Category: Economy

On Tuesday, the United Nations launched its biggest appeal ever for $5 billion. This appeal is made to aid 22 million Afghans by preventing them from ‘catastrophe’. The nation is currently on the brink of a humanitarian crisis along with economic collapse.

Martin Griffiths, UN humanitarian chief calls this “the largest ever appeal”. It said that it was “encouraging” as there is a high degree of consensus for the increasingly desperate needs of the people of Afghan.

The United Nations has announced a pledge conference to follow the appeal. There were indications that other mostly Western nations will provide funding, including another $308 million from the United States and $500,000 from Israel.

During the meeting, Nasir Ahmad Andisha, Afghanistan’s ambassador to Geneva who represents the former government and still holds U.N. recognition, stated that “Afghanistan is experiencing the most severe humanitarian crisis in its modern history, perhaps the worst in the world.” He accused the Taliban of target killing, enforced disappearance, and other rights abuses.

Approximately there are 5.7 million residents take shelter in five neighboring countries as refugees. Initially, the Taliban has promised tolerance and inclusiveness to women along with ethnic minorities. However, their actions towards renewed restriction on women and the all-men government have met dismay by the international community.

On Jan 8, during a telephonic conversation between Indian Foreign Minister S Jaishankar and his counterpart Iran’s Amir-Abdollahian, a partnership offer was made. Both nations agreed to supply humanitarian aid to Afghanistan that will include wheat, the COVID vaccines, and medicines.

Various bilateral regional and international concerns were discussed by Abdollahian and Jaishankar including Afghanistan’s current situation. The importance of forming an inclusive administration in Afghanistan was emphasized during the call. Iran’s Chabahar port usage was also discussed where India operates a major terminal.

India wishes to supply aid to Afghanistan through Iran’s Chabahar port that is located in the Sistan-Balochistan province on Iran’s southern coast. After the Taliban’s takeover of Afghanistan, non-humanitarian financing was frozen by the major donors. This caused a severe economic crisis which exacerbated the humanitarian disaster.

Pakistan has created obstacles for the Indian government to transport 50,000 tonnes of wheat to Afghanistan which is currently experiencing a severe humanitarian crisis. On Dec 11, India donated 1.6 tonnes of medications to Kabul through the special charter plane. On Jan 7, two tonnes of life-saving medicines were also transported by India via Dubai.

Currently having no direct flights between India and Afghanistan, on January 1, the Indian government provided 50,000 doses of the Covid-19 vaccine via Tehran.

On Sunday, Sri Lankan President Gotabaya Rajapaksa request the Chinese government to help South Asian countries weather a worsening financial crisis to help restructure debt repayments. During a meeting with the Chinese Foreign Minister Wang Yi, Rajapaksa made the request in Colombo.

According to reports by analysts, despite benefiting from billions of dollars in soft loans for China, the island nation is facing a foreign exchange crisis. It is currently placing the nation on the verge of default. Behind international financial markets and Asian Development Bank (ABD and Japan, China is the fourth biggest lender to Sri Lanka.

China has lent more than $5billion over the last decade to Sri Lanka for building ports, highways, a coal power plant, and an airport. According to the critics, the funds were used for white elephant projects with low returns. However, China has denied such allegations.

In the official statement, Rajapaksa said, “the president pointed out that it would be a great relief to the country if attention could be paid on restructuring the debt repayments as a solution to the economic crisis that has arisen in the face of the COVID-19 pandemic”. To which Beijing’s foreign ministry spokesman Wang Wenbin said, “China has always helped Sri Lanka develop its economy as best as we can and we will continue to do so in future”.

Sri Lanka has been struggling with its economy since the outbreak of the Covid-19 pandemic. Presently, it is on the brink of bankruptcy and is going through a major financial and humanitarian crisis. The high inflation, increase in food prices, and unemployment, is soared up with the increasing number of Covid-19 cases across the globe. 

According to a British newspaper ‘Guardian’, the country is on a heavy debt of $7.3 billion loan both domestic and foreign which it has to repay within 12 months. A $500 million international sovereign bond repayment is due in January itself. As far as the current economic status is confirmed, they certainly do not have enough to cover their debts as in November, their available foreign exchange currency reserves were just $1.6 billion. The loss of tourism and increase in unemployment in the tourism sector which accounted for 10 percent of the GDP of the country suffered heavily due to the Covid-19 pandemic which halted major operations all over the globe. 

The President of Sri Lanka Gotabaya Rajapaksha in his New Year’s address speech expressed some hope in reviving the cash-strapped economy, but he did not mention how the government would tackle the mounting foreign debts and foreign exchange crisis.   

Singapore’s economy outdid itself in 2021 by showing the highest economic growth in more than a decade. It has shown the steadiest growth despite the recessions followed by the COVID-19 pandemic that hard-hit country’s economy in the previous year. The recession that it faced a year before was the worst one of its entire lifetime, but it grew out of it most efficiently with showing almost 7.9% growth in its economy in 2021.

The Ministry of Trade and Industry said that the country witnessed a sharp rise of 7.2% in its economy in 2021, which is the highest since 2010 and even higher than earlier estimates. In the fourth quarter of 2022, the economy of Singapore inflated by 5.9 percent on a year-to-year basis which moderated from a 7.1 percent growth in the previous quarter which increased due to the low base comparison.

The manufacturing sector witnessed the largest growth in the last quarter of 2021 with a profit of 14 percent year on year, almost double the profit of 7.9 percent witnessed in the previous quarter. The Prime Minister of Singapore Lee Hsien Loong, in his New Year’s address speech, also announced that the economy of Singapore is expected to further grow by 3 percent to 5 percent in 2022.        

India on Wednesday welcomed Egypt’s entry as the fourth new member of the New Development Bank (NDB) that was established by the BRICS countries six years ago.

The NDB admitted Bangladesh, United Arab Emirates (UAE) and Uruguay as its new members in September. External Affairs Ministry Spokesperson Arindam Bagchi said that expansion of the membership by the NDB will help it position as a premier development institution for emerging economies.

The BRICS (Brazil-Russia-India-China-South Africa) set up the bank with an aim to mobilise resources for infrastructure and sustainable development projects in emerging economies.

Marcos Troyjo, President of NDB said that they are delighted to welcome Egypt into NDB’s family. Egypt is one of the world’s fastest-growing countries, a major economy in the African continent and the Middle East region as well as a key player in development finance institutions. NDB looks forward to supporting its investment needs in infrastructure and sustainable development, he added.

Mohamed Maait, Minister of Finance of Egypt said that Egypt fully embraces the decision to join the NDB family and looks forward to building a strong partnership and engagement with the bank over the coming years.

India’s Foreign Secretary Harsh Vardhan Shringla has confirmed that India and Russia signed 28 investment pacts on Monday, which includes agreements on steel, shipbuilding, coal and energy. India has also begun to receive S-400 missiles from Russia this month.

Shringla described the summit talks between Prime Minister Narendra Modi and Russian President Vladimir Putin as “highly productive”. He said 28 agreements were concluded which includes increased mutual cooperation to combat threats like terrorism.

Asked if India raised the issue of the eastern Ladakh standoff with Russia, Mr. Shringla, without giving a specific answer, said that all concerns relating to India’s security were discussed.

The Russian President said that they perceive India as a great power, a friendly nation, and a time-tested friend. Mr. Putin further said that the relations between the two nations are growing, and that they cooperate in the military sphere like no other country.

Mr. Putin arrived in India on Monday and this is his only second work trip outside Russia since the outbreak of Covid19. This was the first in-person meeting between the Indian and Russian Prime Minister after their meeting on the sidelines of the BRICS summit in Brazil in November 2019.

As per the Lowy Institute Asia Power Index 2021, India has been ranked as the fourth most powerful country in Asia. And the report adds that India could have ranked even better if Covid19 didn’t happen.

The country performs best in the future resources measure, where it finishes only behind the United States and China. However, the lost growth potential for Asia’s third-largest economy is largely due to the impact of the coronavirus pandemic that has led to a diminished economic forecast for 2030, the report says.

India’s overall score declined by two points compared to 2020. It is one of eighteen countries in the region to trend downward in its overall score this year.

Further, India has slipped into 8th position for economic relationships measure. The report says that India lags in economic diplomacy.

The top 10 countries for overall power in the Asia-Pacific region are the US, China, Japan, India, Russia, Australia, South Korea, Singapore, Indonesia and Thailand, Lowy Institute said.

The annual Asia Power Index was launched by the Lowy Institute back in the year 2018. It measures resources and influence to assess the relative power of states in Asia. 26 countries and territories are ranked in terms of what they have and how they use it.

Due to the dangers of the quickly spreading Omicron variant of Covid19, the International Monetary Fund (IMF) is likely to lower its global economic growth estimates, the global lender’s chief said at the Reuters Next conference on Friday.

After being first reported in South Africa in the last week of November, Omicron has spread rapidly to at least 40 countries, including India.

IMF Managing Director Kristalina Georgieva told the conference that a rapidly spreading variant can dent confidence, and in that sense, the monetary fund is likely to see some downgrades of its October projections for global growth.

Most of Europe and the US is still grappling with a wave of infections caused by the Delta variant. The new strain will only destabilise the economies. While the Delta variant still accounts for 99.9% of the 90,000 to 100,000 new cases of Covid cases daily in the US, Omicron has also reached about one-third of US states.

As of now, there is no strong word on the severity of the virus, but it has been understood that it is highly transmissible. Some countries have imposed Covid restrictions again, which include no entry of foreigners into their land without a negative pre-departure RT-PCR report, or a week-long isolation post arrival.

As per the latest development, India and the United States have reached a settlement on 2 per cent equalisation levy or the ‘Google Tax’, which is imposed by India on e-commerce operators. The agreement is similar to the Unilateral Measures Compromise reached among the UK, Austria, France, Italy and Spain with the US last month.

As per the settlement, India shall continue to impose the google tax till the implementation of Pillar One or till 31st March 2024. The US, on the other hand, will discontinue the trade tariff actions it had announced in reply to the levy.

The Finance Ministry has released a statement in which it has said that India and the United States will remain in close contact to ensure there is a common understanding of the respective commitments and any further differences of views will be resolved through constructive dialogue.

With this agreement, India and the United States joined 134 members in the framework of the Organization for Economic Co-operation and Development (OECD) to reach an agreement on parity tax.

The solution proposed under the OECD BEPS (Base Erosion and Profit Shifting) framework has two pillars. Pillar 1 deals with reallocating an additional share of the profit to the market areas where the users are. Pillar 2 concerns a global minimum tax of 15 per cent. It is estimated that $150 billion in additional tax revenue should be mobilized under the second pillar.

The final terms of the agreement will be finalised by 1st February 2022.