Are hopeful. Theyll take on the cup to see some of the job aid out there. Ah, you are watching l 0. Your headlines this hour, the u. K is bracing itself for the possibility of more political and economic turmoil as the bank of england ends. Its emergency bond buying scheme. Prime minister list for us is said to hold an unscheduled press conference in just a few hours. And eve barker has more from london. We knew was gonna be an incredibly turbulent day. But as the markets at the bull market center, the Financial Markets across the u. K. And europe stabilize, what were seeing politically is a deepening of the crisis. Not only is there a huge amount of speculation that a series of few turns on their way. Some of them have already been heavily reported upon, including the unfreezes of corp tax, so pivotal to at least draw some had chance laquanta crossings, promises to her supportive. Now, also mounting media speculation that the chancellor himself quasi course and could be out of the job. And we will of course, continue following that story. Meanwhile, the turkish president has ordered his officials to study a proposal by russia to set up a regional gas hub in the country. The russian leader says its the best route to redirect gas to the e. U after the nord stream pipeline was damaged. Early one says both countries will start work on this immediately. More than 500 people have died in nigeria is worse floods in a decade. Unusually heavy rains lead to the destruction of tens of thousands of homes. A russia is calling on civilians in the croissant region to evacuate as Ukrainian Forces game ground in the southeast uses muma every day shrikes to the cities of the curse on region here. So they deal serious damage 1st and foremost to the people. Im asking the leadership of russia to help organize and evacuation. It was a city who, refinery workers in the french town of dont was are protesting outside of tao oil refinery. Calling for better wages. Negotiations are still on the way to try and end 3 weeks of strikes is really forces have killed 2 palestinians during a raid on the janine refugee camp in the occupied west bank. Allison infections of cold for a day of rage. All right, will that, does it for your headlines here on al jazeera, to stay with us at next insight story. Ah, the whist is yet to come. Thats the warning from the International Monetary fund as it paints a grim picture of the Global Economy. But whats behind the spiraling crisis, and what should be done to stop it . This is inside story. Ah. Hello, welcome to the program. Im tom a crime, the International Monetary fund and the world bank holding the annual meetings in washington, d. C. To discuss a number of global issues, the warren, you crying persistence, supply chain disruptions and a looming recession. A topping the agenda just to name a few. The i am if says the World Economy is hitting for what it calls stormy waters. As the many risk fact, as accumulates, a downgraded its Global Growth projections for next year, and warned of a harsh world wide recession. If the fight against inflation is mishandled. A 3rd of the Global Economy expected the contract this year, or next, the 3 largest economies, the United States, china, and the your area will continue to stall. In short, the worst is yet to come. And for many people, 2023 will feel like a recession. Well now the question remains, who will pick up the pieces well live in on the economic collapse, for example, is accelerating in the absence of a government recovery plan. The International Community has made clear the only way out of the crisis through a deal with the i m f. But well get to our guests in a moment. But 1st this report from st hotter in beirut, lebanons economic crisis is heading into its 4th year. The state is nearly bankrupt. It cant buy fuel for electricity. Infrastructure is falling apart. While institutions struggle to afford basic operating call that a desperate need for hard currency. The International Community made clear any funding will only come from the International Monetary fund. That means reforming a dysfunctional system blamed on decades of the management and corruption. But there hasnt been political, will the ruling elite doesnt toronto. And these reforms because it to undermine the structure of their power. And that has been going on for 30 years now. The countrys leaders have refused to open the books at the central bank. They fail to pass laws to investigate all financial crimes and stop billions of dollars being transferred abroad. Instead, the shared interests of the political and financial elite have lead to bank customers, suffering losses and being denied access to their savings. Any Financial Program between the i m f and lebanon would involve passing structural reforms, and Anti Corruption measures to improve governance. Thats likely to hurt the interests of politicians accused of using the states for the interest of themselves and their associates. This was once a middle income country, but the local currency has lost value and its financial losses are estimated to amount to 72000000000. 00. That is 4 times the size of the economy. Official fe, they remain committed to the path laid out by the i m f. But theres still no consensus on a recovery plan. Major reforms normally economical was, can go on with a normal circumstances in lebanon. We need stability on the ben wanted to go live and all the while. One of the worlds worst meltdowns deepens. By the day, seneca, there alger zito battled. Ah, well, its bring in our guests now in brussels. We have daniel girls had director of the scenes for european policy studies in new delhi, mignon, decide economist and a member of the u. K. House of lords and in nairobi, ali khan, such for Financial Advisor and ceo of rich management, a will welcome to you. Well thank you very much for being on this edition of inside story. Daniel, if i can start with you, are you used to work at the i am, if how solid over liable these full casts mean the m. F is always extremely careful. It collects information from all member countries to have the suburban staff, all the ticket tours. So i think these forecasts are as reliable as you can do them right now. But if you have altered roles in publication, theres great uncertainty, little uncertainty above it might be a little bit better, but also lots of uncertainty below so it might get worse. Thats all. But one could say at this point, economics, its not a physical science as always, a lot of uncertainty. Okay, magnet. Do you agree with the myth, grim outlook, the Global Economy as hitting, stormy waters and help you think things could gaze . Yes i, i think i not only agree with the ira down grading the growth rate. I think it is going to be much more serious than even the i am. I realizes because we are seeing a repetition of what we saw in the 1970s. We have an energy price increase we had, which was preceded by inflationary creation of money. And now we are going to also be in a war situation because of the Russia Ukraine war. And i think ill say, a long cycle of stark lation. And theres nothing that normal sandra banking policy can do to avoid that question. All that the central bank can do is to cut them out, but that is not the answer. So we are going to be in a very tough time. So we just have to, im of the right to warn about that. So, so the Global Economy just has to ride it out. Thats one. This one does india. It globally gallery, which is going to smooth l. Yes. Okay, ali can the, i, me, i, i missed chief set of all regions. Africa is in the most precarious position, you know, with a, with a massive food crisis there. What specifically can the, i am after did alleviate the problems in africa . Well i think come, you know, the african situation has been coming at us for quite a while. Africa over borrowed during the good times. You know, when we were in that moment, which lasted more than a decade of disneyland economics, when money was cheap, and now we got a situation where the cost of servicing this debt has risen inexorably high. For example, nigeria, a 102 percent of its revenues now are destined for debt service. Clearly an unsustainable position. So i think africa is going to rely very heavily on the lights of the i, m f and the world bank. But its going to take a lot of a money to rebalance the situation. Just to go back to what both your earlier speakers were saying that, you know what we have now is a very strong dollar. Its highly likely the euro goes back to record lows. Its highly likely dollar yet goes to Something Like 160. 00, and this is going to put immense pressure on emerging in frontier market economies. And i think therefore, these economies are essentially going to be looking for debt restructuring and debt rescheduling. But because of the nature of this crisis, which is a poly crisis and its got cascade effects, you know, its 1st come, 1st served. So in africa, zambia hit you, lemme 1st salad the gate. Hes going to resolve the matter, hopefully. But others i think, are going to be really left in the dust here. Which countries are you talking about specifically . Well, im talking specifically about countries like a nigeria. Im talking about, which just simply, you know, the Political Class really havent got a handle on things. But this is a problem were seeing in many other places around the world. Its not just a phenomena were seeing in africa. You see the trust in quoting show. I mean, these people are not competent. And in africa weve got plenty of policy makers who i think are not on top of the situation. So it, zambia is a positive example. Egypt has a lot of support from its International Institutions and deep pocketed gulf allies. But you know, if you look at places like ethiopia fighting a civil war, essentially with a 1000000000. 00 of reserves is its broke. And then continuing the sexy central battle. And there are so many cases like that across the continent. But, you know, you start to, you will show with lebanon, and let me say this, i strikes me that europe is not much different to lebanon. It had leverage from russia, in terms of its gas supplies. 20000000000. 00 of gas supported a 2 trillion euro economy in germany, that its more leverage than leman. And i think by december, what were seeing in lebanon will be replicated in many capitals around europe. Im afraid so its a very, very big problem. I dont think the majority of policy makers have truly understood the scale of the issue. Daniel, i see you smiling along there. Is that something that you agree with that were going to see . I, you know, the, whats happened in lebanon happening in some other, your European Countries. It is true that europe must pay a price and a heavy price for an over reliance on russian gas. But the time i say, so europe is a little bit better government than lebanon. We have constant squabbles, and my member states. But in the end, they usually agree on the common line. And that seems to be the case. Also, no european, most many European Countries already have saved a lot of gas. The price for consumers has increased and it is good. So because therefore further cost savings will be forthcoming. And therefore, i am quite confident that europe will be able to pose through this printer not easily. There will be problems, but we all know that these are temporary problems. And in the end, europe has also a very Strong Industrial base. Our export us has been able also to increase their price, so theres some offset to the high gas prices. And over all i think europe will come through it with a recession in between. But in one year from now, i think the recession should be behind us in europe. Okay. Can we just talk a little bit about, you know, the real people, if i could put it that way the, the people on the street with thing, you know, everyone brought around the world, paying more for power, more for food. More on the mortgage is basically everything is getting more expensive. Other be plenty of people watching this, wondering how much worse its going to give mic. Ned, how, when do you think there will be some relief . Will it be in a years time . The thing is that we can take a short run perspective on this problem, this problem, and im going to go away anytime soon. Because this, what do, what is previous be concerned about, you know, will be slightly better off than middle Eastern Countries or african countries. But everybody is going to be in a city church, only country rich producers of energy and can deliver energy to people who are in demanding position. They are the only ones until the rest of the world is going to. So i wouldnt say it because i keep on saying and all that the Central Banks will do is to make the decision worse. That is what the Federal Reserve is doing by making the dollars strong. Its going to ruin the situation in us. Well, unfortunately we havent found a way of finding in vision. We got to call this issue. And that is where the problem lies. And i am, if you the very with your part of that the solution. Ok, eli can, you mentioned a little while ago i did, and 60 percent of low Income Countries are now at high risk or already in debt distressed. Thats according to the im, if im obviously many poor countries are going to face Major Economic disruption and potentially default on that date. How big a risk is that . Do you think . How likely is it to happen . Oh, its entirely likely to happen. Youre looking at, were looking at the i m f is looking at the following metric. Theyre looking at debt versus g, d, p. And, and, and looking at that metric, really the number you got to look at is debt Service Versus revenues. And in so many countries, the debt Service Number is now higher than the total government revenue number. So its the so basically these Balance Sheets are shot to bits. And, and unless there is enormous Debt Forgiveness or you know, its an unsustainable situation. The freight train, we can see the lights were in the tunnel and its coming out of tremendous speed. And theres no way of sight stepping it unless a countries are you know, unless the like the i m f, the big credit is a go through a massive round of Debt Forgiveness and look at restructuring these Balance Sheets. Little bit like a dead under nicholas brady. And the brady plan when latin america over borrowed all those years ago. Your previous speaker was speaking about elegy, i dont think its a sanitary, its of you know, you cant print elegy and food. And those countries that have energy and food. And i run the clear counter, intuitively, its russia and the us, they are the most, theyre the strongest economies in the currents in aria, if you cant, if you cant print those things. And this is the european challenge of, unfortunately, amongst other countries challenges. So i dont see cost of living relief coming anytime soon. We have a mickey mouse Monetary Policy who has been able to bring in shouldnt down when inflation is 8. 2 percent in the us with Interest Rates below fall. Ive never seen that happen. Its not going to work, youve got to get Interest Rates much higher. And thats the only way youre going to bring inflation down and the cost of living until we have that happen. The cost of living will continue to increase and it puts undue pressure on people at the bottom of the pyramid who experience much more of that pressure. Okay, id like to keep talking about policy for a little bit, daniel, the, im, if chiefs politicians have to avoid any policy missteps and have to act, act urgently. What exactly do you want to see those and power do and how fast do they need to act . So we dont see any more. Mickey mouse like him, eli can just mentioned cause it depends on what country in the world youre talking about. The United States has to believe sitting pretty it has enough oil and gas to keep its own economy afloat. So for its own good, it was just keep inflation down and that will require a strong dollar full time in europe. What we have to do is to combine 2 things. We have to give people incentives to save on gas and energy in general. That means high prices. But we also have, have had our poor ones to support themselves and to be able to pay those prices. And thats, for example, being done right now in germany, where people get a certain base amount of energy for free and for the rest of the market have to pay the market price so that they are have actually incentive to, to save all 3 kinds of calls a very different story. But again, in africa, one might ask, now do its a country which is a big export our of energy, of petro, of crude oil. And the crude oil prices are currently very high. Why is nigeria not doing very well right now . So these are really very serious internal governance problems that people have beforehand. And i think these are the most urgent bonds that have to be addressed in africa course along with fiscal policy. But one without the other. Were not work. Ok, obviously the war in ukraine is exacerbating all of these issues. The im, its laid out a whole lot of challenges. It basically says, inflation is the top priority, and he cant do you think it can be timed inflation. That is, while the war and ukraine is still going on, do you think the war has to wind before inflation can be brought under control . I think, particularly for europe where, you know, german inflation, for example, has hit a 40 year high until that situation resolves itself. And the supply of not only gas oil, the europeans now want to Sanction Russian Oil or put a price gap on it. You know, it is a boomerang effect, the it defeats b, how the european policy bakers pursue this sanctioned policy, which is a boomerang and hitting their economy 34. 00 times as hard as its hitting the intendent the, the intended adversary. So look until that relaxes inflation. What relaxed in europe, in particular and, and globally as well. But what, what we really have the biggest problem here, you know, i traded short term Interest Rates. Ive never seen a lag between interest or between policy rates and inflation rates that we currently have. The germans, for example, had a bank all the bond us bank. I mean Interest Rates in germany at this point in time. If the Buddhist Bank were in control, would be at 12 percent. And essentially it would break the back of the inflationary problem. But we dont live in those times. We live in a time of still fantasy economics about where people still think they can print or all kinds of commodities, which they cant. Daniel, is there any country that we can look to now thats doing a good job that we can go. Thats the way to handle this crisis. Yes, you might look, for example, at the nordic countries which have been very careful with their energy supplies. They have insulated their home state actually are doing quite well under the circumstances, switzerland, another country which is noticed and noted for its tired fiscal and monetary policies. But even at switzerland you have seen price increases. So one thing is you cannot avoid all the price increases. And the other thing is, if you have a strong domestic governance, then you can actually minimize the effect. But let me add one thing. It is not necessary for the ukrainian war to finish for inflation to come down in europe. It is sufficient that Energy Prices just stabilize at the very high level of which they are right now. And then inflation on its own will come down because there will be no further increases in Energy Prices. And that would be enough for europe or to see inflation coming down to acceptable levels in one or 2 years. So europe can pull through, even if the war continues for a long time. Ok, early cant do you think that term the poor are going to be unduly hit through this crisis that they are, the ones that are going to be, were started, inequality is, is just gonna grow even further from here. So thats been one of the trends that weve seen over the last 12 to 18 months, significant increases inequality, more people being put into poverty. And im afraid that trend is amplifying as, as the Global Economy softens. And of course, you know, if you take somewhere like africa the, the average individual is spending up to 40 percent of their income on food. And therefore increases in food prices. Have a much more severe effect on, on, on the, on the income and spending power of those people. So, you know, i dont want to be a terrible pessimist, but im really concerned. And i think thats why this whole social safety net idea really has to be rolled out for the most needy people across the globe. And i think, you know, this is the moment when you really have to put those sorts of programs and safety nets into place. Daniel is theora, is there a Silver Lining here . As we talked about, the train coming towards us and the tunnel with the lights on is the really light at the end of the tunnel. I think the current try in Energy Markets are actually reassuring. Because prize has almost half the call was the last 2 months. The oil price is coming slightly dont, although hope it has decided to reduce its production. So i think we might, yeah, that actually in the winter where oil prices moderate, even though the war continues, and that will take off some pressure on inflation. That might also allow the Federal Reserve to a little bit soft, not, and therefore to the dollar to return to more manageable level for many emerging markets. So that is the good scenario. Okay, well, that least something just before we go, id like to ask you both this question. Well start with you can do you think that the i m if is still relevant in this day and age for the process, the sludge . Absolutely, i think its more relevant than ever. I mean, the question then becomes, where is it going to be . Is it being effective . You know, the need for an organization i that im f at this moment in time, is massive. Every put it needs the i m f as far as i can see. But the question is, are they had, they got sufficient resources to apply at this time at this moment in time . And are they applying those resources effectively . But definitely, you know, the institution is required as, as the world bank, this is the very time that these institutions are needed. The moment we find ourselves in. Okay, daniel, the same question to you do will, i guess, does the, i have the sufficient resources to deal with us . Do you think thats cool . The i m f didnt exist today. You would have to invent it, and i think it has resources, enough resources. Because the countries which need financing are typically poor countries who is financial needs are not that large compared to the resources of the industrialized countries and therefore of the i m s. And therefore, i think its not a question of resources. Its a question of what the i m f can do at this point. If in these countries that governments stay as corrupt as it has been in the past because that is what brought these countries to the point at which they are right now. Okay, well have to leave it there. Thank you both so very much. That is daniel growth and brussels for us and come to an earlier we spoke to make them decide. Thank you very much for being on the program and thank you to for watching. You can see the program again anytime by visiting our website l just there, a dot com and for further discussion, go to our facebook page. Thats facebook dot com, forward slash i j inside story. You can also join the conversation on twitter. Handle is at a inside story from me to mccrae and the entire team here. And so ha bye for now. I ah a stories of hope and inspiration, shook documentaries from around the world that celebrate carries and resilience in times of time with how to select on now, does it unprompted and uninterrupted discussions from our london Broadcast Center on al jazeera, the wait for the world cup is meily, as the main event gets closer. Ill just hear ice here. Every step of the way. Im gonna go with one month to go. We focus on asia. Things can expect some strong support hearing. Got cut out the pressure of hosting will australia make the most of squeezing through the player or will it be south korea, japan saudi arabia or iran progress for this. The world cup count out on it. Jesse, you know, the latest news as it breaks. Its not just personal property, but also infrastructure that now the big thing from power lines to water main detailed coverage is up a little strange. I know its very hard to think about from around the world at the peak of the hobby season. This process is one of the records on for today ah
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