Category: Economy

Officials report that in a bid to buy food and medicine, Sri Lanka has received a $1bn credit line from India, meanwhile, IMF announces that it will consider a possible bailout.

On Thursday, Treasury Secretary Sajith Attygalle told reporters in Colombo that India and Sri Lanka have formally entered into the credit agreement during finance minister Basil Rajapaksa’s visit to New Delhi.

India’s foreign minister Mr S. Jaishankar said on Twitter, “India stands with Sri Lanka. the US $1 billion credit line signed for the supply of essential commodities”.

Meanwhile, IMF spokesman Gerry Rice said in a statement to reporters in the capital, “We will discuss with the authorities how best we can assist Sri Lanka going forward”. He also said that IMF has highlighted the urgent need for Sri Lanka to implement a “credible and coherent strategy to restore macroeconomic stability and debt sustainability”.

The country is suffering from its worst economic crisis since its independence in 1948. It is facing a crippling shortage of essentials and fears that it will default on its foreign debt or might ask the bondholder to take a “haircut” on repayments.

Recently, a $500 million loan was provided by the Indian credit line to help Sri Lanka buy oil.

In an attempt to boost Britain’s domestic energy security, UK Prime Minister Boris Johnson looks to nuclear and wind energy following Russia’s invasion of Ukraine.

On Monday, PM will meet the leader from the nuclear industry to discuss how to speed up the progress of new projects. The premier of Britain is also scheduled to speak with CEOs from the wind sector soon.

Mr Johnson had banned the import of Russian oil by the end of the year and the cabinet is also looking forward to halting imports of Russian gas by the end of the year.

Since Russia’s war with Ukraine, which caused prices to spike and exacerbated the cost-of-living crisis in the UK, Mr Johnson has prioritized developing alternative energy sources beyond imported oil and gas.

PM’s other goal is to boost domestic oil and gas production in Britain. A forum will be formed of oil and gas leaders to discuss investment conditions for energy companies operating in the North Sea which will be chaired by Treasury minister Helen Whateley.

However, it will take a month to publish the government’s full energy security strategy.

The central bank of Indonesia kept its policy rate unchanged, keeping an eye on global inflation and the consequences of the Ukrainian conflict.

According to the Indonesian Finance Minister Sri Mulyani Indrawati, As a result of Russia’s invasion of Ukraine, consumer prices are on the rise and relations between the world’s biggest economies are deteriorating, which may slow Indonesia’s recovery and undo decades of globalization that made the country a “clear winner”.

She added that record prices for coal and key minerals, including nickel, help fill Indonesia’s coffers just enough, for now, providing it with the resources it needs to fight inflation through limited subsidies and financial assistance.

On Thursday, the Bank of Indonesia kept the seven-day reserve repurchase rate at 3.5% which was predicted by all 29 economists in a survey. Since February 2021, the rate was at a record low.

Governor Perry Warjiyo said that the central bank will look through the current round of food and oil prices. He pointed out that In response to supply-driven pressures, fiscal interventions, such as subsidies and price controls, are more effective.

He said, “I need to emphasize that monetary policy responds to a fundamental increase in inflation which is seen in core inflation and we don’t respond directly to the increase in volatile food and administered price inflation”.

India and Japan have set an investment target of $42 billion (five trillion yen) in the next five years. The announcement came after the 14th annual summit meeting in New Delhi where several agreements were signed.

Both the nations discussed various regional issues including the situation at the Line of Actual Control (LAC) with China, PLA’s attempts at “multiple transgression” on the LAC. The situations were briefed by PM Narendra Modi to PM Fumio Kishida.

According to foreign secretary Harsh Shringla, any normalcy in the India-China relationship will depend on the progress on the LAC de-escalation talks which indicates the proposed visit of Chinese Foreign Minister Wang Yi will focus on.

India-Japan also exchanged six agreements on cybersecurity, waste-water management, economic partnership, urban development, clean energy partnership and an agreement on promoting bamboo-based products from the northeast region.

Since 2018, this was the first India-Japan annual summit that was postponed due to protest against the Citizenship (Amendment) Act and the pandemic.

On the issue of the Russia-Ukraine conflict, a visible difference was seen between both PMs. Mr Kishida was emphasising that Russia’s actions must not be ‘condoned’. However, PM Modi made no direct reference to the situation of the Russia-Ukraine conflict.

On Wednesday, parliament was informed that the bilateral trade in goods will increase from $60 billion to $100 billion over the next five years after the free trade agreement is implemented.

The Comprehensive Economic Partnership Agreement (CEPA) between India and the United Arab Emirates (UAE) was signed during the India-UAE Virtual Summit on February 18.

In a written reply to the Lok Sabha, Minister of State for Commerce and Industry Anupriya Patel said the India-UAE CEPA is a comprehensive and balanced partnership agreement that will give India enhanced market access for both goods and services.

According to her, the UAE has offered immediate market access at zero duties for India’s exports to the UAE that account for 90 per cent of the value of its exports to the UAE.

In her other reply, she said there is no shortage of coal supply from sources of Coal India Limited (CIL) to tea gardens in the northeastern region

She added, “CIL has provided coal supplies to the tune of 618.70 million tonnes (MT) during the current fiscal (up to March 9, 2011) in comparison to 531.4MT supplied during the same period last year, thereby achieving a growth of about 16.4%”.

In terms of trade in services, the UAE has granted India access to 111 sub-sectors from its 11 broad service sectors.

To reduce the dependency on Russian gas post-invasion on Ukraine, France is in talks with Spain to construct a gas pipeline connecting the two countries.

The French ambassador in Madrid, Jean-Michel Casa, said that France has long refused Spanish calls to build the link but is now ready to discuss the feasibility of the Midcat pipeline if Madrid officially requests it.

Casa said, “Now that the underlying situation has changed, is it necessary to talk about Midcat? Let’s talk”.

Both energy regulators in Spain and Portugal rejected the investment proposal for a central section of the Midcat line crossing the Pyrenees in 2019. This disappointed leaders in Spain and Portugal who had been pushing the project for years to strengthen energy links with the rest of Europe.

Spanish Prime Minister Pedro Sanchez is scheduled to visit Paris. He will be meeting France President Emmanuel Macron to discuss the gas pipeline matter.

The construction of the pipeline will help Europe drift away from Russian gas and provide them access to Algerian gas. This will also boost liquefy natural gas imports via Spain. Around a quarter of Europe’s regasification capacity is in Spain

In the future, the pipeline can also be helpful to facilitate other types of fuels like hydrogen to flow through it.

A package worth €2 billion (S$3 billion) has been announced by the French government to assist consumers suffering from high fuel prices. The price at the pump is expected to drop.

On Saturday (March 12), French Prime Minister Jean Castex announced that petrol and diesel prices would be lowered by 15 centimes per litre.

The state will be reimbursing gas station owners for the difference when vehicle owners pay. Petrol prices have risen to over 2 euros per litre in some areas, putting pressure on the government to reduce the impact on households.

A lot of the price at the pump is taxed, which is why it is also being pressured to cut fuel taxes ahead of the presidential elections next month.

Mr Castex said, “That means every time you fill up for 60 euros, you save around 9 euros”.

Due to strong global demand and Russian aggression in Ukraine, petrol and diesel prices have grown by around 30 per cent since March.

Emmanuel Macron’s government announced a cap on gas prices until the end of 2022 and handed out checks to help poor families pay their energy bills.

South Korea chose Suk-yeol as the country’s next president following a tightly-contested race. He is a conservative opposition candidate who edged out his victory over the Democratic Party’s Lee Jae-Myung.

Both the candidates were counted as widely unpopular throughout the campaign. According to the analyst, voters appeared disenchanted by the frontrunners that the local media dubbed the vote “election of the unfavourable”.

Mr Yoon, a political novice promised to tackle class inequality and called his win a “victory of the great South Korean people”. However, the results are said to be closest in history with the final count separated by less than 1%.

On Thursday, Yoon told his supporters that he would “pay attention to people’s livelihoods, provide warm welfare services to the needy, and make utmost efforts so that our country serves as a proud, responsible member of the international community and the free world”.

Concerns among voters included skyrocketing house prices, stagnant economic growth, stubborn youth unemployment, and gender inequality.

A central pledge of Mr Yoon’s campaign was the abolishment of the Ministry of Gender Equality and Family.

Around 0.2% of the Ministry’s annual budget is spent on family-related services, education, and social welfare for children – less than 3% of which goes to the promotion of equality for women.

On Monday, Tata Sons chief Natarajan Chandrasekaran is appointed as the new chairman of Air India. The board cleared his appointment last week.

The development comes days after Ilker Ayci, former chairman of Turkish Airlines, declined an offer from the Tata Group to lead Air India as its CEO and Managing Director. However, the reason for Ayci rejection of the post was not revealed.

Chandrasekaran started his career as a software programmer in 1987. When he was 46, he took over as head of the Tata group and was one of the group’s youngest CEOs. In 2016, he joined the Tata Sons board and in 2017, he became chairman.

The 58-year-old was a chairman of Tata Consultancy Services before taking the position in Tata Sons and third non-Tata after Nowroji Saklatwala and Cyrus Mistry to hold such an enviable position.

Following 69 years of state ownership, Tata group bought back the airline last year in a $2.4 billion equity and debt deal. In India, there are four separate airlines operated by the Tata group, which has been seeking to reform the top management of Air India in an effort to revive the ailing carrier.

On Friday, India and Canada finally agreed to step up talks to consider a free trade agreement between both countries to boost trade in goods and services along with an early harvest deal.

The official statement issued by the commerce minister said, “The Interim Agreement would include high-level commitments ion goods, services, rules of origin, sanitary and phytosanitary measures, technical barriers, and dispute settlement, and may also cover any areas mutually agreed upon”.

The negotiation for India-Canada Comprehensive Economic Partnership Agreement (CEPA) will formally be launched by Commerce minister Piyush Goyal and Canadian Minister for international trade Mary Ng. An interim agreement or early Progress Trade Agreement (EPTA) is also to be considered that will expedite the mutual commercial gains. In New Delhi, the fifth Ministerial Dialogue on Trade & Investment (MDTI) was held on Friday.

As part of the agreement, the two countries have also agreed to intensify efforts regarding Canadian pest risk management in pulses and Indian market access for agricultural products such as sweet corn, baby corn, and bananas. Sectors like pharmaceuticals and critical and rare earth minerals among others were also emphasised to enhance the cooperation between the nations.