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tv   Counting the Cost 2019 Ep 50  Al Jazeera  December 16, 2019 7:32pm-8:01pm +03

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another night of violence between security forces and protesters outside parliament . a court in brussels has postponed a hearing over the arrest warrants issued by spain for the extradition of 3 catalan leaders former separatist leader hard precision mom is facing sedition charges he was charged after organizing an illegal referendum declaring independence he fled to belgium to avoid arrest at least 4 people were killed in sunday's powerful erith quake in the southern philippines rescuers are still searching for survivors there those are your current headlines the news continues here on al-jazeera after counting the cost we will see you in a little while but by. hello
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i'm adrian finnegan this is counting the cost on al-jazeera a weekly look at the world of business and economics this week an i.m.f. followed tax cuts for big business and a sterile sea for the poorest the perfect cocktail the street protests we speak to the vice president of resource rich acquittal. a cash crunch in kenya east africa's largest economy can't pay its bills will it need to ask the i.m.f. to help and the king of streaming is about to face a multi-billion dollar onslaught from the likes of apple and disney will find out at netflix can hold on to its number one spot. weeks of violent street protests were brought to a halt in ecuador in mid october after the president walked back on a stair a scene that has led to marino withdrew the international monetary fund backed
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agreement to increase fuel costs that decision had paralyzed the economy as it hit the poorest and minority indigenous population the most kito had the i.m.f. or a $4200000000.00 loan as it struggled to cut its budget deficits and debt the government decided to cut fuel subsidies which cost the government $1300000000.00 a year at the same time as receiving the loan big business is one of concession wiping out past taxes according to the former economy minister well missile gado which raises the question why would you take a loan to help corporations but cut subsidies to the poorest. i'm delighted to say that we have the vice president of ecuador here to help us understand just what's happening in that country right at the moment also someone holds a is also an economist welcome to counting the cost it's good to have you with us let's start with the issue of fuel subsidies discussing fuel subsidies the right
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thing to do but of course i mean anyone who says the opposite is lying in i told all the time in ecuador why fuel subsidies specifically as we have the nec well 1st of all they only benefit the ones who have the most those who are the ones who have cars who consume the most quantity of fuel it's just like that we just had a story from the international development bank ratifying that 75 percent of the people who use who benefits from fuel subsidies are people who don't need them and that have nothing and subsidies when they're necessary and they go to the people who needs them but in the case of equal and fuel subsidies they just don't it has cost the country more then over g.d.p. if you put it together for the last what 45 years and it has no economic sense no social sense in of course no environmental sense so something that makes no sense why would you keep it you say that they were that they were needed why why then were there protests when they were abolished so we had the 1st step we took the 1st
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of last year we had no protests in this year you have to combine different factors and we have found that out when we manage to handle things because if you see the region not only the region if you see any other countries many other countries mostly in europe. they also have protests and the problem is not how many people are protesting the problem is how they behave that's what's changing in the world if you see the levels of violence the protests are reaching that's something to worry about in the case of ecuador we had 11 days of protests. and at the peak we had only 150000 people protesting it's a 17000000 people country right so we had 150000 people protesting in only 7 of the 24 provinces so it wasn't if you count the if you make the numbers wasn't such a huge thing it was mostly concentrated on one very important demographic unequal which is the indigenous population we have 7 percent of indian us population and
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they were and they were protesting mostly them and it does it didn't come from from the urban sectorial came from the rule rally from the from the fields from the countryside and from the highlands that we are we are we are approaching those issues we're bring in solutions we used managed to reuse this year 5 percent rural poverty inequality big number that's a big result but still there is so much too and then you have an additional matter in the region specifically in 4 countries of the region and that's venezuelan migration in 2 years just in ecuador 500000 venezuelans have created a difficult social environment and when i mean difficult i mean there is difficulties with employment there's difficulties with opportunities because it's 500000 people that we were counting on and nothing against venezuelans these are good people there are trying to find a future where all migrants look at my face i mean i'm a migration person fired you know so. but it's tough for
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a country that is also struggling with its with its economy we're doing our best to talk about the indigenous population the people who are at the core of the of the protests in ecuador. why did they feel that they're not economically safe or that they don't have economic prospects and under under your government other are they cannot make a save you know in general they feel like the rural sector in sector area the rural area in which the main activities have recalled they feel that the country has lacked and i recalled the old policy that helps them they feel that the country has not in our government i mean in the last 2030 years they feel like the country has lacked. development policy all to help them out and i think most times they're right but we're working on it but still there is so much to you know cation in health specifically in the rural areas again when i go into the communities and
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i ask him personally i do it myself i go visit 678 communities say when i'm back in that's how we that's how we managed to control protests. and i asked them why are you protesting they say. they never mention fuel subsidies they say this is because i heard that you are giving subsidies to as well and. that's not true we would love to leave subsidies to everyone who needs it but we have a close a tight budget we cannot give subsidies to everyone so we have to select people properly but the most important question i asked them is has anyone here in 45 years of fuel subsidies in ecuador has this policy helped anyone here go out of poverty no one raises their hand because this is a failed policy so what we wanted to and what we what we proposed is to take fuel subsidies are 90 percent of our budget deficit right if eliminate that where all said so what what what we propose is to direct at least
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a 3rd of those of those that money of the subsidies money. to develop them projects and to direct monetary transfers right that was a proposal and when i explain it to them they say why didn't you do it that way didn't you do that and i say because you didn't lead us ok but what why would you forgive corporate taxes which which if if you. hadn't done you could have covered. much of your budget deficit in what it is you wouldn't have you would and this is right you tell me would you not have needed an i.m.f. loan if you'd if you'd not forgiven corporate taxes we haven't for you in corporate ok what we did is we passed a law one and a half years ago. a law that has been passed in this similar way i mean an article in the lord we pass almost every 4 or 5 years in ecuador and that's also one of the annoyer of the fake news right we had did mostly from small businesses
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and in persons people like not quite not corporations we had that in taxes and in social welfare because you have to pay social services also an amount every month and we have a development bank for agriculture for small farmers right so people who owed money to those $3.00 institutions could pay the amount of capital amount and you will get an exam or exoneration on the fines and some of the interest and many people need that to come out of the problem because if you if you lent if you got a loan for $5000.00 and let's say right. and it became $10000.00 because you couldn't pay on time right you will if you couldn't pay $5000.00 you won't be able to pay $10000.00 so we go back 285000 refinance that so 95 percent of the people who benefit from that decision were small and micro companies the smallest
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right the ones that we need to support and then 5 percent was large corporations but again it only helped us to collect taxes on time we didn't within. let them go of the of the obligation to pay taxes what they what we did is we eliminated the penalties and then we collected the money money that serves exactly people who needs government attendance for its own health insurance or how do you plan now to bridge that the budget deficit so we have working as you say we have been working with the i.m.f. with the world bank we have a financial program in i mean we don't go to the i may have ford to the world bank because we're crazy we believe in we see a possibility there to find loans in better terms instead of borrowing at 10 or 12 percent interest rate 5 years 8 years we're getting we're into a program for $10000000000.00 at 4 percent interest rate 30 years term
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so of course that's a better option and all they want is that we. we bring order into equality and finance and that we have to do with or without the i.m.f. it will raise a dollar as the economy you cannot have deficits up to 8 percent that's what pressing more than a received 8 percent fiscal deficit right so they were around 3 percent we have done our job without the i.m.f. because that's what we have to do we know it's not popular right no one no one wins an election cutting costs right but that's a problem every 4 years governments wants to spare to spend more than what they have and in the end what you have is a huge that in no we'll to bring all other what about the 80 would would it would have been better perhaps to raise v.a.d. to cover some of those costs which is i think healthy so it's also it's also an unpopular decision that has to pass through congress we have passed a law in congress. a law that will allow us to collect taxes there are mostly green
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taxes in healthy taxes right $500000000.00 that we need for next year and for the for the whole fiscal plan. but again if you have something that is so wrong because it is completely wrong like fuel subsidies listen this is crazy the same indigenous leaders that were leaving the protests in ecuador were just last week at the top $25.00 in mothery protesting against fossil fuels so who understand what is so if you have something that is so wrong that costs all the $33000000000.00 a year that has cost it in the last 45 years or $100000000000.00 you have to fix what's wrong 1st and so we have to we want to start with what's what's wrong mr vice president it's been an honor to speak to you and counting the cost many thanks indeed for being with the north thank you for the interior pleasure to hear.
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that kenya is in the midst of a cash crunch the international monetary fund the lender of last resort may light up a loan to make sure that east africa's biggest economy doesn't succumb to an economic shock so what's gone wrong or president uhuru kenyatta has promised to create $1000000.00 jobs a year and to do that he's been increasing spending on health care manufacturing agriculture and housing. now the country has increased its debt to 62 percent of gross domestic product in order to do that which means that it's spending a 3rd of its revenue on servicing debt and worse still the loans aren't cheap it went to the markets to raise some $7000000000.00 euros that means there's less money to pay contractors forcing the government to increase the debt limit to $87000000000.00 ahead of elections in 2 years there seems to be little political will to downsize the civil service which eats another 3rd of the country's tax revenue it appears the government was oblivious to the fact that it breached its
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legal dept ceiling of 50 percent of g.d.p. in 2015 and 16 the infringement only came to light after a new team took over at the treasury after the previous finance minister was charged with graph related offenses and it couldn't come at a worse time bridges and roads have been destroyed by flooding lives of livestock have been lost and this expected to be more flooding the economic cost of that is yet to be determined. let's get more on the situation with lisa strobel she's a senior economist sub-saharan africa economics and country risk at i.h.s. market good to have you with us lisa this cash crunch has meant that companies have been paid jobs have been lost what sort of damage is this doing to the economy perhaps have to look at the latest business sentiment readings that have indicated that. employment levels have gone up slightly in the month of november however the latest business sentiment readings have also indicated that firms reported to be
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more cautious about economic activity in the next year with that set and also the consideration that global market economics fundamentals are expected to be less favorable next year we expect to see a slowdown for kenya's economy currently i just market forecasts a group of 5.7 percent which is a slowdown from 6.3 percent last year and 5.8 percent this year. perhaps on a more bright a note we do expect to see. private borrowing to increase in the near term that's thanks to the latest interest rate cut by the central bank of not 15 percent. as well as the removal of the in 2016 introduced interest rate cap that should somewhat offset the current cash flow problems we have to also keep in mind that besides the job losses we've seen the cash crunch has also cost sticky
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another performing loans in the banking sector so with the removal of the interest rate cap we do expect to see some improvement on this front that will ultimately hopefully support a good demond in the new the president's plan to solve this is laudable but could a have been achieved without resorting to something like 7000000000 euros of of expensive loans from capital markets. yes indeed we have seen kenya tapping into the international markets around 3 times of the last 5 years. unfortunately given the downbeat performance of revenues this little room to really include a non external financing to kenya us major a large projects involving infrastructure and economic development we have seen there the tax to g.d.p.
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ratio last year has been in decline by not want one percentage points non-tax revenue has shown a even weaker performance. so the outlook does not look too good for revenues in the coming year is one way of perhaps dealing with the current situation and something what we have seen. in the east africa region is that governments in order to address their fiscal consolidation is to reproach or see their investment spending away from larch greenfield projects more into refinancing the already existing infrastructure network but typically those investments that have a higher return on investment you know there's been a lot of debate about about the infrastructure projects particularly the ones that the china is ultimately building in that kenya is paying for i mean that's been
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a significant factor in this this cash crunch. yes indeed it has if we look alone into the distribution of loans from china to africa over the term 2010 to 2017 we see that kenya is the 1st largest recipient following angola and its european of chinese loans the export import back off shina is the largest lending institution on the continent and key partner for kenya financing its major project the. standard garc railway that has commenced operations in $2700.00 taking passengers in last year also cargo and fried the overall loan stood at a $1600000000.00 u.s. dollars in commercial and concessional terms to be paid back in 15 years the kenyan authorities have expressed that the current numbers of passengers and flight
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transport will be not sufficient enough to generate the quiet revenue that is required for the repayment of the loan ultimately concerns were race that assume the alternative the only way to achieve to get these revenues done for the repayment is by increasing tax but that again has been a post by the opposition. could sort of address you could the debt have been restructured perhaps with the with loans from the. world bank and the african development bank yes and ultimately it's necessary for kenya to do a restructuring plan in order to address the current cashflow crisis we have seen since 1990 s. . restructuring operations taking place 3 times. that
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have helped the economy to manage its step float alongside the government's need. on the domestic market to refinance expenditure. the i.m.f. has expressed last year concern that the costs are reaching unsustainable levels hence has raised their debt distress rate risk from a low $2.00 to moderate lisa really good to talk to you and comes with a cost many thanks indeed for being with us my pleasure. now cord cutting peek t.v. at the rise of so-called over the top services or streaming to you and me are we witnessing the end of television as we know it it's estimated that 63 percent of people watch their favorite shows online and more content companies like disney h.b.o. peacock are launching their own services now take a look at this the industry leader netflix or 13200000 people watch martin
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scorsese's epic gangster movie the irishman in the us over the 1st 5 days after its release its spending billions on content and has more than $100000000.00 subscribers worldwide but apple is spending $6000000000.00 on content including spending a reported 3 $100000000000.00 on the morning show starring jennifer aniston amazon claims that it signed up millions of people after paying $90000000.00 pounds for 3 years worth of english premier league games joining us now from london daniel got danielle is a research manager at research and analytics film company amp analysis good to have you with us daniel ultimately what's going to determine the success of these streaming services does it all come down to budget i think budget is very important and we've seen that from the likes netflix and amazon who've been investing heavily over the last few years in original content as well as license content so with the
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original content being one of the cornerstones to the new streaming platforms in allowing you to engage with consumers and bring them on to platforms and so that is definitely part of it but then being able to develop a wide array of content for customers is also important but is there room for all of them in the marketplace i mean consumers surely can only afford maybe one perhaps 2 streaming services and it's it's the outliers the people who are the 1st companies like netflix and amazon who are in the lead on pay they have they definitely have a strong market position at the moment and. these new companies coming in like disney and a lot of the studios do have a lot of content to lean on and ultimately i think in their current form this many services might be difficult to sustain in the market what we may see is some of them adapt and change apple is a good example of this where they could become more of an aggregator of content producing a few of these original content to bring people on platform but then also bring
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other services there so you can get it through want one platform now the elephant in the room is that these are all american companies where is the international competition coming from and do this international competition stand any chance or this is one of the challenges a lot of the larger streaming platforms facing local content is definitely on the up and is what consumers want so there could be room that local local content being produced by local producers and there's definitely an opportunity there whether that's working with the streaming services or breaking in on their own i think that there could be an opportunity deficit lots of local platforms can break the sports market do you think it's going to go all out for instance for the english premiership rights or even u.s. sports for that matter. so initially amazon as i said you know they take an aggregate a platform approach they did that toes in the water in some of the sports in the u.k. you know you've mentioned the premier league they've also just gain the rights for
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the champions league in germany but amazon i think at the moment are trying to bring people within their prime ecosystem so they will spend money in e-commerce platform so at the moment i think for amazon it's about using content whether that sports or drama t.v. content to bring people within that platform so i don't think we will see them go all out to collect all of the premier league rights but i think there were cherry pick as and when right become available and what's next for netflix you think netflix is focusing very much on original content and we're going to see that investment grow over the next few years with the likes of as i say disney n.b.c. starting their own platforms they were pulling that content from netflix so this really puts the emphasis on them growing their original content and building that catalog to support all of the customers that they currently have and what i'm going to ask you again something you were talking about a little earlier on a consumer's going to be willing to pay for all of these platforms. so what we've
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seen i think in a lot of different markets is slightly different trends so in western europe we're seeing consumers stock a lot of these streaming services on top of that 8580 platforms in the u.s. we're seeing more replacement at the moment we haven't i think reached that point but as you say with lots of these new platforms coming in are we going to start falling over that edge of having too many of these platforms and will consumers have a base pack of 2 or 3 platforms and then dip into others i think it's all going to change a lot over the next few years and that's what we will say to these platforms that the the success or otherwise of the sound the death knell for traditional broadcasters for free to air services. i mean they could be opportunities on both side with the free to air broadcasters that their specialty in and where their expertise lies in that local content and that could be an opportunity that more and more consumers are moving online not just younger consumers as well so older
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consumers so these are the things that i think need to be considered by the local broadcasters as to adapt it to to the new world to me it's been great talking to your county the cause many thanks indeed for being with us thank you. and that's our show for this week if you'd like to comment on anything that we've seen particularly our interview with the vice president of ecuador you can tweet me a figure on twitter use the hash tag a.g. see t. see if you can or you could drop us a line counting the cost of al-jazeera dot bet is our e-mail address as always there's plenty more few online dot com slash c.t.c. that takes you straight to our page and there you'll find individual sports links even entire episode for you to catch up. but that's it for this edition of counting the cost i'm adrian finnegan from the whole team here in doha thanks for being with us the news on al-jazeera is next.
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a city defined by military occupation there's never been an arab state here with the capital of jerusalem everyone is welcome but this depôt structure that maintains the can only project that's what we refuse it was one of the sound of us of a settlement with this and the story of jerusalem through the eyes of its own people segregation occupation discrimination injustice this is apartheid in the 21st century jerusalem a rock and a hard place on al-jazeera. singapore is really the creation of the world. when i went east goes back to school to find out the sacred to their. own how does
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the. universe distance across india voice their anger against a controversial new citizenship law. hello there until they might all this is al jazeera live from doha also coming up paying tribute to the fallen leaders in west africa feel for more help to battle and. protest in the gambia over a broken promise thousands rally demanding the president step down. the search for a new prime minister is possible and in lebanon and protesters are still demanding a complete overhaul of the political system.


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