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The United States rushed to seize the assets of Silicon Valley Bank on Friday after it experienced a run on the bank.

Silicon Valley, the nation’s 16th-largest bank, failed after depositors — mostly technology workers and venture capital-backed companies — hurried to withdraw money this week as anxiety over the bank’s balance sheet spread. It is the second biggest bank failure in U.S. history, behind Washington Mutual during the height of the financial crisis more than a decade ago.

Silicon Valley was heavily exposed to the tech industry and there is little chance of contagion in the banking sector similar to the chaos in the months leading up to the Great Recession more than a decade ago. The biggest banks — those most likely to cause a systemic economic issue — have healthy balance sheets and plenty of capital.

In 2007, the biggest financial crisis since the Great Depression rippled across the globe after mortgage-backed securities tied to ill-advised housing loans rippled from the United States to Asia and Europe. The panic on Wall Street led to the collapse of the storied Lehman Brothers, founded in 1847. Because major banks had extensive exposure to one another, it led to cascading disruption throughout the global financial system, putting millions out of work.

There has been unease in the banking sector all week and the collapse of Silicon Valley pushed shares of almost all financial institutions lower Friday, shares that had already tumbled by double digits since Monday.

Silicon Valley Bank’s failure arrived with incredible speed, with some industry analysts on Friday suggesting it was a good company and still likely a wise investment. Silicon Valley Bank executives were trying to raise capital early Friday and find additional investors. However, trading in the bank’s shares was halted before the opening bell on Wall Street because of extreme volatility.

Shortly before noon eastern, the Federal Deposit Insurance Corporation moved to shutter the bank. Notably, the FDIC did not wait until the close of business to seize the bank, as is typical in an orderly wind down of a financial institution. The FDIC could not immediately find a buyer for the bank’s assets, signaling how fast depositors had cashed out. The bank’s remaining uninsured deposits will now be locked up in receivership.

The bank had $209 billion in total assets at the time of failure, the FDIC said. It was unclear how much of its deposits were above the $250,000 insurance limit at the moment, but previous regulatory reports showed that much of Silicon Valley Bank’s deposits exceeded that limit.

The FDIC said Friday that deposits below the $250,000 limit would be available Monday morning.

Silicon Valley Bank appeared stable this year, but on Thursday it announced plans to raise up to $1.75 billion to strengthen its capital position. That sent investors scurrying and shares plunged 60%. They fell further on Friday before the opening of the Nasdaq, where it is traded.

As its name implied, Silicon Valley Bank was a major financial conduit between the technology sector, its founders and startups as well as its workers. Hundreds of companies held their operating capital with the bank, and it was seen as good business sense to develop a relationship with Silicon Valley Bank if a founder wanted to find new investors or go public.

“We saw building a relationship with Silicon Valley Bank as a logical step, given their reach,” said Ashley Tyrner, CEO of FarmboxRx, a company that delivers food as medicine to Medicaid and Medicare recipients. While Tyrner has money in other banks and can make payroll, she said a good portion of her business’ profits are now locked up with the bank.

Silicon Valley’s connections to the tech sector became a liability rapidly. Technology stocks have been hit hard in the past 18 months after a growth surge during the pandemic and layoffs have spread throughout the industry.

At the same time, the bank was hit hard by the Federal Reserve’s fight against inflation and an aggressive series of interest rate hikes to cool the economy.

As the Fed raises its benchmark interest rate, the value of bonds, typically a stable asset, start to fall. That is not typically a problem as the declines lead to “unrealized losses,” or losses that are not counted against them when calculating the capital cushion than banks can use should there be a downturn in the future.

However, when depositors grow anxious and begin withdrawing their money, banks sometimes have to sell those bonds before they mature to cover that exodus.

That is exactly what happened to Silicon Valley Bank, which had to sell $21 billion in highly liquid assets to cover the exodus of deposits. It took a $1.8 billion loss on that sale.

Tyrner said she’s spoken to several friends who are backed by venture capital. She described those friends as being “beside themselves” over the bank’s failure. Tyrner’s chief operating officer tried to withdraw her company’s funds on Thursday but failed to do so in time.

“One friend said they couldn’t make payroll today and cried when they had to inform 200 employees because of this issue,” Tyrner said.
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A global shortage of semiconductor chips in the automotive industry starting in 2020 has motivated many countries to increase their domestic manufacturing. The United States has allocated more than $50 billion to promote semiconductor production and research stateside as the global need for the chips is expected to double over the next decade. Keith Kocinski has more from New York.
Camera: Keith Kocinski and Rendy Wicaksana
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Sri Lanka looks set to get a sign-off on a long-awaited $2.9 billion four-year bailout from the International Monetary Fund (IMF) on March 20 after the crisis-hit country secured new financing support from China.

The IMF and the island nation confirmed on Tuesday that Sri Lanka had received assurances from all its major bilateral creditors, a key step to deploy financing and an important moment for the country engulfed in its worst economic crisis since independence from Britain in 1948.

Sri Lankan President Ranil Wickremesinghe told parliament there were signs the economy was improving, but there was still insufficient foreign currency for all imports, making the IMF deal crucial so other creditors could also start releasing funds.

“Sri Lanka has completed all prior actions that were required by the IMF,” Wickremesinghe said, and that he and the central bank governor had sent a letter of intent to the IMF.

“I welcome the progress made by Sri Lankan authorities in taking decisive policy actions & obtaining financing assurances from all their major creditors, incl. China, India & the Paris Club,” IMF chief Kristalina Georgieva said on Twitter, adding that she looked forward to presenting the IMF-supported program to the executive board on March 20.

Approval is expected since the board generally will not add items to its agenda unless its members are ready to act.

The country’s international debt and currency soared higher on the news, with bonds adding around 3 cents in the dollar, while the Sri Lankan rupee jumped as much as 7.8% to a 10-month high. Stocks closed more than 2% higher.

A new letter by the Export-Import Bank of China (EXIM) sent on Monday to Sri Lanka resolved the stalemate. Sources close to the talks said EXIM provided “specific and credible” financing assurances for a debt restructuring, with a specific link to the IMF program and clear language on debt sustainability.

The first tranche of funding was expected to be released shortly after the board meeting, the sources added.

In a letter in January, EXIM had offered Sri Lanka a two-year debt moratorium, but sources said this was not enough to meet IMF conditions.

“This is a positive development: it might be the first time that China provides textbook financing assurances to the IMF outside of a Common Framework process,” said Theo Maret, senior research analyst at Global Sovereign Advisory, in Paris.

By end-2020, Sri Lanka owed EXIM $2.83 billion, or 3.5% of its external debt, according to IMF data. In total, Sri Lanka owed Chinese lenders $7.4 billion, or nearly a fifth of public external debt, by end-2022, calculations by the China Africa Research Initiative showed.

IMF financing provides an anchor for countries to unlock other funding sources. Sri Lanka was in negotiations with India, its second biggest creditor, to extend a $1 billon credit line due to expire by March 17, two sources said.

Sri Lanka needs to repay about $6 billion on average each year until 2029 and will have to keep engaging with the IMF, Wickremesinghe said.

Countries in debt distress such as Zambia and Sri Lanka have faced unprecedented delays in securing IMF bailouts as China and Western economies have clashed over how to provide debt relief.

Sri Lanka has been waiting for about 187 days to finalize a bailout after reaching a preliminary deal. This compares to a median of 55 days it took low- and middle-income countries over the past decade to go from preliminary deal to board sign-off, according to data compiled by Reuters.

“Debt restructurings both within and outside the Common Framework have been taking longer than usual due to issues with creditor coordination and foot-dragging by China,” said Patrick Curran at Tellimer. “The restructurings in Sri Lanka and Zambia are likely to set important precedents for future restructurings.”

Chinese Foreign Minister Qin Gang said on Tuesday that Beijing would continue to participate in the settlement of international debt problems in a constructive manner.

Responding to a question on the sidelines of an annual parliament meeting, Qin also said China should be the last to be accused of causing debt traps and called on other parties to share the burden.
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Federal Reserve Chair Jerome Powell said Tuesday the U.S. economy is advancing at a faster pace than expected, which could prompt central bank policy makers to raise interest rates at a faster pace than originally planned to curb spending and borrowing in hopes of reining in the continuing increase in consumer prices.

Policy makers at the central bank had signaled their intent to increase its benchmark interest rate by a quarter of a percentage point at upcoming meetings over several months. But Powell told the Senate Banking Committee that may not be enough to curb the U.S. inflation rate, which rose 6.4% over the 12 months ending in January, about three times the 2% pace the Fed considers acceptable.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell said. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

The Fed raised its benchmark interest rate, which affects borrowing costs for both businesses and consumers, by a quarter-point to a range between 4.5% and 4.75% last month, easing the pace of rate boosts following increases of a half percentage point in December and 0.75% in November.

The Fed had projected increasing the rate to between 5% and 5.5% and keeping it there until 2024, but the faster economic growth could alter those plans and push policy makers to increase the benchmark rate even higher.

“We will continue to make our decisions meeting by meeting,” Powell said. “Although inflation has been moderating in recent months, the process of getting inflation back down to 2% has a long way to go and is likely to be bumpy.”

Some U.S. economists have continued to predict that the economy, the world’s largest, will dip into a recession in the coming months, but that has yet to occur. Employers continue to add hundreds of thousands of new workers to their payrolls month after month — 517,000 in January alone — and the national unemployment rate is 3.4%, a 53-year low.

A report for hiring in February is due out Friday.

Fed policy makers last met February 1, but economic data revisions since then showed consumer price increases and the demand for more workers late last year didn’t slow as much as first reported.   

A robust labor market is usually favorable for workers looking for higher pay and hundreds of thousands of U.S. workers have switched jobs for bigger salaries as the country continues to recover from the 2020 coronavirus pandemic.

Powell told lawmakers that “strong wage growth is good for workers but only if it is not eroded by inflation.”

“We have more work to do,” he said. “Our policy actions are guided by our dual mandate to promote maximum employment and stable prices. Without price stability, the economy does not work for anyone.”
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On a recent winter weekday at Penn Station Shoe Repair and Shoe Shine, men hop onto shoeshine chairs and pull out newspapers and phones to read while shoeshiners get to work applying polish and elbow grease to loafers, boots and other leather shoes. When finished, these customers hand over $8 in cash at a counter where a sign reads “We’re not God, but we do save soles.”

Shoeshining has a vaunted history in the U.S. In the 1860s, Horatio Alger popularized the “rags-to-riches” American narrative with his book “Ragged Dick” about a shoeshiner (or “bootblack”) who works his way up to wealth. “Shoeshine boys” (and occasional girls) have subsequently been in countless movies and TV shows.

Today, the tradition of getting a quick polish from a rag-toting shoeshiner is greatly diminished, and many stands similar to the one in Penn Station have disappeared across the country. The decline has been exacerbated by the pandemic, remote working and the rise in popularity of more casual workwear when people did return to the office. SC Johnson, which makes the biggest shoe polish brand, Kiwi, even said in January that it had stopped selling the brand in the U.K. due to softening demand (they still sell it in the U.S.) 

The last time the Census listed shoeshining as a discrete business was 2007, when only 30 establishments were counted. The more-encompassing shoe repair market has declined an estimated 23% between 2013 and 2023 to $307 million, according to market research firm IBISWorld. Shoe polish sales in 2022 totaled 27.3 million units, down 29% compared with 2019, according to figures from Nielsen, a sign of the changes brought on by the pandemic. 

Nisan Khaimov, who owns the Penn Station stand, said his stand would shine 80 to 100 shoes each workday before the pandemic. Now it’s between 30 to 50 on Tuesday to Thursday, and even fewer on Mondays and Fridays. Hybrid work is hurting his business.

“Until people come back to work, the problems will not be solved,” said Khaimov, who benefits from commuters traveling in and out of New York City who can’t get their shoes shined where they live. “And it’s not good for landlords and for tenants also like us. So, we’re waiting. But eventually it will go back to normal, we hope. But when we don’t know.”

Rory Heenan, 38, an accountant in Philadelphia, said that as a young boy he would take the train with his father on his way to work one Friday each month and watch him get a shoeshine.

“I would just sit here as a a little guy, you know, observing,” he said. “And here I am, you know, 30 years later, doing the same thing. So, it’s certainly something that’s passed down over time.”

Across town, in the corridor between the subway and The Port Authority bus terminal, Jairo Cardenas is also feeling the pinch. Business at Alpha Shoes Repair Corp., which he’s run for 33 years, is down 75% compared with prior to the pandemic. He’s down to one shoeshiner, from the three he employed before the pandemic. His shoeshiners used to shine 60 or 70 shoes a day. Now a good day is 10 to 15 shines.

Cardenas’ landlord gave him a break on rent, but he’s still struggling, and has seen several other shoeshine stores in the area close. Still, he is noticing an uptick in people returning to work and hopes business slowly returns to normal by the spring.

Shoe repairs typically bring in more money than shines. At David Mesquita’s Leather Spa, which operates five shoe repair and shoeshine businesses, including two in Grand Central, the bulk of the business comes from shoe, handbag and garment repair. But shoeshines are still a key offering to draw people in to Leather Spa locations since they’re not available everywhere.

Pre-pandemic, Leather Spa had four shoeshine chairs in Grand Central and six shoeshiners rotating, who would do about 120 shines a day. Nowadays, there are three shoeshiners who do 40 or 50 shines on the best days.

But Mesquita is seeing people slowly coming back. His December 2022 shoeshine numbers were up 52% compared with December 2021. Mondays and Fridays are less busy than the middle of the week due to office workers’ hybrid schedules.

“Traffic is slowly coming back in, we’re seeing the commuters come in and everything, but we’re still not back 100% of what we were,” Mesquita said.

Mesquita said shoeshining is not something that will go away completely.

“I think it’s just a little luxury,” he said. “People like to treat themselves, you know, whether it’s once a week or twice a week or, you know, once every two weeks. It’s just nice.”

Besides big city transit hubs, airports are one of the few remaining spots to reliably get a shoeshine. Jill Wright owns Executive Shine, which operates shoeshine stations in the Denver and Charlotte airports. Her business was devastated when air travel shut down.

When airports started to reopen, they were empty. The only people getting their shoes shined were pilots and crew, she said, which kept her company in business. Now, Wright says her businesses is still just 35% of what it was in 2019.

“Travel has really changed,” she said. “Companies are starting to come back but not to the degree that they were.”

Business travel is rebounding, but the U.S. Travel Association predicts 2023 business trips will still be down 10% from 2019, and will return to pre-pandemic levels in 2024. Meanwhile, people are dressing differently when they travel. Instead of traveling in workwear, some travelers that still want to get their shoes shined will travel in tennis shoes, pull out their dress shoes to get a shine, and then put them back in their bag, Wright said.

Like Mesquita, Wright expects demand for shoeshines will never go away completely, because it’s more than just a transactional service. A shine is a moment of connection between two people, particularly at an airport where there is a lot of rushing around and stress, she said.

“People come for a shoeshine, but they also come for the connection and for the conversation and just for a place to relax and talk and be seen and feel some compassion,” she said. 
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China’s government announced plans to promote a consumer-led revival of the nation’s struggling economy as its legislature opened a session Sunday that will tighten President Xi Jinping’s control over business and society.

Premier Li Keqiang, the top economic official, set this year’s official growth target “around 5%” following the end of anti-virus controls that kept millions of people at home and triggered protests. Growth last year fell to 3%, the second-weakest level since at least the 1970s.

“We should give priority to the recovery and expansion of consumption,” Li said in a nationally televised speech on government plans before the ceremonial National People’s Congress in the Great Hall of the People in central Beijing.

The full meeting of the 2,977 members of the NPC is the year’s highest-profile event but its work is limited to endorsing decisions made by the ruling Communist Party and showcasing official initiatives.

This month, the NPC is set to endorse the appointment of a government of Xi loyalists including a new premier after the 69-year-old president expanded his status as China’s most powerful figure in decades by awarding himself a third five-year term as party general secretary in October, possibly preparing to become leader for life. Li, an advocate of free enterprise, was forced out as the No. 2 party leader in October.

Xi’s new leadership team will face challenges ranging from weak global demand for exports and lingering U.S. tariff hikes in a feud over technology and security to curbs on access to Western processor chips because of security fears. Beijing’s relations with Washington and its Asian neighbors have been strained by disputes over technology, security and control of the South China Sea.

In his report Sunday, the premier called for accelerating industrial and technology development, an area in which Beijing’s state-led efforts have strained relations with Washington and other trading partners. They complain China steals or pressures foreign companies to hand over technology and improperly subsidizes and shields its fledgling competitors in violation of its market-opening commitments.

Xi earlier singled out encouraging jittery consumers and entrepreneurs to spend and invest as a priority at the ruling party’s economic planning meeting in December.

Beijing needs to “fully release consumption potential,” Xi said, according to a text released last month.

Since taking power in 2012, Xi has promoted an even more dominant role for the ruling party. He has called for the party to return to its “original mission” as China’s economic, social and cultural leader and carry out the “rejuvenation of the great Chinese nation.”

Xi has crushed dissent, stepped up censorship and control over information, and tightened control over Hong Kong.

Xi’s government has tightened control over China’s biggest e-commerce and other tech companies with anti-monopoly and data security crackdowns that wiped billions of dollars off their stock market value. Beijing is pressing them to pay for social welfare and official initiatives to develop processor chips and other technology.

That has prompted warnings economic growth will suffer.

Li’s report Sunday reinforced the importance of state industry. It promised to support entrepreneurs who generate China’s new jobs and wealth but also said the government will “enhance the core competitiveness” of state-owned companies that dominate industries from banking and energy to telecoms and steel.

Li also called for “resolute steps” to oppose formal independence for Taiwan, the self-ruled island democracy claimed by Beijing as part of its territory. He called for “peaceful reunification” between China and Taiwan, which split in 1949 after a civil war, but announced no initiatives.

Taiwan never has been part of the People’s Republic of China, but Beijing says it is obligated to unite with the mainland, by force if necessary. Xi’s government has stepped up efforts to intimidate the island by flying fighter jets and bombers nearby and firing missiles into the ocean.

Chinese economic growth has struggled since mid-2021, when tighter controls on debt that Beijing worries is dangerously high triggered a slump in the vast real estate industry, which supports millions of jobs. Smaller developers were forced into bankruptcy and some defaulted on bonds, causing alarm in global financial markets.

Longer term, the workforce has been shrinking for a decade, putting pressure on plans to increase China’s wealth and global influence.

Consumer spending is gradually recovering, but the International Monetary Fund and some private sector economists forecast growth this year as low as 4.4%, well below the official target.

A measure of factory activity rose to a nine-year high in February. Other measures of activity including the number of subway passengers and express deliveries rose.

A central bank official said Friday real estate activity is recovering and lending for construction and home purchases is rising.

A recovery based on consumer spending is likely to be more gradual than one driven by stimulus spending or a boom in real estate investment. But Chinese leaders are trying to avoid reigniting a rise in debt and want to nurture self-sustaining growth based on consumption instead of exports and investment.

The official in line to become premier is Li Qiang, a former party secretary of Shanghai who is close to Xi but has no government experience at the national level. Li Qiang was named No. 2 party leader in October.

That reflects Xi’s emphasis on promoting officials with whom he has personal history and bypassing party tradition that leadership candidates need experience as Cabinet ministers or in other national-level posts.

If achieved, the official growth target would be an improvement over last year but down sharply from 2021’s 8.1%.
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On a blustery late-winter day in Shakespeare’s birthplace, the foyer of the Other Place theater is a cozy refuge. Visitors are having meetings over coffee, checking emails, writing poetry, learning to sew.

It looks and feels like an arty café in the picturesque streets of Stratford-upon-Avon, but it’s a “warm hub” set up by the Royal Shakespeare Company drama troupe to welcome people struggling to heat their homes because of sky-high energy prices.

Warm hubs have sprouted across Britain by the thousands this winter as soaring food and energy prices drive millions to turn down the thermostat or skimp on hot meals. Research by the opposition Labour Party counted almost 13,000 such hubs, funded by a mix of charities, community groups and the government and nestled in libraries, churches, community centers and even a tearoom at King Charles III’s Highgrove country estate.

Wendy Freeman, an artist, writer and seventh generation Stratfordian, heard about the RSC’s warm hub from a friend. She lives in “a tiny house with no central heating” and relies on a coal fire for warmth. Like many, she has cut back in response to the cost-of-living crisis driven by the highest inflation since the 1980s.

“You just adapt,” said Freeman, 69, who was using the center as a warm, quiet place to work on a poem. “Little things, like putting less water in the kettle. I was brought up with ‘save the pennies, and the pounds will look after themselves.’ I always cook from scratch and eat what’s in season.

“But it’s nice to go somewhere warm,” she added.

A perfect storm of Russia’s war in Ukraine, lingering pandemic disruption and economic aftershocks of Brexit is putting more people in Britain under financial strain. Households and businesses were hit especially hard after Russia’s invasion of Ukraine drove up the cost of natural gas needed for heating and helped push the U.K. to the precipice of a recession.

The U.K.’s annual inflation rate was just above 10% in January, with food prices up almost 17% over the year. Some 62% of adults are using less natural gas or electricity to save money, according to the Office for National Statistics. A quarter of households regularly run out of money for essentials, pollster Survation found.

Though oil and natural gas prices have fallen from last year’s peaks, the average British household energy bill is still double what it was a year ago. Costs for many are due to rise by another 20% on April 1 when a government-set price cap goes up.

Anne Bolger, a retired math teacher, happened across the warm hub during a walk one day and has come back every week since. She drops in to check emails, prep for math tutoring or do a jigsaw puzzle.

“Today’s the day that I’m appreciating it, because home is freezing,” she said.

The hub runs one afternoon a week in the smallest of the RSC’s three theaters. On Tuesday, the space held a mixture of theater staff, actors on the way to rehearsals and visitors looking to get warm. Organizers provide puzzles, games, toys for children, free tea, coffee and Wi-Fi — even a sewing table.

“I like the fact that it’s such a creative space,” said Bolger, 66. “People are having meetings there, they’re talking, they’re working. I just feel a bit more alive than sitting at home, a bit more connected.”

That’s just what organizers want to hear. They say warm hubs exist to ease loneliness as well as energy poverty.

“The warmth is in the welcome as much as a warm building to come to,” said Nicola Salmon, who oversees the hub as the RSC’s creative place-making manager. “There is always somebody here to chat to.”

Stratford, about 100 miles (160 kilometers) northwest of London, is a prosperous town that makes a good living from William Shakespeare, its most famous son. Even on a wintry weekday, tourists traipse though streets of half-timbered Tudor buildings to see the house where the Bard was born, visit the schoolroom where he studied and stand over his grave in the medieval Holy Trinity Church.

The RSC is one of Stratford’s main cultural attractions and major employers. Salmon says the warm hub is part of the company’s efforts to get closer to its surrounding community, a town that “is often perceived as affluent and well-off” but contains “areas of great deprivation.”

Like Britain’s food banks — now numbering an estimated 2,500 — warm hubs are a crisis measure showing signs of becoming permanent.

The Warwickshire Rural Community Council, a charity covering the county around Stratford, set up a mobile warm hub — a minibus-turned-pop-up outdoor café — in 2021 as pandemic restrictions plunged many rural residents into isolation.

A year ago, the charity ran five hubs across the county, with backing from Cadent, the private company that distributes much of Britain’s heating gas. As winter hit and energy bills soared, the number mushroomed to 90, providing everything from meals to repair workshops and slow-cooking courses meant to reduce gas use.

About 30 of the hubs will stay open this summer — with a view to becoming permanent — and the mobile hub will be on the road five days a week.

“People say we shouldn’t be in this situation, and we shouldn’t be,” said Jackie Holcroft, the charity’s warm hubs manager. “But we are. And I think one of the most amazing things is that you’ve got hundreds, thousands of volunteers around Warwickshire and they’re all coming together to make a difference.”

The RSC’s warm space will close at the end of March, but the company is already planning for its return next year.

“I’ll miss it like crazy,” said Bolger, one of the regulars. “I’m not hoping that the fuel crisis goes on forever, but I am hoping this place will stay open.”
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Pakistan’s economic crisis is hitting the health sector hard. Pakistan relies heavily on imports such as raw material needed to manufacture medicines and complex surgical equipment. The medical supply chain is coming under increased pressure due to the country’s low foreign exchange reserves and declining rupee. Sarah Zaman reports from Islamabad. Camera and edit: Wajid Asad, Waqar Ahmad
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Pakistan’s currency fell 7% against the U.S. dollar Thursday as the government struggles to persuade the International Monetary Fund to resume lending to the cash-strapped country to help avert a default on its foreign debt.

The Pakistani rupee has weakened to a record low in recent weeks after foreign exchange companies were allowed in January to remove a cap on the exchange rate. The currency’s official value closed at 285.09 rupees against the dollar Thursday versus 266.11 the previous day.

The market-determined currency exchange rate is a key IMF demand for Prime Minister Shehbaz Sharif’s government to complete before the lender’s board approves a funding tranche of more than $1 billion to Pakistan. 

Islamabad has since failed to secure the tranche, which was initially expected to be disbursed in December as part of a stalled $6.5 billion IMF bailout program, over a lack of progress on fiscal consolidation.

“A delay in IMF funding is creating uncertainty in the currency market,” said Mohammed Sohail of Topline Securities, a Karachi-based brokerage house.

The IMF program is key to unlocking other external bilateral and multilateral financing sources for Pakistan. The drawn-out negotiations between the two sides are putting pressure on government finances and the country’s more than 220 million population.  

Pakistan’s foreign exchange reserves have dwindled to precarious levels and stood at just over $3 billion, hardly enough for three weeks of imports.

Inflation has also skyrocketed to 31.5%, according to official data published Wednesday. Food and fuel prices have soared beyond the means of many Pakistanis.

Decades of financial mismanagement, corruption, and political instability are blamed for pushing Pakistan’s economy to the brink of default. A global energy crisis and last year’s devastating floods across the country have worsened the crisis. 

The Sharif administration has already taken most other actions to keep the talks with the IMF on track. They include a hike in fuel and energy tariffs, the withdrawal of subsidies in export and power sectors and generating more revenue through new taxation in a supplementary budget.

Analysts anticipated the fiscal adjustments would likely further fuel inflation in Pakistan whether or not a deal with the IMF has been reached. 

Pakistani Finance Minister Ishaq Dar rejected reports as “malicious rumors” that the country was on the verge of a default.

“This is not only completely false but also belie the facts. SBP forex reserves have been increasing and are almost U.S. $1 billion higher than four weeks ago, despite making all external due payments on time,” Dar tweeted Thursday.

“Our negotiations with IMF are about to conclude and we expect to sign staff level agreement with IMF by next week. All economic indicators are slowly moving in the right direction,” Dar asserted. He added that foreign commercial banks had started extending facilities to Pakistan.

China, a longtime ally of Pakistan, is the only country that has helped Islamabad get a $700 million loan facility from the China Development Bank last month.

IMF Managing Director Kristalina Georgieva, while speaking at last month’s Munich Security Conference, urged Pakistan to collect more taxes from the wealthy and spend the money on the poor.

“Why should rich people benefit from subsidies when the country faces such a difficult task? Why should rich people and businesses not pay their taxes when the country has such tremendous challenges?” she asked while responding to a question about the delay in reaching a deal with Pakistan.

“In my view what is at stake is fairness in society and we will stand for this fairness, of course, very much hoping that we can get to a good point in moving the policy in Pakistan in the right direction,” Georgieva said. 

Pakistan has long been under fire for not imposing taxes on the wealthy in a country where less than 2% pay income taxes. The rest evade it either in collusion with tax authorities or by exploiting loopholes in the legal system, say financial experts. 

The World Food Program, in its latest assessment, has warned the ongoing economic crisis in Pakistan is “progressively deteriorating, with a depreciated currency, increased food and fuel prices and uncertainty over resuming a $6.5 billion funding package with the IMF.”

The statement added that flood-affected people “are resorting to negative coping strategies that include the sale of income-producing assets, taking on additional debt, withdrawing children from school, and skipping meals.”

Some information for this report came from Reuters.
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Big Tech shed tens of thousands of jobs over the past several months as giants Google, Amazon, Meta and Microsoft have reduced their workforces. But while white-collar jobs are cut, some blue-collar jobs are difficult to fill despite the rising wages in that sector of the economy. Keith Kocinski has more.
Camera: Keith Kocinski, Rendy Wicaksana
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In a possible sign that the so-called “decoupling” of the U.S. and Chinese economies is continuing, a recent media report said that the Chinese government has urged large state-owned enterprises (SOEs) to cease using the world’s biggest global accounting firms to audit their onshore businesses.

The report, published last week by Bloomberg, cites people familiar with communications between the Chinese Ministry of Finance and large SOEs, in which the ministry encouraged the companies to allow their existing contracts with Western firms to lapse when they expire, and to replace them with accounting firms from mainland China or Hong Kong.

According to the report, the Chinese government’s focus is on the so-called “Big Four” accounting firms, PricewaterhouseCoopers (PwC), Ernst & Young, KPMG and Deloitte. All four firms have headquarters in London but are instrumental in helping many global companies comply with the audit requirements U.S. authorities require of public firms with shares listed on U.S. stock exchanges.

There has long been tension between the Chinese government, which highly values the security of information held by its large companies, and Western financial services regulators, who prize the kind of transparency that allows investors to make informed decisions about companies seeking to raise money in the capital markets.

Chinese authorities have, for years, been trying to strike a balance between the protection of Chinese firms’ information and the access to international investment capital that comes with exposure on stock markets like those in the U.S.

China disputes report

The Chinese government, through the state-controlled publication the Global Times, has disputed the Bloomberg report. A recent news story in the Global Times said that Big Four firms “have won bids to provide accounting services to China’s state-owned enterprises in recent days.”

The Global Times cited a decision in February by state-run insurance firm China Taiping to hire PwC to provide its audits from 2023-2027, and another recent decision by Liaoshen Bank, closely connected to the state-owned Liaoning Financial Holding Group, to hire KPMG. Neither report could be independently verified.

The Global Times article, published under a “GT Staff reporters” byline, did not quote any government officials by name.

A request for comment emailed by VOA to the Chinese Embassy in Washington was not answered in time for publication.

An uneven pattern

In recent years, Beijing has taken a number of measures to curtail the outside world’s access to information about Chinese companies.

Last year, citing concerns about potential privacy violations, the Chinese Communist Party forced several firms to give up their listings on U.S.-based stock exchanges, and blocked the efforts of others to list in the U.S.

At the same time, the Communist Party has, at times, seemed willing to cooperate with Western regulators. Last year, Beijing struck a deal that provided U.S. regulators with data on Chinese firms, eliminating the possibility that several would have been forced off of U.S. stock exchanges.

Report comes amid tension

The Bloomberg report was published at a low point in relations between the U.S. and China. Early this month, the U.S. shot down a suspected Chinese spy balloon after it traversed most of the continental U.S. The presence of the balloon led Secretary of State Antony Blinken to cancel a trip to China that was seen as the beginning of an effort to restore dialogue.

Since then, U.S. and Chinese officials have had conversations at international gatherings, but those interactions were marked by U.S. warnings that China should avoid providing arms to Russia to support its invasion of Ukraine or risk serious consequences.

The House of Representatives Select Committee on the Chinese Communist Party was scheduled on Tuesday evening to hold a prime-time hearing entitled “The Chinese Communist Party’s Threat to America.” The hearing is expected to be the first in a long series of high-profile public forums in which members of Congress dig into perceived threats from China.

Data security concerns

Also on Tuesday, media reports revealed that the White House Office of Management and Budget had given all federal agencies 30 days to ensure that the Chinese social media app TikTok is removed from all electronic devices owned by the federal government.

As minor as it might seem on its face, the TikTok ban is actually a mirror image of some of the concerns driving China’s suspicion of Western auditing firms. The concern on the part of the White House is that ByteDance, the firm that owns TikTok, is collecting personal information about the app’s users, and making it available to the Chinese government.

U.S. officials frequently point to a Chinese law that obligates companies to assist state intelligence services in their investigations.

Experts dubious

Some experts told VOA they were not convinced of the validity of the Chinese government’s fears about data security, especially because Western accounting firms are legally bound to protect the privacy of client data that is not part of publicly released reports.

“It’s an excuse. No other government or country has this problem,” said James Lewis, director of the Strategic Technologies Program at the Center for Strategic and International Studies in Washington. “Beijing is paranoid about controlling the economic narrative and worries that the audits might give access to information about the problems of the SOEs that they regard as sensitive.”

Lewis added in an interview, “This is another part of China’s decision to separate itself from the global market and force other countries to accept China’s rules.”

Impact on business may be small

Derek Scissors, a senior fellow at the American Enterprise Institute, told VOA that if the Bloomberg report is correct, and the Chinese government’s request went to state-owned enterprises only, the impact on foreign investment in Chinese firms might not be significant.

“Most foreign investment does not involve state-owned enterprises,” Scissors said. “If this is the only step taken, it will not have a big effect. If other firms are urged to drop foreign auditors, that could frighten investors.”

Scissors also said that the request would not necessarily cut off Chinese state firms from overseas listings.

“They can use foreign auditors just for [initial public offerings] if they ever want to list units overseas,” he said.

Rong Shi of VOA’s Mandarin Service contributed to this report.
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A majority of the nation’s business economists expect a U.S. recession to begin later this year than they had previously forecast, after a series of reports have pointed to a surprisingly resilient economy despite steadily higher interest rates.

Fifty-eight percent of 48 economists who responded to a survey by the National Association for Business Economics envision a recession sometime this year, the same proportion who said so in the NABE’s survey in December. But only a quarter think a recession will have begun by the end of March, only half the proportion who had thought so in December.

The findings, reflecting a survey of economists from businesses, trade associations and academia, were released Monday.

A third of the economists who responded to the survey now expect a recession to begin in the April-June quarter. One-fifth think it will start in the July-September quarter.

The delay in the economists’ expectations of when a downturn will begin follows a series of government reports that have pointed to a still-robust economy even after the Federal Reserve has raised interest rates eight times in a strenuous effort to slow growth and curb high inflation.

In January, employers added more than a half-million jobs, and the unemployment rate reached 3.4%, the lowest level since 1969.

And sales at retail stores and restaurants jumped 3% in January, the sharpest monthly gain in nearly two years. That suggested that consumers as a whole, who drive most of the economy’s growth, still feel financially healthy and willing to spend.

At the same time, several government releases also showed that inflation shot back up in January after weakening for several months, fanning fears that the Fed will raise its benchmark rate even higher than was previously expected. When the Fed lifts its key rate, it typically leads to more expensive mortgages, auto loans and credit card borrowing. Interest rates on business loans also rise.

Tighter credit can then weaken the economy and even cause a recession. Economic research released Friday found that the Fed has never managed to reduce inflation from the high levels it has recently reached without causing a recession.
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Twitter Inc has laid off at least 200 employees, or about 10% of its workforce, the New York Times reported late on Sunday, in its latest round of job cuts since Elon Musk took over the micro-blogging site last October. 

The layoffs on Saturday night impacted product managers, data scientists and engineers who worked on machine learning and site reliability, which helps keep Twitter’s various features online, the NYT report said, citing people familiar with the matter. 

Twitter did not immediately respond to a Reuters request for comment. 

The company has a headcount of about 2,300 active employees, according to Musk last month. 

The latest job cuts follow a mass layoff in early November, when Twitter laid off about 3,700 employees in a cost-cutting measure by Musk, who had acquired the company for $44 billion. 

Musk said in November that the service was experiencing a “massive drop in revenue” as advertisers pulled spending amid concerns about content moderation. 

Twitter recently started sharing revenue from advertisements with some of its content creators. 

Earlier in the day, The Information reported that the social media platform laid off dozens of employees on Saturday, aiming to offset a plunge in revenue. 
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In its latest ambitious roadmap to tackle climate change, California relies on capturing carbon out of the air and storing it deep underground on a scale that’s not yet been seen in the United States.

The plan — advanced by Democratic Gov. Gavin Newsom’s administration — comes just as the Biden administration has boosted incentives for carbon capture projects to spur more development nationwide. Ratcheting up 20 years of climate efforts, Newsom last year signed a law requiring California to remove as much carbon from the air as it emits by 2045 — one of the world’s fastest timelines for achieving so-called carbon neutrality. He directed the powerful California Air Resources Board to drastically reduce the use of fossil fuels and build massive amounts of carbon dioxide capture and storage.

To achieve its climate goals, California must rapidly transform an economy that’s larger than most nations’, but opposition to carbon capture from environmental groups and concerns about how to safely transport the gas may delay progress — practical and political obstacles the Democratic-led Legislature must now navigate.

Last year, the California state legislature passed a law that says no carbon dioxide may flow through new pipelines until the federal government finishes writing stronger safety regulations, a process that could take years. As a potential backup, the law directed the California Natural Resources Agency to write its own pipeline standards for lawmakers to consider, a report now more than three weeks overdue.

While there are other ways to transport carbon dioxide gas besides pipelines, such as trucks or ships, pipelines are considered key to making carbon capture happen at the level California envisions. Newsom said the state must capture 100 million metric tons of carbon each year by 2045 — about a quarter of what the state now emits annually.

“We do not expect to see (carbon capture and storage) happen at a large scale unless we are able to address that pipeline issue,” said Rajinder Sahota, deputy executive officer for climate change and research at the air board.

State Sen. Anna Caballero, who authored the carbon capture legislation, said the state’s goal will be to create a safety framework that’s even more robust than what the federal government will develop.

Last year’s Inflation Reduction Act increased federal funding for carbon capture, boosting payouts from $50 to $85 per ton for capturing carbon dioxide from industrial plants and storing it underground.

Without clarity on the state’s pipeline plans, the state is putting itself at a “competitive disadvantage” when it comes to attracting projects, said Sam Brown, a former attorney at the Environmental Protection Agency and partner at law firm Hunton Andrews Kurth.

The geology for storing carbon dioxide gas is rare, but California has it in parts of the Central Valley, a vast expanse of agricultural land running down the center of the state.

Oil and gas company California Resources Corp. is developing a project there to create hydrogen. It plans to capture carbon from that hydrogen facility and the natural gas plant that powers it. The carbon dioxide would then be stored in an old oil field. That doesn’t require special pipeline approval because it’s all happening within the company’s property.

But the company also wants to store emissions from other industries like manufacturing and transportation. Transporting that would rely on pipelines that can’t be built yet.

“These are parts of the economy that have to be decarbonized,” said Chris Gould, the company’s executive vice president and chief sustainability officer. “It makes economic sense to do it.”

Safety concerns increased in 2020 after a pipeline in Mississippi ruptured in a landslide, releasing a heavier-than-air plume of carbon dioxide that displaced oxygen near the ground. Forty-five people were treated at a hospital, and several lost consciousness. There are thousands of miles of carbon dioxide pipelines operating across the country and industry proponents call the event an anomaly. But the Mississippi rupture prompted federal regulators to explore tightening the existing rules for carbon pipelines.

Lupe Martinez, who lives in California’s Kern County, worries about what will happen as developers target the region for carbon storage.

He used to spray fields with pesticides without protective equipment. On windy days, he’d be soaked in chemicals. Martinez, who watched some of his fellow workers later fight cancer, says he was lied to about safety then and doesn’t believe promises that carbon capture is safe now.

“They treat us like guinea pigs,” said Martinez, a longtime labor activist.

The oil and gas industry’s emissions are a main cause of climate change and in the past the industry undermined sound evidence that greenhouse gases are deeply disturbing the climate. Now carbon capture — unproven as a major climate solution — will help the industry keep polluting places that are already heavily polluted, environmentalists argue. Instead of shutting down fossil fuel plants, carbon capture will increase their profits and extend their life, said Catherine Garoupa, executive director of the Central Valley Air Quality Coalition.

But advocates of carbon capture say it’s essential for Kern County oil and gas companies to find new ways to make money and keep people employed as California moves away from fossil fuels, an industry that is the “very fabric” of the region’s identity, said Lorelei Oviatt, director of Kern County Planning and Natural Resources.

Without a new revenue source like carbon capture, “Kern County will be the next Gary, Indiana,” she said, referring to the rust belt’s years-ago collapse.

There are currently no active carbon capture projects in California. To demonstrate the technology is viable and people can get permits for it, it’s essential to build the first projects, said George Peridas, director of carbon management partnerships at Lawrence Livermore National Laboratories.

Peridas said one area with potential to store carbon dioxide is the Sacramento-San Joaquin River Delta, a vast estuary on the western edge of the Central Valley that’s a vital source of drinking water and an ecologically sensitive home to hundreds of species.
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Mexico is undergoing a fevered competition among states to win a potential Tesla facility in jostling reminiscent of what happens among U.S. cities and states vying to win investments from tech companies.

Mexican governors have gone to extremes, like putting up billboards, creating special car lanes or creating mock-ups of Tesla ads for their states.

And there’s no guarantee Tesla will build a full-fledged factory. Nothing is announced, and the frenzy is based mainly on Mexican officials saying Tesla boss Elon Musk will have a phone call with Mexican President Andrés Manuel López Obrador.

The northern industrial state of Nuevo Leon seemed to have an early edge in the race.

It painted the Tesla logo on a lane at the Laredo-Colombia border crossing into Texas last summer and is erecting billboards in December in the state capital, Monterrey, that read “Welcome Tesla.”

The state governor’s influencer wife, Mariana Rodriguez, was even shown in leaked photos at a get-together with Musk.

However, López Obrador appeared to exclude the semi-desert state from consideration Monday, arguing he wouldn’t allow the typically high water use of factories to risk prompting shortages there.

That set off a competitive scramble among other Mexican states. The governors’ offers ranged from crafty proposals to near-comic ones.

“Veracruz is the only state with an excess of gas,” quipped Gov. Cuitláhuac García of the Gulf Coast state, before quickly adding “gas … for industrial use, for industrial use!”

A latecomer to the race, García had to try harder: He noted Veracruz was home to Mexico’s only nuclear power plant. And he claimed Veracruz had 30% of Mexico’s water, though the National Water Commission puts the state’s share at around 11%.

The governor of the western state of Michoacan wasn’t going to be left out. Gov. Alfredo Ramírez Bedolla quickly posted a mocked-up ad for a Tesla car standing next to a huge, car-sized avocado — Michoacan’s most recognizable product — with the slogan “Michoacan — The Best Choice for Tesla.”

“We have enough water,” Ramírez Bedolla said in a television interview he did between a round of meetings with auto industry figures and international business representatives.

Michoacan also has an intractable problem of drug cartel violence. But similar violence in neighboring Guanajuato state hasn’t stopped seven major international automakers from setting up plants there.

Nuevo Leon Gov. Samuel García had to think fast to avoid being shut out entirely.

García reached out to the western state of Jalisco, whose governor, Enrique Alfaro, belongs to the same small Citizen’s Movement party. Together, the two came up with an alliance Thursday that would allow trucks from Jalisco preferential use of Nuevo Leon’s border crossing, the same one where a “Tesla” lane appeared last year.

Jalisco has a healthy foreign tech sector, but most importantly, it has more water than Nuevo Leon.

López Obrador’s focus on water might be more about politics than about droughts, said Gabriela Siller, chief economist at Nuevo Leon-based Banco Base. She said the president appeared to be trying to steer Tesla investment to a state governed by his own Morena party, like Michoacan or Veracruz.

That could be a dangerous game, Siller said.

“Tesla could say it’s not somebody’s toy to be moved around anywhere, and it could decide not to come to Mexico,” she said.

There are doubts that whatever Musk eventually does announce will be an auto assembly plant. Foreign Relations Secretary Marcelo Ebrard said his understanding is that it won’t be a plant, but rather an ecosystem of suppliers.

Musk at times has floated the idea of building a $25,000 electric vehicle that would cost about $20,000 less than the current Model 3, now Tesla’s least-expensive car. Many automakers build lower-cost models in Mexico to save on labor costs and protect profit margins.

A Tesla investment could be part of “near shoring” by U.S. companies that once manufactured in China but now are leery of logistical and political problems there. That those companies will now turn to Mexico represents the Latin American country’s biggest foreign investment hope.

“The fight among states to attract investments from this nearshoring phenomenon is going to be tough, complicated,” Michoacan’s Ramírez Bedolla said.

As Ramírez Bedolla put it, “wherever Tesla sets up, it is going to be big news in Mexico.”
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Pakistan has to unwillingly accept the strict conditions of a deal with the International Monetary Fund (IMF) to provide a lifeline for an economy in turmoil, Prime Minister Shehbaz Sharif said Friday.

Sharif was speaking to top security officials at his office in Islamabad in a meeting that was telecast live.

“We have to accept unwillingly the strict conditions for the IMF deal,” he said, adding that an accord was still a “week, 10 days” away.

Pakistani authorities have been negotiating with the IMF since early February over policy framework issues and are hoping to sign a staff-level agreement that will pave the way for more inflows from other bilateral and multilateral lenders.

Once the deal is signed, the lender will disburse a tranche of more than $1 billion from the $6.5 billion bailout agreed to in 2019.

Pakistan has already taken a string of measures, including adopting a market-based exchange rate; a hike in fuel and power tariffs; the withdrawal of subsidies, and more taxation to generate revenue to bridge the fiscal deficit.

Officials say the lender is still negotiating with Islamabad over power sector debt, as well as a potential increase in the policy rate, which stands at 17%.

The strict measures are likely to further cool the economy and stoke inflation, which was 27.50% in January.

The South Asian country’s economy has been in turmoil and desperately needs external financing, with its foreign exchange reserves dipping to about $3 billion, barely enough for three weeks’ worth of imports.

A “friendly country” is also waiting for the deal to be confirmed before extending support to Pakistan, Sharif said without elaborating.

Longtime ally China this week announced refinancing of $700 million, according to Pakistan’s Finance Ministry.

Finance Minister Ishaq Dar on Friday said Pakistan’s central bank has received the money.

“Thank God,” he said in a tweet.
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Russia’s invasion of Ukraine nearly a year ago has profoundly affected how the world powers itself.
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