Joko Widodo: From promising democrat to Indonesia’s kingmaker

Indonesian President Joko Widodo waves to the crowd while on his journey to Presidential Palace by carriage during the ceremonial parade on 20 October 2014 in Jakarta, Indonesia.Getty Images

Many had said it was Joko Widodo’s “man of the people” image that helped score his first presidential victory in July 2014.

The former furniture salesman was Indonesia’s first leader from outside the political and military elite. His decisive win was propelled by people’s frustrations with corruption and nepotism in the country’s young democracy, which is also the world’s third largest.

When he was first became president, Time magazine hailed him as “the new face of Indonesian democracy”.

Under the 62-year-old, Indonesia’s GDP grew by a cumulative 43% since he entered office with the country also seeing a boost in infrastructure.

And even as he is about to step down he remains hugely popular, enjoying consistently high approval ratings of more than 70% – turning from a once fresh-faced figure to a powerful kingmaker.

But the enviable legacy he is leaving behind has been somewhat marred by a perceived attempt to build a political dynasty through his eldest son.

Rise to power

Mr Widodo was born in 1961 in the city of Solo to a family of wood sellers, who lived in a riverside shack until they were evicted by the local government.

He first entered politics with the Indonesian Democratic Party of Struggle (PDI-P) in 2005 when he was elected mayor of Solo, a city in central Java.

In 2012, he was elected the governor of Indonesia’s capital Jakarta with a resounding victory. He grew in popularity as a grassroots leader who was able to empathise with the poor.

Barely two years later, Mr Widodo was elected president. He made anti-corruption the mantra in his campaign and championed meritocracy.

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In a country marred by dynastic politics and corruption, many Indonesians saw him as a revolutionary.

“In 2014, there was a slogan, ‘Jokowi is one of us’. He was not a typical Indonesian politician,” said political analyst Firman Noor from Indonesia’s National Research and Innovation Agency.

“Everybody had high hopes for a better democracy,” he said.

Mr Widodo’s administration had a somewhat shaky start, rushing into some policies only to backtrack on them later.

Over the years, he built a strong track record on economic growth and infrastructure development. His infrastructure push produced 16 new airports, 18 new ports, 36 dams and over 2,000 kilometres of toll roads. Indonesia is expected to overtake Russia and the UK to become the world’s sixth largest economy by 2027, according to IMF forecasts.

All these while remaining close to the ground. One of his political trademarks, known in Indonesian as “blusukan”, involved impromptu visits to connect with the people and listen to their needs and grievances.

A controversial decision

But this one-of-us image lost some of its sheen.

Mr Widodo revived the death penalty for drug traffickers shortly after entering office. Fourteen people were executed within six months of his election amid international outcry.

For his re-election bid in 2019, Mr Widodo again raised eyebrows by picking Islamic cleric Ma’ruf Amin as his running mate.

Indonesian President Joko Widodo gives money and food packages to poor people during Eid al Fitr celebration in Surakarta,

Getty Images

His second stint in office saw him appointing controversial ex-general Prabowo Subianto as defence minister. Mr Prabowo, who was Mr Widodo’s bitter opponent in the past two elections, has faced allegations of human rights abuses. Rights groups said the appointment marked a “dark day” for the country.

Mr Prabowo is now the frontrunner for next Wednesday’s elections. His running mate is none other than Mr Widodo’s eldest son Gibran Rakabuming Raka.

Mr Widodo has not openly endorsed any candidate, but has appeared at Mr Prabowo’s campaign events. Analysts said this has widened tensions between Mr Widodo and his own party. The PDI-P’s candidate Ganjar Pranowo was previously seen as Mr Widodo’s shoo-in successor.

More recently, critics have accused Mr Widodo of bending rules to build his political dynasty – an irony for someone who once declared that “becoming a president does not mean channelling power to my children”.

A constitutional court, where Mr Widodo’s brother-in-law serves as chief justice, controversially cleared the way for 36-year-old Mr Gibran to run for vice-president – Indonesian law had initially required him to be older.

Critics believe Mr Gibran, if elected, would simply serve as a proxy for his father.

A campaign poster of presidential candidate and Indonesia's Defence Minister Prabowo Subianto and vice presidential candidate Gibran Rakabuming Raka, son of President Joko Widodo

YASUYOSHI CHIBA

The president had earlier rubbished allegations that he was seeking to build a dynasty, telling the BBC in 2020: “If I directly appointed my family, or my son, as a minister, that’s a political dynasty. But if they participate in elections, it’s the people who decide. Not Jokowi.”

Foreign policy track record

Mr Widodo will also be remembered for his work to assert Indonesia’s presence on the global stage, despite early criticism that he had little experience in foreign policy.

It was on Indonesian soil that US President Joe Biden and his Chinese counterpart Xi Jinping met for the first time as leaders of their countries – during the G20 summit in Bali in November 2022.

Indonesia was the first country in Asean (or the Association of South East Asian Nations) to assume the G20 presidency.

During its tenure, Mr Widodo also offered to broker peace between Russia and Ukraine. His visits to both countries in June 2022 was the first by an Asian leader since Russia’s invasion of Ukraine in February.

Those efforts made little headway, but he managed to push the G20 member states to adopt a joint declaration condemning the invasion – a feat for someone who has maintained throughout his tenure that diplomacy is not his forte.

This was also an opportunity for Mr Widodo to show Indonesians that he was trying to tackle the country’s food crisis at its source. Indonesia is dependent on Ukraine for wheat and Russia for fertiliser.

Closer to home, Mr Widodo had sought to use Asean to push for peace amid Myanmar’s bloody civil war, although that too has achieved little so far.

The Whoosh high-speed train

BAY ISMOYO

Indonesia’s wealth of natural resources makes it valuable to global powers. Late last year, it strengthened ties with the US after Mr Widodo visited Mr Biden in the White House, despite the countries’ differing views on the war in Gaza.

Indonesia has also cultivated closer ties with China under Mr Widodo’s leadership. Large Chinese investments have created jobs and diversified Indonesia’s economy.

However an influx of Chinese money and workers – Beijing pledged $21.7bn in new investments last September to strengthen economic and political ties – have also stirred discontent among Indonesians. Many worry that their country will be caught in a debt trap.

Mr Widodo’s legacy may be tainted by his perceived failure to entrench the democratic values he first campaigned for, but his administration has strengthened Indonesian’s economy and its international profile.

Based on his current approval ratings, he will be stepping down as Indonesia’s most popular president.

With reporting from BBC Indonesian

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Srettha touts debt initiative’s success

About B670m dealt with in two months

Srettha touts debt initiative's success
Prime Minister Srettha Thavisin speaks at a press conference on the solution to the informal debts nationwide. The Interior Ministry has been entrusted to mediate between debtors and creditors with the police acting against predatory lenders who resort to violent methods of dealing with defaulters. Chanat Katanyu

The government has managed to bring down the total amount of informal debts by 670 million baht in just two months, solving 102,000 out of 140,000 cases reported to authorities as part of the push to reduce the household debt burden.

According to Prime Minister Srettha Thavisin, who is also finance minister, the progress is the result of extensive cooperation by all agencies tasked with solving the nation’s debt problems, including the Interior, Finance, Justice, Education, and Agriculture and Cooperatives ministries, along with several government-linked financial institutions.

He said 102,000 of more than 140,000 appeals for help received by the government since the initiative was launched on Nov 28 last year have been successfully resolved, bringing down the total amount of debt being handled by the government initiative by 670 million baht.

As of Dec 1, the initiative was handling about 9.8 billion baht in debt, which Mr Srettha pledged to clear up before his tenure as PM ends.

Speaking at a press conference on the matter on Monday, Mr Srettha said the Interior Ministry had been assigned to catalogue “off-system debts” to facilitate negotiations with informal lenders.

The RTP, meanwhile, is responsible for pursuing criminal charges against creditors that engage in illegal practices to force repayments, he said.

Other initiatives which will be launched as part of the effort to solve the nation’s ballooning household debt include “debt-solving markets”, which will be organised in every province four times a month.

Government-owned banks will offer low-interest loans to debtors who have successfully negotiated with their creditors, and local authorities will roll out courses to improve people’s professional skills to allow them to earn extra incomes, he said.

Citizens who are struggling with problems relating to debt can register for assistance at their local district office or by calling the Ministry of Interior’s Damrongdhama Centre via the 1567 24-hour hotline, according to Mr Srettha.

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An economy-focused election in Pakistan – Asia Times

Pakistan’s political and economic landscape is no stranger to upheavals.

At present, former prime minister Imran Khan’s party, Pakistan Tehreek-e-Insaf (PTI), faces corruption charges during the 2024 Pakistan general elections.

Meanwhile, Nawaz Sharif of the Pakistan Muslim League (Nawaz) (PML-N) stirred controversy by sporting a Gucci cap, allegedly worth more than 100,000 rupees (US$360), amid the country’s economic struggles.

Bilawal Bhutto Zardari, chairman of the Pakistan People’s Party (PPP), also grapples with past allegations of misgovernance and money laundering from 2018.

Beyond the political theatrics, the 2024 election is overshadowed by pressing financial challenges. With year-on-year inflation at 28% in January 2024, escalating fuel prices, and anticipated hikes in electricity bills, economic concerns dominate the campaign’s final stretch.

PML-N pledges to boost annual exports, finalize a US$10 billion oil-refinery deal with Saudi Arabia, and continue projects under the China-Pakistan Economic Corridor (CPEC). Simultaneously, PPP aims to double per capita income and provide free electricity to underprivileged families.

A fragile economic landscape

Pakistan’s economic predicament stems from a convergence of factors, including the global upheaval triggered by the Covid-19 pandemic, disruptions in global supply chains, and geopolitical tensions, especially the conflict between Ukraine and Russia.

This confluence has led to economic disarray marked by dwindling purchasing power, depleting foreign-exchange reserves, and escalating civil unrest.

Pakistan’s national headline inflation (y-o-y) before and after Covid-19. Source: The World Bank

The nation’s economic challenge is exacerbated by a significant decline in forex reserves. In early 2023, reserves hit a historic low of $3.19 billion, barely covering two weeks of imports and falling below the International Monetary Fund’s recommended three-month minimum.

Coupled with the daunting task of repaying a projected debt of $73 billion by 2025, including substantial portions owed to China and Saudi Arabia, Pakistan faces a precarious situation.

The dramatic devaluation of the Pakistani rupee further complicates matters. From hopes of becoming the world’s best-performing currency in October 2022 to hitting a record low in February 2023, the devaluation has far-reaching implications, impacting such essential imports as fuel, edible oil, and pulses.

Additionally, Pakistan’s gray-listing by the Financial Action Task Force (FATF) has significant economic implications, with estimated GDP losses since 2008 reaching $38 billion. While the country’s exclusion from the list in October 2022 provided some relief, it underscores the need for robust anti-money-laundering and counterterrorism financing reforms.

Unsettled external debt dynamics

Pakistan’s external debt dynamics are complex, reflecting historical ties with China and Saudi Arabia. The total external debt, representing 33% of GDP as of December 2022, is a mix of multilateral, Paris Club, private, and commercial loans, with Chinese financial institutions holding more than 30%.

The short-term nature and high interest rates associated with some of these loans present significant hurdles for Pakistan’s debt management.

The China-Pakistan Economic Corridor, envisaged as transformative in 2015, has become a central factor in Pakistan’s economic crisis. The economic complexity of CPEC, coupled with China’s reluctance to restructure debt repayments, has strained negotiations with international financial institutions, including the IMF.

While experts emphasize the need for short-term financial assistance, the relationship between Pakistan and the IMF, marked by 22 bailouts in the past 60 years, adds challenges.

Post-election challenges

Despite a focus on the economy in the elections, distractions have emerged due to circumstances surrounding Imran Khan’s removal from power. Doubts about the election’s credibility, including concerns about media influence, law-enforcement assaults, and potential manipulation of results, raise the specter of heightened political unrest and economic instability.

Navigating Pakistan’s $340 billion economy within a volatile political landscape necessitates addressing the adverse impact of inflation on citizens, especially the vulnerable population enduring prolonged inflation and unemployment. The incoming government faces challenges such as implementing a new IMF program, reducing expenditures, and managing the deficit.

Aligning campaign promises with the reality of a sluggish economy requires urgent comprehensive planning, advocating for an expanded tax net and a departure from a consumption-based growth model. Significant investments in climate mitigation and adaptation strategies are crucial to combat the repercussions of climate change.

Ultimately, a holistic, whole-of-nation approach is imperative for Pakistan’s prolonged journey toward economic recovery and sustained growth. Decoupling economic governance from politics, implementing necessary reforms, and re-evaluating international partnerships are essential steps for Pakistan’s economic resurgence.

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PT rebuffs wallet warning

NACC says cash handout scheme poses graft risks

PT rebuffs wallet warning
Supporters of the digital wallet handout programme gather at the headquarters of the Pheu Thai Party in October last year. (Photo: Somchai Poomlard)

The ruling Pheu Thai Party (PT) has brushed aside a warning issued by the National Anti-Corruption Commission (NACC) against the government’s 10,000-baht digital wallet handout scheme.

Anusorn Iamsa-ard, a Pheu Thai list-MP, said that the government is ready to listen to suggestions from all agencies.

“If the government had refused to listen, it would have already implemented the scheme. Previously, several sectors also urged it to go ahead as they suggested that the NACC’s recommendations would only delay the handout.

“But I believe the government is willing to listen to all feedback to ensure the scheme will be implemented in line with the law.

“The NACC should calm down as the scheme has not yet started. The NACC can wait until the scheme has started. It is not too late for the agency to scrutinise it. There is no need for the NACC to scrutinise it in advance,” he said.

“If the digital wallet scheme is delayed as a result of the NACC’s warnings, the agency must respond to questions from the people,” he said.

The NACC has warned the government about a range of potential pitfalls tied to the scheme, from graft to legal risks, while insisting the economy is not yet facing a crisis.

The digital wallet handout is the flagship policy of the Pheu Thai-led government to stimulate the economy, with 10,000 baht to be handed out to 50 million Thais.

The legality of the scheme has been called into question, however, as the government plans to request a 500-billion-baht loan to fund it, which goes against the party’s election campaign promise that it would not resort to taking out any loans.

On Wednesday, Niwatchai Kasemmongkol, secretary-general of the NACC, revealed the results of a panel study into the scheme that indicated it may be prone to exploitation by corrupt actors.

Mr Niwatchai said the scheme poses a risk of corruption as it could benefit certain parties, politicians or business groups. Graft could also occur during its implementation unless clear methods are mapped out to ensure all vulnerable groups benefit from it, he said.

As the economy has now started to rebound, the government should consider the financial burden the scheme will impose, and whether it is worth creating a debt burden of 500 billion baht, he said.

The NACC also warned of legal risks, including laws related to financial discipline, treasury reserves and a constitutional law mandating that the Election Commission should first inspect Pheu Thai’s campaign pledge made last May to ensure it matches the planned rollout of the scheme. If not, the promises made could be considered propaganda, he said.

He said information regarding the economy from the Bank of Thailand, the World Bank and the International Monetary Fund all suggest it has not yet reached crisis status but remains sluggish.

Sorawong Thienthong, Pheu Thai secretary-general, on Thursday dismissed claims that what Pheu Thai promised voters during the election campaign last year differed from what was announced in parliament.

“No previous governments have ever been able to deliver on 100% of campaign pledges. A government must work with all sectors. It cannot do everything on its own,” he said.

During the campaign, Pheu Thai promised to give 10,000 baht to every citizen aged 16 or older to attract voters, making 56 million people eligible for the money. However, it later laid down additional conditions that would benefit only 50 million people.

The party said in its campaigning that the scheme would be financed from the budget. It now plans to raise 500 billion baht in loans to fund the scheme.

Government spokesman Chai Wacharonke said on Thursday that the government believes the digital wallet handout scheme is necessary as it will inject a cash flow into the economy to allow low-income earners access to financial resources, and this will help the country avoid the prospects of a real economic crisis.

“Currently, commercial banks are very strict in extending loans, which results in a lack of liquidity in the system and a lack of purchasing power and deflation. Without any action taken to address the problem, Thailand may face a real economic crisis,” Mr Chai said.

Ruangkrai Leekitwattana, a member of the Palang Pracharath Party, on Thursday threatened to ask the NACC to launch a probe against the government if it insists on implementing the handout scheme, originally scheduled for May.

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Pheu Thai rebuffs wallet warning

NACC says cash handout scheme poses graft risks

Pheu Thai rebuffs wallet warning
Supporters of the digital wallet handout programme gather at the headquarters of the Pheu Thai Party in October last year. (Photo: Somchai Poomlard)

The ruling Pheu Thai Party (PT) has brushed aside a warning issued by the National Anti-Corruption Commission (NACC) against the government’s 10,000-baht digital wallet handout scheme.

Anusorn Iamsa-ard, a Pheu Thai list-MP, said that the government is ready to listen to suggestions from all agencies.

“If the government had refused to listen, it would have already implemented the scheme. Previously, several sectors also urged it to go ahead as they suggested that the NACC’s recommendations would only delay the handout.

“But I believe the government is willing to listen to all feedback to ensure the scheme will be implemented in line with the law.

“The NACC should calm down as the scheme has not yet started. The NACC can wait until the scheme has started. It is not too late for the agency to scrutinise it. There is no need for the NACC to scrutinise it in advance,” he said.

“If the digital wallet scheme is delayed as a result of the NACC’s warnings, the agency must respond to questions from the people,” he said.

The NACC has warned the government about a range of potential pitfalls tied to the scheme, from graft to legal risks, while insisting the economy is not yet facing a crisis.

The digital wallet handout is the flagship policy of the Pheu Thai-led government to stimulate the economy, with 10,000 baht to be handed out to 50 million Thais.

The legality of the scheme has been called into question, however, as the government plans to request a 500-billion-baht loan to fund it, which goes against the party’s election campaign promise that it would not resort to taking out any loans.

On Wednesday, Niwatchai Kasemmongkol, secretary-general of the NACC, revealed the results of a panel study into the scheme that indicated it may be prone to exploitation by corrupt actors.

Mr Niwatchai said the scheme poses a risk of corruption as it could benefit certain parties, politicians or business groups. Graft could also occur during its implementation unless clear methods are mapped out to ensure all vulnerable groups benefit from it, he said.

As the economy has now started to rebound, the government should consider the financial burden the scheme will impose, and whether it is worth creating a debt burden of 500 billion baht, he said.

The NACC also warned of legal risks, including laws related to financial discipline, treasury reserves and a constitutional law mandating that the Election Commission should first inspect Pheu Thai’s campaign pledge made last May to ensure it matches the planned rollout of the scheme. If not, the promises made could be considered propaganda, he said.

He said information regarding the economy from the Bank of Thailand, the World Bank and the International Monetary Fund all suggest it has not yet reached crisis status but remains sluggish.

Sorawong Thienthong, Pheu Thai secretary-general, on Thursday dismissed claims that what Pheu Thai promised voters during the election campaign last year differed from what was announced in parliament.

“No previous governments have ever been able to deliver on 100% of campaign pledges. A government must work with all sectors. It cannot do everything on its own,” he said.

During the campaign, Pheu Thai promised to give 10,000 baht to every citizen aged 16 or older to attract voters, making 56 million people eligible for the money. However, it later laid down additional conditions that would benefit only 50 million people.

The party said in its campaigning that the scheme would be financed from the budget. It now plans to raise 500 billion baht in loans to fund the scheme.

Government spokesman Chai Wacharonke said on Thursday that the government believes the digital wallet handout scheme is necessary as it will inject a cash flow into the economy to allow low-income earners access to financial resources, and this will help the country avoid the prospects of a real economic crisis.

“Currently, commercial banks are very strict in extending loans, which results in a lack of liquidity in the system and a lack of purchasing power and deflation. Without any action taken to address the problem, Thailand may face a real economic crisis,” Mr Chai said.

Ruangkrai Leekitwattana, a member of the Palang Pracharath Party, on Thursday threatened to ask the NACC to launch a probe against the government if it insists on implementing the handout scheme, originally scheduled for May.

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Black swan turns white on US debt default probability – Asia Times

We humans, as author, mathematician and former options trader Nassim Nicholas Taleb observes, “lack imagination to the point of not even knowing what tomorrow’s important things will look like.”

That is unless we’re talking about Asia’s view of the battle underway on Capitol Hill over the US deficit.  

Taleb, famous for his 2007 bestseller “The Black Swan: The Impact of the Highly Improbable, argues this threat is hiding in plain sight. The “white swan” about which Taleb warns is a “spiral” as the US debt tops US$34 trillion and lawmakers gamble with Washington’s last AAA credit rating.

In November, Moody’s Investors Service warned it might yank away America’s only remaining top rating. That followed three months after Fitch Ratings downgraded the US to AA+ as Republicans and Democrats brawled over funding the government.

“The risk is right in front of us,” Taleb told an investment forum last week. “If you see a fragile bridge, you know it’s going to collapse at some point.” Taleb adds that “we need something to come in from the outside, or maybe some kind of miracle.”

Yet miracles seem in short supply as US fiscal priorities favor continued expansion. On Wednesday (February 7), the US Congressional Budget Office (CBO) said the deficit will continue to climb over the next decade, ensuring that interest payments, already a record share of government spending, become an even bigger challenge for lawmakers and burden to America’s bottom line.

The CBO sees deficits jumping to $2.6 trillion in 2034 from US$1.6 trillion this year. Today, the gap is 5.6% of gross domestic product (GDP); by 2025, it’s seen increasing to 6.1%. “The primary deficits in the CBO’s projections are especially large given the relatively low unemployment rates that the agency is forecasting,” the agency says.

Hence Taleb’s concerns that the globe’s biggest economy is courting a debt reckoning in ways everyone can see coming, as white not black swan.

“So long as you have Congress keep extending the debt limit and doing deals because they’re afraid of the consequences of doing the right thing, that’s the political structure of the political system, eventually you’re going to have a debt spiral,” Taleb said.

Nassim Nicholas Taleb isn’t the only one who sees a possible US debt default. Image: X Screengrab

Granted, the black swan scenario that the 2008 Lehman Brothers crisis proved to be has been invoked early and often since then. Wrongly, too.

In late 2021, many feared the fallout from China Evergrande Group’s default might be a systemic shock that very few had built into their investment portfolios. Not so much. The resulting chaos remained a mostly mainland phenomenon.

In recent years, hedge fund bigwig Michael Burry, who played a central role in the film “The Big Short”, declared it was time to sell US Treasuries. Then the market went on to boom despite tight US Federal Reserve policies.

Now, though, as US political polarization hits a fever pitch, there’s little scope for a pivot toward fiscal sobriety. As US President Joe Biden runs for reelection on November 5, his Democratic Party has zero plans for debt reduction. Ditto for Republicans loyal to ex-president and rival candidate Donald Trump.

“This makes me kind of gloomy about the entire political system in the Western world,” Taleb said.

It’s a reminder of how the US is likely to stress-test the global economy as rarely before in 2024 and a moment of maximum anxiety for Asia. With China’s property crisis undermining growth, Japanese growth flatlining and economies from South Korea to Indonesia to Thailand facing intensifying headwinds, the specter of turbulence from the West is slamming market confidence.

Taleb may be onto more than he knows. Former US Treasury Secretary Robert Rubin has warned the current fiscal trajectory puts the US economy in a “terrible place.” Rubin, who helped lead the global response to the 1997-98 Asian crisis, recently told Bloomberg, “the risks are enormous and some of them are materializing already, like higher interest rates.”

Rubin earned his fiscal bona fides in the early 1990s as then-president Bill Clinton’s economic czar. Back then, Rubin struck a deal with the Fed: debt reduction in exchange for rate cuts, an arrangement that led to a balanced US budget and surpluses, too.

Now Rubin worries that the 3-percentage-point surge in longer-term US yields is just the beginning. The fiscal outlook has darkened and inflation remains elevated. Rubin cautions that when markets are “out of sync with reality,” things can “correct savagely.” 

Sadly, the political climate on Capitol Hill leaves little reason for hope lawmakers can head off catastrophe.

“Looking forward, we’re having to deal with both spending and taxes,” Rubin notes. But “when you get realistic about it, I think you’re going to have to largely” focus on the tax side to increase revenues.

As Rubin sees it, “there’s a lot of talk but the talk is always divided politically between the Republicans who refuse to raise taxes and the Democrats who won’t do entitlements.” His conclusion about Congress or the White House tackling the deficit is that “I wouldn’t bet on it.”

As Moody’s points out in a new report, “the greatest near-term danger to the dollar’s position stems from the risk of confidence-sapping policy mistakes by the US authorities themselves, like a US default on its debt for example. Weakening institutions and a political pivot to protectionism threaten the dollar’s global role.”

The dominance of the US dollar may be nearing its end. Photo: Wikimedia Commons

Moody’s adds that “although we expect that politicians will eventually agree to raise or suspend the debt limit and avoid a default on government debt, greater polarization in the domestic political environment over the last decade has weakened both the predictability and effectiveness of US policymaking. Sanctions further inhibiting the free flow of the dollar in global trade and finance could encourage greater diversification.”

For now, the dollar benefits from a level of liquidity and low transaction costs with which peers can’t compete. Moody’s also points to a dearth of viable alternatives. This may ensure the dollar’s continued advantages in international trade and finance. Though down from 71% in 2000, 58% of central bank reserve levels around the globe are still in dollars.

Yet many worry the dollar is losing its reserve status faster than investors may realize, says economist Stephen Jen at Eurizon SLJ Capital. By Jen’s calculations, the dollar’s share of global reserves in 2023 fell at a rate 10 times the normal speed over the last 20 years.

In 2022 alone, Jen says, “the dollar suffered a stunning collapse” in its market share as a reserve currency, “presumably due to its muscular use of sanctions. Exceptional actions taken by the US and its allies against Russia have startled large reserve-holding countries,” most of which are emerging economies that constitute the so-called Global South.

In the past, Jen explains, the dollar was the “indisputable hegemonic reserve.” Still, he warns, its continued dominance “is not preordained” going forward.

“The prevailing view of ‘nothing-to-see-here’ on the US dollar as a reserve currency seems too innocuous and complacent,” Jen says. “What needs to be appreciated by investors is that, while the Global South is unable to totally avoid using the dollar, much of it has already become unwilling to do so.”

Louis Gave, economist at Gavekal Dragonomics, notes that “the dollar remains the world’s reserve currency, but for how long? After all, some 20% of the global oil trade is being settled in non-dollar currencies, debt in most emerging markets is outperforming treasuries in a tightening cycle and gold is breaking out.”

Cryptocurrencies, too. Andrew Peel, head of digital asset markets at Morgan Stanley, says Bitcoin’s “remarkable” adoption worldwide may accelerate the erosion in the dollar’s standing. He notes that 100 million people worldwide hold the cryptocurrency while companies like Tesla and nations like El Salvador are going digital.

Of course, not everyone thinks the dollar’s days are numbered. Valentin Marinov, strategist at Credit Agricole, notes that the euro’s share of international SWIFT transactions has “collapsed” while those in Japanese yen and British pound have “moderated.”

The “importance of the dollar as the currency of choice for international payments and transactions is another reason for global official and private investors to buy the currency,” Marinov says. “In turn, this should slow down further any push towards de-dollarization.”

The yuan is indeed making major inroads versus the dollar, both in global finance and trade. But some wonder if China’s policy missteps over the last few years might slow the yuan’s momentum toward reserve-currency status.

Fallout from President Xi Jinping’s crackdowns on tech and finance, on top of draconian Covid lockdowns, continues to weigh on economic growth. A $7 trillion stock rout since 2021 is further damaging investor confidence.

Now, Xi’s determination to boost the yuan’s value may bring unintended consequences, notes economist Rory Green at TS Lombard. Letting the exchange rate rise “could act to constrain monetary policy,” Green says.

In general, Green adds, the People’s Bank of China might be wary of easing monetary policy to avoid downward pressure on the exchange rate.

“Needless to say,” Green notes, “an artificially strong currency attached to a weak economy is not a good combination.”

Even so, the “white swan” troubles facing the US are about to intensify.

They include renewed contagion fears. Concerns about a reckoning for the US commercial property market are going global. In America, a slower-than-expected return to offices following the pandemic has occupancy rates skyrocketing.

Exposure to the sector saw Japan’s Aozora Bank record its first loss in 15 years. Moody’s cut New York Community Bancorp (NYCB) to junk amid real estate-related problems. Germany’s Deutsche Pfandbriefbank flagged its exposure to the “greatest real estate crisis since the financial crisis.”

Silicon Valley Bank’s troubles could still be the tip of the iceberg for US banks. Image: Screengrab / Twitter / TechCrunch

On Tuesday, US Treasury Secretary Janet Yellen felt the need to step to the microphone to claim all’s well in the financial system.

This week, NYCB shares closed at the lowest level since 1997 as about $4.5 billion of its market value evaporated. Moody’s says the institution faces “multi-faceted” market risks and governance challenges.

“There are reasons to think that NYCB is not the only struggling US bank, as others face a squeeze on both profits and asset quality,” write analysts at Gavekal. “But the problems seem especially acute among small banks, which have some 30% of their assets in the troubled commercial real estate sector compared to 6% at large banks.”

All this coming a year after the spectacular demise of California’s Silicon Valley Bank is putting Asian markets directly in harm’s way. And in ways that no one could argue markets didn’t see coming.

Even the man who popularized the idea of unforeseeable risks now says “black” is “white” where financial risks in 2024 are concerned.

Follow William Pesek on X at @WilliamPesek

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BMC gives B23.4bn nod for Green Line

Money to be spent on second extension

The Bangkok Metropolitan Council (BMC) has approved up to 23.4 billion baht for payment to the Bangkok Mass Transit System Plc (BTSC) for electrical and mechanical (E&M) installation work and operation services for the Green Line’s second extension.

The BMC held its sixth general meeting to hear the result of a review of the additional expenditure from the annual budget yesterday. Those present included Bangkok governor Chadchart Sittipunt, executive officials and other high-ranking state officials. The motion to approve the spending received 43 votes, with one abstention.

Napapon Chirakul, Bangkok councillor for Bangkok Noi district and chairman of the committee reviewing the draft budget ordinance, said the proposed additional expenditure is fixed at 23.4 billion baht.

The special expenditure budget was set aside for the BMA to receive the second Green Extension Line assets and settle the costs of the E&M and the Green Line’s operation services.

BMA and its business arm, Krungthep Thanakhom (KT), owe the BTSC 30 billion baht for hiring the BTSC to provide operation and maintenance services. In December last year, the BMA began charging passengers for the Green Line’s second extension routes, a move believed to be part of a bid to address the debt.

The Napapon panel yesterday urged the Bangkok Metropolitan Administration (BMA) to tell people why a budget was needed for the E&M system. The panel also said the BMA should speed up spending for the E&M so it can turn its attention to other projects.

Mr Chadchart said the BMA’s Traffic and Transportation Department will meet KT Corporation (KT) and BTSC today to flesh out details of the spending. The draft ordinance will also be published in the Royal Gazette, while the BMA must also inform the Interior Ministry of any progress made in the payment.

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City council approves B23.4bn for Green Line

Bangkok government is “relieved” by the passage of the resources to assist in resolving long-standing debt issues.

City council approves B23.4bn for Green Line
At the Khu Khot depot in Pathum Thani, commuters wait in line to purchase tickets for the Green Line expansion. ( Image: Pattarapong Chatpattarsill )

A budget of up to 23.4 billion baht has been approved by the Bangkok Metropolitan Council to pay Bangkok Mass Transit System Plc ( BTSC ) for the construction and maintenance of the second Green Line extension.

At a meeting that was also attended by Bangkok governor Chadchart Sittipunt, executives of the Bangkok Metropolitan Administration ( BMA ), and other state officials, the draft ordinance received 43 votes in favor with one abstention.

According to Napapon Chirakul, a council for the Bangkok Noi area and the chairman of the committee reviewing the document, the resources would enable the BMA to acquire the assets from the expansion line and to pay the long-overdue costs for electrical and mechanical work and operations borne by BTSC.

The Golden Line rail at Samrong place and the Pink Line at Wat Phra Si Mahathat station are connected by the Green Line’s following extension. Last month, the BMA started charging people on the extension a smooth suffer of 15 baht per trip.

In order to focus on planning the money for various projects, the board urged the BMA to increase resources spending for the E&amp, M job.

For the sake of clarity and everyone’s benefit, the screen has reviewed the draft ordinance by adherence to relevant laws, according to Mr. Napapon.

The BMA’s Customers and Transport Department, according to Mr. Chadchart, will discuss the specifics of the 23.4 billion ringgit in investing with KT Corporation and BTSC on Thursday.

The government expressed his relief that the council members had approved of it. “KT may make an effort to haggle over a lower payment with BTSC.”

For operating and maintaining the Green Line, the BMA and its business arm Krungthep Thanakhom (KT ) owe BTSC about 30 billion baht.

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Digital handout may violate charter, graft busters warn

According to NACC, there is no issue; only an economic slowdown and unjustified borrowing.

Digital handout may violate charter, graft busters warn
At Government House in November of last year, Prime Minister Srettha Thavisin tries to explain Pheu Thai’s 10,000 bass online budget plan. ( Image: Chanat Katanyu )

The government was forewarned by the National Anti-Corruption Commission on Wednesday that its 10,000 bass digital wallet flyer may be illegal under the constitution and other laws and result in a significant public debt burden.

Niwatchai Kasemmongkol&nbsp, the NACC secretary general, informed investigators that the commission’s decision was the result of extensive research and discussions with experts, scientists, and representatives of pertinent organizations.

It may lower the risk of breaking the law, the State Fiscal and Financial Disciplines Act, and the Currency Act and, most important, do not result in a long-term public debt problem, he said, “if its implementation is through the ordinary budget process, not based on loans raised through borrowing legislation.”

The coalition-core Pheu Thai Party’s online budget plan, according to Mr. Niwatchai, differs from the plan the government unveiled in parliament on September 11, 2023, during fighting for the May 14 general election.

” The Office of the Election Commission should determine whether this contravenes both the natural laws on social functions and the law… Normally, it will be precedent-breaking, he said, that political parties are exempt from having to implement their platform after winning office.

According to the NACC secretary-general, the 10, 000 baht flyer could be viewed as coverage problem if it turns out to gain specific political parties, politicians, people, and conglomerates, which is more likely than benefitting small businesses.

He added that although the authorities intended to use 500 billion baht to carry out the plan, its fiscal multiplier was only 0.4 ( the amount that people and organizations end up spending on other things as a result of purchasing one good or service ).

So, loans will result in a significant debt burden on both the government and the populace. The loan may be repaid over a period of four to five years, which will have an impact on government spending and purchase, according to Mr. Niwatchai.

When there is no financial crisis, the NACC recommended that the government provide financial aid to the poor in order to avoid negative economic effects.

According to the NACC investigation, the Bank of Thailand’s issue signals and data from World Bank and International Monetary Fund studies show that Thailand is experiencing an economic downturn rather than a crisis.

The government should concentrate on economic structure, encourage private consumption and saving and investment in the state industry, and develop employees ‘ skills, according to the NACC, in order to stimulate the economy with balance and sustainability.

Because the flyer would be one-off within a six-month period, the commission also questioned the viability of the government’s plan to use blockchain technology to utilize the online budget scheme.

Niwatchai Kasemmongkol, NACC secretary-general

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Pakistan elections may not lead to a meaningful alternative – Asia Times

The forthcoming elections for Pakistan’s National Assembly and municipal meetings, which are scheduled for this Thursday, are of utmost significance given the recent turmoil in the nation.

Importantly, the new detention and conviction of Imran Khan, a former prime minister, adds to the complexity. On January 31, Khan was given a 14-year prison sentence for corruption, which added three years in jail to his already existing statement. In addition, he was given a 10-year prison sentence and an nbsp statement last month in another circumstance accusing him of leaking classified condition documents. &nbsp,

Inflation, poverty, and a pressing capital crisis are all looming over the country’s prospects as it becomes mired in an intricate web of socioeconomic problems. Hunger looms large, escalating cultural disparities and preventing the population’s general well-being.

Staff are chosen in what ways?

The National Assembly and the Senate make up Pakistan’s two-chamber legislature, which is governed by a political system. The makeup of the National Assembly and the four municipal assemblies—Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan—will be decided by the upcoming elections.

The first-past-the-post technique is used to elect 266 members of the National Assembly, which has 336 seats, straight from single-member constituencies. Also, 10 seats are set aside for minorities and 60 for women. Women’s reserved seats are distributed among parties according to the number of seats in each province, with minority seats being given out based on the total desk matter of each party.

Following this, 100 members of the Senate, which serves as the Pakistani Parliament’s lower house, are chosen by the municipal meetings.

The group or alliance that wins the majority of votes in the National Assembly is granted the right to choose its leader, who then becomes prime minister.

important events

The social landscape in Pakistan is characterized by &nbsp, a number of well-known events, each of which is led by powerful individuals. Former prime minister Nawaz Sharif is in charge of the Pakistan Muslim League ( PML-N), and Bilawal Bhutto Zardari, a former foreign minister, is the party’s leader. Imran Khan is in charge of Pakistan’s Tehreek-e-Insaf ( PTI), and Maulana Fazlul Haq is the head of Jamiat Ulema- e Islam Pakistan ( Fazla ). &nbsp,

The baseball bat, the PTI’s designated political sign, has been refused by the Election Commission of Pakistan (ECP). As a result, the majority of its candidates must then run for office as Independents. The PTI’s president, Imran Khan, is barred from taking part in the primaries. He is prohibited from running for any common company for the following ten years.

Background and part of the military

Imran Khan, who was once supported by the Pakistani Army, is now the government’s main foe. The conflict started when Khan visited Russia and the military appointed Lieutenant-General Nadeem Ahmed Anjum as the Inter-Services Intelligence ( ISI) chief against Khan’s wishes.

The latter could have angered the US because it demonstrated Pakistan’s extreme natural stance at the start of the Ukraine-Russian war. After Khan was arrested, his followers after vandalized one of the generals ‘ homes. The commanders set out to get rid of him, and they have now succeeded in doing so. &nbsp,

However, there has historically been a complicated relationship between Pakistan’s social group and its defense. Military treatments have been a recurring theme in Pakistani history.

When president Iskander Mirza&nbsp declared martial law, nullified the law, and closed the national and provincial assemblies in 1958, it was a key moment. The takeover by General Mohammad Ayub Khan signaled the beginning of martial law. Since then, there have been numerous martial interventions in Pakistan.

The Pakistan Army Act states that the military forces ‘ responsibilities include defending the country from outside hazards and aggression and, when needed, assisting legal authority. But, disagreements between the civil and military governments have often arisen on matters of policy. Using criticism parties as equipment, the military has seized power on a number of times.

Pakistan regularly spends a sizeable portion of its resources on defence, with the planning for 2022 reaching 17.9 % of GDP. This number is significant, especially for a nation where the annual per capita income in 2022 was$ 1,590 USD, or roughly$ 4.35 per day.

important issues

The current state of Pakistan’s economy is marked by a dramatic truth as inflation has skyrocketed to previously unheard-of levels, exceeding&nbsp, 30 %, and reaching an all-time deep in 2023. In the previous quarter, it was at&nbsp, 28.3 %.

The country’s location in the region, where its GDP, per head money, and GDP growth are among the lowest, more highlights this financial unrest. High unemployment costs, persistent challenges in terms of&nbsp, and inflation rates all add to the general financial stress.

Pakistan is ranked at&nbsp, 161st out of 191 places, according to the UN Development Program’s Human Development Index, indicating small achievements in important areas like wellbeing, knowledge, and living standards. Pakistan is now one of the 31 nations with the lowest levels of human growth worldwide. In Pakistan, the poverty rate was 39.4 % in 2022. &nbsp,

The state experienced devastating floods in 2022, which made the situation worse. The floods had a trickling impact on the economy as well as common harm to agricultural land and critical equipment. The aftermath of the storms caused an increase in prices, which had a particularly negative effect on food costs and exacerbated the people’s financial hardships.

Capitalist capitalism’s difficulties

A larger crises rooted in liberal capitalism is indicated by the rising cost of living, rising unemployment, and the threat of stagflation, all of which are linked to the constraints of growth.

This situation is not unique to one regime; instead, it is the result of a neoliberal framework’s overall influence, which makes it difficult for succeeding governments to effectively manage crises. Regardless of changes in social events or military dictators, the fundamental problems at hand continue.

The difficulties at hand are rooted in Pakistan’s place in the liberal capitalism international political economy. Pakistan is finding it difficult to thrive, which has a negative socio-economic impact. &nbsp,

With its capacity to produce a workplace destined to job abroad and produce goods that the private working class is hardly purchase, Pakistan is increasingly becoming the working-class back yard of foreign capital. A new minority of people who are eager to find employment that the country is unable to provide is emerging as a result of the annual exodus of more than 800,000 pepple&nbsp seeking employment worldwide. &nbsp,

Pakistan’s rely on foreign funding, which are frequently taken out at high interest rates, is a significant factor in its financial difficulties. The nation now relies on these loans and is tasked with the difficult task of paying off a sizable debt of$ 80 billion over the course of the next three years.

It is impossible to simply replace one political party with another to end the continuing crisis in Pakistan. It is intricately linked to ingrained issues of injustice, energy concentration in the fingers of a select few, and leaders ‘ lack of willingness to provide an effective solution.

Uncertainty still surrounds a new democratic entity’s capacity to overcome these difficulties. Despite this, these elections carry a lot of weight because the country seems to be heading for an uncertain future with no obvious path to recovery, the population is going through pain, and there is widespread skepticism about the political process.

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