WORLD FINANCE NEWS
People in China are no strangers to digital payments—if anything, it’s easier to move around and shop in Shanghai or Beijing with an Alipay or WeChat Pay smartphone app than it is bearing a pocketbook filled with yuan notes.
The Chinese government has begun a pilot program for an official digital version of its currency—with the likelihood of a bigger test at the Beijing Winter Olympics in 2022.
The program started small in April, with a limited rollout in the cities of Shenzhen, Suzhou, Chengdu, and Xiong’an—a new “smart” city in the making, southwest of Beijing, conceived by President Xi Jinping.
“This has very strong political will behind it,” says Andrew Polk, co-founder and head of economic research at Trivium China, a Beijing-based consultant.
Foreign-exchange transactions currently can take a business day or two to clear. A widespread digital yuan could also encourage countries and people overseas to get on board with China’s technology—and eventually, its currency.
The test will be whether Chinese consumers trust the new cash technology—as well as the power behind it.
President Vladimir Putin and his U.S. counterpart Donald Trump discussed the OPEC+ deal, just days before the producers’ alliance meets to discuss the future of its output cuts.
It has been stated that the multilateral agreement reached with the active support of U.S. and Russian presidents has been leading to a gradual recovery of oil demand and price stabilization,” the Kremlin said in a statement
The alliance has agreed to collectively curb output by a record 9.7 million barrels a day in May and June to offset the impact on oil demand of coronavirus lockdowns.
India’s Sovereign Rating Cut at Moody’s Citing Policy Risks
India’s credit rating was cut to the lowest investment grade by Moody’s Investors Service, citing policy challenges in addressing a prolonged slowdown and the government’s deteriorating fiscal position.
India missed its fiscal deficit target for the year ended March even before the worst of the coronavirus hit the economy, with economists seeing the budget sliding deeper into the red this year.
The cut brings Moody’s rating on India on par with S&P Global Ratings and Fitch Ratings Ltd., both of which have a BBB- rating.
The downgrade comes at a time when economic growth in India slowed to 3.1% in the first three months of this year, and the coronavirus pandemic pushes the economy toward its first full-year contraction in four decades.
With India opening up its high-yielding debt market to foreigners, any downgrade by S&P and Fitch would hurt inflows into a nation that relies on imported capital to fund investment.
Move ‘unavoidable’ but will benefit SMEs, which currently suffer from high government fees Emirati lawyer Habib Al Mulla is the chairman of law firm Baker McKenzie Habib Al Mulla.
Corporate tax will ultimately be introduced in the UAE and GCC to replace the current high government fee system, with Covid-19 expected to accelerate the process, according to top Emirati lawyer Habib Al Mulla.
The governments need to diversify their sources of income to something which will be steady and not as reliant on one commodity.
Both the UAE and Saudi Arabia introduced a 5 per cent value-added tax (VAT) in January 2018, meaning both countries are now equipped with the expertise and regulation to move to a corporate taxation system, according to Al Mulla, but in order to do so they must first abandon their current high fees system.
Al Mulla said a corporate tax will provide a friendlier business environment to companies in the UAE and GCC, particularly to SMEs who are required to pay the same fees paid by larger corporations with higher profit margins, despite their smaller size.
According to Wamda Group executive chairman Fadi Ghandour the government fee system can itself be altered to fit the size of a company’s revenue.
While Al Mulla believes the UAE is ready to introduce a corporate tax and must position itself similarly to other global economies, he said it will take at least a year before the Emirates make the move.
Saudi Arabia will pump 50 billion riyals ($13.3 billion) into the banking system to help manage the fallout from the coronavirus pandemic and the drop in oil prices.
The programme is aimed at helping banks amend and restructure loans without additional fees and support private sector employment.