt portfolio.

“The question will be how Chinese debt and domestic debt will be included in the talks,” said Timothy Ash, senior emerging markets sovereign strategist at Bluebay Asset Management.

“Other bilateral creditors will not want to allow China to be denied comparable treatment this time around. China is part of the problem and must be part of the solution this time around.”

For months, the population of 22 million has battled runaway inflation, economic contraction and severe shortages of essential items of food, fuel and medicine caused by a record drop in foreign exchange reserves. Read more

The country’s worst financial crisis since independence from Britain in 1948 stems from the combined impact of the COVID-19 pandemic and economic mismanagement, sparking unprecedented protests.

In July, then-president Gotabaya Rajapaksa fled the country and resigned after a mass uprising sparked by what many Sri Lankans saw as his mishandling of the financial crisis. Read more

President Ranil Wickremesinghe, who is also finance minister, plans to ask Japan to lead bilateral debt restructuring talks after Sri Lanka secures IMF support. Read more

Join now for FREE unlimited access to Reuters.com

Reporting by Uditha Jayasinghe; Editing by Clarence Fernandez

Our standards: The Thomson Reuters Trust Principles.

]]>
The Covid-19 financial crisis that was not https://guwiv.com/the-covid-19-financial-crisis-that-was-not/ Tue, 23 Aug 2022 15:18:22 +0000 https://guwiv.com/the-covid-19-financial-crisis-that-was-not/ Comment this story Comment The sudden realization in mid-March 2020 that Covid-19 was going to be a once-in-a-century pandemic created the kind of disruption that financial crises are made of. Experts predicted an unprecedented triple shock: lockdowns would decimate demand, travel bans would devastate supply, and the “money rush” would freeze financial activity. Stock markets […]]]>

Comment

The sudden realization in mid-March 2020 that Covid-19 was going to be a once-in-a-century pandemic created the kind of disruption that financial crises are made of. Experts predicted an unprecedented triple shock: lockdowns would decimate demand, travel bans would devastate supply, and the “money rush” would freeze financial activity. Stock markets plunged and bond yields jumped.

But despite the disastrous human toll and the inevitable economic slowdown, the financial crisis did not occur. To figure out what went right, our Yale Financial Stability Program research team compiled a database of some 9,000 government actions in 180 countries. The lessons: Go big, go early, and prepare for next time.

Fiscal, monetary and other authorities around the world acted quickly amid extreme uncertainty. They used tools employed during the 2008 financial crisis, adapted to the deeper and faster events of the pandemic. They promised extraordinary sums and took risks on new programs. Even though some of the worst fears have come true – in just one quarter, annualized US economic output has fallen by a third and unemployment has tripled – there has been no global depression or credit crisis. .

► The same tools can be useful in different crises. Financial disasters share some common elements: liquidity runs out, depositors and creditors flee, asset prices crash. For this reason, many of the tools implemented during the 2008 financial crisis have proven easily adaptable in 2020. The Bank of England, for example, relaunched its Contingent Term Repo Facility to enable struggling counterparties to trade hard-to-sell assets for central bank cash. .

The authorities have also modernized the interventions, applying their experience of past crises. For example, the Bank of Japan relaunched its special fund operations, through which it provided interest-free guaranteed loans to creditworthy financial cooperatives. However, the focus of the Covid-era program has shifted to private sector financing and financial market stability, rather than supporting corporate bond and commercial paper markets.

► Be ready to innovate and experiment. New problems call for new solutions. For example, many Covid-19 actions have focused on bolstering vulnerable real economy industries, such as airlines and healthcare, as opposed to financial institutions. After the first round of interest rate cuts and emergency liquidity programs, many countries launched unprecedented market interventions during the 2008 financial crisis, including fiscal measures such as payment moratoriums, tax deferrals and subsidies (but not without unintended consequences).

► Go big and the market will do your work for you. When governments and central banks pledged trillions of dollars to buy everything from municipal bonds to exchange-traded funds, they often didn’t need to spend even a small fraction of the money. In cases such as the Swedish Riksbank’s corporate bond buying program and the US Federal Reserve’s term asset-backed securities lending facility, mere announcements have restored much-needed confidence to private investors. to get them back into action.

► Prepare for quiet periods. Reforms put in place in the years following the 2008 financial crisis have made a crucial difference in 2020. More importantly, banks have operated with significantly more capital, which has absorbed losses and enabled them to recover. act as a source of strength rather than contagion (although the central bank’s efforts to provide liquidity and support asset prices also helped a great deal). A dozen countries had also required banks to have a countercyclical capital buffer, which provided additional resilience at the start of the shutdowns.

Meanwhile, the pandemic has exposed gaps in countries’ crisis management toolkits – gaps they are filling now that markets have calmed down. For example, central banks are considering how to redesign liquidity buffers, which require banks to hold additional cash to cover their obligations in difficult times. During the pandemic, banks have been reluctant to deploy liquidity, fearing stigma or regulatory backlash. So regulators are thinking about how to make buffers more usable.

Financial regulators are often accused of “waging the last war”, that is to say of reacting to crises with heavy reforms that will be useless the next time around. Yet the experience of the pandemic demonstrates that many lessons and tools are enduring, that preparedness is possible and useful, and that leaders can adapt and innovate in the midst of battle. The global financial system survived Covid through years of assessing the previous crisis, and authorities can draw on that experience to prepare for the next one.

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Adam Kulam is an MBA and MMS candidate at the Yale School of Management. He was previously a Senior Research Associate in the Yale Financial Stability Program.

Lily Engbith is an MBA candidate at the Yale School of Management. She was previously a senior research associate at the Yale Financial Stability Program.

More stories like this are available at bloomberg.com/opinion

]]>
China News: Xi crisis as drought triggers blackouts and energy rationing – economy battered | Science | New https://guwiv.com/china-news-xi-crisis-as-drought-triggers-blackouts-and-energy-rationing-economy-battered-science-new/ Mon, 22 Aug 2022 20:00:18 +0000 https://guwiv.com/china-news-xi-crisis-as-drought-triggers-blackouts-and-energy-rationing-economy-battered-science-new/ A severe drought in China has caused parts of the Yangtze River in Sichuan to dry up. It comes after an extreme heatwave sent shockwaves across the country, prompting authorities to issue a ‘red alert’ warning for the 11th straight day on Monday. And, worryingly, the record drought has left water levels in Sichuan’s hydroelectric […]]]>

A severe drought in China has caused parts of the Yangtze River in Sichuan to dry up. It comes after an extreme heatwave sent shockwaves across the country, prompting authorities to issue a ‘red alert’ warning for the 11th straight day on Monday. And, worryingly, the record drought has left water levels in Sichuan’s hydroelectric reservoirs dangerously low, plunging by half.

Meanwhile, demand for electricity in the region has soared by 25%.

While the province gets 80% of its energy from hydroelectricity, the provincial government said the “particularly serious” drop in water levels had led to a “serious situation”.

But not only does this affect Sichuan, but areas downstream of Chongqing city and Hubei province have been affected.

Restrictions on energy consumption have already been introduced from August 15 to 20, forcing thousands of factories to use limited power.

Households have also been given energy rationing instructions due to the shortage.

But curbs were extended for a further five days on Sunday, following scorching temperatures of 40 degrees Celsius.

The closures have caused major disruption to several industries, including the automotive sector.

Volkswagen, the German automaker, said it was experiencing mild disruptions at its plant in Chengdu, the capital of Sichuan.

A Volkswagen spokesperson said: “We are monitoring the situation and communicating closely with our suppliers.”

Toyota and Tesla operations at some factories have been impacted over the past two weeks.

READ MORE: Medieval ‘Welsh Atlantis’ map reveals location of TWO ‘lost’ islands

In Shanghai, its iconic Bund skyline will be forced into darkness for two days in a bid to save energy amid the drought.

Chenyu Wu, analyst for China and North Asia at consultancy Control Risks, said: “Local efforts to save energy and increase production are likely to help alleviate the electricity shortage situation. in the coming weeks, especially if the long-awaited end of the scorching heat wave arrives.

The drought is believed to have affected at least 2.46 million people, including 780,000 people in need of direct government assistance, China’s Ministry of Emergency Management said.

It also caused problems for farmland in Sichuan, Hebei, Hunan, Jiangxi, Anhui and Chongqing regions.

In order to limit the impact of industrial closures on the country’s economy, its central bank announced on Monday that it was cutting its five-year interest rate by 0.15 percentage points, to 4.3%.

The country was already suffering from sluggish consumer spending due to Covid, with the heatwave only adding to the strain already placed on the country by the pandemic.

]]>