Swiss spooked by using debt to prop up economy

Swiss spooked by using debt to prop up economy
With Swiss firms struggling through another lockdown, the federal government last week finally loosened its purse strings a bit. (File/AFP)
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Updated 21 February 2021

Swiss spooked by using debt to prop up economy

Swiss spooked by using debt to prop up economy
  • Some 10 billion francs in debt will have to be paid off within six years according to a constitutional debt brake rule

ZURICH: Germany, which is known for strict budgets, has tapped debt markets to prop up its virus-hit economy, while neighboring Switzerland has consistently curbed borrowing despite calls to change course.
With Swiss firms struggling through another lockdown, the federal government last week finally loosened its purse strings a bit, doubling emergency aid to 10 billion Swiss francs ($11.2 billion, 9.3 billion euros) as part of a program to boost the economy.
But when he presented the package for companies worst hit by the latest Covid restrictions, Finance Minister Ueli Maurer again lamented that Switzerland had to borrow to boost the economy.
Some 10 billion francs in debt will have to be paid off within six years according to a constitutional debt brake rule, Maurer warned.
He promised to present various options to do so as soon as the economic outlook cleared a bit.
Despite mounting criticism that the wealthy Alpine nation isn’t doing enough to support companies, Maurer has repeated time and again that the Swiss government has “no money.”
The government is already borrowing “150 million francs a day, or six million per hour, or 100,000 a minute,” he notes.
In 2020, Switzerland’s federal government spent 15 billion francs ($16.7 billion, 13.8 billion euros) to support the economy, and preliminary data shows it ended the year with a deficit of 15.8 billion ($17.6 billion, 14.5 billion euros).

Some have called for Switzerland to put balanced budget dogma aside during the crisis, to protect against potential long-term economic damage.
“Switzerland could be much more generous,” said Michael Graff, an economics professor at ETH Zurich, a public research university.
He believes the country could borrow what it needed to boost business activity without a problem.
A study published by Graff in January argued the nation’s post-crisis finances would remain healthy even if borrowing rose, primarily because the country entered the pandemic with one of the world’s lowest debt ratios.
National debt stood at 25.8 percent of gross domestic product (GDP) at the end of 2019.
That was less than half the European Union’s widely breached target of 60 percent.
According to Graff, if the Swiss debt ratio rose by 10 percentage points, or even 20, and “if things take a turn much worse than expected” the country would still be at a level that is “extremely low, compared to other nations, once the crisis is overcome.”
If Switzerland is in some ways a very liberal nation, Graff pointed to a “public debt phobia” which he said was a cultural trait.
After debt soared at the end of the 1990s owing to a crushing real-estate crisis, Switzerland became a champion of fiscal rectitude, introducing a debt brake into its constitution in 2003.

“This fear of going into debt is something irrational,” argued Cedric Tille, an economics professor at Geneva’s Graduate Institute of International and Development Studies.
This is especially so, he said, because Switzerland currently benefits from negative interest rates, which means investors are willing to lose money to own Swiss 10-year bonds.
Former Swiss central bank vice president Jean-Pierre Danthine believes the country’s debt brake rule should be suspended when the economy is facing a crisis.
With negative rates, Switzerland can borrow “all it needs for its economy,” he said in a recent interview with Leman Bleu television.
The country did not suffer as badly as some European neighbors during the first wave of the pandemic moreover, and its economy has fared better.
It was able to ease restrictions faster and count on strong pharmaceutical exports.
The Swiss government rapidly implemented economic support measures and allocated 70 billion francs ($78 billion, 64 billion euros) to finance partial unemployment benefits for workers and short-term business loans.
After falling by 8.6 percent in the first half of the year, Swiss GDP rebounded with a 7.2-percent gain in the third quarter.
But after infections surged again, cafes, restaurants, theaters, cinemas, museums and sports clubs were closed in mid-December and all non-essential shops followed a month later.
Shops are slated to reopen on March 1, but some fear the shutdown will lead to a wave of bankruptcies at small- and medium-sized businesses.
“For the second wave, they should have distributed aid much earlier to cover lost revenue,” remarked Rafael Lalive, an economics professor at the University of Lausanne.


Abu Dhabi opens up free COVID-19 vaccines to tourists

Abu Dhabi opens up free COVID-19 vaccines to tourists
Updated 9 min 34 sec ago

Abu Dhabi opens up free COVID-19 vaccines to tourists

Abu Dhabi opens up free COVID-19 vaccines to tourists
  • Infections have risen in the UAE in the past month, and Abu Dhabi still has restrictions on entry, including home quarantine and PCR testing at intervals after arrival

DUBAI: Abu Dhabi, the capital of the United Arab Emirates, is offering tourists free COVID-19 vaccinations that were previously restricted to UAE citizens and residency visa holders.
There is no indication that the change applies to Dubai, the most populous emirate, or the other five emirates that make up the UAE.
Visitors with visas issued by Abu Dhabi and passport holders eligible for tourist visas when they arrive in the UAE through Abu Dhabi can book free vaccines, according to information provided by the Abu Dhabi Health Services Company (SEHA), which operates the emirate’s public health infrastructure.
Holders of expired residency or entry visas are also eligible for free vaccinations, Abu Dhabi Media Office said on June 11.
Job losses and travel restrictions during the pandemic mean some people’s residency visas have expired or have been canceled when they were made redundant.
UAE Health authorities said this month nearly 85 percent of the eligible population had received at least one vaccine dose, but did not say how many had had two doses.
Infections have risen in the UAE in the past month, and Abu Dhabi still has restrictions on entry, including home quarantine and PCR testing at intervals after arrival. People driving from other emirates are tested to show they are not infected.
Travelers from 27 countries including China, Germany and the United States can enter without quarantine on arrival.
SEHA offers COVID-19 vaccines by China’s state-owned drugmaker Sinopharm and by Pfizer/BioNTech in Abu Dhabi.
Dubai Media Office did not immediately respond to a request for comment on whether eligibility criteria was to change. Dubai Health Authority information says vaccines are given only to citizens and holders of valid Dubai residency visas.


OPEC+ said to discuss gradual oil output rise from August

OPEC+ said to discuss gradual oil output rise from August
Updated 18 min 47 sec ago

OPEC+ said to discuss gradual oil output rise from August

OPEC+ said to discuss gradual oil output rise from August
  • OPEC+ is returning 2.1 million barrels per day (bpd) to the market from May through July as part of a plan to gradually unwind last year’s record oil output curbs

DUBAI: OPEC+ is discussing a further gradual increase in oil output from August as oil prices rise on demand recovery, but no decision had been taken on the exact volume yet, two OPEC+ sources familiar with the talks said on Tuesday.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, is returning 2.1 million barrels per day (bpd) to the market from May through July as part of a plan to gradually unwind last year’s record oil output curbs. OPEC+ meets next on July 1.
“It is highly possible to increase gradually from August,” said one of the sources, adding that no final decision had been made and the exact volumes are yet to be agreed on.
Crude oil prices rose on Tuesday, with Brent hitting $75 per barrel for the first time since April 2019, as investors remained bullish about recovery in oil demand and concerns eased over a quick return of Iranian crude to the market.


Does Iceland tourism rebound provide hope for Dubai?

Does Iceland tourism rebound provide hope for Dubai?
Updated 37 min 57 sec ago

Does Iceland tourism rebound provide hope for Dubai?

Does Iceland tourism rebound provide hope for Dubai?
  • Dubai is traditionally a popular destination for British holidaymakers
  • Britain is working on easing travel restrictions for fully vaccinated people to allow them to take a summer holiday

DUBAI: Iceland’s fourteen-fold increase in tourist arrivals in May compared to a year earlier highlights the extent of pent up demand for travel and could provide lessons for other emerging economies, according to research group Tellimer.

Similar to Dubai around the turn of the year, Iceland is currently demonstrating the pent-up demand for tourism, Tellimer said in a strategy note on Tuesday.
“I can attest to the unpleasant experience of spending 11 nights in a UK government quarantine hotel. I traveled from the UAE, which is a “red list” country despite doing a much better job of managing Covid than many on the UK’s “amber list,” and despite being personally very fortunate, by global standards, to have two doses of the Pfizer vaccine by virtue of being a Dubai resident,” said report author Hasnain Mailk. “If I had more time the route I might have taken would have been to spend ten days in Iceland, which is on the UK’s ‘green list.’”
Proof of vaccine means tourists can enter Iceland, take a free PCR test on arrival, and start their holiday with minimum fuss.
“Iceland, like other tourism destinations, is doing whatever it takes to re-open, but, of course, the resumption of tourism also requires a cooperative, competent, and unbiased policy from the country of a visitor’s origin or ultimate destination,” said Malik. “In the last two months, Iceland is providing an example of how vast the pent-up demand is for international tourism. It follows a similar experience in Dubai around the turn of the year. It remains to be seen whether there is a similar spike in infections as seen in Dubai (which subsequently moderated).”
Dubai, which has been urging UK authorities to ease travel restrictions to the emirate, is traditionally a popular destination for British holidaymakers.
Britain is working on easing travel restrictions for fully vaccinated people to allow them to take a summer holiday, UK Health Secretary Matt Hancock said on Tuesday. However the plans are not yet finalized.


Dubai’s Tabby gets $50m in debt financing

Dubai’s Tabby gets $50m in debt financing
Updated 41 min 50 sec ago

Dubai’s Tabby gets $50m in debt financing

Dubai’s Tabby gets $50m in debt financing
  • The investment came from US-based Partners for Growth (PFG)
  • It will be used to expand Tabby’s lending capacity

DUBAI: Tabby, a Dubai-based buy now, pay later service, has raised $50 million in debt financing.
The investment came from US-based Partners for Growth (PFG), and will be used to expand Tabby’s lending capacity, it said in a statement.
Transaction volumes and merchant numbers of the platform have significantly increased since it was founded in 2019, CEO Hosam Arab said.
“It was essential for us to partner with an organization that would support our current and long-term growth,” he added, referring to the PFG investment.
The global lending firm has particularly focused on emerging growth companies, providing debt facilities to up and coming startups such as Tabby.
“Tabby is one of the fastest growing companies in the MENA region and they have an attractive market opportunity ahead,” Max Penel, PFG’s investment director, said.
 “We are excited to support the tabby team and provide financing that can enable tabby to scale the platform, harnessing the continuous growth of the buy now pay later sector both regionally and globally,” he added.


Egypt wants to export surplus gas to Europe through Greece

Egypt wants to export surplus gas to Europe through Greece
Updated 22 June 2021

Egypt wants to export surplus gas to Europe through Greece

Egypt wants to export surplus gas to Europe through Greece
  • It is part of a wider push to boost cooperation across energy and electrical grid interconnection across the island of Crete

RIYADH: Egyptian Prime Minister Mostafa Madbouly said he wanted to work with the Greek government to export surplus natural gas to Europe.
It is part of a wider push to boost cooperation across energy and electrical grid interconnection across the island of Crete, which lies midway between the North African country and mainland Greece.
He made the disclosure during talks in Cairo on Monday between Egypt and Greece, co-chaired by Madbouly and his Greek counterpart Kyriakos Mitsotakis, Al Arabiya reported.
A number of recent offshore gas finds in the Eastern Mediterranean are rapidly redrawing Europe's energy landscape and shifting the balance of power as more countries move towards self-sufficiency in gas.
At the same time some countries in the region are also exploring the potential to link their power grids to allow the movement of electricity across borders.
It could potentially lead to Gulf Arab states exporting power north to Europe during the winter months when demand is high for heating and for European countries to share their excess power in the summer months, when demand rises in the Gulf, driven by rising air conditioning consumption.