1 Over a million migrants reach Europe by sea (Paul
Adams on BBC) More than one million refugees and migrants have reached Europe
by sea since the start of 2015, the United Nations refugee agency (UNHCR) says.
More than 80% of the 1,000,573 people arrived in Greece, with the majority
landing on Lesbos island, it said.
About 844,000 travelled to Greece from nearby
Turkey. Most of the others - over 150,000 - crossed the Mediterranean from
Libya to Italy. The migrant crisis is Europe's worst since World War Two. The
number of sea arrivals has increased vastly since 2014, when it was recorded at
slightly more than 216,000.
"Increasing numbers of refugees and migrants
take their chances aboard unseaworthy boats and dinghies in a desperate bid to
reach Europe," the UNHCR said. "The vast majority of those attempting
this dangerous crossing are in need of international protection, fleeing war,
violence and persecution in their country of origin."
About 49% of those crossing the Mediterranean Sea
are from Syria, with 21% coming from Afghanistan, it added. The number of those
dead or missing at sea is now at 3,735.
While the Lesbos island feels less overwhelmed than
usual, thousands more people are still waiting to be registered so they can
travel further into Europe. The majority travel to Germany, which has accepted
a million refugees and migrants. On 21 December, the International Organization
for Migration (IOM) said the total number of migrants arriving by both land and
sea had reached more than 1,006,000.
2 Gulf nations embark on reform as oil plunges (Fareed
Rahman in Gulf News) Gulf countries are undertaking reforms to cut subsidies
and increase fuel prices as oil hovers near eleven year lows on abundant supply
and slowing demand.
Bahrain will be increasing fuel prices starting from
Friday. They haven’t mentioned how much the increase would be but said the new
move would contribute to providing financial savings and rationalising energy
consumption. Bahrain becomes the third country in the Gulf region to bring in
reforms in the energy sector after UAE and Saudi Arabia.
Saudi Arabia on Monday announced that they would
raise fuel prices by 50 per cent as the country posted a record $98 billion budget
deficit in 2015 due to the sharp fall in oil prices. Oman which is losing
revenue in a big way could be the next one in the list, analysts said.
Edward Bell, a commodity analyst at Emirates NBD,
said Qatar and Kuwait are probably in a safer position. “Kuwait historically
has actually had problems in under spending. It has bit of a better fiscal
position to be in. Qatar again is quite similar in that respect.”
According to Bell, there is awareness among Gulf
countries that they can’t bank on oil prices staying very high for protracted
period of time like in 2010 to halfway through 2014. Energy subsidies represent
a direct cost of 3.4 per cent of GDP for GCC governments, and petroleum
accounts for about two-thirds of energy subsidies in the GCC, while electricity
and natural gas together represent another third.
http://gulfnews.com/business/economy/gulf-economies-embark-on-reforms-as-oil-prices-plunge-1.1645441
3 A bearish case for Indian rupee (Matein Khalid in
Khaleej Times) I watch the fall of the Indian rupee to two-year lows at 66 with
deep concern. The Fed rate hikes coincide with offshore money outflows from
Dalal Street, the reason the Sensex was slammed to 25,000. Conventional wisdom
states that RBI Governor Rajan - India's Paul Volcker - alone is sufficient to
stabilise the rupee. Wrong. The Indian rupee can well fall to 74 against the US
dollar in 2016. Why?
India's banking crisis is slowly morphing into an
external debt crisis. This was the reason the rupee was Asia's worst-performing
currency in November 2015, even though crude oil collapsed 12 per cent even
before the Vienna debacle. True, RBI reserves are $350 billion, well above the
August 2013 "taper tantrum" levels at $275 billion. Yet these reserves
are a mere 16 per cent of GDP, far below, say, Singapore's 100 per cent or
Taiwan's 84 per cent of GDP.
India's foreign debt and external liabilities have
risen alarmingly even as the current account deficit has narrowed to two per
cent of GDP, thanks to a $60 billion crude oil import bill windfall. India's
net international investments (assets liabilities) is now an alarming $370
billion, a six-fold rise since the 2008 financial crisis. Offshore hot money,
short term borrowings and trade credit done is $300 billion.
India's foreign reserves are low compared to its
external debt, a kiss of death for the rupee in a higher Fed rate and King
Dollar milieu. India's external debt (government and private) is now a
dangerous 1.45 times state reserves Short-term external debt is 25 per cent of
sovereign reserves. The real sword of Damocles for the Indian rupee is the
surge in private sector external borrowings, now a staggering 19 per cent of
GDP.
India's private sector is leveraged and faces a
short US dollar funding mismatch that will spell disaster in 2016 as King
Dollar continues to rise. Indian banking's non-performing/restructured loan
ratio is a shocking 11 per cent of all loans in 2015, the reason Dr Rajan
ordered a hike in provisions. Private sector debt has basically doubled in the
past decade.
To borrow a Churchillian metaphor, never in the
history of Indian capitalism have so few owed so much to so many. Corporate leverage
is at dangerous levels at a time when world trade is shrinking, $200 billion in
bad loans gut the banking system and a fall in inflation has raised real
borrowing costs. This is the worst possible global economic and monetary
environment to have an external debt crisis.
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