THE COLOMBO STOCK EXCHANGE (CSE) will remain temporarily closed for a week from Monday (18) to provide investors with an opportunity to have "more clarity and understanding" of the current economic conditions in crisis-hit Sri Lanka.
"The stock market will remain temporarily closed for a period of five business days from April 18, 2022," the Securities and Exchange Commission of Sri Lanka (SEC) said in a press release on Saturday (16).
Sri Lanka is facing its worst economic crisis since gaining independence from the UK in 1948. The economic crisis also triggered a political turmoil in the island nation with citizens holding nationwide street protests for weeks over lengthy power cuts and shortages of fuel, food and other daily essentials and demanding the ouster of president Gotabaya Rajapaksa.
The board of directors of the CSE in a communication on Friday (15) called upon the SEC to temporarily close the stock market citing the present situation in the country, the release said.
Many other stakeholders of the securities market, including the Colombo Stock Brokers Association, have also sought the temporary closure of the market on the same grounds.
The SEC said it carefully considered the grounds and evaluated the impact the present situation in the country could have on the stock market, in particular the ability to conduct an orderly and fair market for trading in securities.
"The SEC is of the view that it would be in the best interests of investors as well as other market participants if they are afforded an opportunity to have more clarity and understanding of the economic conditions presently prevalent, in order for them to make informed investment decisions," the release said.
Sri Lanka is on the brink of bankruptcy, saddled with dwindling foreign reserves and $25 billion (£19.14 bn) in foreign debt due for repayment over the next five years. Nearly $7 billion (£5.36 bn) is due this year.
The government announced Tuesday (12) that it is suspending repayments of foreign debt, including bonds and government-to-government borrowing, pending the completion of a loan restructuring programme with the International Monetary Fund (IMF).
Rajapaksa has defended his government's actions, saying the foreign exchange crisis was not his making and the economic downturn was largely pandemic driven by the island nation's tourism revenue and inward remittances waning.
(PTI)
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Budget halted economic growth, Bank of England warns
Dec 20, 2024
THE Bank of England has cautioned that the UK economy is stagnating, following measures introduced in chancellor Rachel Reeves’s budget. Businesses are reportedly responding to tax hikes and a higher minimum wage by cutting jobs and raising prices.
Andrew Bailey, the Bank's governor, revealed that growth forecasts for the final quarter of 2024 have been downgraded to "zero." He also stressed a cautious approach to reducing interest rates, which remain at 4.75 per cent, citing economic uncertainty. “We need to ensure we meet the 2 per cent inflation target sustainably,” Bailey said.
The Bank attributed some of the economic slowdown to Reeves’s decision to raise employers’ national insurance contributions and increase the national living wage, the Times reported. A survey of businesses indicated that the £25 billion national insurance hike has led many firms to increase prices and lay off workers.
Labour, which has promised to boost living standards and lead the G7 in economic growth, is facing criticism over the sluggish economy. Prime minister Sir Keir Starmer defended the budget, acknowledging that recovery would take time. “It can’t all be fixed by Christmas,” he told MPs, arguing that the tax measures were essential for economic stability.
However, inflation has risen to 2.6 per cent in November, its highest level in eight months, raising concerns about the balance between stimulating growth and controlling price pressures. Analysts, including Ruth Gregory from Capital Economics, warn that the Bank faces a tough decision on how quickly to lower interest rates without fuelling further inflation.
Starmer remains optimistic, insisting that reforms to planning and regulation will drive growth. “Our ambition is beyond current forecasts,” he said, reiterating Labour’s focus on improving living standards rather than specific growth targets.
Reeves defended her policies, stating, “We want to put more money in the pockets of working people, but that’s only possible if inflation is stable.” She highlighted measures such as freezing fuel duty and increasing the national living wage as efforts to support struggling families.
The Bank also pointed to global challenges, including geopolitical tensions and potential economic impacts from proposed US tariffs under Donald Trump, as factors affecting the UK’s economic outlook.
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‘UK-India trade sees growth as payments rise by 121 per cent’
Dec 19, 2024
BUSINESS activity between the UK and India flourished in 2024, with payments received by clients in Britain from India rising by 121 per cent, according to the latest data from HSBC UK.
The multinational bank highlighted the figures based on its two-way support for businesses within the India-UK corridor this week and said its data on payments and client referrals showed yearon-year growth.
In the nine months to October 2024, the value of payments made by HSBC UK business clients to India reportedly rose by 32 per cent and the bank received 36 per cent more new business client referrals from HSBC India year-on-year.
“Our data shows that business between the UK and India is not only strong, it’s getting even stronger, and the opportunities for expanding businesses in India are huge,” said Cora McLaren, head of international subsidiary banking at HSBC UK.
“India’s population is not only a vast number of potential customers, within it there is a growing middle class, creating opportunities for businesses selling quality products and services. In addition, India is increasingly seen as a hub for Global Capability Centres – from which multinational corporates run multiple strategic functions – due to the level of language and technology skills,” she added.
McLaren said, “HSBC has ties to India which go back more than 100 years. We’re very proud to be able to help ambitious UK businesses expand there and likewise welcome Indian firms operating on these shores.” She described it as a relationship working both ways, as Indian firms are increasingly doing business in the UK, “particularly those in the pharmaceutical sector in which India is a global leader”.
The data comes as India and the UK are preparing to resume Free Trade Agreement negotiations next year after prime ministers Sir Keir Starmer and Narendra Modi agreed to relaunch the process during their meeting on the sidelines of the G20 Summit in Brazil last month.
“We very much welcome the renewed commitment made by both prime ministers at G20 and the intention to restart FTA negotiations early in 2025,” said Richard McCallum, Group CEO of the UK India Business Council (UKIBC).
“As the HSBC data show, UK-India trade is growing rapidly. This will only accelerate further when the FTA is in place... In the UKIBC’s view, sustained business reforms and geopolitical factors make India a highly attractive investment destination, source of goods and services, and strategic supply chain partner for UK business across sectors,” he added.
Statistics from the Department for Business and Trade (DBT) showed the total trade in goods and services between the UK and India was £42 billion in the four quarters to the end of 2024.
This is expected to be significantly enhanced with an FTA, negotiations for which began in January 2022 before being paused in the fourteenth round earlier this year due to general elections in both countries. The talks are scheduled to resume in the new year, with a clear timeline yet to be officially confirmed.
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Bangladesh seeks renegotiation of Adani Power deal: Report
Dec 19, 2024
BANGLADESH's interim government has accused Adani Power, an energy company controlled by Indian billionaire Gautam Adani, of breaching a multi-billion-pound agreement by withholding tax benefits granted to a power plant central to the deal.
The agreement, signed in 2017, enabled Adani Power to supply electricity to Bangladesh from its coal-fired power plant in eastern India.
Dhaka now seeks to renegotiate the deal, which was awarded by then-prime minister Sheikh Hasina without a tender process.
Documents from Bangladesh's power agency and communications between the two parties reviewed by Reuters reveal that the deal costs Bangladesh significantly more than its other coal power agreements.
Since Adani Power began supplying electricity in July 2023, Bangladesh has fallen behind on payments and owes hundreds of millions of pounds for energy already delivered. However, the two sides disagree on the total amount owed.
Bangladesh’s de facto power minister, Muhammad Fouzul Kabir Khan, told Reuters the country could manage without the Adani supply due to increased domestic capacity, although some local power generators remain inactive.
Adani Power has not been accused of any wrongdoing in Bangladesh. The company stated it has adhered to its contractual obligations and denied receiving indications that Dhaka was reviewing the contract. Adani Group dismissed US allegations of bribery against its executives as "baseless."
Tax exemptions dispute
Adani Power’s Godda plant, designed to supply electricity to Bangladesh, operates on imported coal and benefits from tax exemptions under India's special economic zone policy.
According to the 2017 agreement and its implementation terms, Adani Power was obligated to inform Bangladesh of changes in the plant's tax status and pass on associated benefits.
Bangladesh Power Development Board (BPDB) officials said Adani Power did not comply with these terms. Letters sent to the company in September and October 2024 requested the remittance of tax benefits. BPDB estimates that passing on these benefits would save 0.28p per unit of power, potentially reducing costs by approximately £22.7 million for 2024.
The BPDB chairperson, Md Rezaul Karim, stated that savings from the tax benefits would form a crucial part of future discussions with Adani Power.
Review of the deal
Bangladesh’s interim government, led by Nobel laureate Muhammad Yunus, has appointed a panel to review major energy deals signed during Hasina’s tenure. The contract with Adani Power, described as "negotiated hastily" in a government white paper, has come under scrutiny following US bribery charges against Adani executives.
Adani Power halved its electricity supply to Bangladesh in October 2024, citing payment disputes. The company claims it is owed £714m, while BPDB contends the amount is closer to £516m. Payment delays have been exacerbated by Bangladesh's ongoing foreign currency shortage.
Discussions between the two sides are ongoing, with arbitration clauses in the agreement mandating dispute resolution in Singapore. Bangladesh’s next steps depend on the outcome of investigations ordered by its courts, according to Khan.
(With inputs from Reuters)
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Bank of England maintains interest rate amid inflation rise
Dec 19, 2024
THE BANK OF ENGLAND (BoE) on Thursday kept its key interest rate unchanged at 4.75 per cent, opting not to follow the US Federal Reserve's recent rate cut, as inflation in the UK sees an uptick.
"We've held interest rates today following the two cuts since the summer," BoE Governor Andrew Bailey said in a statement.
Bailey emphasised the importance of meeting the two per cent inflation target, saying, "We need to make sure we meet the two-percent inflation target on a sustained basis."
His comments came after UK annual inflation rose to 2.6 per cent, according to data released earlier this week.
The decision to hold rates contrasts with the US Federal Reserve, which cut borrowing costs by a quarter-point on Wednesday while signalling fewer rate reductions for the coming year.
Last week, the European Central Bank also reduced eurozone rates, while the Bank of Japan left its rates unchanged in an announcement on Thursday.
Chancellor Rachel Reeves expressed support for the BoE’s decision, acknowledging the challenges it poses for households.
"I know families are still struggling with high costs," Reeves said. "We want to put more money in the pockets of working people, but that is only possible if inflation is stable, and I fully back the Bank of England to achieve that."
Had the BoE opted to lower its rate, retail banks might have reduced borrowing costs, including on mortgages, potentially easing pressure on consumers.
(With inputs from Reuters)
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Starmer woos Indian business leaders in Downing Street summit
Dec 19, 2024
PRIME MINISTER Keir Starmer hosted a delegation of 13 Indian companies at 10 Downing Street in London on what the British government described as a “curated visit” to enhance the bilateral partnership and boost investment flows.
The visit on Wednesday (18) follows Starmer’s meeting with Indian prime minister Narendra Modi on the sidelines of the G20 Summit last month, when the leaders committed to take forward an “ambitious” UK-India Comprehensive Strategic Partnership with collaboration opportunities on economic growth, security and defence, technology, climate, health, and education.
According to a readout from the British High Commission in New Delhi, the Indian investors and CEOs also met senior Cabinet ministers to discuss job creation and growth opportunities under a proposed India-UK trade deal after Starmer had confirmed the relaunch of Free Trade Agreement (FTA) negotiations early in the new year.
“India is a vital partner for the UK and we have huge ambition to unlock more opportunities together, building on our already strong relationship,” said Starmer, with reference to the business meeting.
“I’m delighted to welcome some of India’s most senior business leaders to Downing Street and to outline the UK’s ambitious focus on economic growth and innovation."
The delegation, supported by the Confederation of Indian Industry (CII), discussed deepening ties with chancellor Rachel Reeves and foreign secretary David Lammy. Meanwhile, business and trade secretary Jonathan Reynolds and minister for trade policy Douglas Alexander discussed bilateral trade, worth £42 billion a year and supporting over 600,000 jobs across both economies as per UK government statistics.
“As one of the most globally connected economies in the G20, the UK provides unmatched opportunities for Indian businesses to thrive. India already accounts for the second highest number of FDI projects into the UK, and this government is committed to deepening our trade and investment links with India even further,” said Reynolds.
“Boosting investment is a mission at the heart of this government. It was great to hear first-hand from Indian business leaders on why so many of them have given us a vote of confidence and chosen to invest here,” he said.
The companies represented are said to have collectively invested over £10bn into the UK and employ tens of thousands of people across the country. The delegation was led by Sunil Bharti Mittal, founder and chairman of Bharti Enterprises which completed a major investment in the BT Group this year.
“This business delegation comes at a pivotal moment, as India stands as the fastest-growing large economy and is on track to become a $5 trillion economy by 2027. Over time, India-UK relations have developed into a robust, multifaceted partnership built on historical ties, economic synergy, and increasing geopolitical alignment,” said Mittal.
“The India-UK Free Trade Agreement negotiations present significant opportunities for mutual growth and cooperation. We are optimistic that this delegation will pave the way for numerous successful business collaborations. We shall seek guidance from prime minister Starmer on the sectors that may exhibit better collaboration opportunities,” he said.
Other companies represented at the meeting included Bharat Semi Systems, Biocon Group, Blue Star Limited, Essar Group, Hero Enterprise, Jet Synthesis, Piramal Group, Reliance Industries, Tata Steel, TVS Motor Company, TVS Supply Chain Solutions and UPL Limited. The delegation concluded their tour with a reception hosted by the High Commission of India in London.
(PTI)
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