AFP

Sri Lanka’s new prime minister won crucial support from two main opposition parties on Monday, easing the pressure on the ruling Rajapaksa clan in the face of the island’s worsening economic crisis.

But highlighting the dire situation still facing Sri Lanka’s 22 million people, Ranil Wickremesinghe said the country had run out of petrol and that the “next couple of months will be the most difficult ones of our lives”.

“I have no desire to hide the truth and to lie to the public,” Wickremesinghe said in an address to the nation. 

The main opposition SJB party appeared to drop its demands that President Gotabaya Rajapaksa should step down before backing a coalition to manage the crumbling economy.

The SJB, or Samagi Jana Balawegaya, declined to join a unity government led by Wickremesinghe, but said it would “unconditionally support the positive efforts to revive the economy”.

“It is important to save the country from the grave economic crisis,” it said in a brief statement.

And the second-largest opposition party, the Sri Lanka Freedom Party (SLFP), said it would join the cabinet.

Even so, thousands of protestors remained camped outside the sea-front office of 73-year-old President Gotabaya Rajapaksa, whose brother Mahinda quit as premier last week after political violence killed at least nine people.

Shortages of food, fuel and medicines, along with record inflation and lengthy blackouts, have brought severe hardships to Sri Lankans, in the worst financial crisis since independence from Britain in 1948.

Wickremesinghe’s appointment last week — his sixth turn as prime minister — has so far failed to quell public anger at the government for bringing Sri Lanka to the brink of economic collapse.

Troops patrolled the streets as consumers queued up for scarce supplies and the government announced that a six-hour night curfew will be reimposed from Monday after a 24-hour break for a religious holiday.

– Dollar shortage –

Wickremesinghe said on Monday that Sri Lanka had no dollars to finance essential imports with three oil tankers were waiting off Colombo to be paid before they would unload.

He added that the country has run out of 14 essential drugs, including anti-rabies vaccines. The state’s health ministry has not paid its suppliers of medicines for four months and has now been blacklisted, he added.

He also warned that fuel and electricity tariffs will be raised substantially and his government will also sell off its loss-making national airline.

However, he urged people to “patiently bear the next couple of months” and vowed he could overcome the crisis.

– Unity government –

Wickremesinghe has struggled to form a “unity government” and a cabinet swearing-in scheduled for Monday afternoon was pushed back as talks continued on sharing portfolios. 

Four ministers were sworn in on Saturday, all from Rajapaksa’s Sri Lanka Podu Jana Peramuna (SLPP) party.

But there is no finance minister yet, and it is widely expected that Wickremesinghe will retain the crucial portfolio to lead ongoing negotiations with the IMF for an urgent bailout.

The new prime minister held talks Sunday with World Bank and Asian Development Bank representatives in Colombo on medicine, food, fuel and fertiliser supplies, his office said in a statement.

Long queues stretched outside the few fuel stations that were still open on Monday as motorists waited for rationed petrol. 

Heavily armed troops were patrolling the streets with a state of emergency still in effect after at least nine people were killed in violence last week.

Police said over 350 people have been arrested in connection with last week’s mob violence.

Wheat prices surged to a new record high in European trading on Monday after India decided to ban exports of the commodity as a heatwave hit production.

The price jumped to 435 euros ($453) per tonne as the Euronext market opened, up from the previous record of 422 euros reached on Friday.

On the Chicago Board of Trade, just before trading opened the price of the SRW wheat futures contract hit $12.35 a bushel, an increase of 4.9 percent.

Global wheat prices have soared 40 percent on supply fears since Russia’s February invasion of agricultural powerhouse Ukraine, which previously accounted for 12 percent of global exports.

The spike, exacerbated by fertiliser shortages and poor harvests, has fuelled inflation globally and raised fears of famine and social unrest in poorer countries.

India, the world’s second-largest wheat producer, said on Saturday that it was banning exports after its hottest March on record, with traders needing express government approval to enter into new deals.

New Delhi said the move was needed to protect the food security of its own 1.4 billion people in the face of lower production and sharply higher global prices.

Some parts of India have seen prices in wheat and flour jump 20 to 40 percent in recent weeks, Commerce Secretary BVR Subrahmanyam said on Sunday.

Because of the sharp rise in global prices, some farmers were selling to traders and not to the government.

This got the government worried about its buffer stock of almost 20 million tonnes — depleted by the pandemic  — needed for handouts to millions of poor families and to avert any possible famine.

“Contrary to Russia which has had an export quota and tax system in place for years, India no doubt has more difficulty in controlling exports,” said Damien Vercambre at grains brokerage Inter-Courtage.

The export ban drew sharp criticism from the Group of Seven industrialised nations, which said that such measures “would worsen the crisis” of rising commodity prices.

– ‘Worsen the crisis’ –

Export deals agreed before the directive issued on May 13 could still be honoured but future shipments needed government approval, it said.

However, exports could also take place if New Delhi approved requests from other governments “to meet their food security needs”.

India, which possesses major buffer stocks, previously said it was ready to help fill some of the supply shortages caused by the Ukraine war.

Only last week India said it would send delegations to Egypt, Turkey and elsewhere to discuss boosting wheat exports. It was unclear whether these visits will now go ahead.

India recorded its warmest March on record — blamed on climate change — and in recent weeks has seen a scorching heatwave with temperatures upwards of 45 degrees Celsius (113 Fahrenheit).

This hit farmers in wheat-producing northern India, prompting the government to predict output would fall at least five percent this year from 109 million tonnes in 2021.  

The downturn could not come at a worse time as Ukraine, which was in line to become the world’s number three wheat exporter, will see its output cut by a third due to the fighting there, according to forecasts by the US Department of Agriculture. 

The USDA expects Ukraine to export around 10 million tonnes of wheat this year, down from 19 million tonnes last year. Dry weather in the United States and western Europe has added to supply concerns.

Nepal on Monday opened a Chinese-built airport intended to capitalise on Buddhist tourism, as India’s prime minister landed a few kilometres away to mark the birth, enlightenment and death of the religion’s founder.

But Narendra Modi flew by helicopter directly from a nearby Indian airport to the Buddha’s birthplace at Lumbini, bypassing the new facility as his Nepali counterpart Sher Bahadur Deuba inaugurated it.

The sequence of events illustrates the competition for influence in the landlocked Himalayan country by its two giant neighbours.

Nepal has traditionally done a balancing act between New Delhi and Beijing, but analysts believe Indian influence over Kathmandu has been dwindling as China pours heavy investment into the landlocked Himalayan nation.

The $76 million airport project in Bhairahawa, the closest city to Lumbini, is funded by the Asian Development Bank and OPEC Fund for International Development but built by China’s Northwest Civil Aviation Airport Construction Group.

After Nepal’s Deuba opened it alone — only the country’s second international airport — the two prime ministers offered prayers together at Lumbini’s Mayadevi temple, dedicated to Buddha’s mother. 

“The immense devotion to Lord Buddha in both our nations binds us together, makes us members of one family,” Modi said in a speech, while Deuba said the Indian leader’s visit would “contribute to give worldwide visibility to Lumbini”. 

Pradeep Adhikari, the chief of Nepal’s Civil Aviation Authority, told AFP that the existing Kathmandu airport was at capacity.

“Nepal’s air passengers are growing every day… we cannot add more flights in Kathmandu,” he said. “So, we hope this new airport will be able to cater those flights and passengers.” 

It has a capacity of two million passengers a year and is expected to ease travel for pilgrims to one of the holiest sites in Buddhism.

Lumbini, a UNESCO world heritage site, is visited by thousands of pilgrims every year and plans to establish direct air links to countries with significant Buddhist communities, such as Cambodia, Thailand, Laos, Sri Lanka, Myanmar and India.

Saudi Arabia expects to ramp up its daily oil production capacity by more than one million barrels to exceed 13 million barrels by early 2027, the kingdom’s energy minister announced Monday. 

“Most likely it will be 13.2 to 13.4 (million barrels per day, bpd), but that would be (reached) at the end of 2026, beginning 2027,” Prince Abdulaziz bin Salman told an energy conference in Bahrain.

Production at that level would be maintained “if the market allows it”, he said.  

Energy giant Saudi Aramco announced in March 2020 it had been directed by the energy ministry to increase its maximum sustainable capacity from 12 million to 13 million bpd.  

No timeline was given then for the new target.  

Monday’s announcement came one day after Saudi energy giant Aramco posted an 82-percent jump in first quarter profits, buoyed by a global surge in oil prices stemming from the Ukraine war. 

Those results helped Aramco dethrone Apple last week as the world’s most valuable company by market capitalisation. 

They continued a string of positive economic news for Saudi Arabia, which in early May reported that growth in the first quarter had risen 9.6 percent over the same period in 2021.

Yet Aramco has faced security challenges stemming from the war pitting a Saudi-led military coalition against Yemen’s Huthi rebels who have repeatedly targeted the kingdom, including Aramco sites.

– ‘They still believe in oil’ –

Saudi Arabia, the world’s biggest oil exporter, has resisted US entreaties to raise output in an attempt to rein in prices that have spiked since the Ukraine war broke out on February 24. 

As the war got underway, Saudi Arabia and the United Arab Emirates stressed their commitment to the OPEC+ oil alliance, which Riyadh and Moscow lead, underscoring Riyadh’s and Abu Dhabi’s increasing independence from long-standing ally Washington. 

Last year, ahead of the COP26 climate-change summit, Saudi Arabia pledged to achieve net zero carbon emissions by 2060, sparking scepticism from environmental campaign group Greenpeace. 

With increasing global urgency to limit global warming, experts warn of the urgent need to reduce fossil fuel use. 

But Saudi officials’ stated targets indicate “they still believe in oil as a source of energy for the coming decade”, Mazen Alsudairi, head of research for Al Rajhi Capital, a financial services firm in Riyadh, told AFP.

“They are not following the global trend by reducing exposure to hydrocarbons.” 

Also at Monday’s conference in Bahrain, Iraqi Oil Minister Ihsan Abdul-Jabbar Ismail said his country was accelerating its production capacity goals, targeting six million bpd in 2027 and eight million bpd in 2029. 

Iraq’s current daily production is just under 3.5 million. 

It reported $11 billion in oil revenues in March, Iraq’s highest in half a century. 

China’s retail sales and factory output slumped to their lowest levels in around two years, official data showed Monday, capturing the dismal economic fallout from Beijing’s zero-Covid policy.

The world’s second-largest economy has persisted with strict virus measures, choking up global supply chains as dozens of Chinese cities — including key business hub Shanghai — grapple with restrictions. 

Although officials have said they plan to gradually reopen the city, there is no sign of Beijing shifting from the strict zero-Covid approach which analysts warn is severely hitting the economy.

The latest cut came Monday when the National Bureau of Statistics (NBS) announced data showing that retail sales shrank 11.1 percent on-year in April.

It is the biggest slump since March 2020, as consumers remained cooped up at home or jittery over restrictions as China battles its worst Covid outbreak since the early days of the pandemic.

“In April, the epidemic had a big impact on economic operations,” NBS spokesman Fu Linghui told reporters Monday, adding that the outbreak had a “significantly larger-than-expected” effect.

But he stressed that the hit would be “short-term”.

Industrial production growth sank 2.9 percent on-year, reflecting damage from shuttered factories and transportation woes as officials ramped up Covid restrictions last month.

This is down from 5.0 percent growth in March.

“The prolonged Shanghai lockdown and its ripple effect through China, as well as logistics delays resulting from highway controls…have severely affected domestic supply chains,” said Tommy Wu of Oxford Economics.

He added that household consumption was “hit even harder” and disruptions could extend into June.

Home sales dropped 32 percent on-year in the first four months, NBS data showed, reflecting weakness in the key property sector which was struggling even before the latest lockdowns.

Several Chinese developers have sagged under the weight of massive borrowing and defaulted on million-dollar debt repayments.

– Shanghai shutdowns –

Shanghai came under heavy restrictions in early April with some 25 million ordered to stay home in what was originally portrayed as an eight-day lockdown across two halves of the city.

But the shutdowns have dragged for weeks and wreaked havoc on supply chains, spreading frustration among residents.

Officials promised over the weekend to start reopening the city in phases in the next month, while Xinhua news agency said US electric car giant Tesla had made its second overseas shipment after suspending production for nearly three weeks.

But small business owners remain sceptical.

“I don’t have even the slightest expectation about (being able to reopen soon),” one restaurant owner told AFP, asking to remain anonymous.

“Why are people still believing them?”

The urban unemployment rate also climbed in April to 6.1 percent — the highest in more than two years.

Beijing has announced measures to help young people find jobs, including social insurance subsidies for smaller firms that hire more graduates, and officials have lowered the mortgage rate for first-time homebuyers.

But there is fear that stifling restrictions will hamper growth plans.

Financial services firm Gavekal said in a recent note that previous suggestions that “meaningful policy easing is on the horizon have not played out.”

“As Shanghai and Beijing struggle to reopen…officials may yet be forced to crank up stimulus sooner,” Gavekal added.

Economic experts urged support for businesses and consumers at a forum on Saturday, with a top university professor saying the industrial chain cannot be forgotten while reducing infections.

But China cannot “rely on expanding investment and launching large projects,” or on handouts to boost consumption, Premier Li Keqiang said in a speech published by state media Saturday.

Instead, he said, practice has proved that tax and fee reductions are “effective, fair and inclusive”.

Thousands of money exchangers in Afghanistan ended their strike on Monday, the brokers commission said, a day after they shut their shops to protest a steep hike in licence fees imposed by Taliban authorities.

Afghanistan’s formal banking system collapsed when the Taliban swept back to power in August last year, ending two decades of US-led military intervention in the deeply impoverished nation.

Since then money exchangers — who swap currencies, make informal cash transfers and even give loans — have played a key role in meeting the financial needs of many of Afghanistan’s 38 million citizens mired in humanitarian crisis. 

“Today, the money exchange markets across Afghanistan are open,” Abdul Rahman Zeerak, spokesman for Afghanistan’s Money Exchange Commission, told AFP.

“They (Taliban leaders) requested that we should open the markets and that they will resolve our problems fully.” 

Money exchangers in Kabul and other cities, including Herat and Kunduz, went on strike on Sunday after the central bank raised their licence fees to five million Afghanis ($56,000) from 300,000.

Zeerak said the central bank had also told currency traders to conduct transactions online, and that they must have a minimum of 50 million Afghanis to operate.

On Tuesday the commission will have a meeting with the finance ministry and the governor of Afghanistan’s central bank, he said.

Experts said the central bank’s new directives were motivated by the Taliban’s desire to cut off funding paths to militant groups. 

Many foreign nations have made assistance to Afghanistan conditional on the Taliban regime guaranteeing human rights and preventing international terror groups from operating in the country.

Afghanistan’s money market had been volatile for several months after the US seized billions of dollars in Afghan assets during its hasty withdrawal when the Taliban seized power.

Since then there has been a shortage of dollars as international donors also suspended the massive aid inflows that had propped up the Afghan economy for two decades during the US presence in the country.

Indian billionaire Gautam Adani struck a $10.5 billion deal to buy Swiss cement giant Holcim’s local business, the companies said, betting on a construction boom predicted in coming decades.

In his biggest acquisition to date, the deal will give coal-to-ports magnate Adani — who vies with fellow Indian Mukesh Ambani for the title of Asia’s richest person — a controlling stake in India’s second-largest cement manufacturer.

“Our move into the cement business is yet another validation of our belief in our nation’s growth story,” Adani, 59, said in a statement late Sunday.

“Not only is India expected to remain one of the world’s largest demand-driven economies for several decades, India also continues to be the world’s second largest cement market,” he added.

The deal marks Holcim’s exit from the Indian market after 17 years and is a part of a global restructuring strategy after the Swiss cement giant’s 2015 merger with France’s Lafarge.

Once approved by regulators and shareholders, the firm will acquire Holcim’s stakes in local producers Ambuja Cements and ACC.

The acquisitions will make Adani the country’s second-biggest cement maker with a capacity of 70 million tonnes per year.

India, already home to 1.4 billion people, is projected by the United Nations to become the planet’s most populous nation by the middle of the decade.

The International Energy Agency said in a report last year that an estimated 270 million people will be added to India’s urban population by 2040 — the equivalent of adding a new city the size of Los Angeles each year.

This will also likely increase emissions in the world’s third-biggest polluter, since the manufacture of cement produces carbon dioxide.

Shares in Ambuja Cements were up 3.80 percent, while shares in ACC Ltd rose six percent in Mumbai following the announcement.