1 00:00:00,200 --> 00:00:03,640 Speaker 1: We will not get food, we are not having any transport. 2 00:00:03,920 --> 00:00:08,600 Speaker 1: It's really hard to see somebody die without medicine. So 3 00:00:09,240 --> 00:00:11,840 Speaker 1: this is our last fight. We are putting on our 4 00:00:11,920 --> 00:00:19,959 Speaker 1: last fight. Hello and welcome to Stephanomics, the podcast that 5 00:00:20,000 --> 00:00:22,759 Speaker 1: brings the global economy to you. And what you heard 6 00:00:22,760 --> 00:00:26,439 Speaker 1: there was desperation on the streets of Sri Lanka, a 7 00:00:26,560 --> 00:00:29,880 Speaker 1: country now so broke it's shut down at schools for 8 00:00:29,920 --> 00:00:32,440 Speaker 1: two weeks on Monday, along with a significant chunk of 9 00:00:32,479 --> 00:00:35,560 Speaker 1: the government in a last ditch effort to save fuel. 10 00:00:36,240 --> 00:00:39,400 Speaker 1: The International Monetary Fund team arrived that same day to 11 00:00:39,440 --> 00:00:43,160 Speaker 1: begin negotiations over a possible bailout, but a rescue looks 12 00:00:43,280 --> 00:00:46,640 Speaker 1: quite far off because the IMF economists still struggling to 13 00:00:46,680 --> 00:00:49,040 Speaker 1: see how the country could ever get on top of 14 00:00:49,080 --> 00:00:52,680 Speaker 1: its debts. And if Sri Lanka is at one end 15 00:00:52,680 --> 00:00:57,160 Speaker 1: of the global economic spectrum, today is definitely the other. 16 00:00:57,880 --> 00:01:00,840 Speaker 1: I've been in Doha for the Kutar Economic Forum, and 17 00:01:00,880 --> 00:01:03,600 Speaker 1: you'd have to say the war in Ukraine had treated 18 00:01:03,680 --> 00:01:08,160 Speaker 1: them very well. With Europe now scrambling to source gas 19 00:01:08,200 --> 00:01:11,920 Speaker 1: from Cathar, not President putin the world even seems to 20 00:01:11,920 --> 00:01:14,399 Speaker 1: be coming around the idea of the Gulf state hosting 21 00:01:14,520 --> 00:01:19,080 Speaker 1: this year's World Cup. Bloomberg Simone Foxman has a report 22 00:01:19,240 --> 00:01:22,039 Speaker 1: in a few minutes on the many billions the Qataris 23 00:01:22,080 --> 00:01:26,280 Speaker 1: have spent making this tournament a success. She also asked 24 00:01:26,560 --> 00:01:30,560 Speaker 1: whether it's remotely plausible to expect a lasting legacy in 25 00:01:30,600 --> 00:01:35,120 Speaker 1: the form of stronger work of rights. First, here is 26 00:01:35,120 --> 00:01:39,400 Speaker 1: our South Asia government reporter Sudi Ranjan Sin in Colombo. 27 00:01:51,760 --> 00:01:54,400 Speaker 1: The streets of Colombo, the capital of Sri Lanka, are 28 00:01:54,480 --> 00:01:59,120 Speaker 1: ringing with protests. For months of foreign currency crisis has 29 00:01:59,160 --> 00:02:03,600 Speaker 1: devastated this island nation. Fuel is hard to come by. 30 00:02:04,160 --> 00:02:06,800 Speaker 1: It could take days in a line to get fuel 31 00:02:07,240 --> 00:02:11,960 Speaker 1: or cooking gas. Food prices have skyrocketed. The price of 32 00:02:12,080 --> 00:02:15,560 Speaker 1: bread has traveled in the last few months. Cooking gas 33 00:02:15,840 --> 00:02:23,600 Speaker 1: is scarce and many are back to using firewood. Now 34 00:02:24,080 --> 00:02:28,640 Speaker 1: people want answers how did Sri Lanka unload style for 35 00:02:28,720 --> 00:02:44,800 Speaker 1: economic development in Asia fall? So far? I am on 36 00:02:44,880 --> 00:02:49,959 Speaker 1: the streets at golf acecreen, the iconic street meandering past 37 00:02:50,000 --> 00:02:54,040 Speaker 1: the sea. Thousands of people have gathered and many more 38 00:02:54,280 --> 00:02:58,680 Speaker 1: are marching in. The Crowds are shouting in unision around me, 39 00:02:59,080 --> 00:03:06,120 Speaker 1: calling their leader as thieves and puppets. First, give me 40 00:03:06,120 --> 00:03:09,920 Speaker 1: your name and what do you do. You're an engine? Yeah, 41 00:03:10,160 --> 00:03:14,200 Speaker 1: and I met Naomi Going, a young software engineer at 42 00:03:14,200 --> 00:03:17,760 Speaker 1: the demonstration. Both her parents are sick and she's struggling 43 00:03:17,800 --> 00:03:20,960 Speaker 1: to get old of medicine they need. We the citizens, 44 00:03:21,200 --> 00:03:25,680 Speaker 1: have come to a position that we rather die or 45 00:03:25,720 --> 00:03:28,919 Speaker 1: put up a fight because we will not get food. 46 00:03:29,360 --> 00:03:32,360 Speaker 1: We are not having any transport, we will not get 47 00:03:32,400 --> 00:03:36,040 Speaker 1: any internet. Mostly we don't have medicine. It's really hard 48 00:03:36,080 --> 00:03:41,520 Speaker 1: to see somebody die without medicine. Because you you have 49 00:03:41,640 --> 00:03:44,000 Speaker 1: the money, you don't have a place to buy the medicine. 50 00:03:44,280 --> 00:03:47,480 Speaker 1: So this is our last fight. We are putting up 51 00:03:47,480 --> 00:03:51,960 Speaker 1: our last fight. Like many others, Naomi dialects anger at 52 00:03:51,960 --> 00:03:54,760 Speaker 1: the Raja packs of family and blames in the country's 53 00:03:54,800 --> 00:03:58,680 Speaker 1: worst economic meltdown in decades. So you may know, but 54 00:03:58,760 --> 00:04:01,920 Speaker 1: I will repeat it. Our president, our Prime Minister, and 55 00:04:02,960 --> 00:04:06,800 Speaker 1: most of our MP's belongs to the same family family. 56 00:04:07,000 --> 00:04:09,920 Speaker 1: We are under a corrupted regime. The Raja Paksas have 57 00:04:10,000 --> 00:04:12,720 Speaker 1: been at the helm of fri Lanka for over two 58 00:04:12,760 --> 00:04:17,839 Speaker 1: decades until recently, as many as six Raja Paksas held 59 00:04:18,000 --> 00:04:23,920 Speaker 1: top government positions overseas se of the national budget that 60 00:04:24,000 --> 00:04:28,599 Speaker 1: includes President Gotabaya Raja Pucks. So if the corrupted regime 61 00:04:28,680 --> 00:04:32,640 Speaker 1: is still in power, we will be not having any hope. 62 00:04:33,240 --> 00:04:36,080 Speaker 1: Onns will also be mis managed, so we can't see 63 00:04:36,120 --> 00:04:42,600 Speaker 1: that there may but removing the president won't save every problem. 64 00:04:42,839 --> 00:04:47,520 Speaker 1: Sri Lanka's crisis is years in the making. Problems traced 65 00:04:47,560 --> 00:04:51,760 Speaker 1: to Raga Pukss first days in office. After his election 66 00:04:51,800 --> 00:04:57,360 Speaker 1: in twenty nine, he slashed taxes to post local business, 67 00:04:57,480 --> 00:05:04,160 Speaker 1: making good on a populist campaign promise a galloping Today 68 00:05:04,360 --> 00:05:08,200 Speaker 1: people are crushed under the heavyweight of taxes. We hope 69 00:05:08,240 --> 00:05:11,120 Speaker 1: to change the income tax law, which no longer suits 70 00:05:11,120 --> 00:05:15,159 Speaker 1: the country, and reduce the tax burden for everyone. Instead 71 00:05:15,160 --> 00:05:18,800 Speaker 1: of multiple taxes, we will introduce a single one. We 72 00:05:18,839 --> 00:05:21,880 Speaker 1: will abolish the pay as you earn income tax on 73 00:05:22,040 --> 00:05:28,800 Speaker 1: workers at the state and private sectors. But when the 74 00:05:28,800 --> 00:05:33,479 Speaker 1: panemic hit, the economy took a tumble. Remittances and tourism 75 00:05:33,600 --> 00:05:37,000 Speaker 1: dollars dried up, pinching off revenue and forcing the central 76 00:05:37,000 --> 00:05:41,159 Speaker 1: government to print money. The government also decided to transition 77 00:05:41,360 --> 00:05:45,400 Speaker 1: to organic farming at the worst time possible. A ban 78 00:05:45,640 --> 00:05:50,160 Speaker 1: on import of chemical fertilizer pretty much finished Sri Lanka's 79 00:05:50,200 --> 00:05:55,320 Speaker 1: agricultural sector in the background. Increased indebtedness to China for 80 00:05:55,520 --> 00:06:00,280 Speaker 1: infrastructure projects has not helped. To top it off. The 81 00:06:00,320 --> 00:06:03,240 Speaker 1: tax cut the Draga Pucks has posted two years ago 82 00:06:03,560 --> 00:06:10,039 Speaker 1: totally backfired. The nation's foreign exchange reserves are depleted. Last month, 83 00:06:10,120 --> 00:06:13,839 Speaker 1: the nation defaulted on payments for the first time since 84 00:06:15,480 --> 00:06:19,080 Speaker 1: that was when it achieved independence from the British Empire. 85 00:06:21,400 --> 00:06:25,320 Speaker 1: To stay flowed, economists estimates that Sri Lanka needs as 86 00:06:25,440 --> 00:06:29,200 Speaker 1: much as six billion dollars this year from the International 87 00:06:29,240 --> 00:06:35,799 Speaker 1: Monetary Fund and major creditors, including China, Japan, and India. Now, 88 00:06:36,200 --> 00:06:39,120 Speaker 1: President Rather Pucks and as ministers are trying to secure 89 00:06:39,120 --> 00:06:42,240 Speaker 1: a pailout from the i m F, but people don't 90 00:06:42,279 --> 00:06:49,200 Speaker 1: feel confident about the future. Last month, inflation neared. Here 91 00:06:49,480 --> 00:06:52,680 Speaker 1: is nami again. Yeah, this is my last fight. This 92 00:06:52,760 --> 00:06:55,640 Speaker 1: country has never been defaulted, and now the country's default 93 00:06:56,160 --> 00:06:59,480 Speaker 1: and we are going through tough time. The general public 94 00:06:59,560 --> 00:07:03,160 Speaker 1: is going to tough time. My industry is fairing and 95 00:07:03,920 --> 00:07:09,120 Speaker 1: we have problems of finding our normal day to day transport, 96 00:07:09,680 --> 00:07:15,680 Speaker 1: food and medicine. So yeah, I might also migrate even 97 00:07:15,720 --> 00:07:19,000 Speaker 1: though I'm here fighting. Okay, this is my last fight. 98 00:07:19,080 --> 00:07:22,600 Speaker 1: I'm putting up my last fight for my life. Protesters 99 00:07:22,720 --> 00:07:26,920 Speaker 1: are making waves now. The president is the only Rajapaksa 100 00:07:27,200 --> 00:07:31,280 Speaker 1: left in office. His brother Mahinda, a strongman who served 101 00:07:31,320 --> 00:07:37,119 Speaker 1: as Prime minister, resigned last month. Hours later violence would 102 00:07:37,120 --> 00:07:42,120 Speaker 1: engulf the nation. Meanwhile, political opponents are also putting pressure 103 00:07:42,320 --> 00:07:47,400 Speaker 1: on the Raja government. So you are the She's a 104 00:07:47,400 --> 00:07:54,200 Speaker 1: bureau chief, I reported form Sagi. Prima Dasa is the 105 00:07:54,280 --> 00:07:58,320 Speaker 1: leader of the largest opposition party. He said, even though 106 00:07:58,360 --> 00:08:02,520 Speaker 1: Sri Lanka is technically a democracy, today's issues are part 107 00:08:02,800 --> 00:08:05,320 Speaker 1: of a deeper rot when you look at the causes 108 00:08:06,360 --> 00:08:13,000 Speaker 1: of the present economic devastation, one of which is power concentration, 109 00:08:14,160 --> 00:08:19,760 Speaker 1: singular decision making. Power concentrated in the hands of the executive, 110 00:08:20,480 --> 00:08:24,880 Speaker 1: his stutus, his cohorts and surrogates. You can't have this 111 00:08:24,960 --> 00:08:30,840 Speaker 1: type of decision making being further perpetuated because it maybe 112 00:08:30,840 --> 00:08:35,040 Speaker 1: the cause of many more crises. So what's the solution? 113 00:08:35,240 --> 00:08:38,920 Speaker 1: And dostril Anka even have a road map. Sergeant tells 114 00:08:38,960 --> 00:08:41,920 Speaker 1: me his party is ready to push for the president 115 00:08:41,960 --> 00:08:45,719 Speaker 1: to step down and for a fresh mandate, but he's 116 00:08:45,720 --> 00:08:49,560 Speaker 1: also worried about other important stuff. We only worried about 117 00:08:49,600 --> 00:08:53,360 Speaker 1: the people suffering. Let's all, we don't go around brandishing 118 00:08:53,360 --> 00:08:56,440 Speaker 1: the word elections, elections, elections. People don't want elections, they 119 00:08:56,440 --> 00:08:59,080 Speaker 1: want solutions. But at the end of the day, to 120 00:08:59,240 --> 00:09:02,000 Speaker 1: resolve this, uh well, if I may use an American 121 00:09:02,040 --> 00:09:06,800 Speaker 1: political term, gridlock, I think a fresh man date is 122 00:09:06,840 --> 00:09:10,080 Speaker 1: the only answer. But there again, we have to look 123 00:09:10,080 --> 00:09:15,360 Speaker 1: at at least having some sort of basic communities for 124 00:09:15,400 --> 00:09:21,680 Speaker 1: people to live. We have to ensure that human lives 125 00:09:21,679 --> 00:09:26,000 Speaker 1: are preserved and that people are able to live. There 126 00:09:26,040 --> 00:09:32,440 Speaker 1: should be livability. Now, Sri Lanka is struggling to keep 127 00:09:32,600 --> 00:09:36,160 Speaker 1: its head above the water. On one hand, President Roger 128 00:09:36,200 --> 00:09:39,880 Speaker 1: Paksa has made it clear he's not going anywhere before 129 00:09:40,040 --> 00:09:43,200 Speaker 1: its term ends. On the other, the interim government has 130 00:09:43,280 --> 00:09:46,840 Speaker 1: raised taxes again and it is pushing for a bailout 131 00:09:47,120 --> 00:09:49,640 Speaker 1: from the I m F. To that end, the i 132 00:09:49,800 --> 00:09:51,840 Speaker 1: m F has sent a team to Colombo this week 133 00:09:51,920 --> 00:09:55,960 Speaker 1: to discuss any potential aid, but the fund is hesitant 134 00:09:56,000 --> 00:09:59,360 Speaker 1: to lend money while the country's politics is still in 135 00:09:59,400 --> 00:10:04,319 Speaker 1: a limbo. However, the dogs go, Sri Lanka is unlikely 136 00:10:04,360 --> 00:10:07,880 Speaker 1: to sort out its problem anytime soon. By the day 137 00:10:07,880 --> 00:10:10,960 Speaker 1: to day reality, so Sri Lanka's twenty two million people 138 00:10:11,559 --> 00:10:16,319 Speaker 1: couldn't look any harsher. Authorities have worn of a severe 139 00:10:16,400 --> 00:10:21,160 Speaker 1: for shortage by September, and officials are already stockpiling supplies. 140 00:10:21,880 --> 00:10:26,120 Speaker 1: One thing is certain. Unless the shortage of basic goods ease, 141 00:10:26,840 --> 00:10:38,000 Speaker 1: the protests across the island will only grow. Yeah from Colombo, 142 00:10:38,040 --> 00:10:47,200 Speaker 1: sent for Bloomberg News. So I have our chief emerging 143 00:10:47,240 --> 00:10:51,080 Speaker 1: market economist. Here's the add doubt to chapter. Some of 144 00:10:51,080 --> 00:10:54,920 Speaker 1: the issues raised by the Sri Lanka crisis. I mean, yet, 145 00:10:55,679 --> 00:10:57,880 Speaker 1: we had a very clear sense from that piece of 146 00:10:57,960 --> 00:11:02,160 Speaker 1: the dire straits that a Lanka finds itself in and 147 00:11:02,720 --> 00:11:06,040 Speaker 1: the im effort there as we speak and actually don't 148 00:11:06,080 --> 00:11:08,440 Speaker 1: seem very close to a deal at all, because the 149 00:11:08,520 --> 00:11:12,199 Speaker 1: numbers are so challenging for Sri Lanka. And you look 150 00:11:12,240 --> 00:11:14,920 Speaker 1: across the universe of all emerging market economies, are we 151 00:11:15,000 --> 00:11:18,320 Speaker 1: going to see a lot of similar crises? Who else 152 00:11:18,480 --> 00:11:22,480 Speaker 1: is in the danger zone today? The environment for global 153 00:11:22,520 --> 00:11:26,160 Speaker 1: debt for emerging markets is really not favorable. Stiff and Stephanie, 154 00:11:26,840 --> 00:11:29,319 Speaker 1: we have a lot of emergent markets. Indeed, the rest 155 00:11:29,320 --> 00:11:32,199 Speaker 1: of the world has accumulated large stock of debt since 156 00:11:32,240 --> 00:11:36,079 Speaker 1: the pandemic. You have global interest race, arising local interest race, 157 00:11:36,120 --> 00:11:40,000 Speaker 1: arising currencies in emerging markets are weakening and that's increasing 158 00:11:40,040 --> 00:11:44,040 Speaker 1: the burden of servicing foreign debt. And we have the 159 00:11:44,080 --> 00:11:47,160 Speaker 1: default and Sri Lanka potential default in Russia which could 160 00:11:47,200 --> 00:11:51,520 Speaker 1: trigger contingent elsewhere. Silanka is already down. Who could be next? 161 00:11:51,559 --> 00:11:54,240 Speaker 1: While we looked at the universe of emergent or frontier 162 00:11:54,280 --> 00:11:56,720 Speaker 1: markets looking for countries that have high stock of debt 163 00:11:57,160 --> 00:11:59,960 Speaker 1: as well as rising interest rates, and we identified five 164 00:12:00,200 --> 00:12:03,679 Speaker 1: countries that could be at risk to These are Tunisia, 165 00:12:04,000 --> 00:12:08,920 Speaker 1: Our Salvador, Ghana, Ethiopia, and Pakistan. Some of these countries 166 00:12:09,080 --> 00:12:13,960 Speaker 1: are already struggling economically and have political instability um and 167 00:12:14,040 --> 00:12:16,880 Speaker 1: others could be next the warriors. These countries are rather 168 00:12:16,920 --> 00:12:19,199 Speaker 1: small for the global economy. The work the warriors is 169 00:12:19,240 --> 00:12:22,040 Speaker 1: star small and it gets bigger and it moves to 170 00:12:22,080 --> 00:12:24,000 Speaker 1: other and bigger countries. Well, I was going to ask 171 00:12:24,000 --> 00:12:26,040 Speaker 1: you because obviously one of the questions is always, you know, 172 00:12:26,080 --> 00:12:30,960 Speaker 1: do we have international resources to help these countries? And 173 00:12:31,000 --> 00:12:35,120 Speaker 1: we went through COVID and there was a really a 174 00:12:35,240 --> 00:12:39,320 Speaker 1: lack of global coordination around supporting developing countries around that. 175 00:12:39,360 --> 00:12:41,040 Speaker 1: I mean, there's a exit there's an effort to get 176 00:12:41,120 --> 00:12:45,000 Speaker 1: vaccines to developing countries, but its way behind target um. 177 00:12:45,040 --> 00:12:47,560 Speaker 1: Do we have any chance of having enough money to 178 00:12:47,600 --> 00:12:49,720 Speaker 1: support the kind of countries that they get the number 179 00:12:49,760 --> 00:12:51,959 Speaker 1: of countries that they get to get into trouble? Well, 180 00:12:52,000 --> 00:12:54,440 Speaker 1: I said, that's a big question, right, because the world 181 00:12:54,559 --> 00:12:57,440 Speaker 1: is more fragmented today, the lenders are more fragmented. Some 182 00:12:57,520 --> 00:13:00,079 Speaker 1: of them hold out to debt in the whole of 183 00:13:00,280 --> 00:13:03,320 Speaker 1: recovering more of the debt um. So that's that's the 184 00:13:03,360 --> 00:13:06,959 Speaker 1: big question. Whether we can have quick restructuring and quick 185 00:13:07,240 --> 00:13:10,320 Speaker 1: uh you know, restructuring of debt. And let's take the 186 00:13:10,360 --> 00:13:13,640 Speaker 1: case of Sri Lanka for example, our South Asia economists 187 00:13:13,640 --> 00:13:17,400 Speaker 1: and Kusha klan Asha Gupta estimated that Sri Lanka needs 188 00:13:17,440 --> 00:13:20,280 Speaker 1: to make is disustainable to prevent it from rising indefinitely. 189 00:13:20,600 --> 00:13:24,240 Speaker 1: It needs a haircut of so everyone who had lent 190 00:13:24,320 --> 00:13:29,000 Speaker 1: money to Sri Lanka loses half of their original investment exactly. 191 00:13:29,760 --> 00:13:33,000 Speaker 1: That sounds quite big, it sounds pretty bad. But if 192 00:13:33,000 --> 00:13:38,600 Speaker 1: you look at the historical episodes of debt restructuring from ten, 193 00:13:38,640 --> 00:13:41,360 Speaker 1: that's actually in the middle of the rage. But also 194 00:13:41,440 --> 00:13:43,640 Speaker 1: so Sri Lanka is not an outlier in that sense. 195 00:13:44,000 --> 00:13:45,800 Speaker 1: But also if you look at how long it took 196 00:13:46,200 --> 00:13:49,240 Speaker 1: the duration of negotiations until they managed to settle debt, 197 00:13:49,480 --> 00:13:51,800 Speaker 1: it took about two years. So it's still early days 198 00:13:51,800 --> 00:13:54,440 Speaker 1: for Sri Lanka and figure others then will take us 199 00:13:54,440 --> 00:13:57,280 Speaker 1: a while to get through this. Yeah, I mean you 200 00:13:57,440 --> 00:13:58,959 Speaker 1: raised a good point that it's just got there was 201 00:13:59,000 --> 00:14:01,960 Speaker 1: sort of the old day before our time. I think 202 00:14:01,960 --> 00:14:05,440 Speaker 1: that you know, in this sort of eighties debt restructuring, 203 00:14:05,800 --> 00:14:07,520 Speaker 1: you've sort of got the sense you could get a 204 00:14:07,600 --> 00:14:09,880 Speaker 1: hand There were more or less a handful of big 205 00:14:09,880 --> 00:14:13,160 Speaker 1: banks that had lent to these developing countries in the 206 00:14:13,200 --> 00:14:16,800 Speaker 1: Latin American debt crisis, for example, and there were governments 207 00:14:16,800 --> 00:14:20,240 Speaker 1: who later you might have to negotiate with. But now 208 00:14:20,280 --> 00:14:23,000 Speaker 1: to have investors from all over the globe, and as 209 00:14:23,000 --> 00:14:25,080 Speaker 1: you say, there's these kinds of so called vulture funds 210 00:14:25,120 --> 00:14:28,640 Speaker 1: who actually make their money almost from from going in 211 00:14:28,680 --> 00:14:30,880 Speaker 1: and buying up the debt that might get written down 212 00:14:31,040 --> 00:14:34,240 Speaker 1: and then sort of holding out for the best deal possible. 213 00:14:34,440 --> 00:14:36,360 Speaker 1: And I guess we should say there's an added wrinkle 214 00:14:36,440 --> 00:14:40,160 Speaker 1: to this, which I think will probably try and focus 215 00:14:40,200 --> 00:14:43,640 Speaker 1: on in a more detailed where in a future program. 216 00:14:43,880 --> 00:14:46,960 Speaker 1: But China, as we know, has been lending to a 217 00:14:47,080 --> 00:14:51,080 Speaker 1: lot of developing countries around the world. We haven't necessarily 218 00:14:51,120 --> 00:14:53,280 Speaker 1: even got a good sense of how much they've lent 219 00:14:53,440 --> 00:14:57,880 Speaker 1: or on what terms, and that question mark is raised 220 00:14:58,000 --> 00:15:00,360 Speaker 1: when you're thinking about doing these kind of a negotia Asians. 221 00:15:00,400 --> 00:15:02,400 Speaker 1: I think they even lent money to Sri Lanka, So 222 00:15:02,440 --> 00:15:05,480 Speaker 1: that's another complication. Yeah, and it makes it more difficult 223 00:15:05,520 --> 00:15:08,440 Speaker 1: to know exactly the size of haircut, what kind of 224 00:15:08,480 --> 00:15:11,080 Speaker 1: interest rates are being paid, and especially if we look 225 00:15:11,080 --> 00:15:13,080 Speaker 1: at the economies that are being vulnerable, these are the 226 00:15:13,160 --> 00:15:17,240 Speaker 1: small sort of frontier economies were already there's a there's 227 00:15:17,320 --> 00:15:21,440 Speaker 1: a lack of data transparency and added another layer of 228 00:15:21,760 --> 00:15:23,640 Speaker 1: you know, on the lending side, you don't know who 229 00:15:23,720 --> 00:15:26,680 Speaker 1: gave what on what terms. That makes it more difficult 230 00:15:27,040 --> 00:15:30,960 Speaker 1: to actually assess the sustainability of debt in these countries, 231 00:15:31,000 --> 00:15:32,160 Speaker 1: and it is I think it is going to be 232 00:15:32,160 --> 00:15:35,040 Speaker 1: an issue if if if China, so far at least, 233 00:15:35,040 --> 00:15:36,640 Speaker 1: they have not been willing to go in on these 234 00:15:36,720 --> 00:15:41,520 Speaker 1: multilateral agreements to write down debt and they've wanted to 235 00:15:41,560 --> 00:15:43,840 Speaker 1: do their own thing, and I know that's sort of 236 00:15:44,240 --> 00:15:46,920 Speaker 1: raising eyebrows and the international monetary firm, because what if 237 00:15:46,960 --> 00:15:49,080 Speaker 1: you end up with a situation where Sri Lanka is 238 00:15:49,520 --> 00:15:53,240 Speaker 1: getting its debt that it owes to other countries and 239 00:15:53,280 --> 00:15:55,760 Speaker 1: to the I m F written down but still paying 240 00:15:55,760 --> 00:15:58,200 Speaker 1: its China debt. It's going to be interesting. I suspect 241 00:15:58,200 --> 00:15:59,800 Speaker 1: we're going to come back to this. We're going to 242 00:15:59,840 --> 00:16:02,960 Speaker 1: do of a handbrake turn because we're here in Katar 243 00:16:03,560 --> 00:16:06,120 Speaker 1: speaking in person, which is and it makes a nice change. 244 00:16:06,920 --> 00:16:08,520 Speaker 1: But I guess you'd have to say, if Sri Lanka 245 00:16:08,560 --> 00:16:11,520 Speaker 1: has been one of the biggest losers outside of Europe 246 00:16:12,600 --> 00:16:17,640 Speaker 1: from Russia's invasion of Ukraine, Cattar has been a big willow, 247 00:16:17,640 --> 00:16:19,920 Speaker 1: which doesn't really seem fair given how rich it was 248 00:16:20,520 --> 00:16:24,680 Speaker 1: to start with. What does this desperate need for Europe 249 00:16:24,880 --> 00:16:30,760 Speaker 1: to find new sources for its fuel supply mean for 250 00:16:30,880 --> 00:16:35,320 Speaker 1: Katar's economy. Um, it's another slice of luck for for cutters. 251 00:16:35,360 --> 00:16:38,160 Speaker 1: So if you look at the development of the other economy, 252 00:16:39,160 --> 00:16:42,920 Speaker 1: they developed their liquefied natural gas facilities and that drove 253 00:16:43,000 --> 00:16:46,400 Speaker 1: growth up to two and tent They stopped expanding these 254 00:16:46,440 --> 00:16:49,200 Speaker 1: facilities and then they won the World Cup, and the 255 00:16:49,200 --> 00:16:52,160 Speaker 1: World Cup started a construction boom, and you can see 256 00:16:52,160 --> 00:16:54,680 Speaker 1: it's still still here on the streets and everywhere around 257 00:16:54,720 --> 00:16:58,240 Speaker 1: everywhere is just building sites exactly and that's gonna happen 258 00:16:58,360 --> 00:17:01,000 Speaker 1: in November December. So there's allays A question the last 259 00:17:01,040 --> 00:17:03,640 Speaker 1: few years is what is going to drive growth on 260 00:17:03,760 --> 00:17:08,160 Speaker 1: other After the World Cup and they started expanding their 261 00:17:08,320 --> 00:17:12,000 Speaker 1: energy facilities again like FID natural gas facilities. The question 262 00:17:12,080 --> 00:17:14,520 Speaker 1: then in two thousands seventeen, who's going to buy this? 263 00:17:15,000 --> 00:17:17,120 Speaker 1: We have the war in Ukraine and there's so much 264 00:17:17,160 --> 00:17:19,400 Speaker 1: demand for gas that they can't keep up with demand. 265 00:17:19,680 --> 00:17:22,239 Speaker 1: So it's another slash of luck in the country that 266 00:17:22,280 --> 00:17:25,040 Speaker 1: has one of the highest GDP per captain in the world, 267 00:17:25,320 --> 00:17:27,320 Speaker 1: and that could drive growth for a few years down 268 00:17:27,359 --> 00:17:29,440 Speaker 1: the down the line. But it's important to know which 269 00:17:29,440 --> 00:17:32,119 Speaker 1: it's not just others benefiting from this. Is alsless neighbors 270 00:17:32,119 --> 00:17:35,679 Speaker 1: around here, um, you know, with higher all prices, with 271 00:17:35,800 --> 00:17:38,560 Speaker 1: the you know, places like Dubai, places like Saudi Arabia 272 00:17:38,640 --> 00:17:42,359 Speaker 1: are experiencing a rebounding growth. Um. So this region is 273 00:17:42,359 --> 00:17:45,439 Speaker 1: booming again on high all prices and of course as 274 00:17:45,440 --> 00:17:48,040 Speaker 1: all the Russians pouring into Dubai, so that it's a 275 00:17:48,080 --> 00:17:52,720 Speaker 1: win win for for everyone here. Well, thank you very much. Yeah, 276 00:17:52,760 --> 00:17:55,040 Speaker 1: It's true that it wasn't long ago that planes to 277 00:17:55,200 --> 00:17:58,640 Speaker 1: and from Katta were banned from even entering the airspace 278 00:17:58,880 --> 00:18:02,320 Speaker 1: of its neighbors, and football fans and human rights activists 279 00:18:02,320 --> 00:18:04,919 Speaker 1: were queuing up to complain about that decision to award 280 00:18:04,960 --> 00:18:10,320 Speaker 1: cut World Cup. But now the World Cups almost upon us, 281 00:18:10,520 --> 00:18:14,000 Speaker 1: and the mood music does feel rather different. Here's bloom Bags, 282 00:18:14,080 --> 00:18:23,520 Speaker 1: Simon Foxman. If you fly into Doha from the north, 283 00:18:23,800 --> 00:18:26,720 Speaker 1: you'll see the two reasons all eyes are on Cutter. 284 00:18:26,840 --> 00:18:30,119 Speaker 1: Right now, on your right a brand new eighty thousand 285 00:18:30,160 --> 00:18:32,800 Speaker 1: seat stadium rising from the desert that will host the 286 00:18:32,840 --> 00:18:35,639 Speaker 1: final of the World Cup in December. To your left, 287 00:18:35,760 --> 00:18:38,199 Speaker 1: if you're lucky, you can make out tankers lined up 288 00:18:38,200 --> 00:18:41,000 Speaker 1: in the Persian Gulf to collect super chilled natural gas. 289 00:18:46,040 --> 00:18:51,040 Speaker 1: Football and an increasingly indispensable fuel may have little in common, 290 00:18:51,440 --> 00:18:54,280 Speaker 1: but between them they could mark a dramatic turnaround and 291 00:18:54,320 --> 00:19:01,480 Speaker 1: Cutter's fortunes. The win to organize the two twenty two 292 00:19:01,760 --> 00:19:07,879 Speaker 1: FIFA World Cup is nearly Since the moment the World 293 00:19:07,880 --> 00:19:11,280 Speaker 1: Cup was awarded, Cutter has been beset by criticism, first 294 00:19:11,320 --> 00:19:14,840 Speaker 1: over allegations of corruption and the bidding process, then over 295 00:19:14,880 --> 00:19:18,520 Speaker 1: concerns about human rights violations and the decision to move 296 00:19:18,560 --> 00:19:21,880 Speaker 1: the tournament from summer to winter for time. Some even 297 00:19:21,920 --> 00:19:26,000 Speaker 1: speculated that the tournament would be taken away. Here's Lisa Cleavinis, 298 00:19:26,320 --> 00:19:30,400 Speaker 1: the president of the Norwegian Football Federation, delivering a scathing 299 00:19:30,560 --> 00:19:33,040 Speaker 1: speech in Noha in March of this year. There is 300 00:19:33,080 --> 00:19:36,040 Speaker 1: no room for employers who do not secure the freedom 301 00:19:36,040 --> 00:19:39,560 Speaker 1: and safety of World Cup workers. No room for leaders 302 00:19:39,600 --> 00:19:43,399 Speaker 1: that cannot host the women's game. No room for hosts 303 00:19:43,400 --> 00:19:47,520 Speaker 1: that cannot legally guarantee the safety and respect of lgbt 304 00:19:47,640 --> 00:19:56,560 Speaker 1: Q plus people coming to this theater of dreams. Five 305 00:19:56,560 --> 00:20:00,400 Speaker 1: months out, there's no longer doubt that FIFA World Cup 306 00:20:00,480 --> 00:20:03,840 Speaker 1: will be held in Cutter as planned. Construction on the 307 00:20:03,880 --> 00:20:07,240 Speaker 1: country's seven new stadiums has been completed and an eighth 308 00:20:07,240 --> 00:20:09,960 Speaker 1: has been refurbished, but the country is still scrambling to 309 00:20:10,000 --> 00:20:13,000 Speaker 1: wrap up road projects and make new apartment buildings ready 310 00:20:13,000 --> 00:20:17,160 Speaker 1: for occupancy, ideally before the games begin. Cutter's government has 311 00:20:17,200 --> 00:20:20,439 Speaker 1: spent a staggering amount of money on infrastructure ahead of 312 00:20:20,440 --> 00:20:23,800 Speaker 1: the World Cup. There's the stadiums themselves, of course, but 313 00:20:23,880 --> 00:20:27,760 Speaker 1: other projects a metro system and airport expansion, and the 314 00:20:27,840 --> 00:20:31,560 Speaker 1: construction of a new planned megacity called lu Sale have 315 00:20:31,720 --> 00:20:36,240 Speaker 1: each cost tens of billions of dollars. Uber Khan, a 316 00:20:36,359 --> 00:20:40,200 Speaker 1: senior investment director at Al Ryan Investment who's based in Cutter, 317 00:20:40,640 --> 00:20:43,880 Speaker 1: estimates the government spent over three hundred and fifty billion 318 00:20:43,960 --> 00:20:47,000 Speaker 1: dollars ahead of the event. That money has been spent 319 00:20:47,160 --> 00:20:52,040 Speaker 1: on essentially, in many cases building transport infrastructure that was 320 00:20:52,640 --> 00:20:56,200 Speaker 1: very badly needed. Father had already in prior to two 321 00:20:56,240 --> 00:21:00,440 Speaker 1: thousand and ten. The population had doubled over a relatively 322 00:21:00,440 --> 00:21:04,680 Speaker 1: short period of time given the earlier expansion in gas 323 00:21:05,400 --> 00:21:10,120 Speaker 1: llergy infrastructure and lergy production capacity. So the country hadn't 324 00:21:10,200 --> 00:21:13,800 Speaker 1: kept up with that growth, and so there was very 325 00:21:13,840 --> 00:21:20,240 Speaker 1: serious and significant infrastructure bottled. Some of that money is 326 00:21:20,280 --> 00:21:22,680 Speaker 1: still at work here on the street in Dojan's West 327 00:21:22,720 --> 00:21:25,840 Speaker 1: Bay district. It's not quite nine am, and work on 328 00:21:25,960 --> 00:21:29,280 Speaker 1: road projects is already starting to slow down. An hour 329 00:21:29,400 --> 00:21:32,720 Speaker 1: from now, the small army of laborers will have disappeared. 330 00:21:33,080 --> 00:21:37,359 Speaker 1: That in itself something new. Public outcry over depths of 331 00:21:37,400 --> 00:21:41,679 Speaker 1: low income construction workers has prompted reforms, including limiting the 332 00:21:41,760 --> 00:21:45,160 Speaker 1: hours that laborers can spend working outside in the summer heat. 333 00:21:45,800 --> 00:21:48,919 Speaker 1: It's already a hundred and two degrees fahrenheit in a 334 00:21:48,960 --> 00:21:55,720 Speaker 1: few hours will be hundred and fourteen. Last year, Counter 335 00:21:55,880 --> 00:21:59,280 Speaker 1: also introduced the first universal minimum wage in the Gulf 336 00:21:59,680 --> 00:22:02,399 Speaker 1: No and that it's not based on nationality or gender. 337 00:22:02,840 --> 00:22:06,920 Speaker 1: It's two hundred and seventy four dollars per month. Other 338 00:22:07,000 --> 00:22:10,840 Speaker 1: rules of trying to impose workplace safety standards force companies 339 00:22:10,880 --> 00:22:15,479 Speaker 1: to pay workers on time, stamp out predatory employee recruitment fees, 340 00:22:15,880 --> 00:22:19,119 Speaker 1: and allow workers at all salary levels to change jobs 341 00:22:19,160 --> 00:22:27,840 Speaker 1: without employers permission. They've had mixed success global attention focusing 342 00:22:27,840 --> 00:22:31,919 Speaker 1: on the World Cup, the uproar likely hasn't ended. Amen 343 00:22:32,000 --> 00:22:36,359 Speaker 1: Mossy chero Glu, an associate professor at American University and 344 00:22:36,359 --> 00:22:40,520 Speaker 1: a macro economist at Atlantic Council, predicts that rising interest 345 00:22:40,600 --> 00:22:44,359 Speaker 1: in corporate environmental, social and Government standards or e s 346 00:22:44,400 --> 00:22:50,159 Speaker 1: G may translate into pressure on the ground from these companies. 347 00:22:50,480 --> 00:22:54,680 Speaker 1: And I think that the governments in division government they 348 00:22:54,720 --> 00:22:59,440 Speaker 1: will respond and pay attention to those requests coming from 349 00:22:59,440 --> 00:23:03,040 Speaker 1: these company. Reforms to the labor market aren't just crucial 350 00:23:03,080 --> 00:23:05,879 Speaker 1: for the low income workers. If the country wants to 351 00:23:05,920 --> 00:23:09,040 Speaker 1: make use of all the new apartments and hotels it's built, 352 00:23:09,240 --> 00:23:13,000 Speaker 1: it has to draw talent and tourists. We're talking about 353 00:23:13,080 --> 00:23:15,480 Speaker 1: you know, you know, probably a million of workers are 354 00:23:15,480 --> 00:23:18,800 Speaker 1: going to leave the country because there's no more walk 355 00:23:18,840 --> 00:23:21,520 Speaker 1: opportunities for them in the country. So I think it's 356 00:23:21,560 --> 00:23:23,239 Speaker 1: about that the small group of people who are going 357 00:23:23,280 --> 00:23:25,439 Speaker 1: to stay, and they're going to be mainly in the 358 00:23:25,480 --> 00:23:29,400 Speaker 1: service industry and a little in the infanc in construction 359 00:23:29,400 --> 00:23:39,840 Speaker 1: and construction diversification the holy grail of economic stability in 360 00:23:39,840 --> 00:23:43,320 Speaker 1: the Persian Gulf as leaders try to prepare their economies 361 00:23:43,320 --> 00:23:46,040 Speaker 1: for a world that needs less oil and gas. It's 362 00:23:46,040 --> 00:23:48,720 Speaker 1: also a goal that seems less relevant with oil and 363 00:23:48,800 --> 00:23:52,439 Speaker 1: natural gas and short supply after Russia's invasion of Ukraine. Still, 364 00:23:52,560 --> 00:23:56,680 Speaker 1: Clutter's finance Minister Aliyah Kuwari warns that the country can 365 00:23:56,800 --> 00:24:00,720 Speaker 1: expect the influx of cash prompted by rising energy prices 366 00:24:00,760 --> 00:24:05,200 Speaker 1: to continue indefinitely. We have a very discipline, you know, 367 00:24:05,240 --> 00:24:07,960 Speaker 1: fiscal policy plan in a medium term plan for the 368 00:24:08,000 --> 00:24:11,040 Speaker 1: country and this is based in a long term planning 369 00:24:11,520 --> 00:24:14,280 Speaker 1: and spending and we are very disciplined about our spending 370 00:24:14,320 --> 00:24:17,520 Speaker 1: and our fish country reforms. So we're not changing our 371 00:24:17,520 --> 00:24:23,199 Speaker 1: plans as a result of this high oil prices. Cutter 372 00:24:23,400 --> 00:24:26,639 Speaker 1: is still five months away from having this global spectacle 373 00:24:26,760 --> 00:24:30,200 Speaker 1: on its own soil, but President Putin may have already 374 00:24:30,240 --> 00:24:33,240 Speaker 1: helped to answer the question of what will support the 375 00:24:33,280 --> 00:24:37,959 Speaker 1: economy when all the fans have gone home in Doha. 376 00:24:38,119 --> 00:24:52,520 Speaker 1: Simone fox Men, Bloomberg News from to Sri Lanka. The 377 00:24:52,560 --> 00:24:56,040 Speaker 1: best of times and the worst in today's global economy. 378 00:24:56,600 --> 00:24:59,720 Speaker 1: That was this episode of Stephanomics. We'll be back next week. 379 00:25:00,040 --> 00:25:02,240 Speaker 1: In the meantime, do please rate the show if you 380 00:25:02,320 --> 00:25:05,760 Speaker 1: like it, and check out the Bloomberg terminal news website. 381 00:25:05,840 --> 00:25:09,520 Speaker 1: It's Bloomberg UK now in the UK for more economic 382 00:25:09,560 --> 00:25:12,080 Speaker 1: news and views on the global economy. You can also 383 00:25:12,119 --> 00:25:16,080 Speaker 1: follow our economics on Twitter. This episode was produced by 384 00:25:16,119 --> 00:25:20,600 Speaker 1: Mangus Hendrickson, Summer Sadi and Young Young. Special thanks to 385 00:25:20,680 --> 00:25:27,959 Speaker 1: Simone Foxman, Cud Suddie Ran Jansen, Anusha Underci and Jeanette Rodriguez. 386 00:25:28,640 --> 00:25:32,000 Speaker 1: Mike Sasso is executive producer of Stephanomics and the head 387 00:25:32,040 --> 00:26:00,800 Speaker 1: of Bloomberg Podcast is Francesca leav Ve.