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BUSINESS BUSINESS
Oil back at early
April highs as
demand shows
signs of picking up
REUTERS — LONDON
Oil prices touched a one-and-
a-half month high yesterday
amid signs demand for crude
was picking up, with China
reporting increased refinery
runs and rounding out a week
of bullish news on the supply
front.
West Texas Intermediate
(WTI) oil was up $1.06, or 3.85
percent, at $28.62 a barrel at
1347 GMT, after reaching
$28.89, its highest since early
April. WTI jumped 9 percent in
the previous session.
Brent crude was up 59
cents, or 1.9 percent at $31.72 a
barrel, after touching $32.50,
the highest since April 13. Brent
rose nearly 7 percent on
Thursday.
Both contracts are on track
for a third consecutive week of
gains.
“Further signs of demand
recovery together with deep-
ening production cuts from
Opec+ as well as shut-ins and
natural declines by non-Opec+
is helping oil prices to recover,”
Bjarne Schieldrop, chief SEB
commodities analyst, said.
Amid supply cuts by the
Organization of the Petroleum
Exporting Countries (Opec) and
other major producers, bright
spots are also emerging on the
demand side. Data released on
Friday showed China’s daily
crude oil use rebounded in
April as refineries ramped up
operations.
The market mood remains
less than euphoric, though,
with the coronavirus pandemic
far from over and new clusters
emerging in some countries
where lockdowns have been
eased.
“Oil prices have been up
significantly since yesterday
thanks to a better assessment
of the situation by the Interna-
tional Energy Agency (IEA),”
Commerzbank said in a note.
The IEA expects global
Canary Wharf is ready for banks to return, but the banks aren’t
BLOOMBERG
Canary Wharf Group Plc has
drawn up detailed plans to
allow bankers to return to the
east London financial district.
So far, few are rushing to come
back.
The landlord says returning
workers can expect one-way
entrances and no more than six
in an elevator across the
estate’s skyscrapers and stores.
The European headquarters of
banks including HSBC Holdings
Plc, Barclays Plc and JPMorgan
Chase & Co. have stayed open
amid the pandemic, with just
a few thousand essential
workers keeping things
Further signs of
demand recovery
together with
deepening production
cuts from Opec+ as
well as shut-ins and
natural declines by
non-Opec+ is helping
oil prices to recover.”
crude inventories to fall by
about 5.5 million barrels per
day (bpd) in the second half of
this year.
It also expects oil demand
this year to fall by 8.6 million
bpd, which is a smaller decline
- by 690,000 bpd - than it
forecast last month. It expects
non-Opec supply to fall by 3.2
million bpd.
Barclays raised its forecasts
for Brent and WTI by $5-$6 a
barrel for 2020 and by $16 a
barrel for 2021. It now sees
Brent prices averaging $37 a
barrel and WTI at $33 this year.
For 2021, the bank expects
Brent and WTI prices to
average $53 and $50 per barrel,
respectively.
“The sheer size and speed
of the disruption and asso-
ciated inventory overhang will
take time to get fully absorbed,
in our view,” Barclays analyst
Amarpreet Singh said in a note.
Meanwhile US crude inven-
tories fell unexpectedly for the
first time since January, the
Energy Information Adminis-
tration said on Wednesday.
On the production side,
record cuts of nearly 10 million
bpd by Opec and associated
producers - collectively known
as Opec+ - have kicked in for
May and June, with producers
some producers pledging to cut
beyond their commitments.
running across the district.
But as the government
starts easing restrictions on
returning to work, the Brook-
field Asset Management and
Qatar-owned landlord faces a
conundrum: how to get
125,000 workers back while
maintaining the appropriate
social distancing required to
avoid a second wave of
Covid-19 infections.
“Some tenants are going to
wait as long as possible before
asking people to return, we
have a plan to accommodate
between 10 percent and 20
percent in the first wave,”
Howard Dawber, managing
director of strategy at Canary
B | 02
Lebanon says
ready to float
pound only after
po
aid secured
SATURDAY 16 MAY 2020
Factory launch
Head of the Ile de France regional council Valerie Pecresse (left) and Chinese businessman Hsueh
Sheng Wang (right) give a press conference at the launch of a factory producing protective face
masks in Le Blanc-Mesnil, north of Paris.
UK govt in £1.6bn bailout of
London transport system
AFP _ LONDON
The British government will
pump £1.6bn into London’s
public transport system to
restore services and help
prevent overcrowding as
people return to work, operator
Transport for London (TfL) said
yesterday.
London Mayor Sadiq Khan
(pictured) is now expected to
restore full bus and train
services, having warned they
would be cut further without
emergency state support, owing
to the coronavirus epidemic.
But he criticised the gov-
ernment, which will obtain
control for the period of the
bailout, because of likely fare
increases to offset losses
incurred during the lockdown.
He accused the Department
for Transport of “making
ordinary Londoners pay the
cost for doing the right thing on
COVID-19”.
TfL informed the London
Stock Exchange yesterday that
“an extraordinary funding and
A distant view of Canary Wharf
Wharf Group, said by telephone.
“We have seen a few hundred
BUSINESS | 03
Indonesia to
impose VAT on
streaming, other
digital services
financing support package has
been agreed between TfL and
the Department for Transport
to contribute towards TfL’s
forecast funding shortfall.
“The funding package is
based on the assumption that
the funding shortfall will be £1.6
billon ($1.95 billion, 1.8 billion
euros) for the period 1 April
2020 to 17 October 2020.” TfL
has seen a 90-percent drop in
revenue from ticket sales
during the seven-week coro-
navirus lockdown as passenger
numbers slumped.
It has been paying the
extra people coming in since
Monday.” The pandemic has
Currency TT Rate Currency
QAR/INR : 20.50 QAR/PHP
EUR/QAR : 4.16 GBP/QAR
CHF/QAR : 4.03 SGD/QAR
MAIN BRANCH LULU HYPER MARKET
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MATAR QADEEM MANSOURA - AL MEERA
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alzamanexchange
£600m monthly operating bill
from cash reserves but said the
situation was no longer sus-
tainable.Khan on Thursday
warned that without gov-
ernment funding, bus and Tube
services would have to be cut
to save money, as TfL tried to
balance its books.
The government is urging
people who cannot work from
home to return to work in an
easing of stay-at-home
measures, while also calling for
people to avoid public transport
if possible.
The deal comprises a
£1.095bn grant and a £505m loan,
with the potential for £300m
more if there is still a shortfall. TfL
is a local government body
responsible for the capital’s
transport system, and comes
under Khan’s responsibilities.
Khan has warned com-
muters to expect an above-
inflation one-percent rise in
fares, after the DfT made
several caveats “in order to
safeguard services in the
future”.
posed an existential threat for
landlords, raising questions
from bank bosses including
Morgan Stanley’s James Gorman
and Barclays’ Jes Staley about
how much office space they
need and accelerating a shift to
e-commerce. While short-term
social distancing could mean
more space is required to house
the same number of workers,
the sudden shift to home
working has proved surpris-
ingly smooth for many.
“Banks are looking at their
assets such as local offices and
branches which before
Covid-19 were seen as costs,”
said Paul Ford, founder of
Acin, a financial services
Your Global Remittance Partner
TT Rate Currency TT Rate Currency TT Rate
: 13.72 QAR/LKR : 51.07 QAR/BDT : 23.15
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SANAYYA (STREET 17) AL KHOR
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w w w. a l z a m a n exc h a n g e . co m 44441448
Virus pushes
Germany into
recession
AFP — BERLIN
The coronavirus pandemic has
tipped Germany into a
recession, official data showed
yesterday, with Europe’s top
economy suffering its steepest
quarterly contraction in more
than a decade as lockdown
measures began to bite.
The German economy
shrank by 2.2 percent in the
first quarter of 2020, federal
statistics agency Destatis said,
calling the quarter-on-quarter
decline “the worst since the
global financial crisis” in 2009.
The agency also revised its
gross domestic product (GDP)
figure for the final quarter of
2019 from zero growth to a
contraction of 0.1 percent. That
means Germany has now
experienced two consecutive
quarters of decline, meeting
the technical definition of a
recession.
The worst is yet to come
however, with economists
warning that the full impact
from the coronavirus restric-
tions will be felt more in the
second quarter.
Economy Minister Peter
Altmaier last month warned
that Germany was headed for
“the worst recession” in its
post-war history as the pan-
demic brought huge swathes
of the economy to a
standstill.
Like other European coun-
tries, Germany closed factories,
shops, schools and restaurants
from mid-March and asked
workers to stay at home to help
curb the outbreak.
The export-reliant power-
house was also hammered by
travel curbs and supply chain
shocks worldwide.
“Private consumption,
exports and investments in
equipment shrank consid-
erably as a result,” the German
economy ministry said in a
statement. State spending and
the construction industry were
the only growth drivers in the
first three months of the year.
“Two weeks of lockdown as
well as supply chain disruptions...
brought the German economy to
its knees,” noted ING-Diba econ-
omist Carsten Brzeski.
technology company. “Before
the pandemic, we had a trend
of big centralized offices to
favor interaction of people.
Covid-19 has driven an
extreme of fragmentation. We
won’t be back where we were
before.” The road back to
something resembling nor-
mality is looking long and
arduous.
Long-time Canary Wharf
tenant Credit Suisse Group AG
has a four-phase plan for
returning to its London offices.
That’s yet to begin, according
to a person familiar with the
matter, who asked not to be
identified because the details
are private.
02 BUSINESS
Lebanon says ready to float
pound only after aid secured
AFP — BEIRUT
Lebanon is ready to terminate
a 23-year-old dollar peg and
float the pound, but only after
it secures billions in aid, Finance
Minister Ghazi Wazni said
yesterday.
Speaking to AFP after talks
started Wednesday with the
International Monetary Fund
on a plan to rescue Lebanon’s
crisis hit economy, he also said
banking sector restructuring
would entail halving the
number of lenders.
Foreign exchange
shortages have in recent
months severely strained the
official rate of 1,507 to the
dollar, with the pound losing
well over half its black market
value to trade at considerably
beyond 4,000 against the
greenback.
“The IMF always asks for
the freeing of the pound’s
exchange rate,” Wazni said.
But “we need to change the
stabilisation policy to one of a
flexible exchange rate in a first
stage and for the foreseeable
future,” he said, referring to an
initial managed flotation.
“When we receive financial
support from abroad, we will
transition to flotation” dictated
by the market, he said.
“The Lebanese government
has asked for a transitional
period to pass through a
flexible exchange rate before
we reach flotation,” he added.
Wazni said the first phase
would involve a gradual
depreciation of the Lebanese
pound against the dollar, in
coordination with the central
Arab stock
markets plunge
almost 25% in
Q1: UN report
AFP — BEIRUT
Arab stock markets plunged
almost a quarter in value in
the first three months of 2020
due to the coronavirus
pandemic and the collapse in
oil prices, a UN agency said
Thursday.
“The drop in oil prices and
the COVID-19 pandemic
resulted in a 23-percent
average loss for major Arab
stock markets by the end of the
first quarter of 2020,” the Eco-
nomic and Social Commission
for Western Asia said.
The twin crises have “shat-
tered the stock market in Arab
countries, putting the per-
formance of financial markets
below the 2008-2009 col-
lapse”, ESCWA said in a report.
It said share price values of
the largest banks of the oil-rich
Arab states in the Gulf also
crashed by 25 percent in the
first quarter of this year.
ESCWA and the Union of
Arab Banks said credit to the
private sector is expected to
contract by $14.5bn in the six
Gulf Cooperation Council
states, and by $11.3bn in non-
oil, middle-income countries,
totalling a decline of about
$26bn in 2020.
China industrial output sees shock growth but consumers stay wary
AFP — BEIJING
China’s industrial output
returned to growth for the
first time this year in April,
official data showed
yesterday, but another sharp
drop in retail sales indicated
crucial consumer demand
remains weak, which could
scotch hopes for a quick
economic recovery.
Analysts also voiced con-
cerns over an uptick in urban
unemployment, adding that
the outlook remains unclear
as key export markets
struggle to reopen after
weeks of lockdowns around
the world.
The forecast-beating 3.9
percent rise in industrial pro-
duction was taken as a sign
that China -- where the
Lebanon’s Finance Minister Ghazi Wazni speaks to Agence France-
Presse (AFP) at his office at the ministry in the Lebanese capital
Beirut , yesterday.
bank. He said this was nec-
essary because the gov-
ernment feared a “huge dete-
rioration of the pound
exchange rate” otherwise.
Merging banks - Lebanon,
which was hit last autumn by
unprecedented protests, asked
the IMF for financial assistance
on May 1 after laying out a
much-awaited financial rescue
plan. That plan aims to drum
up billions of dollars in aid,
reduce the deficit, restructure
a colossal debt burden and
slim down an oversized
banking sector.
Wazni said banking sector
restructuring would be carried
out “step by step”, and possi-
bilities included “merging”
financial institutions. “Lebanon
counts 49 commercial banks
and it is normal for that number
to decrease to around half of
that in the next stage,” he said.
UK manufacturers pessimistic about post-virus trade
AFP — LONDON
More than a third of British
manufacturers believe it will
take at least 12 months to get
back to normal trading after
coronavirus restrictions are
eased, a survey showed
yesterday.
Industry body Make UK
questioned 189 firms and 36
percent said they were pessi-
mistic about any return within
Australia relaxes restrictions
Early morning traffic is seen on the Harbour Bridge in Sydney yesterday. The New South Wales state
relaxed COVID-19 restrictions around public gathering and businesses.
pathogen first emerged -- is
bouncing back after weeks of
shutdowns that helped shrink
the world’s number two
economy 6.8 percent in the
first quarter.
The reading -- which
overshot the 1.5 percent
estimate in a Bloomberg poll
-- came after a small
downturn in March and 13.5
percent collapse in the first
two months of the year,
which marked the first con-
traction in three decades.
However, with the con-
sumer playing an increasingly
key role in the Chinese
economy, news that retail
sales dropped 7.5 percent
highlighted the tough road
ahead as people worry about
returning to their normal
habits even as infection and
Wazni said that the IMF
had however not set any
political conditions for
financial assistance.
“No political conditions
have been set,” he said.
Analysts say the economic
collapse is due in part to years
of political crises that have
stalled decision-making and
permitted a culture of waste
and corruption.
A mass protest movement
that erupted on October 17 --
but has since largely dwindled
-- has blamed the financial
crisis on politicians demon-
strators say are inept and
corrupt.
But people have also pro-
tested against the banks, which
have since the autumn
imposed informal capital con-
trols on small depositors,
capping then stopping dollar
withdrawals and banning all
one year -- more than twice
the number in a similar survey
two weeks ago.
A total of 38 percent
thought the recovery would
take between six and 12
months.
The British government
imposed strict stay-at-home
measures on March 23 as the
virus took hold and has only
this week partially lifted
restrictions in England.
death rates remain low.
Still, the reading was
much better than the near-16
percent drop in March but
worse than expectations.
“The data is in line with
the overall trend that supply
is stronger than demand and
the recovery is mainly driven
by supply,” Larry Hu, at Mac-
quarie Group, said. “Looking
ahead, China’s economy will
face strong headwinds in the
next few months if demand
remains weak.”
Also providing a headache
for leaders ahead of the
National People’s Congress
annual legislative session
next week is a 0.1 percentage
point rise in unemployment
to six percent.
The Communist Party has
long staked its legitimacy on
transfers abroad.
The financial fallout of
recent months has created
enormous hardship. Around 45
percent of Lebanon’s popu-
lation now live in poverty and
inflation has soared to 55
percent, according to official
estimates.
The finance minister said
“parliament will pass a capital
controls bill in the coming
weeks”.
Wazni noted Lebanon was
aiming to obtain around $9bn
from the IMF, on top of another
$11bn in grants and loans
already pledged by interna-
tional donors in 2018.
“Lebanon’s quota at the IMF
is about $870m, but it hopes to
secure... around ten times that
amount... around $9bn,” he said.
He said it was in Lebanon’s
interest to reach an agreement
with the IMF quickly.
“The sooner we wrap up
the negotiations, the better for
Lebanon,” he said.
A deal would “give credi-
bility to the government’s pro-
gramme, broaden prospects
for international support con-
ferences, and ease negotiations
between Lebanon and cred-
itors”, Wazni said.
Lebanon is one of the most
indebted countries in the
world, with a debt burden
equivalent to 170 percent of its
gross domestic product.
It defaulted on a eurobond
repayment for the first time
ever in March.
Wazni said a “first call”
with creditors was made two
weeks ago, without providing
any further details.
Last week, the Bank of
England said UK output would
crash 14 percent this year,
although it expected it to
rebound 15 percent in 2021,
and grow 3.0 percent in 2022.
Make UK said sales and
orders were falling at an
“alarming rate”, and one fifth
of companies were planning
to increase the number of staff
on furlough in the next two
weeks.
delivering jobs and prosperity
in return for public acquies-
cence to its political
monopoly.
NBS spokesman Liu Aihua
told a news conference yes-
terday that employment
pressure “remains relatively
large” and businesses still
face difficulties.
She added that while the
economy is gradually
returning to normal, the
spread of the pandemic
abroad poses challenges to its
“stability and recovery”.
Tommy Xie, head of
Greater China Research at
OCBC Bank, told AFP the
unemployment rate “may
reflect the true picture of the
Chinese economy”, adding
that it is likely to rise further
in May.
SATURDAY 16 MAY 2020
QCB’s reserve cash
increases by QR19.7bn
to QR110.7bn in April
FACTS & FIGURES
Banks
Qatar Central Bank’s total
reserve money in the banking
system has increased by
QR19.7bn in April 2020 from
the previous month to reach
QR110.7bn, compared to
QR88.9bn in April 2019, and
about Q72.9bn in April 2018a.
The reserve money con-
sists of four components such Bashir Al Kahlout, Economic Consultant
as source cash, mandatory and Director at Al Byraq Center for
reserves, surplus balances, etc. Economic and Financial Studies.
Cash issued at any time,
is the total currency issued by
the Qatar Central Bank up to between the bank and local
that time in Qatari riyals. banks, its balance jumped by
Compulsory reserve, is QR7.6bn to QR26.1bn com-
the total that banks operating pared to QR18.5bn last March
in the State of Qatar must and QR28bn a year ago.
deposit compulsory with the On the other hand, the
Qatar Central Bank at 4.50 reserve money referred to
percentt of their customer above is equal to and equal
deposits. Reserve reserves to what is known as the cor-
surplus, which is the unex- responding assets, and it con-
ploited surplus with local sists of: Net foreign assets,
banks at any time, and banks and net domestic assets.
optionally deposit them with Net foreign assets were
Qatar Central Bank as a low in the first year of the
reserve in order to cover the siege between June 2017 and
clearing operations between until August 2018, below the
them. level of QR93.5bn, and then
The rise in the reserve there were steady increases
cash in April has verified the after that, and it reached the
changes in its various com- level of QR146.6bn in the
ponents as follows: month of April. The large
Q The obligatory reserve, increase in net foreign assets
which has become 36.6 in the past two years indi-
percent of the reserve money, cates a significant
has increased in April by improvement in the liquidity
about QR0.8bn from last of the banking system,
March to reach QR40.5bnn, despite the pressures exerted
compared to Q39.7bn in by some of the blockade
March, QR37.8bn a year ago. countries on these reserves.
It is worth noting that this As for the net domestic
category is considered a assets, it is often negative,
stable category and is usually and it was at the end of 2016
increased by increasing at the level of negative
deposits with commercial QR85.6bn, and it turned into
banks.
Q The surplus of banks’
positive QR9.8bn at the end
of 2017, then returned to neg-
reserve balances, which are
deposited with the Qatar
ative QR26.7bn at the end of
2018, and to negative
Central Bank, increased by QR69.6bn by the end of 2019,
QR8.6bn to QR18.9bn, com- and decreased to minus
pared to QR10.3bn last March, QR35.9bn by the end of April.
and R5.8bn a year ago. In sum, the total net
Q The issued cash foreign assets with net
increased by QR2.6bn from domestic assets increased to
March to the level of QR110.7bn at the end of April,
QR25.2bn, compared to which is equivalent to the
QR22.6bn in March, and reserve money, or what is
QR17.3bn a year ago. known as the monetary base,
Q Another category, or high-value money.
which represents banks ( The views published in this
deposits with Qatar Central column are those of the author and
Bank through the Qatari do not necessarily represent or
money market mechanism reflect the views of The Peninsula)
Mercedes halting US
plant production
BLOOMBERG
Daimler AG is suspending production at a Mercedes-Benz SUV plant
that was one of the first in the US to reopen due to a shortage of parts
supplied from Mexico. The Alabama factory won’t build vehicles
next week, according to an internal notice. Workers are being given
the option to use vacation time or go without pay and file for state
and federal unemployment benefits. The Mercedes plant reopened
late last month after idling for five weeks as much of the US manu-
facturing base shut down to contain the coronavirus outbreak.
Now, as US carmakers plan to restart their operations beginning
next week, Mexico’s government has sent mixed messages as to
how soon it will allow auto companies to reopen. Daimler rep-
resentatives in Germany and the US didn’t immediately comment.
The company said in its internal notice to workers at the plant in
Tuscaloosa County, Alabama, that the factory will schedule
make-up production for June 29 through July 1, a week that the
factory had been slated for a summer shutdown.
“In China, we didn’t see a infections.
similar scale of job losses as Xie said the external
in the US... We have a lot of demand shock, which may
guidance, asking companies worsen if reopened countries
not to cut jobs,” he said. suffer a second wave of infec-
“That helps to stabilise tions, could cap the recovery
the job market, but if the in industrial production.
companies go bust even- Next week’s National Peo-
tually, such guidance is not ple’s Congress should give
going to help.” Xie said there some visibility on policy spe-
is a risk more firms could fail cifics but Nomura analysts
because of falling demand, said this week that a recent
adding “we are still not quite moderate rebound in locally
firm on how sustainable the transmitted Chinese cases
recovery is”. remains a concern.
Analysts have warned “Retails sales during this
stock markets, which have year’s Labor Day holiday
rallied since hitting deep were still down 6.7 percent
troughs in mid-March, may from last year, and revenue
have been overly optimistic for the catering and accom-
about a swift China rebound, modation industries only
pointing to collapsing recovered to around 70
external demand and the percent of normal levels,”
threat of a second wave of they said.
 SATURDAY 16 MAY 2020
Indonesia to
impose VAT on
streaming,
other digital
services
REUTERS — JAKARTA
Indonesia will require big
internet companies to pay
value-added taxes (VAT) on
sales of digital products and
services from July as part of
efforts to boost revenue amid
the coronavirus pandemic, a
tax official said yesterday.
It will impose 10 percent
VAT on digital products sold by
non-resident internet com-
panies with significant
presence in the Indonesian
market, including streaming
services, applications and
digital games, beginning July 1,
according to a finance ministry
regulation published on the
ministry’s website.
The government has previ-
ously said services by
streaming platforms like
Spotify and Netflix would be
subject to the new tax. Neither
company responded to
requests for comment.
Products and services
bought via Alphabet Inc’s
Google Play among others
would also fall into the cat-
egory, although the gov-
ernment has not named any
companies other than Spotify
and Netflix. Google could not
be immediately reached for
comment.
Indonesia currently charges
a 10 percent value-added tax
on sales of most products and
services.
The country has aimed to
get internet companies to pay
their fair share of taxes for
years and the decision to
impose VAT was announced in
March when President Joko
Widodo outlined emergency
measures to help the country
weather the coronavirus crisis.
The package was passed by
parliament earlier this week.
Indonesia’s internet
India plans to spend $20bn to lift
income for farmers, boost exports
BLOOMBERG
India will spend 1.5 trillion
rupees ($20bn) to help its
farmers and fishermen boost
exports and profits as the
economy gradually reopens
after the world’s biggest
lockdown.
Prime Minister Narendra
Modi’s government will offer
loans to build warehouses and
cold storage systems, support
overseas sales of some local
specialties such as mangoes
and saffron, and help double
exports of shrimp and other
seafood. The administration
also proposes to amend laws
and allow farmers to sell their
produce without any curbs.
“Where entitlements are
due, yes they will be given, but
largely our focus is making sure
India stands up on its own, in
turn generate more jobs and so
on,” Finance Minister Nirmala
Sitharaman said at a briefing
on Friday. “Empowering people
through creation of skill, cre-
ation of logistics and so on.”
Yesterday’s announcements
Eskom seeks to break terms of $3.75bn World Bank loan
BLOOMBERG
Eskom Holdings Ltd is seeking
to have the terms of a $3.75bn
World Bank loan changed to
avoid spending money to cut
emissions from one of its
largest power plants.
The 2010 loan is being used
to partly fund the construction of
the 4,764 megawatt Medupi coal-
fired power plant east of Johan-
nesburg. It contains a “legal cov-
enant” that Eskom must install
economy is the biggest and
fastest growing in Southeast
Asia and is expected to reach
$130 billion by 2025, according
to a research by Google,
Temasek Holdings and Bain &
Company.
Finance Minister Sri
Mulyani Indrawati (pictured)
has said that imposing VAT
on internet goods was to
make sure the government
captures the shift in people’s
consumption patterns as they
stay at home during a
lockdown to curb the spread
of the virus.
Consumers have been
buying fewer physical goods,
but demand for digital items
have risen, Indrawati has said.
The ministry’s tax
department has been in contact
with representatives of affected
companies, but declined to
name them, tax office
spokesman Hestu Yoga
Saksama said.
The government expects a
10 percent drop in state
revenue this year due to the
impact of the coronavirus pan-
demic and weak commodity
prices, forecasting that eco-
nomic growth will more than
halve to 2.3 percent, from 5
percent in 2019. It expects a
fiscal deficit of 5.07 percent of
GDP for 2020, the biggest in
more than a decade.
were her third in the last three
days, part of a $265bn package
that includes several monetary
measures and is equivalent to
10 percent of gross domestic
product. While India’s economy
is set for its first annual con-
traction in four decades, the
government forecasts agri-
culture output will grow faster
than expected, emerging as the
lone bright spot.
With yesterda’s announce-
ments, more than two-third of
the planned stimulus measures
have been released, according
to Bloomberg News calcula-
tions. Sitharaman on
Wednesday offered $72bn
liquidity to small firms, shadow
banks, and electricity distrib-
utors, and on Thursday gave
$32bn of cheap credit to
farmers and workers in the
informal economy.
“We do not foresee any
major immediate benefits of
the measures announced
today, but the long-term
thinking of the government is
clear,” said B. Gopkumar, man-
aging director and
so-called flue-gas desulfuri-
sation, or FGD, equipment at the
plant by 2025 to curb emissions
of sulfur dioxide, according to the
World Bank.
“These are internal consid-
erations that are being dis-
cussed with our stakeholders
and partners, chief of which
are the World Bank and the
government,” Eskom said in a
response to queries. “Eskom
has had informal discussions
with the World Bank, but no
Britain, EU in post-Brexit trade talks stalemate
AFP — BRUSSELS
The EU and Britain ended their
latest round of post-Brexit
trade talks in a state of
deadlock yesterday, with both
sides urging the other to
fundamentally change its
strategy.
EU negotiator Michel
Barnier (pictured) said he was
“disappointed” by Britain’s
lack of ambition -- but also
accused London of seeking the
benefits of single market
access without its
responsibilities.
In London, at the end of a
week of haggling by videocon-
ference, Barnier’s UK coun-
terpart David Frost agreed that
not a lot had been achieved.
Barnier said “no progress
has been possible on the more
difficult subjects,” despite
Britain now having provided
suggested texts in almost all
areas of disagreement.
Britain left the European
Union on January 31 and the
sides have until the end of the
year to agree a new basis for ties,
barring an extension that British
Prime Minister Boris Johnson has
repeatedly ruled out.
There now remains only
one round of talks before an
end of June deadline to decide
whether talks are worth
continuing.
Easing lockdown measures
FROM LEFT: French Junior Minister for Foreign Affairs Jean-Baptiste Lemoyne, Foreign Affairs Minister
Jean-Yves Le Drian, Prime Minister Edouard Philippe and Finance Minister Bruno Le Maire take part
in a video-conference with actors of the tourism sector during an inter-ministerial committee at
Hotel Matignon in Paris on Thursday, as France eases lockdown measures taken to curb the spread
of the COVID-19 disease
chief executive officer of Axis
Securities, adding that the
plans were intended to
strengthen the value chain and
infrastructure. “The impact on
equity markets of today’s
announcements is likely to be
limited as benefits are back-
ended.” Though farming activ-
ities are allowed with some
restrictions during the
lockdown, the movement of
migrant labor has been ham-
pered as most transportation
services remain suspended.
The lockdown came as a shock
to farmers who were getting
ready with their harvests, but
were forced to destroy the crop
in some parts due to disruption
in supply chains.
The government will amend
the Essential Commodities Act
to scrap stockpile limits on
crops including cereals, edible
oils, oilseeds, pulses, onions and
potato, to help farmers fetch
good prices, Sitharaman said.
Curbs will only be imposed if
prices of the commodities rise
during a famine or any national
calamity.
commitment or decision was
made.” Eskom, which is owned
by the government and pro-
duces almost all of South
Africa’s power, is struggling to
service 454 billion rand ($25bn)
of debt and says the equipment
would cost 42 billion rand. Still,
the pollution the utility emits
is the subject of a lawsuit that
has been filed against the gov-
ernment and accounts for
between 300 and just over
2,000 deaths a year, according
“It is hard to understand
why the EU insists on an ide-
ological approach which
makes it more difficult to reach
a mutually beneficial
agreement,” Frost said after
the talks.
“We very much need a
change in EU approach for the
next round beginning on June
1,” he added.
The talks have stumbled on
the same issues since they
launched in March, just ahead
of the coronavirus pandemic
that has paralysed public life
and devastated the European
and UK economies.
“We’re treading water..
There really is no progress and
tempers picked up a bit more
this session,” said one
European source close to
discussions.
The EU insists any deal
must include binding UK com-
mitments to maintain EU
standards on health, safety,
state aid and the environment
-- commonly known as
keeping the “level playing
field”.
“We are not going to
bargain away our European
values to the benefit of the
British economy. Economic
and trade fair play is not for
sale. It is not a ‘nice to have’, it
is a ‘must have’,” Barnier
declared.
Belgian giant
Solvay to shut
two plants in
UK and US
AFP — BRUSSELS
Belgian chemical giant Solvay
announced yesterday it will
close composite materials
plants in Britain and the United
States and cut around 570 jobs,
20 percent of its global work-
force.
The firm had already lost
business due to reduced
production of the troubled
Boeing 737 MAX airliner and
is now facing “significant
headwinds” because of the
coronavirus epidemic, it
said.
Factories will cease pro-
duction in Manchester,
northwest England, and Tulsa,
Oklahoma, and total company
headcount will be reduced
worldwide.
“The decision to part
company with employees is
never one that we take lightly,”
Solvay chief executive CEO
Ilham Kadri said, in a company
statement.
to studies carried out by Eskom
and independent experts.
“Any changes to FGD on
Medupi would require consent
with the World Bank,” the lender
said in a reply to questions. “We
understand that Eskom may be
investigating alternative solu-
tions, however the World Bank
has not received a proposal.” “If
the World Bank backs off of this
condition they will seriously lose
a lot of credibility,” said David
Hallowes, a researcher at
But Britain refuses to
accept that this should form
part of an overarching legal
agreement, insisting on its new
found freedom after the 40
years of being tied to EU rules.
“As soon as the EU recog-
nises that we will not conclude
an agreement on that basis we
will be able to make progress,”
Frost said.
Barnier countered: “The
United Kingdom has not
engaged in a real discussion
on the level playing field,
whatever it says.” Britain
insists it wants nothing more
in its trade deal than the EU
offers other partners such as
Canada or Japan -- while
Barnier says it is in fact asking
for much more.
Britain also rejects any
mention of the jurisdiction of
the European Court of Justice
Pound edges lower as Britain
serves ultimatum to EU
REUTERS — LONDON
Sterling fell yesterday, hitting
its lowest for more than a
month, after Britain and the
European Union traded threats
over a Brexit free trade deal.
British chief negotiator David
Frost said yesterday the major
obstacle to a deal was the EU’s
insistence on including a set of
unbalanced proposals on a so-
called “level playing field” that
would bind Britain to EU rules.
On top of that, the EU’s
Brexit negotiator Michel Barnier
said that the third round of talks
was disappointing.
“Sterling sold off hard on
the headlines across the board,”
Neil Jones, head of FX sales at
Mizuho, said. “The FX market
is clearly disappointed by the
lack of progress on Brexit
talks.” The pound had been
under pressure earlier in the
day after the British gov-
ernment reiterated its refusal
to extend the Brexit transition
period.
The currency is in its fifth
consecutive day of losses and is
the worst-performing G10
Groundwork, a South African
environmental justice
organization.
Eskom argues that in
addition to being expensive,
the equipment would increase
water consumption, neces-
sitate the use of large quantities
of limestone and produce addi-
tional carbon dioxide, a green-
house gas. Some of the money
saved could be used to adapt
some older, coal-fired plants
to use other fuel, it said.
BUSINESS 03
or the European Convention
om Human Rights -- a demand
it says is unnecessary and
belittling.
“There isn’t a halfway
house, you can’t split the dif-
ference between where we
control our own laws and
where we don’t,” a UK official
official told reporters, on con-
dition of anonymity.
The Europeans argue that
Britain’s geographic proximity
and close business connections
to the continent make more
safeguards necessary than
those in a traditional trade
deal.
But Frost and Barnier both
said there were “useful discus-
sions” on another bone of con-
tention -- fisheries -- even if
both sides remain fundamen-
tally far apart.
Spurred on by France,
Brussels is taking a tough
stance on fishing rights, with
demands that European
vessels keep much the same
access to British waters despite
Brexit. Frost said the EU focus
on full access to British waters
was “incompatible with our
future status as an inde-
pendent coastal state”.
Without a deal, Britain and
the EU devolve ties into WTO
rules, creating barriers to trade
that would rock both
economies.
US industrial
output plunges
11.2% in April
AFP — WASHINGTON
American industrial production
dropped a record 11.2 percent
in April, the first full month of
widespread business lock-
downs, with massive declines
across sectors, particularly in
autos and oil, the Federal
Reserve said yesterday.
It was the “largest monthly
drop in the 101-year history of
the index, as the COVID-19
(coronavirus disease 2019)
pandemic led many factories
to slow or suspend operations
throughout the month,” the
Fed said. The auto sector took
the biggest hit, plunging more
than 70 percent, according to
the data.
currency so far this month,
having fallen more than 3
percent against the dollar in May.
The pound fell to $1.2155,
its lowest since March 27, last
trading 0.5 percent lower at
$1.2173. It was also falling
versus the euro, down by 0.8
percent to 89.10 pence.
“The increased pricing in of
a no-deal Brexit should further
weigh on the pound and
encourage a further retreat
toward the $1.20 level, and pos-
sibly below,” Ipek Ozkard-
eskaya, a senior analyst at
Swissquote Bank, said.
The Brexit discussions
added uncertainty as Britain
struggles with COVID-19, the
disease caused by the new
coronavirus.
Britain’s death toll has
topped 40,000, the worst yet
reported in Europe.
More than 440,000 self-
employed workers applied for
a government aid programme
that will give them a grant of
up to 7,500 pounds ($9,142),
during its first day of operation,
finance minister Rishi Sunak
said on Thursday.
“Installing FGD at Medupi
may reduce the impact on
health by a small margin, but
it will result in other negative
environmental impacts,”
Eskom said. Switching older
plants away from coal would
reduce emissions of “sulfur
dioxide, nitrous oxide, partic-
ulates and carbon dioxide
emissions.” Still, many of those
plants are due to close in the
next few years due to the age
of the plants.