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First Move with Julia Chatterley
The I.M.F. Shaving Growth Forecasts amid Rocketing Prices, COVID Concerns, and Supply Chain Fears; China's Fuel Costs Surge as Flooding Impacts Mining; Jamie Dimon Says the Cryptocurrency is Worthless. Aired 9- 10a ET
Aired October 12, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need-to-know.
Rising risks. The I.M.F. shaving growth forecasts amid rocketing prices, COVID concerns, and supply chain fears.
Coal complications. China's fuel costs surge as flooding impacts mining.
And Bitcoin bashing. Jamie Dimon says the cryptocurrency is worthless.
It's Tuesday. Let's make a move.
A warm welcome once again to FIRST MOVE, as always, a very busy Tuesday coming up. We'll be talking pandemic recovery, protests, and vaccinations
with Brazil's Economy Minister. Also the G20 meeting on the crisis and Afghanistan today, too. We'll ask the nation's former Central Bank governor
why restarting international aid is essential.
For now, here is a snapshot of the Wall Street. Walk -- it's actually more of a crawl as you can see. It is energy actually that continues to sap the
energy from investor sentiment. We have one eye on upcoming earnings, too, including JPMorgan, Bank of America and Citi. It's all the big banks. But
the real focus remains on inflation data tomorrow and directly tied to that, of course, the heat that we're continuing to see amongst the energy
Brent crude now above $83.00 a barrel that's for the first time since 2018. The White House says it stands by its call for OPEC+ to do more. They, of
course have strategic reserves that they can release, too, although the message so far has been not touching those.
In the meantime, U.S. natural gas futures falling to a two-week low on rising output and milder weather forecasts. But in Europe, of course,
prices keep on rising as colder temperatures approach and this concern permeating across the Asia session as well. And then you can add to that
another missed international bond payment for the Chinese property giant, Evergrande, and you get a pretty toxic mix as those red arrows show. That's
the third missed interest payment, in fact, in three weeks, so there's plenty of risks, and the International Monetary Fund stands ready to assess
And that's where we begin the drivers. Recovery hobbled by the pandemic, the International Monetary Fund downgrading this year's global growth
forecast, saying supply chains have been hit hard by outbreaks of the delta strain.
Clare Sebastian joins us and has been pouring over this multi-page report that I know was just released. But this for me though, this is less about
the slight shaving of the IMF growth forecasts, Clare, it's all about the risks and what they're saying is the risks are still to the downside as far
as growth is concerned and the risks are to the upside on prices. And that for me, spells trouble.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, so what the I.M.F. is saying, Julia, is that right now, forecasts are more likely to disappoint
than they are to surprise to the upside. They're saying that things like rising inflation, food prices, for example, disproportionately hit the
poor. They're talking about deadlier variants that are still possible out there because of vaccine inequality.
They're talking about, you know, continuing supply-demand mismatches, even climate shocks and cyberattacks. There are a lot of risks out there. But
the other really interesting thing about this report was that it really sort of looks closely at the top end and the bottom end of the income
These are where the downgrades are concentrated. Take a look. So, what we saw, just a small notch lower for the world as a whole. The biggest
downgrade went to the United States, a downgrade of one percent to this year's growth forecast compared to their estimate in July.
They are blaming both supply-demand mismatches, the disruption to the supply chains that we've been seeing and lower consumer spending,
especially in the third quarter. They are also looking at lower income developing countries, they got a downgrade of almost one percent, 0.9
percent for this year from a much lower rate. They're at three percent now, for the year.
They say that in these countries, the outlook has darkened considerably due to pandemic dynamics. We're talking vaccine access. In these countries, 96
percent, the I.M.F. said of the population in many cases have yet to receive one shot whereas in advanced economies, up to 60 percent of
populations are now fully vaccinated.
They say until we fix this, until advanced economies do more to spread the wealth when it comes to vaccines, we will not get out of this crisis and it
will worsen the inequality going forward.
CHATTERLEY: Yes, this is so important and I just thought there, the President of Columbia said on the show yesterday that the policy choices
for the less wealthy nations are becoming that much more difficult whether it is making action on climate change, whether it is trying to protect your
domestic economy, making other investments, quite frankly, amid rising inflation and food price insecurity, you simply can't make all the right
choices and the I.M.F. is saying, to your point, vaccines have to be a focus. Liquidity has to be a focus and debt relief, too, has to be a focus,
allow them some room to maneuver.
SEBASTIAN: Yes and no, the I.M.F. has been active over the past year and a half. They released another sort of $650 billion in what they call special
drawing rights, which is essentially an aid that they're making available to lower income countries. They say that that has helped.
But among the risks going forward, Julia, it is how much that the advanced economies continue to spend. They say that the size of the fiscal package
in the U.S. could impact the sort of global growth outlook going forward.
So, fiscal policy continues to matter a lot and so does monetary policy. The other risk is that monetary policy could be tightened too fast. This is
a risk that you and I talk about pretty often when it comes to the Fed and the sort of delicate balance that they have when they come to the reducing
those emergency measures in the economy.
CHATTERLEY: Yes, a multi-issue dimensional challenges for all of these countries to deal with and plenty of risks out there. Clare Sebastian,
thank you so much for that.
To China no. Coal prices hitting records again on Tuesday as flooding pushed the energy industry deeper into crisis. Torrential rain in two key
mining regions has pushed prices up 20 percent since Sunday. Coal-fired power producers will be allowed to charge some customers market prices from
Selina Wang joins me now. How very young Chinese, Selina, to allow this and it shows you that the pressures are coming all along the supply chain. What
more can you tell us?
SELINA WANG, CNN CORRESPONDENT: Julia, right. This all just makes Beijing's job so much harder to try and stem this crisis. You have this
heavy flooding we talked about yesterday worsening in neighboring Shanxi and Shanxi Province, and it's hit these two key mining hubs that account
for nearly half of China's coal output and an accident at one of the coal mines in this region is making matters worse, a roof collapse, killing four
miners and injuring four others according to state media, the local authorities are still investigating the cause of the collapse. And it comes
just days after the local government asked these mines to boost their security checks.
Now, this flooding in Shanxi as we talked about yesterday has shut down 60 coal mines. Now, most of them have since resumed production, but this comes
at a time when China is pulling out all of the stops to try and stem this crisis. It has asked coal mines to significantly boost production, it's
also now allowing electricity prices to rise as much as 20 percent, which is a big deal in a country where electricity prices are regulated.
So when coal prices were rising, many of these power companies were losing money, they were hesitant to boost production. But despite these measures
being taken, many experts still expect this energy crunch to worsen into these winter months, and these power shortages in China are a result of
really a perfect storm of factors. You've got the post-pandemic construction boom combined with China's efforts to tackle the climate
crisis earlier this year, shutting down hundreds of coal mines and now extreme weather making all of that worse -- Julia.
CHATTERLEY: Yes, and as you say, the boldest reform actually of the power sector that we've seen in decades in China, the fear I think is, as we've
seen in the past when they try and --whether under duress or otherwise -- enact severe reform very quickly. There tends to be a crunch in power
prices certainly feeling it.
Selina Wang, thank you so much for that report there.
Okay, let's move on. Bitcoin blasted. Billionaire Jamie Dimon calling the cryptocurrency quote, "worthless." The CEO of JPMorgan Chase insists that
this is just his personal opinion.
(BEGIN VIDEO CLIP)
JAMIE DIMON, CEO, JPMORGAN: I personally think that Bitcoin is worthless, but I don't want to be exposed to it. I don't care. It makes no difference
to me. I don't think you should smoke cigarettes either, you know.
But now, it comes into like okay that now, JPMorgan -- our clients are adults, they disagree that's what makes markets, so if they want to have
access to buy yourself Bitcoin, we can't custody it, but we can give them legitimate as clean as possible access.
(END VIDEO CLIP)
CHATTERLEY: Paul La Monica has more. That's what makes markets, Paul, and that's what makes JPMorgan money, top.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, obviously, you know, Jamie Dimon may have this personal distrust, dislike whatever you want to call it
for Bitcoin, but yes, you're not going to bite the proverbial hand that feeds you and as there are many people that want to be owning and trading
Bitcoin, then JPMorgan Chase will clearly try and profit from that, like many other banks and financial institutions around the world have been
Clearly try and profit from that, like many other banks and financial institutions around the world have been doing. But you know, Dimon
continues to tax on Bitcoin. They don't really seem to be resonating with the cryptocurrency community because when you look at Bitcoin prices, we
are what -- hovering around $57,000.00.
LA MONICA: People have pointed out that when Dimon first made very bearish comments about Bitcoin, September in 2017, where were Bitcoin prices then?
$4,500.00? Is it a bubble? Will it eventually burst? Perhaps. Could Dimon be vindicated? Maybe. But right now, he is clearly on the wrong side of
this long running trade.
Chat Yes, there's a lot of people -- a lot of rich people actually being driven crazy by his comments, and we'll leave it at that. But he also did
make some other points, which I think is very important, and it's something that we've talked about, and we continue to talk about on FIRST MOVE, which
is, firstly, I think separating cryptocurrencies from the underlying blockchain technology, and perhaps the uses, the positive uses that that
might have, and is already having, I think, in certain cases in the future.
He also raised questions, and this goes to the heart of the investment thesis that a lot of crypto crazies and positive crypto crazies make, and
that is the limited supply of Bitcoin. What did you make of this?
LA MONICA: Yes, I guess. Well, let's tackle that last point first, Julia. It's a little bizarre to question the long running argument that you have
this $21 million cap on Bitcoin, and then that does give the bulls an argument that you do have supply being something that will be fixed.
I mean, I don't know why Dimon -- and Dimon in his comments didn't really give any firm evidence for why he doesn't think that may be the case. So,
it's kind of like me saying, Julia, the sky isn't blue. Well, just go outside and take a look and I'm clearly wrong.
So, I'm not sure exactly where Dimon is getting this notion that Bitcoin may not be something that has this algorithm in place that will limit
supply and could lead to more demand at a fixed supply. But getting back to the other point, Dimon is right, and he is not a total digital payments
bear. JPMorgan Chase has something called JPM Coin that is allowing people to make payments digitally.
He, I think, just makes the argument that the Federal Reserve and Central Banks around the world are likely to dominate digital money going forward,
and that that could be a problem for Bitcoin, Ether, and the scores, the thousands of other cryptocurrencies out there that could fall by the
wayside if governments wake up and decide that they want skin in this game in a major way.
CHATTERLEY: Yes. I know. I mean, the only challenge I would make to your analogy, though, is it is like saying the sky is blue while being in a room
without windows, because what he is saying is he called can't the algorithm himself, perhaps and therefore, he's a skeptic, but of course, I guess
Yes, Paul, we're going to talk about this again, I'm sure. No end of Jamie Dimon comments as far as this is concerned. Meanwhile, JPMorgan makes
Paul La Monica, thank you so much for that.
Okay, let me bring you up to speed now with some of the stories making headlines around the world.
Italy is hosting a special G20 Summit to address the recent Taliban takeover and growing humanitarian crisis in Afghanistan. World leaders
attending the video conference will focus on aid, security, and ongoing evacuation.
CNN's Ben Wedeman joins us from Rome. Ben, I guess the priority has to be international aid. Clearly, the money that's held outside of Afghanistan
was frozen, those assets frozen. But there is a humanitarian and economic crisis going on in the country and someone has to help address it.
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, and this is why Mario Draghi, the Italian Prime Minister called for this behind closed door
virtual Summit of the G20. And just before this Summit began, in fact, the European Union announced that it was providing an additional 700 million
euro, that's more than $800 million in emergency aid in humanitarian aid, and not to the Taliban, to like programs in Afghanistan itself where of
course the country is going through an economic collapse, keeping in mind that prior to the collapse of the -- rather the takeover by the Taliban,
that 75 percent of Afghanistan's revenue came from international aid.
So without that, with Afghanistan's assets frozen, the economy is in freefall. Banks are running out of cash, civil servants haven't been paid.
Essentially the country is in a state of paralysis at this point.
WEDEMAN: And beyond the obvious concerns about the humanitarian situation in Afghanistan, with the Taliban in control there, the rights of women and
the freedom of the press. Europe is concerned, for instance, about the possibility of an additional outflow of refugees towards Europe, the likes
of which we saw back in 2015.
This meeting, of course, is not just involving Europe. It involves the United States, all the leaders of the G20 have been invited to participate,
but we understand that the leaders of China and Russia, two key members of the G20 are not participating in this virtual Summit.
So it's questionable, what can actually come out of this Summit, given that two important countries very close to Afghanistan are not participating --
CHATTERLEY: Thank you, Ben. Ben Wedeman in Rome there.
Now, coming up later, more on the Summit with my guest, Ajmal Ahmady. He's former Acting Governor of the Central Bank of Afghanistan. We'll talk about
the financial situation and the risks.
Now, still to come on FIRST MOVE, Brazil's Economy Minister joins us to discuss vaccines, the COVID recovery, and climate goals.
And averting economic disaster, I ask the former head of Afghanistan's Central Bank, as I mentioned, if there's a way through the country's cash
More to come, stay with us.
CHATTERLEY: Welcome back to FIRST MOVE. Brazil was one of the country's hardest hit by the coronavirus with over 600,000 people having died, only
the United States has lost more people. Yet Brazil's vaccine strategy is paying off.
More than 70 percent of Brazilians have had at least one vaccine dose that compares to 65 percent in the United States of America, and the economy is
fighting back, too. The International Monetary Fund says it has now returned to its pre pandemic level and it is predicting 5.3 percent growth
this year, though unemployment remains high at over 14 percent.
To talk through this with us, joining us now, Brazil's Economy Minister, Minister Paulo Guedes.
Minister Guedes, fantastic to have you on the show. Thank you for joining us.
I think the statistics speak for themselves. There are great challenges. The economy was hit by the coronavirus, but there are also reasons for
optimism in the recovery. How optimistic are you, sir?
PAULO GUEDES, BRAZILIAN ECONOMY MINISTER: Oh, hi, Julia. Well, I've just updated the facts on vaccines. Mass vaccination is a matter of fact,
advancing so fast that we have already 90 percent of population, adult population that received already the first those, and 60 percent of the
whole population, adult population that received -- that are fully vaccinated.
So we are watching a safe return to work. The economy is rebounding very sharply. Brazil dropped less than most advanced country, recovered faster,
and is growing higher than the average, not only of Latin America and the Eurozone, but also the advanced countries.
So we digitalized 68 million people. We provided the direct income transfers to the most vulnerable citizens. We mass vaccinated the
population, the adult population. We created more than three million new jobs from the bottom. We recovered in a V-shape, very strong recovery,
creating a lot of jobs, three and a half million new formal jobs and another three and a half informal jobs.
In hard facts, clear evidence that our policy responses were effective because we preserved one-third of the formal jobs with our job preservation
program, helping -- instead of the company firing the guy, they would call us since we digitalized 68 million vulnerable, and then we would give a
supplement for the wage payments.
So we spent 10.5 percent of GDP primary deficit, and we bounced it back to one and a half again, this year. So we sustained it, a double commitment.
Health in first place, preserving lives. But on the other hand, fiscal responsibility.
So all expenses paid on health services, on vaccinations. We go to the other side. We controlled -- we didn't give wage increases during these two
years. We are implementing structural reforms. I think Brazil is the only country in the world that is implementing structural reforms during the
Independent Central Bank fiscal triggers, regulatory frameworks -- we are changing the regulatory frameworks for oil and gas, for electricity. Brazil
is now the largest investment frontier in the world.
CHATTERLEY: Minister, you have a lot going on, as you've laid out. And I want to congratulate you on the progress on vaccinations, which is a huge
achievement, I think given what we're seeing elsewhere in the world.
But I do want to ask you, in light of what you've said, and you mentioned the economy and the fact that you're trying to build jobs and the progress
that you've made there. In some ways, the handling of the pandemic came at great cost, human life costs, and it was a choice made by the government.
And though the government has been criticized for it and we will look back, I'm sure and talk about it.
Was it the right choice to continue to try and battle to keep the economy open, to preserve jobs as best you could even at the cost of human life? Is
that what you're saying?
GUEDES: I don't think this -- I don't think this is fair. I think, it is political noise. I don't think Brazil made a choice. Quite the contrary.
Our choice was exactly to preserve lives in the first place. That's why we spent 10.5 of GDP in income -- in direct income transfers to poor people,
so that they could practice social distancing. It's exactly what happened.
We lost one million formal jobs in 40 days -- 45 days, and we preserved lives exactly extending the social programs, decentralizing money. So there
is a lot of political noise saying that we made a choice, the wrong choice.
And it's why the country, we made the right choice. We preserved lives. We practiced social distancing. I myself went for one year and a half, I
didn't go to my home in Rio de Janeiro. I spent the whole time in Brasilia working with social distance, with masks, with vaccination.
So it is a political noise. All information has signals and noise. The signals we are giving is exactly that, we practice social distancing.
That's why GDP collapse, 4.1 percent. That's why unemployment bloated higher.
But then what happened is that we are vaccinating, mass vaccinating, and the economy is rebounding.
CHATTERLEY: And you are.
GUEDES: And we preserved --
CHATTERLEY: And Minister, I want to interrupt you because I do want to talk about the future, I want to talk about tackling unemployment. I also
want to talk to you about rising prices. Because I know this is another challenge that you're facing and you have to tackle. What's the plan as far
as getting more of those jobs back? And how concerned are you by rising prices?
GUEDES: Well, first, about investments and growth, because we are changing the regulatory framework, we already have investment commitments of more
than $100 billion on oil, on natural gas, on renewable energy, wind, eolic energy on cabotage. So Brazil is really with its regulatory framework
changes, has already received $100 billion investment commitments for the future.
So the big challenge now that we are facing is how to transform a cyclical recovery out of the COVID based on direct income transfers and sustainable
consumption. We want to transform this into an investment based recovery. That's the big challenge ahead.
And again, I think Brazil will surprise in the upside. People were saying that Brazil would collapse, 10 percent, and I saw Spain more than 10
percent drop. I saw Italy, more than eight. I saw U.K. more than nine. I saw France more than seven percent drop. I saw Germany more than five. I
saw Japan four and a half, and Brazil four percent.
Exactly because we practiced the social distancing, we waited for the vaccines. When the vaccines came, we mass vaccinated the population and the
economy bounced back.
The challenge now -- the challenge now --
CHATTERLEY: I guess the answer to that would be that they lost as a proportion, less lives, and I don't want to debate it again. Because as you
say, it feels like political noise. But the comparisons in growth aren't accurate unless you're comparing the human costs, too.
Minister, we had the President of Colombia on the show yesterday, and he was saying for less wealthy nations making choices now. And it goes exactly
to your point about investing for the future, talking about perhaps climate investment as a specific example. He said that the international economy
need to allow more leeway for spending for countries like yours.
So climate spending, for example, shouldn't be included in the deficit calculation. There should be debt forgiveness for positive investment in
things like transitioning your economy and climate spending, in particular. Would you agree with that? Because that would help.
GUEDES: Julia, we spent more than double the average of emerging countries and 10 percent more than the average of advanced economies, saving lives.
So, I do not accept your narrative.
We spent more money saving lives than you. We spent more money saving lives than advanced countries, 10 percent more. And we used double the
expenditure saving lives than the average of emerging countries.
So having said that, I agree that some relief on debt, some additional help is very interesting and very important to continue to protect lives. So be
sure of that.
The first thing we did was to preserve lives. The second thing was exactly mass vaccination that people could come back to a safe return to work. And
these, we still have under -- still in use all our layers of protection for the poor people, all the layers are still there. We are phasing out very
There were around $100.00 in the beginning in the first year, then we reduced it to $70.00, so we are reducing slowly these layers of protection
as people get back safely return to work.
I think inflation, which was your second issue in the last question, inflation is all over the world. Half of inflation is exactly food and
energy. That's why our protection is still there. We'll keep the protection. We will raise our direct income transfers for people exactly to
pay for higher food prices and higher energy prices.
GUEDES: And the thing is going on all over the world. You just announced it before we started talking here, you just announced an increase in the
coal prices in China, because it is raining too much.
GUEDES: And in Brazil, it was the other way around, it's raining too little, which sends us to the next theme, which is exactly climate change.
Brazil is entirely involved. We will be in Glasgow announcing our green growth program, our entire responsibility, commitment, accountability, with
responsiveness to the climate change challenge. So it's two and a half billion dollars announced exactly with sustainable infrastructure with
We know the future is green. We know the future is digital. And we'll be there. Brazil is a green power and Brazil is the fourth largest digital
market in the world and helped us a lot.
CHATTERLEY: And you're also among the top five nations of issues of green bonds. I saw that as well in your climate report as well.
Sir, we will talk again about your focus on climate because I'm actually fascinated in the work that you're doing. And I actually think that's
misunderstood. But I do want to understand and I'm sure you'll forgive me for the question, I want to ask about the findings from the Pandora Papers.
And they revealed that you had significant wealth held abroad.
And I think there's two questions really. There is one of transparency on whether the Brazilian people had the right to know. And then I think
there's a question of whether you've benefited from things like the fall in the Brazilian real.
Second, I'll ask, have you done anything wrong? Do you feel like you've done anything wrong?
GUEDES: That's a good question. It is a good question, and then a chance to explain.
I've done nothing wrong at all. As a matter of fact, before assuming office, I sold my participation in most investments I had directly that I
could affect. I put a blind trust on my Brazilian properties. I sold the direct investment. I lost four or five times more than the value of this
company when I accepted to go to the government.
The offshore is legal, reported to the Ethics Committee of the Presidents. It is declared to the Internal Revenue Service and it's also registered at
the Central Bank. And I left the board of the company weeks before accepting the office. And more than that, last week, the Supreme Court
dismissed the case.
CHATTERLEY: So you've done nothing wrong, sir, just to reiterate.
GUEDES: Nothing whatsoever.
CHATTERLEY: Minister, it was great to talk to you thank you for joining us. Thank you for answering my questions, and please come back and talk to
us soon, because I received your climate report very early this morning and I would love to talk to you specifically about that because I know there's
a lot going on in your country. Thank you, sir.
GUEDES: Thank you very much, Julia.
CHATTERLEY: Thank you. Brazil's Economy Minister there, Paulo Guedes.
More to come. Stay with us.
CHATTERLEY: Welcome back to FIRST MOVE. G-20 leaders joining today's virtual Summit on Afghanistan are under pressure to avert an economic
Italy hosting the event says the world's richest countries have a duty to do something. Since the Taliban takeover, banks are running out of dollars
while access to foreign currency and international aid has been blocked.
My next guest is the former Acting Governor at the Central Bank who was forced to leave the country for the safety of his family. Ajmal Ahmady is
trying to reconcile what happened in the lead up to that event. He blames a weak government struck by devastating blows from the United States.
And Ajmal Ahmady joins us now. Great to have you on the show. Thank you so much for joining us.
I'm taking comments that you made in an op-ed in "Foreign Policy" Magazine, Ajmal. But I just want to get your understanding and your wisdom as someone
who I think who knows the financial situation of the country better than anyone. How important is it that foreign governments step up and unlock aid
or international bodies like the U.N., for example, someone needs to get financing into the country?
AJMAL AHMADY, FORMER ACTING GOVERNOR AT THE AFGHANISTAN CENTRAL BANK: Well, thank you very much for having me on the program, Julia. It's an
honor to be here.
Afghanistan is facing a triple shock and was facing a triple shock even before the current economic crisis. We had the shock of COVID, the shock of
conflict and of drought. So COVID, of course, most countries around the world are having trouble dealing with this issue. And Afghanistan with its
weak healthcare infrastructure in particular is having difficulty.
Second, Afghanistan also had conflict with tens of thousands being injured or killed over the past few years and that conflict hasn't subsided. ISIS
is still pursuing attacks in Afghanistan. And third is the issue of drought. Afghanistan is facing one of the worst droughts in decades.
And so these key issues were hitting the country before this economic crisis. And on top of it, now we have the freezing of international
reserves and the freezing of international aid flows into the country. And that's going to have severe negative consequences for the economy. I think,
first of all, you're going to see GDP growth declining, you'll see inflation rising. And as a result, poverty is going to increase in the
So it's a very positive sign, I think, that the G20 met today in discussing these issues.
CHATTERLEY: Can you put some numbers on that just to help us understand? Like, what are we talking about in terms of the impact on growth? The
number of people living in poverty? The risk of inflation -- an accelerated inflation -- just so that people can understand that we're talking sort of
depression on depression style numbers?
AHMADY: Absolutely, Julia. So, I think if we take a look at case studies of other countries -- in conflict countries, you typically see GDP declines
of 10 to 20 percent and that might be understating the case given the three shocks I cited earlier.
So in Lebanon, currently, GDP is expected to decline by significant amounts. I think in Afghanistan, I'd say 20 percent to 30 percent might be
the base case figure. If we're taking a look at inflation, it's very tied to the currency rate and we've already seen the currency rate depreciate by
around 10 to 15 percent.
And so I would expect initially for inflation to rise by those figures during the first few months, but coming into next year, I would expect
inflation to increase even further, perhaps even reaching hyperinflationary figures by mid to end of next year.
In terms of poverty, we already had poverty rates above 50 percent again before this crisis.
AHMADY: The U.N., I believe is now forecasting that poverty rates will increase to 92 percent before the end of this crisis.
CHATTERLEY: How likely is there a banking collapse -- sort of what we'd call a formalized currency crisis, Ajmal? I mean, again -- and there's been
articles written suggesting that there were strange movements of cash out of the Central Bank to some of the regional areas.
And obviously, the final payment, the transfer payment that would have brought cash into the country, because it was obviously done periodically,
never took place. And you've tweeted about what happened in those final few days before you left.
So how likely is it that we see a sort of formal banking crisis and a currency collapse based on what you know of the cash situation in the
country or the lack of cash?
AHMADY: Unfortunately, it's quite likely, one of the last actions I took was to limit withdrawals or placed withdrawal limits on withdrawals from
bank accounts. And the reason for that is, we had a very drastic change.
So before the Taliban took over, we have $9 billion in reserves, which by any foreign metric is a very high level. So it represented approximately 50
percent of GDP, one of the highest rates in the world, or 15 months import coverage ratio, which is extremely high, the standard metric is three
months import coverage ratio. So we're many multiples above that in a very solid situation. But of course, those reserves were frozen.
The second aspect is donor flows, which were, perhaps $5 billion a year have now been frozen. So when you freeze the stock of assets, as well as
freeze the flow of assets into the country, you're preparing yourself for some sort of currency crisis. You're going to have to place withdrawal
limits and make it -- make the assets that you have last for as long as possible. So, I think those are some of the key issues that you're looking
CHATTERLEY: I want to talk about the article because you -- and I read it several times -- and you sounded like someone who was trying to make sense
of the nonsensical in what happened particularly towards the end and your decision to leave quite dramatically.
You talk about trying to reform too quickly, perhaps in the government, not bringing on board vested interest those that would have helped with
security. There was political infighting. There were clearly internal issues.
But also what happened with the United States and perhaps the sort of rug that was pulled when the Doha Agreement was signed by the Trump
administration and without the involvement of the government.
Do you think that was the moment where any hope of a future of democracy in Afghanistan and being able to hold together meager institutions, let's be
AHMADY: I think that's a correct framing, Julia. Afghanistan had weak institutional structures. We had the issues that you will find in any
frontier market. So we had political infighting, perhaps security forces, I mentioned had weak security sector leadership, and there is the issue of
And these are issues that affect most emerging market economies or developed economies, but perhaps more so in Afghanistan. And so -- but we
were on a somewhat sustainable, slightly improving trajectory.
What happened is when the Doha process began, was that the U.S. government began negotiating directly with the Taliban, excluding the Afghan
government. And that was, I think, the first stage of a long process by which most of the actors within Afghanistan and regional actors understood
that the U.S. was on the way out, and so therefore, the situation was likely to deteriorate.
CHATTERLEY: You're sort of suggesting like it would have been better for the United States to leave rather than negotiating any kind of agreement
before they left.
AHMADY: I did make note of that, and I was a little bit confused and I think perhaps a lot of participants were confused as to why if the U.S.
wanted to leave, they simply did not withdraw troops without engaging with the Taliban firsthand because there are many aspects of the Doha Agreement
that made the situation worse.
One specific example, of course, is that it forced the Afghan government to release 5,000 Taliban prisoners. So you can imagine that prisoners that
have been convicted that had gone through the judicial process were now being released and actually, there are now complaints from women judges who
are now stuck in Afghanistan, who say that the prisoners, the people they put in jail through a judicial process, who now have been released, are now
coming after them.
AHMADY: And so that disincentivizes, that gives less hope to the people of Afghanistan who were pursuing the rule of law.
CHATTERLEY: I just wanted --
AHMADY: So perhaps, it might have been better to leave without signing that agreement.
CHATTERLEY: Ajmal, I have about 30 seconds left. Do you feel guilt for leaving? Do you feel like you could have done more? Or are you just
relieved that you've protected your family?
AHMADY: I think I feel guilt for the staff that I have -- I have staff working at the Central Bank, some of whom are still there. In particular,
we have female staff who have been now told to stay at home. And these are women who have received Bachelor's or Master's Degrees in Finance, or
working for a professional Central Bank, and now don't have a particular place to work and don't know what their next step is.
So I think from my perspective, that's where I wish I could have done better during the evacuation. But I'm glad that this wasn't a macroeconomic
or economic collapse. It was a rather a political and security sector collapse. And so for that, I'm glad we managed the macroeconomics situation
CHATTERLEY: Yes, you were trying to build a future. Ajmal Ahmady, thank you for joining us and come back and talk to us soon, please. Former Acting
Governor of the Central Bank of Afghanistan. Stay well.
We're back after this.
AHMADY: Thank you.
CHATTERLEY: Welcome back to FIRST MOVE. Ambition is one thing, but the President of the U.N. Climate Change conference says what's needed from
several nations is action. Alok Sharma called for urgency just weeks before COP 26 begins in Scotland, and he was speaking in Paris and that's where we
find our Jim Bittermann.
Jim, the message we're hearing is deliver or face disaster, is that right?
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: That's exactly right. I mean, Sharma couldn't have been clearer this morning. The current
action, he said the current action pledges by nations leave the world well short of the goal of keeping the climate change increase in temperatures to
1.5 degrees Celsius.
BITTERMANN: In fact, it'll be far over that if countries don't step up according to Sharma. He said, "If temperatures continue to rise, we will
step through a series of one-way doors, the end destination of which is climate catastrophe." And he had some dire predictions for those who are
assembled to hear him this morning and there will be more people assembled to hear him when he speaks in Glasgow as the President of COP 26 just three
weeks from now.
I think, he is trying to rally support ahead of that, especially support from the G20 nations, which account for about 80 percent of the greenhouse
gases that are polluting the atmosphere and raising the temperature -- Julia.
CHATTERLEY: Yes, I mean, we're seeing rising prices, but without smart policy action, we could see rising energy prices the same way as we're
seeing today, so we've got to get this right.
Jim Bittermann, thank you so much for that.
Okay, after the break, a billionaire brag, being only the world's second richest person is a pretty good problem to have. But that hasn't stopped
Elon Musk from saying something about it. We'll explain, next.
CHATTERLEY: Welcome back to FIRST MOVE. Elon Musk is known for pulling his punches and now, he has a new target on social media -- Jeff Bezos.
Musk who is currently the richest man in the world trolled Bezos on Twitter for coming in second place on the Bloomberg Billionaires Index.
Christine Romans is here to explain. You know, their combined wealth is more than the GDP of South Africa, paper wealth, of course, but they're
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes, they are. And I think this is a one-sided billionaire brag fest.
CHATTERLEY: Yes, I was about to say.
ROMANS: Because we have not heard from Jeff Bezos at this time, but what we're hearing from Elon Musk is that the gap is widening. I mean, his
wealth has grown, his pile of wealth has grown some $52 billion just since the beginning of this year. That puts him far and away on top of this list,
a list with some very rich people on it.
It's interesting though, the timing here, I think, Julia, because you've got in the United States and actually around the world a global energy
crunch. Gas prices here that are at a seven-year high and have basically doubled. It's the shortage economy.
"The Economist" Magazine calls it the shortage economy, we're talking about inequality around the world that has been exacerbated frankly, by COVID.
And Elon Musk in vintage musk in form is drawing attention to all of his wealth, even at a time when progressives in the United States are talking
about maybe taxing some of those vast riches to help pay to undo the inequality that is a byproduct of the American economy.
Interesting, I think his timing.
ROMANS: And he is just putting a big sign on himself, "Look at all my money."
CHATTERLEY: I know. Astonishing achievement, let's be clear, because in both of these cases, they are innovators. They've created new companies. I
mean, that is a huge testament to the environment hereto and what perhaps in the past, maybe less so today, and we can debate that.
It allows you to achieve, but I think to your great point with great wealth comes great responsibility to perhaps share it and if not, you're going to
come under a lot of pressure as we saw of that text or tweets in order to do so.
ROMANS: Exactly. A lot of people this morning are talking about maybe this is sort of frat-boy kind of behavior from Elon Musk, right, to put a silver
medal around and he is, you know, we had other kind of worst that frat-boy type humor about Jeff Bezos before, so, you know, I think it is vintage
Elon Musk, and this is why some people, frankly, adore him, right?
Because he just says what he wants to say, tweets when he wants to tweet and makes money all along the way.
CHATTERLEY: And we talk about it. Wait until energy prices get so high that you can't afford the electricity to recharge your electric vehicle,
and then some of that people's wealth dissipates.
Yes, Christine Romans, thank you for that, as always.
ROMANS: Nice to see you, Julia.
CHATTERLEY: A pleasure. Yes.
And that's it for the show. If you've missed any of our interviews today, they will be on my Twitter and Instagram pages. Search for @jchatterleyCNN.
Stay safe. "Connect the World" with Becky Anderson is next.
And I'll see you tomorrow.