The Executive Board of the International Monetary Fund (IMF) approved today a disbursement under the Rapid Credit Facility (RCF) equivalent to SDR 165.6 million (about US$ 226 million, 60 percent of quota) to help Cameroon meet the urgent balance of payments needs stemming from the COVID-19 pandemic. The outbreak of the COVID-19 pandemic and the terms of trade shocks from the sharp fall in oil prices are having a significant impact on Cameroon’s economy, leading to a historic fall of real GDP growth.

The authorities are taking several actions to contain the spread of the disease, boost health and social protection spending, and provide support to affected businesses and households. However, due to a significant deterioration of the macroeconomic outlook and weakening of fiscal situation, driven by the drop of revenue in combination with additional direct health and social expenditures, urgent external and fiscal financing needs have emerged. The IMF’s support will help to fill immediate external needs and preserve fiscal space for essential COVID-19-related health expenditure. It is also expected to help catalyze additional donor support.

Following the Executive Board’s discussion on Cameroon, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, issued the following statement:

“Cameroon is facing serious challenges from the twin Covid-19 pandemic and terms of trade shocks. Weak global demand, depressed commodity prices, and domestic containment measures weigh on the outlook, and are causing significant adverse economic and social effects. The shocks have given rise to substantial fiscal pressures and an urgent balance of payments need.

“The authorities are taking decisive actions to limit the spread of the virus and its economic and social impact. They have implemented strong crisis containment and mitigation measures and are scaling up spending to bolster their health response. Additional measures currently under consideration will provide support to vulnerable households and firms.

“Given the sudden and pressing nature of the shocks, accommodative fiscal and monetary policies are warranted to mitigate the human and economic impact of the outbreak. However, the authorities remain committed to their reform agenda under the ECF arrangement. They plan to undertake adjustments to return to the fiscal consolidation path once the crisis abates to safeguard debt sustainability and ensure a strong recovery.

“IMF emergency financing under the RCF will support the government’s efforts to mitigate the impact of the twin shocks. Additional assistance from development partners will be critical to fill the remaining financing need. Strict budgetary controls and transparency will be needed to ensure that the assistance under the RCF meets its intended objectives.”

Culled from IMF

France said on Friday it was readying a “historic” package of multi-billion euro loans to help carmaker Renault and flag-carrier Air France through the crisis caused by the coronavirus.

For Air France, a seven billion euro ($7.5 billion) package is planned and for Renault five billion euro ($5.4 billion), Finance Minister Bruno Le Maire announced.

He said the package was needed to save Air France amid an unprecedented industry crisis but warned the money would come with strings attached, with the airline notably having to improve its environmental credentials.

For Air France, the loan package is made up of four billion euros in bank loans guaranteed by the state and a three billion euro loan direct from the state, he told TF1 television.

“We need to save our national company and the 350,000 direct and indirect employees affected,” he said, while describing the plan as “historic support”.

“We are behind Air France, behind the employees of Air France to guarantee our independence and save jobs,” he added, while denying that nationalisation was on the cards.

But he warned that the help was not a “blank cheque” and would come with “conditions” linked to its profitability but also environmental factors.

“Air France should become the most environmentally respectful airline in the planet. This is the most important condition for me.

“Air France needs to present a plan for reducing CO2 emissions and transforming its fleet to be less polluting,” he said.

In The Hague, Dutch Finance Minister Wopke Hoekstra announced the government plans to support KLM with an aid package worth between two to four billion euros.

“We are currently working out the exact form and details,” the finance minister said Friday.

‘Crisis will last years’

For Renault, a five billion euro ($5.4 billion) bank loan package guaranteed by the state is being worked on, Le Maire said.

“What is at stake here is our automobile industry. Renault is an industrial flagship that belongs to our culture and history,” he added.

The French state retains shareholdings in both Renault and Air France of 15 and 14.3 percent respectively.

Le Maire had previously warned that he expects GDP in France to contract 8 percent this year due to the effects of the lockdown against the coronavirus, which is due to last in France until May 11.

“This crisis is historic. It will last years. It will be long. It will be difficult. I want every businessperson to know that… the state will be beside them,” he added.

He said France would do everything “to save its companies and start again with an economy that is more respectful for the environment.”

Source: AFP

European Union leaders agreed on Thursday to build a trillion euro emergency fund to help recover from the coronavirus pandemic, avoiding another all-night bust-up but leaving divisive details until the summer.

With the EU’s Brussels headquarters under lockdown – along with most of Europe – the 27 leaders held a four-hour video conference to consider proposals, rallying around a bigger common budget for 2021-27 with a recovery programme.

At around 1% of the EU’s economic output, the multi-year common budget has long been one of the most contentious subjects of debate for its members. Expanding it will not be easy, even if Italy’s Prime Minister Giuseppe Conte hailed “great progress” after the summit ended.

French President Emmanuel Macron said differences continued between EU governments over whether the fund should be transferring grant money, or simply making loans.

“Divisions remain,” Macron told reporters in Paris.

“I’m saying this sincerely: if Europe raises debt to loan to others, that won’t live up to the response we need,” he said, adding that it would saddle already heavily-indebted countries, such as Italy, Belgium and Greece, with yet more debt.

Europe is facing a severe economic shock from the spread of COVID-19, the respiratory disease caused by the novel coronavirus, which has also led to border closures across the bloc and left member states fighting over medical supplies.

European Central Bank Governor Christine Lagarde told the leaders the pandemic could cut between 5% and up to 15% of euro zone economic output, officials and diplomats said.

The euro zone’s economic growth for 2020 is forecast to contract 5.4%, which would make it the worst year since the common currency was introduced in 1999, according to a Reuters poll. That is still better than the International Monetary Fund’s latest forecast for a decline of 7.5%.

‘Political emergency’

After weeks of squabbling, the leaders approved half-a-trillion euros worth of an immediate rescue scheme to protect jobs, businesses and offer cheap credit to governments.

But with Italy and Spain hit far harder than Germany by the crisis, old enmities have surfaced across the bloc. Reaching agreement among euro zone finance ministers two weeks ago on the smaller euro rescue scheme was torturous, as the Netherlands refused an Italian demand to issue common debt.

Conte told leaders that a recovery fund should be 1.5 trillion euros in size and provide grants to EU governments to stop countries heading towards economic collapse and thereby threatening the viability of the bloc’s internal market.

“Grants are essential,” Conte said, according to diplomats who were on the video conference. “The sanitary emergency has quickly become a social emergency. But now we are facing a political emergency as well.”

Austria’s Chancellor Sebastian Kurz took the opposite view, saying on Twitter that, while Vienna was ready to show solidarity, “we should do this through loans”.

Kurz said he would coordinate with “like-minded countries”, a reference to wealthy but cautious northern countries such as Denmark, Sweden, Finland and the Netherlands, who resent having to pay for poorer southern countries they see as fiscally irresponsible.

Spain, one of the world’s worst hit countries, backs Italy’s view that a fund must issue grants, rather than loans, while France has argued for a fund that could issue common EU debt, hoping its temporary nature will calm passions.

German Chancellor Angela Merkel took a conciliatory stance as she publicly called for a major recovery fund after the summit. “Things can only go well for Germany if they go well for Europe,” she said.

Leaders tasked the European Commission, the EU executive, to present detailed proposals by May 6, diplomats said.

Commission President Ursula von der Leyen said EU countries had so far handed out state aid worth 1.8 trillion euros to cushion the economic hit and that the new recovery fund would be in the order of magnitude of a trillion euros.

She said the solution was to increase the amount that each EU government would be liable to pay into a recovery fund if needed, raising it to 2% of gross national income (GNI), from 1.2% today. GNI is the EU’s preferred measure of economic output.

Most significantly, that means an implicit guarantee needed from EU governments for the Commission to issue bonds, a kind of “contingent liability”.

The Commission has a triple-A credit rating, issuing against the security of the next EU long-term budget.

“We are slowly heading towards some form of joint debt. We’ll never call it ‘coronabonds’ or ‘eurobonds’ and it will be raised by the Commission, rather than member states together,” said a senior EU diplomat involved in the summit.

Source: REUTERS

A new study shows that African-American and Hispanic families in the United States have been hit hardest by job losses in the wake of the coronavirus pandemic.

The study conducted by the Pew Research Center and released on Tuesday showed that ethnic minorities in the United States are taking the biggest income hit due to the epidemiological crisis and they are less prepared to withstand the economic blow of it.

Hispanics are the worst-affected, with over 60 percent of them saying they or somebody in their family lost a job or had an income cut, according to the research study.

The figure is nearly 45 percent for African Americans and only 38 percent for white people.

Moreover, the study by the Pew Research Center showed that only 29 percent of Hispanics and 27 percent of African-American adults said they had rainy-day funds to cover their bills for up to three months, compared with 53 percent of white adults.

The Pew report, based on an April survey of 4,917 adults, highlighted racial disparities inside the US, where minorities suffer a disproportionately higher number of COVID-19 fatalities.

The US virus death toll has risen above 45,000 as of Tuesday, and more than 818,000 people have also been infected in the US.

The White House has been seeking to deflect criticism of its own sluggish response to the COVID-19 crisis by putting too much emphasis on the virus’s likely origins in China, with US President Donald Trump and other American officials, including Secretary of State Mike Pompeo, referring to the coronavirus as the “Chinese virus.”

Source: Presstv

Oil futures plunged below zero on Monday, the latest never-before-seen number to come out of the economic coma caused by the coronavirus pandemic.

Stocks and Treasury yields also dropped on Wall Street, with the S&P 500 down 1.8%, but the market’s most dramatic action by far was in oil, where the cost to have a barrel of US crude delivered in May plummeted to negative $37.63. It was at roughly $60 at the start of the year.

Traders are still paying $20.43 for a barrel of US oil to be delivered in June, which analysts consider to be closer to the “true” price of oil. Crude to be delivered next month, meanwhile, is running up against a stark problem: traders are running out of places to keep it, with storage tanks close to full amid a collapse in demand as factories, automobiles and airplanes sit idle around the world.

Tanks at a key energy hub in Oklahoma could hit their limits within three weeks, according to Chris Midgley, head of analytics at S&P Global Platts. Because of that, traders are willing to pay others to take that oil for delivery in May off their hands, so long as they also take the burden of figuring out where to keep it.

“Almost by definition, crude oil has never fallen more than 100%, which is what happened today,” said Dave Ernsberger, global head of pricing and market insight at S&P Global Platts.

“I don’t think any of us can really believe what we saw today,” he said. “This kind of rewrites the economics of oil trading.”

Also exacerbating the volatility is that few traders are buying and selling US oil to be delivered in May. They won’t even have the opportunity to do so after Tuesday, when trading contracts for it expire and the earliest delivery they’ll be able to buy is for June.

Brent crude, the international standard, fell nearly 9% to $25.57 per barrel.

A dismal 2020

The plunge in oil sent energy stocks in the S&P 500 to a 3.7% loss, the latest in a dismal 2020 that has caused their prices to nearly halve.

Halliburton lurched between gains and sharp losses, even though it reported stronger results for the first three months of 2020 than analysts expected. The oilfield engineering company said that the pandemic has created so much turmoil in the industry that it “cannot reasonably estimate” how long the hit will last. It expects a further decline in revenue and profitability for the rest of 2020, particularly in North America.

The S&P 500 fell 51.40 points to 2,823.16. The Dow Jones Industrial Average lost 592.05 points, or 2.4%, to 23,650.44, and the Nasdaq dropped 89.41, or 1%, to 8,560.73.

The losses ate into some of the big gains indexes have made since late March, driven lately by investors anticipating the potential reopening of businesses as infections level off in hard-hit areas. Pessimists have called the rally overdone, pointing to the severe economic pain sweeping the world and continued uncertainty about how long it will last.

“The government can declare whatever they want in terms of encouraging people to get out and do stuff,” said Willie Delwiche, investment strategist at Baird. “Whether or not broad swaths of society do that remains to be seen. It’s going to take seeing people start to get out and do stuff again. That will be the necessary positive development, not just declaring getting things open.”

New stay-at-home economy

More gains from companies that are winners in the new stay-at-home economy helped limit the market’s losses. Netflix jumped 3.4% to set another record as people shut in at home look to fill their time. Amazon added 0.8%.

In Asia, Tokyo’s Nikkei 225 fell 1.1%. The Hang Seng index in Hong Kong lost 0.2%, and South Korea’s Kospi fell 0.8%.

European markets were modestly higher. The German DAX was up 0.5%, the French CAC 40 was up 0.7% and the FTSE 100 in London gained 0.7%.

In a sign of continued caution in the market, Treasury yields remained extremely low. The yield on the 10-year Treasury slipped to 0.62% from 0.65% late Friday.

Stocks have been on a general upward swing recently, and the S&P 500 just closed out its first back-to-back weekly gain since the market began selling off in February. Promises of massive aid for the economy and markets by the Federal Reserve and US government ignited the rally, which sent the S&P 500 up as much as 28.5% from a low on March 23.

More recently, countries around the world have tentatively eased up on business-shutdown restrictions put in place to slow the spread of the virus.

But health experts warn the pandemic is far from over and new flareups could ignite if governments rush to allow “normal” life to return prematurely. The S&P 500 remains nearly 17% below its record high as millions more US workers file for unemployment every week amid the shutdowns.

Many analysts also warn that some of the the recent rally for stocks is due to expectations the economy will pivot quickly and rebound sharply once economic quarantines are lifted. Those could prove to be too optimistic.

“There’s still uncertainty surrounding the reopening of the economy,” said Julian Emanuel, chief equity and derivatives strategist at BTIG. “Come fall, are we going to be back on airplanes? Are we going to go out and eat?”

Source:AP

The ranks of Americans thrown out of work by the coronavirus ballooned Thursday to more than 20 million in just four weeks, an unprecedented collapse fueling widening protests and propelling President Donald Trump’s push to relax the nation’s social distancing guidelines.

Trump planned to announce new recommendations later in the day, despite warnings from business leaders and governors that more testing and protective gear are needed first.

The government said 5.2 million more people applied for unemployment benefits last week, bringing the running total to about 22 million out of a U.S. work force of roughly 159 million — easily the worst stretch of U.S. job losses on record.

Some economists say the unemployment rate could reach 20% in April, the highest since the Great Depression of the 1930s.

While some leaders and citizens have called on government to reopen stores, factories and schools, health authorities and many politicians warned that returning to normal is a distant goal and that easing up on restrictions too soon could allow the virus to come storming back.

The decision of when and how to ease up rests with state and local leaders, who imposed the mandatory lockdowns and other restrictions put in place over the past month.

The outbreak has infected more than 2 million people worldwide and killed more than 137,000, according to a tally by Johns Hopkins University, though the true numbers are believed to be much higher. The death toll in the U.S. reached about 31,000, with over 600,000 confirmed infections.

Fallout from the virus spread in ways both predictable and devastating, from police torching an illicit food market in Zimbabwe, to emergency flights carrying foreign farm workers to Britain and Germany, and protests at U.S. state capitols against job losses.

In France, Amazon suspended operations after a court ruled it wasn’t doing enough to protect its workers in the country. The online retailer has six warehouses in France.

In Britain, a government survey found that a quarter of companies had suspended business. Cargo traffic at Europe’s massive port of Rotterdam in the Netherlands sank 9.3% in the first quarter from the same period a year ago, and its CEO warned of worse to come.

The World Health Organization’s European chief said optimism that the spread of the virus is declining in Italy, Spain and France has been tempered by the knowledge that it is rising or remaining at a high level in Britain, Russia and Turkey.

“The storm clouds of this pandemic still hang heavily over the European region,” Dr. Hans Kluge said.

On Wednesday, the U.S. reported that American industrial output shriveled in March, registering its biggest decline since the nation demobilized in 1946 at the end of World War II. Retail sales fell by an unprecedented 8.7%, with April expected to be far worse.

The International Monetary Fund said fallout from what it calls the “Great Lockdown” will be the most devastating since the Depression.

That has made leaders all the more anxious to send people back to work and school and to rebuild devastated economies.

Italy’s hardest-hit region of Lombardy is pushing to relaunch manufacturing on May 4, the day that the national lockdown is set to lift. Regional officials are considering ordering companies to stagger opening hours to avoid cramming public transportation.

But Italy’s deputy economic development minister, Stefan Buffagni, called the plan premature: “Going in a random order risks fueling confusion among citizens and businesses.”

In the U.S., thousands came out in Michigan and Oklahoma to protest the lockdowns they say have destroyed livelihoods.

In Michigan, some were masked and armed with rifles, but many unmasked people defied stay-at-home orders and jammed nearly shoulder-to-shoulder in front of the Capitol building in Lansing. In Oklahoma, cars plastered with protest signs drove past the Statehouse in Oklahoma City: “All jobs are essential,” read one sign on the back of a pickup truck.

“This arbitrary blanket spread of shutting down businesses, about putting all of these workers out of business, is just a disaster. It’s an economic disaster for Michigan,” said protester Meshawn Maddock.

In Michigan’s northern Leelanau County, Sheriff Mike Borkovich said enforcing the restrictions is taking a toll.

“People are frantic to get back to work. They have been very edgy,” he said.

Troubling data indicate the worst may still be to come in many parts of the world.

Japan’s prime minister announced he would expand a state of emergency to the entire country, rather than just urban areas, as the virus continued to spread. Japan has the world’s oldest population, and the elderly are especially vulnerable to the coronavirus.

The British government was set Thursday to extend a nationwide lockdown for several more weeks, as health officials say the coronavirus outbreak in the country is peaking. Britain awaited its first flight of Romanian farm workers, and more than 30,000 other workers registered for flights to Germany to help plant and harvest.

U.N. Secretary-General Antonio Guterres urged stepped-up efforts to prepare Africa for the virus, warning that the continent “could end up suffering the greatest impacts.”

In Zimbabwe, where food was scarce even before the outbreak, police raided a market, torching 3 tons of fresh fruit and vegetables and scattering farmers who had broken travel restrictions to try to sell their crops.

(AP)

It’s a grim truth that times are good for the coffin business when they’re bad for people, and the coronavirus pandemic is no exception.

At a factory belonging to Europe’s largest coffin maker, OGF, in eastern France, workers are doing overtime to meet demand from families parting with their loved ones.

“Due to the epidemic, we decided to manufacture just four models of coffins that are top sellers with families” compared to the 15 types usually on offer, said factory director Emmanuel Garret.

The change “allowed us to optimise production”, he added.

Output has risen to 410 coffins per day, compared to 370 normally.

Workers are putting in nearly an extra hour per day.

“People have been forewarned and are ready to come in and work on Saturdays,” said Didier Pidancet, who heads up the team that selects the wood for the coffins.

France has been one of the countries worst hit by the coronavirus.

“We’re proud to be participating in this national effort, we’re doing our best to ensure that victims can have their final overcoat, as we say,” added Pidancet.

– No shortages –

Founded in 1910, the factory in the town of Jussey originally produced wood charcoal and flooring. At the outset of World War II it began to specialise in making coffins.

It is now part of the OGF Group, which has two factories including the one at Jussey, and makes one in four coffins used in France.

The 10 hectare (25 acre) site is responsible for the entire process of producing coffins. It strips the logs, cuts then dries the wood, which is eventually crafted and assembled into coffins.

The wood, mostly oak, comes from local forests.

While temporarily cutting back on the number of models, the factory has made another adjustment: it has been making more larger coffins.

“Orders for larger sizes are up a bit,” said Garret, although he declined to draw a link to reports that COVID-19 mortality rates are higher for overweight people.

While many manufacturers have encountered problems as lockdown restrictions complicate deliveries, the Jussey factory is well stocked.

“We’re OK, we have three months of stocks of wood, glue, nails and varnish,” said Garret.

– ‘Play our part’ –

Some of the factory’s workers are no strangers to previous surges in deaths.

“During the 2003 heatwave we increased production to 500 caskets a day,” said David Theurez, a 30-year veteran at the site.

The heatwave, which claimed nearly 15,000 lives in France, was in some ways more difficult for the factory as they had no warning and had to call workers back from vacation.

“But today, it’s a bit different, you have to protect yourself as well with masks and gloves,” said Theurez.

“It’s a collective crisis, we all have to make an effort and play our part,” he added.

The factory’s workers themselves haven’t gone unscathed: three have come down with COVID-19.

Fifteen others are at home, forced into isolation by existing serious health issues, or because they have to mind their children as school has been cancelled.

Like many other French companies, the factory has had difficulty obtaining protective gear for all of its employees.

It had a local seamstress make masks for employees and work stations are disinfected regularly.

The factory’s director thinks that the rapid adoption of social distancing measures and protective gear has helped them avoid more cases as eastern France has been hard hit with coronavirus infections.

“Fingers crossed,” said Garret.

Source:  AFP