Economy

Sri Lanka’s rupee has plunged to a record low to become the world’s worst-performing currency, as President Gotabaya Rajapaksa struggles to contain a worsening economic and political crisis. The Sri Lankan rupee was hovering near SLRs300 per US dollar on Wednesday, down 32 per cent year to date and lagging even Russia’s rouble, after Rajapaksa ended emergency rule just days after it was imposed. Sri Lanka is facing a foreign exchange crisis as its government grapples with looming debt payments, widespread protests and an economic emergency. The backpedal on the emergency decree from Rajapaksa’s government came after his new finance minister, Ali Sabry, quit less than 24 hours into the job.Sabry’s resignation was the latest in a rush of departures. The country’s entire cabinet quit over the weekend following nationwide protests over severe food and power shortages as well as runaway inflation. Central bank governor Ajith Nivard Cabraal, who was scheduled to oversee a policy meeting on Thursday, also resigned on Monday.The hollowing out of Rajapaksa’s administration has stoked concerns over the country’s ability to secure help from the IMF to avoid defaulting on looming international bond payments. Previous finance minister and the president’s brother Basil Rajapaksa had been preparing to fly to Washington to discuss terms with the IMF prior to his resignation over the weekend. “Things don’t look good. So much depends on whether they can get any IMF funding,” said Steve Cochrane, chief Asia-Pacific economist at Moody’s. “A stable government matters.”Cochrane said raising interest rates could help curb inflation and potentially bolster the rupee. “But there are other factors driving inflation that the central bank has little control over,” he added, including commodity prices pushed up by Russia’s invasion of Ukraine, supply chain constraints and lack of foreign reserves to pay for imports.

Analysts said markets were focused on a $1bn sovereign dollar bond repayment due on July 25. On Wednesday, that bond was trading well below face value at a record low of $0.58, as doubts mounted over Sri Lanka’s ability to come up with enough dollar funding to make the payment.As finance minister, the president’s brother oversaw a regime of drastic tax cuts that prompted global rating agencies to repeatedly downgrade the country’s sovereign credit rating, leaving it frozen out of international debt markets.That forced Sri Lanka to make interest payments on its sovereign bonds from dwindling foreign reserves, which have come under pressure during the coronavirus pandemic. The tourism sector, one of the island nation’s main revenue generators, has been hit particularly hard.The IMF estimated in late February that Sri Lanka had only about a month worth of foreign reserves left.“With the government in disarray, the prospects of securing an IMF package look bleak,” said Alex Holmes, Asia economist at Capital Economics. “That again elevates the chances that the government will eventually have to resort to a sovereign default”. More

If you want to understand money and power, work in a restaurant. Years ago, when I was still waiting tables, I accepted payment with a £50 note that could only have been a more obvious fake if the word “pounds” had been misspelled. I did so because, while I knew that the note was fake, I also knew that the diner’s knuckle-duster was real. This taught me that while I valued the money my then-employer gave me, I valued the teeth our fraudulent guest had the capacity to deprive me of a lot more. While you are unlikely to face this dilemma at the average branch of PizzaExpress, how the mid-market British chain redistributes tips among its workers is a handy demonstration of how power is shifting in the 21st century, and how people respond to threats to their position and status. (If not their teeth.)Since the easing of coronavirus restrictions in the UK, many restaurants have redistributed tips from waiting staff, in order to make it easier to attract people to the skilled back-of-house kitchen roles that have become harder to fill. At PizzaExpress, this led to service charges being split 50/50 between those working on the floor and those toiling in the kitchen. Thanks to a campaign by waiting staff, backed by the trade union Unite, the chain has now reversed course: waiting staff will retain 70 per cent of service charges, with the kitchen team pocketing the remaining 30 per cent. How you feel about the justice of that says a lot about where you come from: as a former waiter, one of my few unshakeable convictions is that when customers leave a tip, they are doing so not as a commentary on the quality of the meal but on the person who served them. When I waited tables, the vast majority of my tips came in cold, hard, undetectable cash. Although in theory they all went into a communal pot, the waiting staff had quietly agreed that we would carefully restrict what and how much we added to the shared pile. Everyone had a different approach to this, as well as varying degrees of honesty in how we declared our tips to the taxman. What separated us from today’s waiters is that we were in the driving seat. The drastic decline in cash payments means that the modern waiter starts at a disadvantage: they can’t hide how much they are pulling in service charges from either their colleagues or the state. I’m not saying that serving staff should be at the front of the queue as far as the losers from the end of cash are concerned: political dissidents, people without bank accounts, or anyone with complex care needs, often suffer a bigger cost from the end of paper money. But they share a common problem, and it is therefore worth asking: how might other losers from these social and economic changes react? This is important because it’s not just in footing the bill for cashless societies that the changing dynamic between the waiting and kitchen staff is a microcosm of wider pressures. Most roles in a kitchen are “skilled” roles — or, more accurately, “credentialed” roles. As someone who used to be a very bad waiter, let me tell you being a good one requires a great deal of skill. But they are not, for the most part, skills that are easily expressed through paper qualifications. Whether you work in a care home, a call centre or wait tables, the uncredentialed worker is increasingly poorly treated and poorly remunerated. Their pay has stagnated and so has their prestige. What does this say about the rest of society? It’s instructive, I think, that what helped get PizzaExpress waiters some of their money back was the support of a trade union. That campaign was able to persuade not only management to tip the balance back in waiters’ favour on tips, but equally importantly, kitchen staff voluntarily to relinquish their 50/50 share. It’s a common anti-union argument that they cause inflation. One reading of the PizzaExpress affair would absolutely support that: after all, when the dust settles, the chain will still be struggling to recruit qualified staff to back-of-house roles, and will still need to raise pay and thus prices to do so. While it’s true to say that “unskilled” workers have had a difficult time, skilled workers have not had a particularly good one either.But it may be more accurate to see trade union membership as a thermostatic reaction for most people: a response to inflation and increased cost-of-living pressure, and, in this case, a way to reach internal accord without acrimony. That PizzaExpress workers reacted to the era of cashless payments and real-terms pay cuts by joining forces with a trade union may well be a pretty good indicator of how workers more generally respond to the new strains on their incomes and livelihoods in the months ahead. The age of inflation could yet prove to be the age of the trade [email protected] More

This is the first of a two-part series on the new era of financial warfare It was the third day of the war in Ukraine, and on the 13th floor of the European Commission’s headquarters Ursula von der Leyen had hit an obstacle.The commission president had spent the entire Saturday working the phones in her office in Brussels, seeking consensus among western governments for the most far-reaching and punishing set of financial and economic sanctions ever levelled at an adversary.A deal was close but, in Washington, Treasury secretary Janet Yellen was still reviewing the details of the most dramatic and market-sensitive measure — sanctioning the Russian central bank itself. The US had been the driving force behind the sanctions push. But as Yellen pored over the fine print, the Europeans, worried that the Russians might get wind of the plans, were anxious to push the plans over the finishing line as quickly as possible.Von der Leyen called Mario Draghi, Italian prime minister, and asked him to thrash the details out directly with Yellen. “We were all waiting around, asking, ‘What’s taking so long?’” recalls an EU official. “Then the answer came: Draghi has to work his magic on Yellen.” By the evening, agreement had been reached.Yellen, who used to chair the US Federal Reserve, and Draghi, a former head of the European Central Bank, are veterans of a series of dramatic crises — from the 2008-09 financial collapse to the euro crisis. All the while, they have exuded calm and stability to nervous financial markets.But in this case, the plan agreed by Yellen and Draghi to freeze a large part of Moscow’s $643bn of foreign currency reserves was something very different: they were effectively declaring financial war on Russia.The stated intention of the sanctions is to significantly damage the Russian economy. Or as one senior US official put it later that Saturday night after the measures were announced, the sanctions would push the Russian currency “into freefall”.This is a very new kind of war — the weaponisation of the US dollar and other western currencies to punish their adversaries.It is an approach to conflict two decades in the making. As voters in the US have tired of military interventions and the so-called “endless wars”, financial warfare has partly filled the gap. In the absence of an obvious military or diplomatic option, sanctions — and increasingly financial sanctions — have become the national security policy of choice. “This is full-on shock and awe,” says Juan Zarate, a former senior White House official who helped devise the financial sanctions America has developed over the past 20 years. “It’s about as aggressive an unplugging of the Russian financial and commercial system as you can imagine.”The weaponisation of finance has profound implications for the future of international politics and economics. Many of the basic assumptions about the post cold war era are being turned on their head. Globalisation was once sold as a barrier to conflict, a web of dependencies that would bring former foes ever closer together. Instead, it has become a new battleground. The potency of financial sanctions derives from the omnipresence of the US dollar. It is the most used currency for trade and financial transactions — with a US bank often involved. America’s capital markets are the deepest in the world, and US Treasury bonds act as a backstop to the global financial system. As a result, it is very hard for financial institutions, central banks and even many companies to operate if they are cut off from the US dollar and the American financial system. Add in the euro, which is the second most held currency in central bank reserves, as well as sterling, the yen and the Swiss franc, and the impact of such sanctions is even more chilling.The US has sanctioned central banks before — North Korea, Iran and Venezuela — but they were largely isolated from global commerce. The sanctions on Russia’s central bank are the first time this weapon has been used against a major economy and the first time as part of a war — especially a conflict involving one of the leading nuclear powers. Of course, there are huge risks in such an approach. The central bank sanctions could prompt a backlash against the dollar’s dominance in global finance. In the five weeks since the measures were first imposed, the Russian rouble has recovered much of the ground it initially lost and officials in Moscow claim they will find ways around the sanctions.Whatever the result, the moves to freeze Russia’s reserves marks a historic shift in the conduct of foreign policy. “These economic sanctions are a new kind of economic statecraft with the power to inflict damage that rivals military might,” US President Joe Biden said in a speech in Warsaw in late March. The measures were “sapping Russian strength, its ability to replenish its military, and its ability to project power”.George W Bush speaks to rescue workers, firefighters and police officers from the rubble of Ground Zero on September 14 2001 © Eric Draper/White House/Getty ImagesGlobal financial policeLike so much else in American life, the new era of financial warfare began on 9/11. In the aftermath of the terror attacks, the US invaded Afghanistan, moved on to Iraq to topple Saddam Hussein and used drones to kill alleged terrorists on three continents. But with much less scrutiny and fanfare, it also developed the powers to act as the global financial police.Within weeks of the attacks on New York and Washington, George W Bush pledged to “starve the terrorists of funding”. The Patriot Act, the controversial law, which provided the basis for the Bush administration’s use of surveillance and indefinite detention, also gave the Treasury department the power to effectively cut off any financial institution involved in money laundering from the US financial system. By coincidence, the first country to be threatened under this law was Ukraine, which the Treasury warned in 2002 risked having its banks compromised by Russian organised crime. Shortly after, Ukraine passed a new law to prevent money laundering.Treasury officials also negotiated to gain access to data about suspected terrorists from Swift, the Belgium-based messaging system that is the switchboard for international financial transactions — the first step in an expanded network of intelligence on money moving around the world.The financial toolkit used to go after al-Qaeda’s money was soon applied to a much bigger target — Iran and its nuclear programme.Stuart Levey, who had been appointed as the Treasury’s first under-secretary of terrorism and financial intelligence, remembers hearing Bush complain that all the conventional trade sanctions on Iran had already been imposed, leaving the US without leverage. “I pulled my team together and said: ‘We haven’t begun to use these tools, let’s give him something he can use with Iran’,” he says.The US sought to squeeze Iran’s access to the international financial system. Levey and other officials would visit European banks and quietly inform them about accounts with links to the Iranian regime. European governments hated that an American official was effectively telling their banks how to do business, but no one wanted to fall foul of the US Treasury.During the Obama administration, when the White House was facing pressure to take military action against its nuclear installations, the US imposed sanctions on Iran’s central bank — the final stage in a campaign to strangle its economy. Levey argues that financial sanctions not only put pressure on Iran to negotiate the 2015 deal on its nuclear programme but also cleared a path for this year’s action on Russia.“On Iran, we were using machetes to cut down the path step by step, but now people are able to go down it very quickly,” he says. “Going after the central bank of a country like Russia is about as powerful a step as you can take in the category of financial sector sanctions.” Central banks do not just print money and monitor the banking system, they can also provide a vital economic buffer in a crisis — defending a currency or paying for essential imports.Soldiers walk through destroyed Russian tanks in Bucha, close to Kyiv, on Sunday © Rodrigo Abd/APRussia’s reserves increased after its 2014 annexation of Crimea as it sought insurance against future US sanctions — earning the term “Fortress Russia”. China’s large holdings of US Treasury bonds were once seen as a potential source of geopolitical leverage. “How do you deal toughly with your banker?” then secretary of state Hillary Clinton asked in 2009.But the western sanctions on Russia’s central bank have undercut its ability to support the economy. According to Official Monetary and Financial Institutions Forum, a central bank research and advisory group, around two-thirds of Russia’s reserves are likely to have been neutralised. “The action against the central bank is rather like if you have savings to be used in case of emergency and when the emergency arrives the bank says you can’t take them out,” says a senior European economic policy official.A revived transatlantic allianceThere is an irony behind a joint package of American and EU financial sanctions: European leaders have spent much of the past five decades criticising the outsized influence of the US currency.

One of the striking features of the war in Ukraine is the way Europe has worked so closely with the US. Sanctions planning began in November when western intelligence picked up strong evidence that Vladimir Putin’s forces were building up along the Ukrainian border. Biden asked Yellen to draw up plans for what measures could be taken to respond to an invasion. From that moment the US began coordinating with the EU, UK and others. A senior state department official says that between then and the February 24 invasion, top Biden administration officials spent “an average of 10 to 15 hours a week on secure calls or video conferences with the EU and member states” to co-ordinate the sanctions. In Washington, the sanctions plans were led by Daleep Singh, a former New York Fed official now deputy national security adviser for international economics at the White House, and Wally Adeyemo, a former BlackRock executive serving as deputy Treasury secretary. Both had worked in the Obama administration when the US and Europe had disagreed about how to respond to Russia’s annexation of Crimea.The EU was also desperate to avoid a more recent embarrassing precedent regarding Belarus sanctions, which ended up much weaker as countries sought carve-outs for their industries. So in a departure from previous practices, the EU effort was co-ordinated directly from von der Leyen’s office through Bjoern Seibert, her chief of staff.“Seibert was key, he was the only one having the overview on the EU side and in constant contact with the US on this,” recalls an EU diplomat. A senior state department official says Germany’s decision to scrap the Nord Stream 2 pipeline after the invasion was crucial in bringing hesitant Europeans along. It was “a very important signal to other Europeans that sacred cows would have to be sacrificed,” says the official. The other central figure was Canada’s finance minister Chrystia Freeland, who is of Ukrainian descent and has been in close contact with officials in Kyiv. Just a few hours after Russian tanks started rolling into Ukraine, Freeland sent a written proposal to both the US Treasury and the state department with a specific plan to punish the Russian central bank, a western official says. That day, Justin Trudeau, Canada’s prime minister, raised the idea at a G7 leaders emergency summit. And Freeland issued an emotional message to the Ukrainian community in Canada. “Now is the time to remember,” she said, before switching to Ukrainian, “Ukraine is not yet dead.” The threat of economic pain may not have deterred Putin from invading, but western leaders believe the financial sanctions that have been put in place since the invasion are evidence of a revitalised transatlantic alliance — and a rebuke to the idea that democracies are too slow and hesitant. “We have never had in the history of the European Union such close contacts with the Americans on a security issue as we have now — it’s really unprecedented,” says one senior EU official. Draghi takes the initiativeIn the end, the move against Russia’s central bank was the product of 72 hours of intensive diplomacy. With Russia seemingly intent on a rapid occupation of Ukraine, emotions were running high. During a video call with EU leaders on February 24, the day the invasion began, Volodymyr Zelensky, the Ukrainian president, warned: “I might not see you again because I’m next on the list.”The idea had not been the priority of prewar planning, which focused more on which Russian banks to cut off from Swift. But the ferocity of Russia’s invasion brought the most aggressive sanctions options to the fore.“The horror of Russia’s unacceptable, unjustified, and unlawful invasion of Ukraine and targeting of civilians — that really unlocked our ability to take further steps,” says one senior state department official.In Europe, it was Draghi who pushed the idea of sanctioning the central bank at the emergency EU summit on the night of the invasion. Italy, a big importer of Russian gas, had often been hesitant in the past about sanctions. But the Italian leader argued that Russia’s stockpile of reserves could be used to cushion the blow of other sanctions, according to one EU official.“To counter that . . . you need to freeze the assets,” the official says. The last-minute nature of discussions was critical to ensure Moscow was caught off-guard: given enough notice, Moscow could have started moving some of its reserves into other currencies. An EU official says that given reports Moscow had started placing orders, the measures needed to be ready by the time the markets opened on Monday so that banks would not process any trades. “We took the Russians by surprise — they didn’t pick up on it until too late,” the official says. According to Adeyemo at the US Treasury: “We were in a place where we knew they really couldn’t find another convertible currency that they could use and try to subvert this.” The last-minute talks caught some western allies off guard — forcing them to scramble to implement the measures in time. In the UK, they triggered a frantic weekend effort by British Treasury officials to finalise details before the markets opened in London at 7am on Monday. Chancellor Rishi Sunak communicated by WhatsApp with officials through the night, with the work only concluding at 4am.No clear political strategyYet if the western response has been defined by unity, there are already signs of potential faultlines — especially given the new claims about war crimes, which have prompted calls for further sanctions.Western governments have not defined what Russia would need to do for sanctions to be lifted, leaving some of the difficult questions about the political strategy for a later date. Is the objective to inflict short-term pain on Russia to inhibit the war effort or long-term containment?Even when they work, sanctions take a long time to have an impact. However, the economic pain from the crisis is being unevenly felt, with Europe suffering a much bigger blow than the US. Europe has so far been reluctant to impose an oil and gas embargo, given the bloc’s high dependence on Russian energy imports. But since the atrocities allegedly perpetrated by Russian soldiers in the suburbs of Kyiv have been revealed, a fresh round of EU sanctions was announced on Tuesday that will include a ban on Russian coal imports and, at a later stage, possibly also oil. A decision among the 27 capitals is expected later this week. The other key factor is whether the west can win the narrative contest over sanctions — both in Russia and in the rest of the world. Speaking in 2019, Singh, the White House official, admitted that sanctions imposed on Russia after Crimea were not as effective as hoped because Russian propaganda succeeded in blaming the west for economic problems. “Our inability to counter Putin’s scapegoating,” he told Congress, “gave the regime far more staying power than it would have enjoyed otherwise.” In the coming weeks and months, Putin will try to convince a Russian population undergoing economic hardship that it is the victim, not the aggressor. To China, India, Brazil and the other countries which might potentially help him evade the western sanctions, Putin will pose a deeper question about the role of the US dollar in the global economy: can you still trust America? Additional reporting by Dan Dombey in Madrid, Colby Smith in Washington, George Parker in London, Robin Wigglesworth in Oslo More

Investors are buying more US farmland in search of a hedge against inflation as commodity shortfalls caused by Russia’s invasion of Ukraine drive world food prices to record highs. Land values in the Midwest grain belt have gained 25-30 per cent in the past year while auctions draw intense bidding for available ground. Demand for land has picked up in the past month as the war in Ukraine and financial sanctions on Russia curtail critical exports of wheat and corn from the Black Sea region. The UN’s world food price index in February rose 24 per cent from a year earlier. “Interest in the asset class has never been this high before,” said Bruce Sherrick, a professor of farmland economics and director of the University of Illinois’ TIAA centre for farmland research.In the Midwestern state of Iowa, which restricts corporate ownership of farms, the buyer pool last month consisted of 35 per cent investors and 65 per cent farmers, according to the Realtors Land Institute, compared with 18 per cent investors in 2019. The price of Iowa farmland rose by a third between March 2021 and March 2022, the institute said. Big institutions have long pursued farmland, led by fund groups such as TIAA and public pension plans, but institutional investors own only 2 per cent of the $3tn US market, according to industry estimates. More than 40 funds have raised $8.7bn in the past five years to invest in US farmland, according to Preqin, a data provider. Retail investors are able to buy into farmland investment trusts such as Gladstone Land, whose shares have doubled over the past year and trade under the ticker LAND, or Farmland Partners, which is up 21 per cent over the past year.“Our investor education team cannot answer all the calls they are receiving. It’s been difficult to get to the backlog of inquiries,” said Carter Malloy, the founder of AcreTrader, a firm that enables retail investors to buy stakes in farms. As land prices rise, competition for available farms has intensified. Investors are having to look harder to find attractive ground. “We’re walking away from many more aggressively priced farms now,” said Artem Milinchuk, founder of farmland investment platform FarmTogether. Higher land prices have in some cases outstripped farmland’s earnings potential, leading income returns to investors to decline in recent years, according to Nuveen Natural Capital, a division of TIAA. But total returns, which also include price appreciation, have been strong: for annual cropland they were 11.1 per cent in 2021, according the NCREIF Farmland Index, which tracks holdings of investors including Gladstone, TIAA and Prudential.

In the Midwest, the most mature and liquid US farmland market, investors are paying high land prices at a time where farm input costs such as fertiliser and diesel are going up, said Craig Wichner, the founder of Farmland LP, an investment fund that owns more than $200mn in land and raised more than $130mn in March.“The worry is they’re investing into office buildings right before Covid,” Wichner said.About 70 per cent of US farmland is set to change hands in the next 20 years, according to the US Department of Agriculture, and institutional investors are poised to gain a bigger share as old farmers retire.John Robinson, a fourth-generation soyabean and corn farmer in central Illinois, said more investor involvement could prove valuable. “I’m not going to buy $20,000-per-acre farm ground, good Lord,” he said. “Land prices have jumped in the last two years. If there’s an investor who wants to do it, perfect. Let them take on the risk.” More

San Francisco Fed President Mary Daly compared high inflation with unemployment, saying that higher prices are “as harmful as not having a job.”
Daly said the Fed will use its tools to combat inflation. “If you don’t have that confidence, let me give it to you,” she said.

San Francisco Federal Reserve Bank chief of research Mary Daly stands near the podium before a speech at the CFA Society in San Francisco, California, U.S. July 10 2018.
Ann Saphir | Reuters

San Francisco Fed President Mary Daly is worried about inflation, telling an audience Tuesday that the high cost of living is causing a heavy burden on society.
“I understand that inflation is as harmful as not having a job,” she said, “that if you have a job and you can’t pay your bills, or I feel like I can’t save for what I need to do, then that’s keeping you up at night.”

“And our goal is to make sure that people don’t stay up worrying about whether their dollar today will be the same and worth a dollar tomorrow,” she said, during a session presented by the Native American Finance Officers Association.

Daly spoke as the Fed embarks on a policy tightening phase that will include higher interest rates and a reduction in the amount of bonds the central bank is holding. Fed officials hope that reversing the ultra-easy policies they put into place during the pandemic will help get inflation closer to their 2% longer-run goal.
The consumer price index, which measures a basket of dozens of common items, is running at a 7.9% rate over the past 12 months, the highest in more than 40 years.
While she didn’t specify how quickly she thinks the Fed will move, Daly said the efforts will have an impact.
“It will mean interest rates go up, making it harder to finance a car or a business,” she said.

“Most Americans, most people, most businesses, hopefully people in tribal nations, you all have confidence that we’re not going to let this go forever,” she added. “But if you don’t have that confidence, let me give it to you.”
Even with the higher rates, Daly said, she doesn’t see the economy entering recession, though she expects things to slow.
She said the economy “could teeter,” but “nothing that tips us into recession this year.”

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The bloc’s combined economy, which includes China and India, is projected to expand 5.2% this year, the ADB said in a report, down slightly from 5.3% forecast in December, and sharply lower than the previous year’s 6.9% growth. For 2023, the region is forecast to grow 5.3%. “The Russian invasion of Ukraine has severely disrupted the outlook for developing Asia which is still contending with COVID-19,” the ADB said in its Asian Development Outlook report.The Manila-based multilateral lender said other factors could also cloud the region’s growth outlook, including ongoing increases in commodity prices, heightened financial stability risks that may stem from aggressive interest rate hikes in the United States, and the emergence of deadlier COVID-19 variants.China’s economy will probably grow 5.0% this year, the agency said, slower than its December projection, and much weaker than its 8.1% expansion in 2021, as COVID-19 outbreaks disrupt economic activities and chill consumer spending. Except for South Asia, all sub-regions were expected to post slower-than-expected growth this year. The ADB now sees East Asia and Southeast Asia growing 4.7% and 4.9% respectively, instead of 5.0% and 5.1%.With the sharper-than-expected increases in commodity prices, the ADB raised its inflation forecast for the region to 3.7% in 2022 from its earlier forecast of 2.7%, before easing to 3.1% in 2023.GDP GROWTH 2020 2021 2022 2022 2022 2022 2023 JULY SEPT DEC APR APR Central Asia -2.0 5.6 4.0 4.2 4.4 3.6 4.0 East Asia 1.8 7.6 5.1 5.1 5.0 4.7 4.5 China 2.2 8.1 5.5 5.5 5.3 5.0 4.8 South Asia -5.2 8.3 7.0 7.0 7.0 7.0 7.4 India -6.6 8.9 7.5 7.5 7.5 7.5 8.0 SEast Asia -3.2 2.9 5.2 5.0 5.1 4.9 5.2 Indonesia -2.1 3.7 5.0 4.8 5.0 5.0 5.2 Malaysia -5.6 3.1 5.7 6.1 5.9 6.0 5.4 Myanmar 3.2 -18.4 n/a n/a n/a -0.3 2.6 Philippines -9.6 5.6 5.5 5.5 6.0 6.0 6.3 Singapore -4.1 7.6 4.1 4.1 4.1 4.3 3.2 Thailand -6.2 1.6 4.9 3.9 4.0 3.0 4.5 Vietnam 2.9 2.6 7.0 6.5 6.5 6.5 6.7 The Pacific -6.0 -0.6 4.0 4.8 4.7 3.9 5.4 Developing -0.8 6.9 5.4 5.4 5.3 5.2 5.3 Asia INFLATION 2020 2021 2022 2022 2022 2022 2023 JULY SEPT DEC APR APR Central Asia 7.7 8.9 6.3 6.7 7.3 8.8 7.1 East Asia 2.2 1.1 2.2 2.2 2.0 2.4 2.0 China 2.5 0.9 2.3 2.3 2.1 2.3 2.0 South Asia 6.5 5.7 5.1 5.1 5.3 6.5 5.5 India 6.2 5.4 4.8 4.8 4.8 5.8 5.0 SEast Asia 1.5 2.0 2.4 2.4 2.5 3.7 3.1 Indonesia 2.0 1.6 2.8 2.7 2.7 3.6 3.0 Malaysia -1.1 2.5 2.0 2.3 2.3 3.0 2.5 Myanmar 5.7 3.6 n/a n/a n/a 8.0 8.5 Philippines 2.4 3.9 3.5 3.5 3.7 4.2 3.5 Singapore -0.2 2.3 1.2 1.4 1.4 3.0 2.3 Thailand -0.8 1.2 1.0 1.0 1.4 3.3 2.2 Vietnam 3.2 1.8 4.0 3.5 3.8 3.8 4.0 The Pacific 2.9 3.1 3.9 4.1 4.1 5.9 4.7 Developing 3.2 2.5 2.7 2.7 2.7 3.7 3.1 Asia  More

Yellen and WHO Director-General Tedros Adhanom Ghebreyesus discussed the importance of continuing efforts to vaccinate 70% of the population in all countries this year, and working to strengthen the global architecture to fight pandemics.”They agreed on the urgency of tackling the chronic under-funding of pandemic preparedness before the world’s attention turns elsewhere,” Treasury said in a statement.Nearly 491 million people have been reported to be infected by the novel coronavirus globally and over 6.5 million have died, according to a Reuters tally.Yellen underscored the United States’ commitment to working closely with the WHO, the World Bank and the Group of 20 major economies to develop a financial intermediary fund on pandemic preparedness housed at the World Bank.She and Tedros agreed such a fund would be an important element of the pandemic preparedness architecture.Yellen emphasized the U.S. remains committed to helping countries get more COVID-19 vaccines in arms around the world and to supporting robust, well-coordinated efforts, including with the international financial institutions.She stressed the G20 Finance-Health Task Force should work to bring finance ministers and their health counterparts more closely together to strengthen the global health architecture.Tedros welcomed Yellen’s leadership in pushing for a stronger global response to COVID-19, better longer-term pandemic preparedness and greater health finance collaboration, a source familiar with the meeting said.They also discussed the obstacles to boosting vaccination rates and the need for stronger coordination, as well as clear political, financial, operational and public messaging. More

Yellen, in prepared remarks to the House of Representatives Financial Services Committee for a hearing on Wednesday, said she will ask institutions including the World Bank and the African Development Bank to expand ways to address food security, “including long-term investments in agricultural productivity and agricultural infrastructure.”The international financial institutions, including the International Monetary Fund, will play a critical role in addressing spillovers from the Ukraine conflict that are heightening economic vulnerabilities in many countries battered by the COVID-19 pandemic, she said.”The IMF, World Bank, and EBRD (European Bank for Reconstruction and Development) will be critical partners in rebuilding Ukraine, alongside bilateral donors, and they also will provide vital support to neighboring countries welcoming refugees,” Yellen said.The IMF has provided $1.4 billion in rapid financing for Ukraine, while the World Bank has provided $490 million in rapid financing for Ukraine, part of a $3 billion package of support planned in coming months. The EBRD has proved an initial 2 billion-euro package for Ukraine.Yellen said this assistance has given Ukraine fiscal space to pay salaries for soldiers, doctors, nurses and civilian government employees while meeting its external debt obligation.”These are admirable acts of credibility by a government under siege,” she said.Yellen added that the multilateral development banks should promote energy efficiency and capital investments to help governments diversify away from fossil-fuel-based energy sources including Russia.She said the Biden administration was seeking congressional authorization to provide financing to bolster IMF lending facilities for poor and vulnerable countries — the Poverty Reduction and Growth Trust and the new IMF Resilience and Sustainability Trust. More