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US-India Trade “Surging” Amid Torrid Times, Global Leaders Tell Summit

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Leaders from the world’s two largest and oldest democracies played down talk of “torrid times” over trade at the opening day of the 2019 India Economic Summit in Delhi, instead noting that relations between the two nations are robust and on the up.

“The torrid times in our relations could also be a torrid love affair,” declared Piyush Goyal, Minister of Commerce and Industry and Minister of Railways of India, at the summit. “Relations between the Indian government and US government, at our level and at the people-to-people level are better than ever before.”

Amid rising trade tensions between India’s neighbour, China, and the United States, and the ripple effect of that dynamic on the global economy, Goyal noted that trade between India and the US is robust and growing.

Citing just one example of what Goyal said was “surging” trade between the two nations he said that imports from the US to India have grown by nearly 30%, while exports from India to the US have grown by nearly 20% in the last year.

Responding to criticism that no trade deal resulted from a meeting in September between India and the US, Wilbur Ross, Secretary of Commerce of the United States, said he saw no reason why one could not soon be reached.

“Neither government said there would a trade deal in five minutes,” he noted, “I think that was just speculation. We do think there is no structural reason why there can’t be one pretty quickly … Now that the election has come and gone and Prime Minister Modi has a very clear and strong position in the parliament it should be a lot easier to take decisive action.”

The relationship between India and the US has the potential to be one of the greatest of the 21st century, but global leaders speaking at the summit acknowledged there would be challenges ahead. India has an important role to play in the geopolitics of the region and that positioning will inevitably lead to sensitive questions as to how to develop its relationship with China.

“India will have to decide for themselves their relationship with China in a larger context. India and China are trading partners, they are neighbours and they have a huge population, and all I would say is India will take this advice carefully, but a decision will have to be taken critically by India,” offered Sunil Bharti Mittal, Chairman of Bharti Enterprises, before adding “My view is they should be in play”.

With US companies being encouraged to shift manufacturing outside China, there is an opportunity for a fundamental recasting of global supply chains. Indian industry is ready to take on the challenge to increase its competitiveness, said Vikram Kirloskar, President of the Confederation of Indian Industry (CII) and Vice-Chairman of Toyota Kirloskar Motor, using as an example, the automotive industry, which accounts for almost one-half of manufacturing in India.

“Over the last 20 years we have become part of the global supply chain and to a large extent a lot of our automotive components that are being exported are fairly competitive now,” said Kirloskar. “I think we are ready to increase capacity more, and we need the domestic market to increase as well as exports. For us, regional cooperation is also very important.”

Speaking from the standpoint of neighbouring Bangladesh, Rubana Huq, Chairperson of Mohammadi Group, urged participants to consider the impressive performance of another South Asian nation.

“We are almost the size of Wisconsin with almost 165 million people and with many challenges what is happening in Bangladesh should be an example for the rest of the world, and we have been largely overlooked,” said Huq. “Bangladesh can work together. It need not be a competition in terms of inter-regional connectivity; maybe we should join hands.”

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Development

Report Underlines Reforms to Support Fiscal Federalism, Green Growth in Nepal

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Nepal has made significant strides in implementing fiscal federalism while key reforms are needed to support fiscal sustainability and Nepal’s transition towards green, resilient, and inclusive development states the World Bank’s Public Expenditure Review (PER) Report on Fiscal Policy for Sustainable Development launched today.

With the country’s transition to federalism, expenditure responsibilities have been devolved to subnational governments that are predominantly financed through intergovernmental transfers and revenue sharing. These now account for between 8 and 9 percent of GDP per year (or close to 30 percent of the annual budget). While federalism is helping bring policymaking closer to the people, it has also increased fiscal spending and (exacerbated by the COVID-19 pandemic) led to a sharp rise in fiscal deficits and public debt, states the report.

“This report provides an analytical basis to inform our reform efforts to strengthen federalism and create fiscal space to support our new focus on a green, resilient, and inclusive development (GRID) model,” statedMr. Madhu Kumar Marasini, Finance Secretary. “This complements our ongoing efforts to refine the fiscal transfer system put in place the systems for monitoring and reporting for a more results oriented and accountable delivery of local services.”

The PER identifies key reforms to help Nepal strengthen fiscal sustainability and initiate a shift to a GRID pathway. It identifies the following five top priority reforms: (i) Encouraging the update of subnational spending responsibilities through the intergovernmental grants system; (ii) supporting exports and job creation through reforms to import duties; (iii) strengthening domestic revenue, for example by reviewing VAT exemptions; (iv) enhancing public capital spending by rolling out the National Project Bank; and (v) providing fiscal incentives for a green growth transition.

“The World Bank will continue to support government reforms to improve fiscal sustainability and the implementation of fiscal federalism, drawing on the recommendations of the PER Report,” said Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal, and Sri Lanka. “This report complements our human development PER, both of which will help inform the design of World Bank support to Nepal, including through our ongoing support through our various Development Policy Credits.”

The report also stresses the importance of strengthening investment processes and fiscal policies for green growth, and fiscal policy reforms to enable Nepal to use its green electricity surplus to mitigate air pollution to protect the health of people and the economy.

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Development

Philippines: Boosting Private Sector Growth Can Strengthen Recovery, Create More Jobs

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Rebounding from a deep contraction in 2020, the Philippine economy is forecast to grow 5.3 percent this year before accelerating to an average of 5.8 percent in 2022-23 on the road to recovery, according to the Philippines Economic Update (PEU) titled Regaining Lost Ground, Revitalizing the Filipino Workforce, released today by the World Bank.

Government spending on infrastructure is expected to buoy growth, aided by the steady progress in vaccination leading to greater people mobility and the revival of businesses. Barring a new uptick in COVID-19 cases, household consumption is projected to recover, anchored on rising remittances and improving incomes as more people regain or find new jobs.

“The new variant has added a layer of uncertainty but economic reopening, along with progress in vaccination, is clearly strengthening domestic dynamism and market confidence,” said Ndiame Diop, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand. “As the recovery gains traction, it will be important to enhance private sector participation in the recovery by deepening current efforts to make the country’s business environment favorable to job creation while upskilling the workers so that they can benefit from new or emerging job opportunities.”

Reforms that open more sectors to foreign investments, streamline administrative procedures to facilitate market entry and encourage firms to adopt new technology are measures that can boost private sector growth, create more jobs, and strengthen recovery, Diop added.

The nearly two-year long pandemic, however, has forced the closures of many firms, leading to losses of jobs and incomes, alongside health insecurities and disruptions in children’s education.

The Philippines underwent two surges of COVID-19 infections this year, first in March-April and in August-September due to the more infectious Delta variant. In both instances, the authorities reinstated strict mobility restrictions in Metro Manila and nearby provinces, and key metropolitan areas.

Nonetheless, the recent surge and mobility restrictions have not severely hampered economic activity. As a result, the economy expanded by 4.9 percent in the first three quarters of 2021, rebounding from a 10.1 percent contraction over the same period in 2020.

In 2022, the phased economic reopening is expected to benefit the services sector especially transportation, domestic tourism, and wholesale and retail trade. Sustained public investment will continue to support construction activities.

The PEU flags that despite encouraging trends, the COVID-19 pandemic remains a major risk to the country’s growth prospects.

The report notes that even in countries with high vaccination rates, infections have continued to spread, albeit with greatly reduced severity of illness, hospitalization, and mortality. Variants of concern, breakthrough cases, and waning vaccine efficacy have highlighted the complexity of economic reopening.

“Speeding up vaccination especially in areas outside the National Capital Region and sustaining the observance of health protocols including masking and maintaining social distancing are measures that remain important as the country navigates the challenges of reviving the economy,” said Kevin Chua, Senior World Bank Economist.

Social protection measures, Chua added, including the country’s cash transfer programs remain important measures to mitigate the adverse impact of the pandemic on livelihoods, health, and education, especially among poor families.

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Africa Today

United States COVID-19 vaccine delivery to Mozambique

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In an effective effort to make tremendous and recognizable contributions to help fight the spread of coronavirus, the United States Embassy in Mozambique has announced the arrival of more than two million doses of the Johnson & Johnson coordinated through COVAX in Maputo, Mozambique.

This is the United States’ fourth and largest bi-lateral COVID-19 vaccine delivery to Mozambique, bringing the total number of U.S.-donated vaccines to nearly 3.5 million, and maintaining the United States as Mozambique’s largest bi-lateral vaccine donor.

“The United States remains committed to sharing vaccines equitably, around the world,” U.S. Ambassador to Mozambique Dennis W. Hearne said. “No one is protected from COVID-19 until everyone is vaccinated. As more vaccines become available to all nations around the world, we have a shared interest in getting everyone who is eligible vaccinated.”

The U.S. Government has provided early and ongoing support for the response to the COVID-19 pandemic in Mozambique, including assistance valued at $62.5 million. This assistance includes the recent donation of 60 oxygen cylinders and a PSA oxygen plant, 50 ventilators, personal protective equipment for healthcare workers, laboratory and oxygen equipment, training, and funding for increased medical staff, among other initiatives.

In close collaboration with the Government of the Republic of Mozambique, the U.S. Government provides more than $500 million in annual assistance to improve the quality of education and healthcare, promote economic prosperity, and support the overall development of the nation.

The Mozambican government’s target is to vaccinate about 16.8 million people. Excluded from the vaccination are pregnant women and children under 15 years of age. According to the latest figures from the Health Ministry, the number of people fully vaccinated against the disease now stands at 3,324,849, and 6,158,360 have received at least one dose of the vaccine.

Mozambique shares borders with South Africa where a new COVID variant (B.1.1.529), renamed Omicron, is currently spreading. Travellers from the region are monitored. The United States, Europe and Asian States have restricted flights from southern African region, and that include Botswana, Zimbabwe, Namibia, Lesotho, Eswatini, Mozambique and Malawi.

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