Aurelia Butler

These risks, along with the threat of a grid failure due to repeated power cuts and persistent high inflation, have increased the systemic risks to the financial system, the South African Reserve Bank (SARB) said in its biannual health check on Monday.The South African economy has been pummeled by a host of negative factors this year, with the continent’s most advanced economy facing its worst-ever power cuts, adding billions of rand to the cost of doing business and household expenses.In February, the country was also put on a “grey list” by the Financial Action Task Force (FATF), an intergovernmental financial crime watchdog, to force it to implement standards to prevent money laundering and terrorism financing.The FATF greylisting and poor local economic conditions have brought down foreign participation in South African government bonds to 25% from 42% in the last five years, SARB’s Financial Stability Review (FSR) said. These local issues were followed earlier this month by a diplomatic stand-off with the U.S. as one of its diplomats accused the country of supplying weapons to Russia, leading to fears of sanctions and to a sharp drop in the rand.Sanctions on South Africa would make it “impossible to finance any trade or investment flows, or to make or receive any payments from correspondent banks in USD,” the report said. It said the country’s domestic financial institutions and financial system remained resilient amid the recent global banking sector turmoil, but a mix of global and local factors could test its strength beyond the next 12 months. More

Russia has stepped up its drive to boost economic ties with Africa to help offset a big chill in relations with the West prompted by its invasion of Ukraine, and plans to hold an Africa-Russia summit in St Petersburg in July.Kenya’s presidency said in a statement that bilateral trade with Russia was still low despite the potential and the pact would give business the “necessary impetus”.It did not say when the pact might be sealed or give details on what it might encompass. Russia currently sells mostly grain and fertilisers to Kenya.On Ukraine, the statement reiterated Kenya’s support for respecting the territorial integrity of all countries, adding: “Kenya calls for a resolution of the conflict in a manner respectful to the two parties.”Russia says its invasion of Ukraine, launched on Feb. 24, 2022, is aimed at protecting its own security against Ukraine’s pro-Western leadership.Kyiv and its Western allies accuse Moscow of waging an unprovoked war of aggression. Western nations have slapped sweeping economic sanctions on Russia, prompting it to forge closer ties with China, India, African nations and others.Lavrov has visited the African continent at least three times this year, while Ukraine’s foreign minister Dmytro Kuleba travelled to countries including Ethiopia, Rwanda and Mozambique last week.Kenya’s presidency said Lavrov was on his way to Cape Town for a June 1 meeting of foreign ministers of the BRICS group of emerging economies, which comprises Brazil, Russia, India, China and South Africa. More

WASHINGTON (Reuters) – The U.S. is rapidly approaching the deadline for Congress to pass a deal, reached over the weekend by Democratic President Joe Biden and top congressional Republican Kevin McCarthy, to suspend the government’s $31.4 trillion debt ceiling or risk a catastrophic default.WHEN WAS THE DEBT CEILING REACHED?Washington regularly sets a limit on federal borrowing. Currently, the ceiling is roughly equal to 120% of the country’s annual economic output. The debt reached that ceiling in January and the Treasury Department has kept obligations just within the limit by suspending investments in some federal pension funds while continuing to borrow from investors.The Treasury on Friday warned that it could run out of room under the limit as soon as June 5, a few days later than its earlier June 1 forecast. Because the Treasury borrows close to 20 cents for every dollar it spends, Washington at that point would start missing payments owed to lenders, citizens or both.IS THE DEBT CEILING GOOD FOR ANYTHING?Few counties in the world have debt ceiling laws and Washington’s periodic lifting of the borrowing limit merely allows it to pay for spending Congress has already authorized.Treasury Secretary Janet Yellen and other policy experts have called on Washington to eliminate the limit, because it amounts to a bureaucratic stamp on decisions already made.Some analysts have proposed that the Treasury can bypass the crisis by minting a multitrillion-dollar platinum coin and putting it in the government’s account, an idea widely seen as an outlandish gimmick. Others argue the debt ceiling itself violates the U.S. Constitution. But if the Biden administration invoked that argument, which involves the 14th Amendment, a legal challenge would follow.The White House has dismissed both ideas as impracticable at this stage.WHAT HAPPENS WHEN WASHINGTON CAN NO LONGER BORROW MONEY?Shockwaves would ripple through global financial markets as investors questioned the value of U.S. bonds, which are seen as among the safest investments and serve as building blocks for the world’s financial system.The U.S. economy would almost certainly fall into a recession if the government was forced to miss payments on things like soldiers’ salaries or Social Security benefits for the elderly. Economists expect that millions of Americans would lose their jobs. Ratings agencies have warned they could downgrade the U.S.’s sovereign credit rating — as occurred in a prior 2011 showdown — and investors have shunned some U.S. debt securities that come due in the coming weeks as they try to avoid bills maturing when the risk of a debt default is highest.HOW DID WE GET HERE?Republicans, who hold a narrow 222-213 majority in the House of Representatives, in late April passed a bill that would raise the debt limit but also set in place sweeping spending cuts over the next decade.The bill has no chance of approval in the Democratic-controlled U.S. Senate. McCarthy and Biden over the weekend agreed on a tentative deal to suspend the borrowing limit for two years and cap spending, but they face objections from the most partisan lawmakers in each party.HAVEN’T WE HEARD THIS SONG BEFORE?This kind of brinkmanship has been part of U.S. politics for decades but worsened significantly after fiscal hawks in the Republican Party grew in power since 2010.In a 2011 showdown, House Republicans successfully used the debt ceiling to extract sharp limits on discretionary spending from Democratic President Barack Obama. Spending caps stayed in place for most of the rest of the decade, but the episode rattled investors and led to a historic downgrade of the U.S. credit rating. More

The writer is the author of ‘The Case for Nature’ Protecting nature is lovely but climate tech is cool. Learning from the success of the latter could be essential to bolstering the former: we need to move nature from the realm of nice-to-haves and place it firmly at the heart of the modern economy.While the climate fight is far from won, there is cause for cautious optimism. In 2022, the EU produced more power from wind and solar than from gas. The US Inflation Reduction Act marked the single largest-ever climate action taken by the world’s largest historical emitter of greenhouse gases. Global climate pledges, including from developing nations, have reached the point where they would keep the world well below 2C of warming if fully implemented. Climate investments have also weathered the broader market slump. Last year saw a record near $500bn invested in renewable energy. There were over 1,000 venture and growth equity investments into climate start-ups in 2022; the number of deals grew in every quarter, with over $40bn deployed. These dramatic shifts in infrastructure, policy and finance are supported by a subtle, but powerful, force: a good narrative. Climate action is no longer just righteous, it is now the stuff of exciting careers. This is no longer a field only for engineers and scientists. Narratives can create a virtuous circle of action. Pioneering governments and companies kick-started markets for lower-carbon products and services; the economic logic for climate action encouraged entrepreneurs and investors to enter a visibly thriving sector, leading to more ambitious net zero commitments and investment. The biodiversity crisis is just as urgent. As extinctions accelerate and habitats are lost, it isn’t just plants and animals that suffer — the natural services that humans rely on for survival, from fresh water to soil health and pollination, are also at risk. But this other crisis doesn’t receive anywhere near the level of attention as climate; when it does, it is still stuck in the old paradigm of charitable giving to protect picturesque landscapes and charismatic species. The conservation movement did inspire successive generations, but the time has come to complement the intrinsic case for nature with an economic one.The work has already begun: across the world, pioneers are building markets for ecosystem services like carbon and biodiversity, proving that nature-positive models of food production and eco-tourism can raise community incomes — even that cities can save money and lives by relying on natural infrastructure such as mangrove wetlands. In some places, agricultural subsidies are being reshaped to encourage nature recovery. Companies are discovering that nature-related risks to supply chains are all-too real, and that there is measurable economic value in mitigating them.This work is helped by technology. We can now measure and monitor nature, from satellite-based habitat monitoring to bioacoustics that can analyse sounds with a precision that would have been unimaginable a decade or two ago. Better measurement allows companies or governments to pay for tangible outcomes, rather than to shovel money at feel-good projects that lack transparency.The point here is economic logic. And while the business cases for nature are nowhere near as developed as for energy, elevating early examples of success and backing them up with sound money and policies could create the necessary momentum for change. Putting safeguards in place so communities remain the primary beneficiaries of new business models will be vital. But the successful shift in the climate narrative has shown that these risks can largely be overcome. While the climate story is still being written, nature’s looks ripe for a reboot. More