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White House, Senators Strike Deal on Massive Stimulus Package Published: 25 March 2020

  • The Trump administration struck a deal with Senate Democrats and Republicans on an historic rescue package that tees up more than $2 trillion in spending and tax breaks to bolster the hobbled U.S. economy and fund a nationwide effort to stem the coronavirus.
  • The legislation was still being drafted but McConnell said the Senate would vote on it Wednesday. It would still have to pass in the House before it gets to President Donald Trump’s desk. House Speaker Nancy Pelosi had consulted with Schumer throughout his negotiations with Treasury Secretary Steven Mnuchin.
  • The plan includes about $500 billion that can be used to back loans and assistance to companies, including $50 billion for loans to U.S. airlines, as well as state and local governments. It also has more than $350 billion to aid small businesses. Then there is $150 billion for hospitals and other health-care providers for equipment and supplies.
  • For individuals the package provides direct payments to lower- and middle-income Americans of $1,200 for each adult, as well as $500 for each child. Unemployment insurance would be extended to four months, the benefits would be bolstered by $600 weekly and eligibility would be expanded to cover more workers.

(Source: Bloomberg)

Oil prices fall as demand woes eclipse U.S. stimulus Published: 25 March 2020

  • Oil prices slipped into negative territory on Wednesday as faltering fuel demand from the spread of the coronavirus outweighed a massive pending U.S. economic stimulus package.
  • Brent crude was down 92 cents, or 3.4%, at $26.24 per barrel after earlier rising to a high of $28.29. U.S. crude was down 34 cents, or 1.42%, at $23.67 after earlier hitting a high of $25.24 per barrel.
  • U.S senators and Trump administration officials have reached an agreement on the $2 trillion stimulus bill which is expected to be passed through the Congress later on Wednesday. Still, demand for oil products, especially jet fuel, is falling worldwide as more governments announce nationwide lockdowns, putting a lid on oil price gains.
  • Refineries globally are responding to the fall in demand by reducing output, with plants in India the latest cut crude processing, while ports in the country could face delays to crude discharging amid new measures to curb the spread of the virus.
  • India, the world’s second most populous country and the third largest oil consumer, has entered a 21-day government enforced lockdown.
  • ING on Wednesday slashed its Brent crude price forecast for the second quarter to $20 a barrel from $33 due to the coronavirus outbreak and an expected supply surge from Saudi Arabia and Russia from April.

(Source: CNBC)

World Bank Approves US$70 Million to Support Jamaica’s Fiscal Sustainability and Resilience Published: 20 March 2020

  • The World Bank Board of Executive Directors approved today US$70 million in budget support financing to Jamaica to support the country’s reform program and efforts to strengthen and accelerate recent gains in fiscal consolidation and sustainable growth.
  • The First Economic Resilience Development Policy Loan (ERDPL I) aims to help Jamaica advance its economic reform agenda, while at the same time protecting the poor and vulnerable, including from natural disaster risks.
  • “Jamaica’s authorities have shown the commitment needed to maintain macroeconomic stability and demonstrated significant progress, including major reduction in public debt,” said Ozan Sevimli, World Bank Resident Representative for Jamaica. “These efforts will contribute to strengthening the country’s capacity to cope with the threats of natural disasters and public health crises.”

(Source: World Bank)

Brazil Cuts Rates to 3.75% With Recession Likely After Virus Published: 20 March 2020

  • Brazil cut its benchmark interest rate by half a point to a record low in a bid to mitigate the effects of the coronavirus pandemic that’s likely to push Latin America’s largest economy into recession.
  • The central bank’s board, led by its President Roberto Campos Neto, on Wednesday lowered the Selic to 3.75%.
  • Brazil now joins a wave of nations from the U.S. to Turkey that are pumping monetary stimulus to counter the pandemic’s economic impact.

(Source: Bloomberg)

Venezuela’s Military Takes Over Fuel Pumps as Shortages Increase Published: 20 March 2020

  • Venezuela’s military seized control of gasoline pumps in at least three states, as the coronavirus outbreak deepens fuel shortages and further isolates the country from the rest of the world.
  • In Zulia, Carabobo and Guarico, states in the northern part of the country, soldiers displaced PDVSA personnel and private managers at gas stations.
  • The takeover comes as President Nicolas Maduro ordered the entire country to enter quarantine as the number of coronavirus cases doubled to 33 early this week. The country’s armed forces are heading the effort and enforcing strict controls at state borders and on the capital’s streets.

  (Source: Bloomberg)

World Bank Group Increases COVID-19 Response to $14 Billion To Help Sustain Economies, Protect Jobs Published: 20 March 2020

  • The World Bank and IFC’s Boards of Directors approved today an increased $14 billion package of fast-track financing to assist companies and countries in their efforts to prevent, detect and respond to the rapid spread of COVID-19
  • IFC, a member of the World Bank Group, will increase its COVID-19 related financing availability to $8 billion as part of the $14 billion package, up from an earlier $6 billion, to support private companies and their employees hurt by the economic downturn caused by the spread of COVID-19.
  • The bulk of the IFC financing will go to client financial institutions to enable them to continue to offer trade financing, working-capital support and medium-term financing to private companies struggling with disruptions in supply chains. IFC’s response will also help existing clients in economic sectors directly affected by the pandemic--such as tourism and manufacturing—to continue to pay their bills. The package will also benefit sectors involved in responding to the pandemic, including healthcare and related industries, which face increased demand for services, medical equipment and pharmaceuticals.

(Source: The World Bank)

Oil gains as governments pile on the economic stimulus Published: 20 March 2020

  • Oil prices rose on Friday as the world’s richest nations poured unprecedented aid into the global economy to stop a coronavirus-driven recession and U.S. President Donald Trump hinted he may intervene in the price war between Saudi Arabia and Russia.
  • Brent crude futures were up 82 cents, or 2.8%, to trade at $29.29 per barrel. U.S. crude futures for April rose $1.34, or 5.3%, to trade at $26.56 per barrel. The front-month contract expires later on Friday. The more active U.S. crude futures contract for May was up $1.89, or 7.3%, at $27.80.
  • Both U.S. contracts gained more than Brent because of U.S. plans to buy up to 30 million barrels of crude for its emergency stockpile by the end of June and reports that regulators in Texas might curtail output.
  • As the spread of the coronavirus brings much of the world to a halt, nations have poured increasing stimulus into their economies while central banks have flooded markets with cheap dollars to ease funding strains.

(Source: CNBC)

FosRich reports solid Year-End Profits owing to Strong Revenue Growth Published: 19 March 2020

  • For the year ended December 2019, FosRich reported a 9.2% increase in audited net income relative to the corresponding period in 2018. Net Profits rose from $90.39Mn (EPS:18¢) in 2018 to $98.87Mn (EPS: 20¢) in 2019.
  • This favourable result was largely due to a 24.1% (or $323.43Mn) increase in total revenue, which surpassed the 34.7% (or $169.97Mn) increase in total expenses.
  • The company’s stock price has fallen 42.0% since the start of the year, closing Wednesday’s trading session at $2.42. At this price, the stock currently trades at a P/E of 12.1x which below the Junior Market Distribution Sector Average of 28.3x.

(Source: FosRich’s Financials)

Bureau of Standards Targeting MSMEs Published: 19 March 2020

  • The Bureau of Standards Jamaica (BSJ) will be providing targeted support to micro, small and medium-sized enterprises (MSMEs), during the new fiscal year, which begins April 1.
  • Emphasis will be placed on the priority sectors of manufacturing and agriculture/agribusiness as well as the emerging industries of medical cannabis, hemp and bamboo.
  • As stated in the 2020/21 Jamaica Public Bodies Estimates of Revenue and Expenditure, activities will include assessment of need for standards; design, development and delivery of relevant standards; and the provision of training and conformity assessments at discounted rates.
  • The increased assistance to MSMEs is in keeping with the BSJ’s focus, over the next four years, on ensuring the international competiveness of Jamaican products and facilitating business development and trade, thus aiding the country’s economic growth.

(Source: JIS)

Covid-19 A Major Risk To Mexico's External Account Stability Published: 19 March 2020

  • Mexico’s external accounts will be impacted by falling goods exports, driven primarily by declines in manufacturing and the oil sector, and a deceleration in remittances amid the global Covid-19 (coronavirus) outbreak.
  • As a result, Fitch has revised its forecast for Mexico’s current account to -1.1% of GDP, from -0.8% previously and –0.2% in 2019, as falling imports will limit the expansion of the current account deficit.
  • Risks to the forecast are towards wider deficits, given risks to growth in the US, and risks to capital inflows stem from potential erratic policymaking and the poor finances of national oil company Pemex.

 (Source: Fitch)