Aurelia Butler

COLOMBO/LONDON (Reuters) – An International Monetary Fund (IMF) team arrives in Sri Lanka on Monday for talks on a bailout programme, but time is short for a country just days from running out of fuel and likely months from getting any relief money.Sri Lanka is battling its worst financial crisis since independence in 1948, as decades of economic mismanagement and recent policy errors coupled with a hit from COVID-19 to tourism and remittances, shrivelling foreign reserves to record lows.The island nation of 22 million people suspended payment on $12 billion debt in April. The United Nations has warned soaring inflation, a plunging currency and chronic shortages of fuel, food and medicine could spiral into a humanitarian crisis.The IMF team, visiting Colombo through June 30, will continue recent talks on what would be Sri Lanka’s 17th rescue programme, the IMF said on Sunday.”We reaffirm our commitment to support Sri Lanka at this difficult time, in line with the IMF’s policies,” the global lender said in a statement.Colombo hopes the IMF visit, overlapping with debt restructuring talks, will yield a quick staff-level agreement and a fast track for IMF board disbursements. But that typically takes months, while Sri Lanka risks more shortages and political unrest.”Even if a staff-level agreement is reached, final programme approval will be contingent upon assurances that official creditors, including China, are willing to provide adequate debt relief,” said Patrick Curran, senior economist at U.S. investment research firm Tellimer.”All considered, the restructuring is likely to be a protracted process.”But the crisis is already overwhelming for average Sri Lankans, like autorickshaw driver Mohammed Rahuman, 64, who was recently standing in line for gasoline for more than 16 hours.”They say petrol will come but nothing yet,” he told Reuters. “Things are very difficult. I cannot earn any money, I cannot go home and I cannot sleep.” Snaking lines kilometres long have formed outside most fuel pumps since last week. Schools in urban areas have closed and public workers have been asked to work from home for two weeks.Bondholders expect the IMF visit to give clarity on how much debt Sri Lanka can repay and what haircuts investors may have to take.”This IMF visit is very important – the country will need every help and support it can get,” said Lutz Roehmeyer, portfolio manager at Berlin-based bondholder Capitulum Asset Management. “For many international bondholders, this will be a key requirement to ensure they come to the table and talk about a debt restructuring in the first place.” Prime Minister Ranil Wickremesinghe said this month an IMF programme is crucial to access bridge financing from sources such as the World Bank and Asian Development Bank.Representatives from Sri Lanka’s financial and legal advisors, Lazard (NYSE:LAZ) and Clifford Chance, are in Colombo. More

Rightmove said asking prices for homes put on sale between May 15 and June 11 were 0.3% higher than a month earlier, down from a 2.1% rise in its May data.Compared with a year earlier, asking prices are up 9.7%, less than the 10.2% increase recorded for May.”The exceptional pace of the market is easing a little, as demand gradually normalises and price rises begin to slow, which is very much to be expected given the many record-breaking numbers over the past two years,” Rightmove director Tim Bannister said.Rightmove expects price increases to slow further over this year, to give a 5% annual rise.Earlier this month Bank of England Deputy Governor Jon Cunliffe said the property market appeared to be slowing, reflecting broader weakness as the public faced the highest consumer price inflation in 40 years.The BoE has raised rates five times since December to 1.25%, and financial markets expect them to hit 3% by the year’s end. House prices surged in Britain and many other Western countries after the initial onset of the COVID-19 pandemic, as many richer households had spare disposable income and sought more spacious housing for working from home.Other house price measures from Nationwide Building Society and Halifax have also cooled from recent peaks, though year-on-year price gains remain high.Rightmove said the number of prospective buyers per home on offer was still more than double its level before the pandemic – and 6% higher than a year ago – but had dropped by 8% over the past month.In a sign of the bottlenecks affecting many parts of Britain’s economy, Rightmove said the legal conveyancing process for buying a home now took an average of five months, 50% longer than in 2019. More

Good morning.The German government said yesterday it would pass emergency laws to reopen mothballed coal plants for electricity generation and auction gas supplies to industry to incentivise businesses to curb consumption. The move illustrated the depth of concern in Berlin over possible gas shortages in the winter months as Russian cuts to gas exports threaten shortfalls in Europe’s largest economy.“This is bitter but in this situation essential to lower the use of gas,” said German economic minister Robert Habeck, a member of the Green party. The plan is at odds with Germany’s climate policy, which aims to phase out coal by 2030 as it is much more carbon-intensive than gas.Russia cut capacity on the main gas export pipeline to Germany last week by 60 per cent, sending ripples across the continent as western officials became convinced that Moscow is weaponising its gas exports in response to EU sanctions following the full-scale invasion of Ukraine. Italy, which has also seen gas supplies from Russia fall, is expected to announce emergency measures in the coming days if supplies are not restored. Habeck said Berlin was working on a new law to temporarily bring back up to 10 gigawatts of idle coal-fired power plants for up to two years; that would increase Germany’s dependence on coal for electricity generation by up to a third. “The situation is serious,” said Habeck. “It is obviously Putin’s strategy to upset us, to drive prices upwards, and to divide us . . . We won’t allow this to happen.” Thanks for reading FirstFT Asia, and we hope you have a great week. Here’s the rest of the day’s news. — SophiaFive more stories in the news1. US lawmakers push for more money to counter China in Indo-Pacific The US House of Representatives will introduce the “Indo-Pacific Engagement Act” to spur the White House to funnel more money to the Indo-Pacific region. Lawmakers are aiming to narrow the gap between the rhetoric about Asia being the priority region and funding levels.2. Crypto industry braced for fallout after weekend meltdown Bitcoin fell as low as $17,628 on Saturday before rebounding. This has contributed to an escalating credit crunch in the digital asset industry that threatens to engulf many of its major actors.3. EU and India to restart trade talks after decade-long gap In an effort to woo New Delhi away from its historic ties with Russia, the EU will begin talks with India at the end of June for agreements on trade, investment protection and other specific regional products. The targeted timeline is for the deal to be signed by the end of 2023.4. Japan’s largest discount store Daiso besieged by sinking yen Seiji Yano, the president of Daiso Industries, has vowed to defend the chain’s price tag of ¥100 ($0.75) per item despite an existential threat to the business from global inflation and the plunging yen. In his first-ever interview with the media, he said that the store was reviewing its product mix to ensure its survival.Go deeper: The Bank of Japan kept its main policy rate at minus 0.1 per cent last week, putting it at odds with other central banks that have raised interest rates to tame inflation.5. China launches new aircraft carrier China has launched its most advanced aircraft carrier to date as Beijing races to catch up with US military capabilities and make good on its threats to retake Taiwan by force if necessary. The vessel, named Fujian after the coastal province opposite Taiwan, had been under construction at Shanghai’s Jiangnan shipyard since 2018.The day aheadWorld Air Transport Summit The International Air Transport Association continues their summit in Doha, Qatar today, and will release the IATA Annual Report.Juneteenth The United States observes a federal holiday today to commemorate the end of the legal enslavement of Black Americans.Economic data Germany releases its May producer price index (PPI) figures today, and the UK will release trade figures, Rightmove monthly house price index plus Office for National Statistics data on house affordability.India Australian defence minister Richard Marles visits India, continuing newly elected prime minister Anthony Albanese’s focus on tightening relations with the subcontinent as a counter to China.What else we’re readingChinese tourists struggle to clear Covid travel hurdles As the rest of the country remains wary, Beijing and Shanghai residents have emerged from stringent lockdowns. Tourists tentatively beginning to move about the country are encountering a patchwork of local quarantine regulations that, in some cases, require seven-day quarantines before travellers can begin their holidays.Related: Chinese consumers are forecast to spend $5.2bn on camping equipment this year, as urbanites trek into the wild for escapist adventures.Why pay rises for your company’s ‘flight risks’ can backfire Bosses are doing their best to throw money and promotions at would-be resigners to convince them to stay, but the Great Resignation has complicated this practice of counter-offering.Ransomware gangs target Japan as a feeding ground The US and Europe have long been the principal targets of ransomware attackers. But now one of Japan’s strongest natural defences — its language — is quickly evaporating with the help of AI translation software that aids criminals in crafting traps that appear more plausible and legitimate.

© Maria Hergueta

How to escape innovation’s Great Stagnation With inflation soaring and research productivity dropping, ideas have been getting more expensive to find. Spending more on R&D won’t solve the productivity problem — the urgent issue is to improve the scientific process. The answer may lie in accelerating remote collaboration.Men must step up at home to boost birth rates When we talk about how to address falling birth rates, the conversation usually centres on young women. But a more fruitful policy target may in fact be men. With career versus family no longer such a trade-off for women, “having it all” is only possible with increased paternal childcare, writes John Burn-Murdoch.TravelThe pandemic accelerated the trend toward mini campervans. While smaller RVs lose out on kitchens and toilets, they’re easier to drive, park, and manuever — opening up a whole new world of adventure.

© Lyndon French | Patti Waldmeir with the Mercedes-Benz Metris More