Egypt to halt flights from Thursday to stem spread of coronavirus

Tourists take Luxor-bound EgyptAir flight from Cairo International Airport in Cairo, Egypt October 9, 2019. Picture taken October 9, 2019. (Reuters)
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Updated 16 March 2020

Egypt to halt flights from Thursday to stem spread of coronavirus

CAIRO: Egypt will halt all air traffic at its airports from Thursday until March 31 to prevent the spread of coronavirus, Prime Minister Mostafa Madbouly said on Monday.
Egypt will sanitize hotels and tourist sites during the closure, he said in a news conference, adding that tourists now in the country would be able to complete their vacations.
Madbouly said Egypt’s strategic reserves of key commodities would last for months and there was no need for people to stock up.
He said local firms in the aviation sector would suffer losses of 2.25 billion Egyptian pounds ($143 million) due to the latest measures. The last plane allowed to depart would leave on Thursday, March 19, at noon.
Tourism is a key sector for the most populous Arab country. Tourism revenue rose to a record high of $12.57 billion in the financial year that ended in July.
Revenue continued to rise in the July-Sept quarter, the latest data published by the central bank, to $4.19 billion, the country’s best quarter ever.
Egypt closed schools and universities for two weeks on Sunday to prevent the spread of coronavirus. The number of cases rose to 150, information minister Osama Haikal said on Monday, up from 126 reported by Sunday.
Three people in Egypt have died from the virus.
Analysts have hailed Egypt for reforms tied to a $12 billion loan program with the International Monetary Fund agreed in 2016, which included devaluing the currency by about half, cutting energy subsidies and introducing a value-added tax.
Analysts say the spread of the virus makes Egypt, with its large tourism industry, vulnerable. A global trade downturn could also hurt Suez canal revenues, which came to $5.7 billion in 2019.
Lower oil prices will likely be neutral, since Egypt’s bill for hydrocarbon imports, at $15.5 billion, is virtually equal to what it earns from exports, mainly natural gas.
Worker remittances worth $25 billion annually could fall if Gulf countries, the biggest employer of expatriate Egyptians, scale back projects.
Several Gulf oil producers have halted or restricted international passenger flights to combat coronavirus. ($1 = 15.7500 Egyptian pounds)


S&P cuts Australia’s sovereign outlook, affirms AAA rating

Updated 08 April 2020

S&P cuts Australia’s sovereign outlook, affirms AAA rating

  • S&P affirmed Australia’s prized rating but said a downgrade was possible within the next two years
  • Australian long-dated bonds sold off after S&P’s outlook downgrade

SYDNEY: Global ratings agency S&P on Wednesday lowered its outlook on Australia’s coveted ‘AAA’ rating to “negative” from “stable” in anticipation of a “material” weakening in the government’s debt position as it splashes out a large fiscal stimulus package.
S&P affirmed Australia’s prized rating but said a downgrade was possible within the next two years if the economic damage from the COVID-19 outbreak is more severe or prolonged than it currently expects.
Australia is among a handful of countries in the world to boast the best ranking from all three major ratings agencies.
But it has come under a cloud as the pandemic has dealt Australia a severe economic and fiscal shock, with S&P predicting the A$2 trillion ($1.23 trillion) economy would plunge into recession for the first time in nearly 30 years.
This would cause a “substantial deterioration of the government’s fiscal headroom at the ‘AAA’ rating level,” S&P said in a statement.
Treasurer Josh Frydenberg said the outlook downgrade was “a reminder of the importance of maintaining our commitment to medium term fiscal sustainability.”
The government has pledged A$320 billion ($197.73 billion) in fiscal spending, or 16.4 percent of annual economic output, to backstop the economy and prevent a crisis as the pandemic shuts companies and leaves many unemployed.
Some fund managers said Wednesday’s outlook downgrade was unlikely to raise the government’s borrowing costs by much though it could hurt Australian companies whose ratings are dependent on the sovereign rating.
“A large proportion of credit funds are mandated to maintain funds in a specific ratings bucket,” said Asmita Kulkarni, Director Investment Strategy at FIIG.
“With potential widespread downgrades we could see funds being forced to sell-down investment which would result in a widening of credit spreads.”
Australian long-dated bonds sold off after S&P’s outlook downgrade with 10-year yields jumping to 0.967 percent from 0.909 percent at Tuesday’s close.
Economists said they do not expect a rating downgrade prior to the federal budget due on Oct. 6.
It was only in September 2018 that S&P upgraded Australia’s outlook to “stable” from “negative” as the budget came close to balance. The government had even projected a surplus for the current fiscal year and next.
While all those predictions are now under water, Australia’s public debt is still in good shape, S&P noted.
“While fiscal stimulus measures will soften the blow presented by the COVID-19 outbreak and weigh heavily on public finances in the immediate future, they won’t structurally weaken Australia’s fiscal position,” S&P said.
“This expected improvement is a key supporting factor of our ‘AAA’ rating.”