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Lanka invites Indian investments in infra, energy & manufacturing
International Desk
17 Jan 2022, 19:17
Photo: Collected
Indian External Affairs Minister S. Jaishankar held a virtual meeting with Finance Minister of Sri Lanka Basil Rajapaksa on Saturday. This interaction follows Rajapaksa’s visit to India last month.
Both Ministers positively noted the extension of $ 400 million to Sri Lanka under the SAARC currency swap arrangement and deferral of A.C.U. settlement of $ 515.2 million by two months, which would assist Sri Lanka.
The two Ministers reviewed the progress in extending the Indian credit facility of $ 1 billion for importing food, essential items and medicine and $500 million for importing fuel from India.
The Lankan Minister welcomed Indian investments in Sri Lanka in a number of important spheres including ports, infrastructure, energy, renewable energy, power and manufacturing and assured that conducive environment will be provided to encourage such investments
"Jaishankar conveyed that India has always stood with Sri Lanka, and will continue to support Sri Lanka in all possible ways for overcoming the economic and other challenges posed by COVID-19 pandemic. As close friends and maritime neighbors, both India and Sri Lanka stand to gain from closer economic interlinkages," according to a statement issued by the Ministry of External Affairs.
Rajapaksa recalled India’s longstanding cooperation with Sri Lanka and deeply appreciated the gestures of support. In this context, both Ministers noted that the recent steps taken by Lanka for jointly modernizing Trincomalee Oil Tank Farms will boost confidence of investors, apart from enhancing Sri Lanka’s energy security.
Jaishankar brought up the issue of Indian fishermen detained in Sri Lanka. He urged the Government of Sri Lanka to ensure early release of the detained fishermen on humanitarian considerations.
Source: The Economic Times
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Japan's yen dips to 34-year low against US dollar
The Japanese yen has hit its lowest level against the dollar in decades, even after Japan's central bank announced a hike in interest rates.
Currency markets saw Japan's yen dip to its lowest point against the dollar in more than three decades on Wednesday.
The fall has raised speculation that authorities might intervene in market trading to prop up the currency.
What's happening with the yen?
The yen fell to 151.97 against the dollar — the lowest point since 1990 — before rallying slightly. The dollar was last down at 151.19.
In the past two years, the yen has weakened significantly from roughly 115 against the dollar before Russia's invasion of Ukraine.
In a historic shift in monetary policy, Japan increased interest rates this month for the first time since 2007. However, this has done little to stablize the falling price of the yen, given that Japan's benchmark interest rates remain among the lowest in the developed world and are not expected to rise much further.
A weaker yen makes exports from Japan cheaper. However, it also drives up import costs and energy prices for consumers in the world's fourth-largest economy.
In a sign of concern about the need to shore up the currency, the Bank of Japan, the Finance Ministry, and Japan's Financial Services Agency held a meeting late in Tokyo trading hours.
Japanese Finance Minister Shunichi Suzuki said earlier that authorities could adopt "decisive steps" against yen weakness.
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"Now we are watching market moves with a high sense of urgency," he told reporters.
The government could intervene directly in the currency market, buying large amounts of yen and usually selling dollars for the Japanese currency. Tokyo last took such action in 2022 when the yen was also floundering.
Why is the yen so low?
Japan last week raised interest rates for the first time since 2007 in a move that marked a historic shift in monetary policy.
Despite the rise in interest rates from negative territory, the cost of borrowing in Japan remains very low at 0 to 0.1%.
For investors, the US — which adopted an aggressive policy of hiking rates to tamp down inflation — offers a far more attractive rate of 5.25 to 5.5%, with a cut not priced in until July.
The value of the Japanese yen has already fallen more than 7% this year against the dollar.
Meanwhile, the dollar is on track for solid quarterly gains after investors tempered their expectations of big interest rate cuts in light of strong economic data and the reluctance from central bankers.
Decoding China’s Neo-Colonist practices in Africa
China’s interest in the African continent has been decades in the making. The Asian giant’s increased economic activities in African countries have raised significant concerns about the nature of its engagements in the continent, with many analysts and civil society groups drawing attention to worrying trends in China’s engagements in the continent.
These concerns stem from Beijing’s tendencies of deploying neo-colonist measures such as self-interested economic engagements spanning from high-interest loan lending for development projects to one-sided trade activities among others. With China becoming Africa’s largest trading partner and with trade volumes reaching billions of dollars annually, the concerns raised by civil society groups are attempting to signal towards the onset of a larger China problem in the continent.
The ‘China problem’ throughout Africa
Beijing has over the years become the largest bilateral creditor to African countries by providing financial loans for developmental projects to over thirty African countries including Angola, Ethiopia, Kenya, Djibouti, Cameroon, Zambia and Republic of Congo amongst many others in recent years. These financial loans have led to the continent owing Chinese creditors over $93 billion dollars up until 2022 and is expected to reach an all-time high figure of around $153 billion in the upcoming years.
Moreover, in its expansionist quest, Beijing has also overtaken major financial institutions such as the World Bank, the IMF and other traditional creditors all together and is the world’s largest official creditor currently. The Asian giant also has an outstanding claim of more than 5% of the globe’s total GDP and more than a dozen under-developed and developing countries own finances of at least 20% of their GDPs to China.
Under the pretext of developmental projects, China has masqueraded their economic assistance to nations that have been financially volatile due to various reasons. For instance, countries like Zambia, Congo, Ethiopia, Kenya amongst others have been pushed in to economic crisis more so due to high interested loans that have been granted by China’s developmental banks. The practice of ‘hidden debts’ in loan agreements has also caused major setbacks to volatile economies in Africa.
The BRI project alone has caused lower and middle-income countries with hidden debts amounting to around $385 billion until 2020 and is expected to far exceed the figure in the coming years. The Chinese side on its part has gone on record to demand for strict discretion on details of MoU’s that have been signed. This has subsequently left very little room for manoeuvring for these volatile economies in the continent subjecting them to be left at the behest of Chinese authorities.
The case of Kenya and Zambia as reminders for the African continent
In 2022, protests broke out in Kenya due to the economic turmoil caused by the high indebtedness to Chinese lenders, with protesters calling for greater transparency in contract details of MoU’s signed with Chinese authorities over the period of five years. Up until last year, Beijing-based companies as well as the Chinese government amounted for around a third of Kenya’s debt overall debt.
The protests in the African country forced the government to release partial details of the loan agreements which brought out the true imperialistic tendencies showcased by Chinese firms as well as the government. According to the contract details released by Kenya’s Transport department the details pertained to one of Kenya’s most ambitious projects taken under China’s behest – The Standard Guage Railway initiative. The project during its inception was agreed to be paid by the Exim Bank of China, in addition to the loans granted by the Exim Bank.
The Kenyan government had previously declared in 2020, that it had financial dues amounting to over 38 billion shillings to Afristar, a Chinese owned firm for the same project. This took the overall borrowing for the railway project above and over to 420 billion shillings from China.
In the released details it was also revealed that the Kenyan government was bound by the terms of the contract to keep the details secretive even though unfavourable terms had been agreed upon in the MoU. Until the details were made public, observers noted that Chinese contracts with developing countries usually included clauses in which borrower countries were mandated to prioritize repayments to Chinese state-owned firms over its other borrowings.
The contract details also stated that the SGR deal was a twenty-year-old loan with a seven-year grace period, in which Kenya was to repay within 13 years. Within this, at least 42% of the revenue generated from the project was to be used for repayment of the loans leading to the Kenyan government receiving no monetary benefit for a period of at least twenty years up until the Chinese loans were paid off.
The Zambian government too, faced a similar situation leading to political upheaval in the country due to excessive Chinese borrowings. The southern African country has currently sustained excessive debts most of which have been provided by Chinese developmental banks for white elephant projects that has generated under-performing revenues as compared to the cost of construction induced within them.
These excessive loans have now led to the Zambian government pleading its creditors for financial restructuring in debt agreements. Moreover, this had also led to the government cancelling around $1.6 billion worth of undisbursed loans form Chinese lenders causing a further halt to infrastructural projects across the country. Ironically however, China has refused to restructure debt repayments and has on the contrary secured itself guarantees from the Zambian government mandating the country to disburse its repayments first.
These preconditions have also hampered Zambia’s efforts in securing debt relief from its other creditors who have accused Beijing of sabotaging Zambia’s volatile economy in lieu for its own guarantees.
These examples serve as an important reminder to China’s sinister tendencies of colonizing the African continent through neo-imperialistic means. Under the pretext of development, Beijing has deployed all possible colonizing strategies to influence economic outcomes in different countries in the continent with many such countries now having to focus on repayments to China instead of crafting strategies for economic revival.
In light of such detrimental Chinese practices, it far more important and of urgency that other countries learn from the examples of despair faced by its fellow African nations before China comes knocking with excessive financial resources on their own doorsteps.
Hence a collective strategy must be undertaken by all African countries that see themselves under Chinese debt, for they may be Beijing next target.
Source: PML Daily
Jacob Zuma barred from running in election
The former president has been expelled from the ruling ANC and has been campaigning for the newly formed MK party. An MK spokesman said the party will appeal the decision made by the Independent Electoral Commission.
Former South African President Jacob Zuma has been disqualified from running in the country's general elections in May.
The Independent Electoral Commission (IEC) said on Thursday he was one of eight candidates who faced official objections.
"In the case of former president Zuma, yes, we did receive an objection, which has been upheld," IEC chairperson Mosotho Moepya said at a media briefing.
The IEC disqualified him over his 2021 conviction and jailing for contempt of court.
Increasing tensions in the run-up to the polls
Zuma, who led the country from 2009 to 2018 until his removal amid wide-ranging allegations of corruption, parted ways with the ruling African National Congress in December and is now leading the newly formed uMkhonto weSizwe Party (MK).
MK spokesman Nhlamulo Ndlhela told the AFP news agency the party " of course will appeal" the IEC's decision.
Some of the party's leaders have previously threatened violence if Zuma was barred from contesting the elections.
Seperately the ANC has launched a legal challenge against Zuma's party, disputing its use of the name and trademark of the dissolved organization.
The MK party is named after the former military wing of the ANC, which was disbanded at the end of apartheid.
MK party can still compete in the vote
The IEC's decision does not prevent the MK party from taking part in the May 29 poll.
It is widely expected to be the most competitive vote since the advent of democracy in South Africa in 1994.
According to recent polls, the ANC may dip below 50% of the national vote for the first time since it came into power.
Zuma's popularity has helped the MK Party gain traction ahead of the upcoming polls, particularly in his home province of KwaZulu-Natal.
45 dead in South Africa bus crash, 8-year-old girl only survivor
Local transportation authority says bus was carrying people to attend Easter weekend church service.
A bus carrying 46 people crashed over a bridge in South Africa, killing everyone on board except an 8-year-old girl, local officials said Thursday.
The accident happened on the Mma Matlakala Bridge between Marken and Mokopane, in the northern province of Limpopo, roughly 320 kilometres north of Johannesburg.
The Limpopo Department of Transportation and Community Safety said, in a statement posted on Facebook, the bus was believed to be carrying people who were travelling to attend an Easter weekend church service in the town of Moira.
According to the statement, it's believe the bus lost control and went over the side of the bridge and plummeted 50 metres below onto a rocky surface and caught on fire.
The child who survived the accident was transported to a nearby hospital to be treated, but details of her condition are unclear.
The bus was registered in the neighbouring country of Botswana, the department said, and officials are working to confirm the citizenship of the victims.
The statement went on to say "some bodies were burned beyond recognition," while others were either trapped in wreckage or scattered nearby.
Source: CBC
World's most expensive cow sold for $4.3 million in Brazil
A Nelore cow named Mara Emovis set a world record in 2023 by selling for an astonishing $4.3 million at an auction in Brazil
Nelore cattle, known for their resilience in hot climates, efficient metabolism, and adaptability to harsh conditions, are highly prized for their genetic attributes and potential to improve the breed as a whole.
The record-breaking sale of Viatina-19 FIV Mara shows the importance of Nelore cattle in Brazil's beef industry and their ability to thrive in the country's challenging environment, making them a valuable asset for the future of the industry.
Turkey: Polls close in Erdogan's 'last election'
Analysts say local elections this Sunday are crucial for Turkey's opposition parties, which are under threat of being utterly sidelined by an increasingly authoritarian regime.
As millions of eligible voters headed to the polls to elect mayors in 81 Turkish cities and municipalities on March 31, it is a historic local election for one person in particular: President Recep Tayyip Erdogan, who has spoken of his "last election" before handing over responsibility to the next generation.
Turkey's constitution obliges Erdogan to step down in four years due to term limits. But an Erdogan loyalist in the Turkish parliament, former Justice Minister Bekir Bozdag, has long teased a constitutional amendment that would allow the head of state to run for another term. And the president's ultranationalist ally Devlet Bahceli has publicly pleaded with Erdogan, telling him: "You cannot leave the Turkish nation alone!"
Erdogan's AKP takes on Ekrem Imamoglu
Erdogan's political career gained momentum when he was elected mayor of Istanbul in 1994. But it was there, too, that the ruling Justice and Development Party (AKP) suffered a major defeat in 2019 local elections.
This year, it hopes to erase that embarrassment. A few weeks ago, Erdogan spoke of "five wasted years." In 2019, a united opposition achieved a historic victory after 25 years and succeeded in taking back 11 cities, including Istanbul and the Turkish capital, Ankara, from the AKP.
Many factors were responsible for the defeat of the ruling party, but one man in particular stood out: Ekrem Imamoglu from the Republican People's Party (CHP), who was elected mayor of Istanbul. His reelection or defeat on March 31 could determine the future of Turkey.
If Imamoglu wins, his chances of running for president in 2028 will significantly increase, predicted Berk Esen, a political scientist at Istanbul's Sabanci University. "In my opinion, Imamoglu is the best possible opposition candidate if Erdogan's power machine is to be beaten," he said.
Esen said Imamoglu has the necessary qualities to rally a majority. "He can win the votes of very different population groups. He has the potential to reach conservative, left-wing, Kurdish and even pro-Erdogan voters," he said.
Esen also pointed out that Imamoglu was positioning himself as a direct rival to the president on the campaign trail. "Imamoglu is using these elections to attack Erdogan directly," he said.
In Istanbul, AKP may benefit from divided opposition
But it won't be easy for the anti-AKP camp this Sunday. According to a survey by the Turkish ORC research institute, there are only 1.2 percentage points between Imamoglu and AKP candidate Murat Kurum in Istanbul. The job of Istanbul mayor is of paramount importance for the country as a whole: one-fifth of the Turkish population lives in the metropolitan Istanbul region, and half of Turkey's exports as well as 56% of its imports pass through the megacity.
In the 2023 presidential election, the opposition put forward a joint candidate to face Erdogan but fell short. This time, the three biggest opposition parties — the CHP, the nationalist Good Party (IYI) and the pro-Kurdish DEM — are all presenting their own candidates.
Esen explained that the united opposition front fell apart after Erdogan's victory in the 2023 presidential election, leading to a loss of trust among voters. "In view of this fragmentation and internal struggles among the opposition parties, there is a sense of hopelessness and disenchantment with politics," he said.
When Erdogan was elected mayor of Istanbul in 1994, it was despite the fact that he had received only around 25% of the vote. His four opponents received 22, 20, 15 and 12%. Today, many fear his party's candidate for Istanbul, Kurum, could likewise benefit from such a divided opposition.
Erdogan's opponents seem unmotivated, said Ulas Tol, director of the CORE Research Institute in Istanbul. "Until 2019, Erdogan's party ruled in the big cities and the opposition's ultimate goal was simply winning elections," he said. "Now, those who don't vote for Erdogan are either emotionally politicized to the extreme or turning away from politics altogether."
Erdogan wants to 'get rid of potential 2028 rivals'
These elections will show, "which direction the authoritarian system in Turkey could develop in the coming years," said political scientist Esen.
"Erdogan wants to use these elections to weaken, or completely get rid of potential 2028 rivals," he said. "If he succeeds, the Turkish opposition will be even less able to compete than it is today. The situation is perhaps not comparable with Russia but with Venezuela: elections are held there regularly, but the opposition has no chance of winning. That's why this election is so important for the [Turkish] opposition."
Italy is overtaking Germany as Europe's economic powerhouse
While Germany's economy is stalling, Italy is experiencing continued growth. But this has little to do with PM Giorgia Meloni's economic policies and everything to do with subsidies and new debt.
Mauro Congedo has been finding and renovating small architectural treasures with his brother and father for 25 years in Salento — a peninsula in the southeast of Italy that makes up the "heel" of the country.
The apartments and houses that Congedo restores in this rather remote region are now suddenly finding buyers from Germany and England. "Things are going well again," said the 50-year-old architect.
During the coronavirus pandemic, business almost came to a standstill. But what happened afterward in Italy in the industry was "crazy" he says, dragging out the "a" for a long time. But look deeper and Congedo isn't the only one enthusiastic about the economic recovery in Italy.
Italy goes from problem child to head of the class
While governments in Rome were used to announcing depressing growth forecasts and poor debt rankings in the years before the pandemic, the country is now quickly becoming Europe's growth engine.
In the last quarter, the Italian economy grew by 0.6%, while the German economy shrunk by 0.3% in the same period. Beyond this short three-month snapshot, other figures for Europe's third-largest economy are impressive.
"The Italian economy has grown by 3.8% since 2019," said Jörg Krämer, chief economist at Commerzbank. That is "twice as much as the French economy and five times more than the German economy," he told DW.
In Germany, the prospects are indeed looking bleak. The Organization for Economic Cooperation and Development (OECD) predicts growth of 0.3% this year for Germany. Leading German experts are only expecting growth of 0.1%. Italy, on the other hand, is expected to grow by 0.7% this year, according to the OECD.
The Italian stock market is also benefiting from the optimistic mood. The FTSE MIB benchmark index, which is made up of 40 big companies, rose by around 28% last year, more than any other European stock market indices. Italy is on track for more growth.
Trust in the Italian government is returning
It didn't always look so encouraging. Economists initially reacted very cautiously when Giorgia Meloni became prime minister in October 2022. During the election campaign, Meloni and her Brothers of Italy party announced a nationalist "Made in Italy" economic course, agitated against migrants and did not clearly distance herself from Russia.
After her election, the German weekly Stern described her as the "most dangerous woman in Europe." But in terms of economic policy, Meloni has so far largely remained on the same course as her predecessor Mario Draghi. This course is paying off for Italy, at least on the bond market. The interest rate at which the county borrows money is back to the level before she took office.
At a press conference earlier this year, Meloni tried to take credit for the economic upswing. Above all, the lack of political stability in the past had slowed the economy she said, speaking from a position firmly in the saddle.
But how much of the growth is down to Meloni's success?
"Not much," said Krämer from Commerzbank. "The strong growth can be explained by Italy's loose fiscal policy." That means Italy's growth is based primarily on new debt. While the Italian state's new debt before COVID-19 was 1.5% of gross domestic product (GDP), it has shot up in recent years and was 8.3% of GDP in the first half of 2023.
The country's overall mountain of debt is growing, too. In January, the EU Commission estimated that it would exceed 140% of GDP this year and continue to rise in 2025. For comparison, in Germany the debt ratio is 66%, in France it is almost 100%.
Huge construction subsidies inject the economy
To help the economy, the Italian state has been funding various home renovation measures since the end of 2020. For some measures they pay around 50% of the cost, others get even more. The most popular is called the "Superbonus 110" for energy-efficient renovations.
Through this program anyone who renovates their house or apartment to make it more energy-efficient will get the entire expenses plus a 10% refund on top through a tax reduction scheme.
"You can imagine that construction investments have skyrocketed," said economist and Italy expert Krämer. "This effect explains two-thirds of the strong growth we are seeing."
The architect Mauro Congedo is not overly enthusiastic about the Superbonus 110 program. Everything has become more expensive. On top of inflation, the program drove up the costs of materials and workers.
"If the state pays for everything, then people don't care how much it costs," said Congedo. In addition, no one controls the prices. Construction companies from Naples, Bari and the provincial capital Lecce asked him several times to adjust his costs upward. "They wanted me to charge twice as much. I didn't do it. It feels like stealing," he said.
He thinks a bonus for the energy-efficient renovation of buildings is a good thing in general. However, owners should have to contribute to the costs and not just get it all from the government. Congedo doesn't think much about Giorgia Meloni either. The only good thing she did was get the Superbonus 110 program under control, he says.
Money from the European Union
In fact, the ultra-right head of government has slowed down the Superbonus program introduced by the left-wing Five Star Movement. In 2023, it covered a maximum 70% of costs and this year up to 65% of the renovation costs.
Nevertheless, the tax credits resulting from the program will significantly reduce government revenue in the next few years. For the government in Rome it is probably very convenient that billions are still flowing — primarily from Brussels. Italy is one of the biggest recipients of the EU's COVID recovery fund.
By 2026, almost €200 billion ($216 billion) will be paid out to Italy in the form of subsidies and loans. "The Italian state must reduce its very high budget deficit by this time at the latest," said Krämer. "If they only start saving then, then this Italian growth miracle will probably end because they didn't use the time for structural reforms."
Mauro Congedo is worried that remnants of the Superbonus 110 program will remain for a long time. "The prices are very high, and we have incurred a lot of debt."
Luckily, he won't run out of work anytime soon. He's currently working on eight projects at the same time.
