Mexico, one of the countries hardest hit by the coronavirus around the world, has fallen short in providing as much stimulus funding as it would have liked — and far less than in developed countries — largely because of the structural challenges that have held it and the rest of Latin America back for decades.
In comparison, developed economies like Canada, Germany, Japan, the United Kingdom and the United States have been able to spend more on economic stimulus because of their low borrowing costs.
Mexico's central bank cut the overnight interbank lending rate by 50 basis points to 5% on Thursday. But the US Federal Reserves cut its benchmark rate to 0.25% in March from 1.75% the previous month, while the Bank of England slashed its rate to 0.1% from 0.75% in the same period.
The Inter-American Development Bank (IDB) has agreed to redirect $500 million in funding to help micro, small and medium-sized enterprises (MSMEs) in Argentina recover from the economic effects of the COVID-19 pandemic.
The redirected funds will go to medium-term loans for MSMEs to cover liquidity needs, pay bills to vendors and refinance existing loans, among other purposes, the IDB said. "It will also help them deal with a temporary rise in demand as a result of the crisis".
The Argentine government plans to grant financing through the national productive development fund Fondep and put up money from the federal guarantee fund Fogar to back loans from financial institutions, according to the IDB.
The Federal Reserve put new restrictions on the U.S. banking industry Thursday after its annual stress test found that several banks could get uncomfortably close to minimum capital levels in scenarios tied to the coronavirus pandemic.
The Fed said in a release that big banks will be required to suspend share buybacks and cap dividend payments at their current level for the third quarter of this year. The regulator also said that it would only allow dividends to be paid based on a formula tied to a bank’s recent earnings.
A recovery in 2021 also will be weaker, with global growth forecast at 5.4% for the year compared to 5.8% in the April forecast. The Fund said, however, that a major new outbreak in 2021 could shrink the year’s growth to a barely perceptible 0.5%.
The Federal Reserve’s stash of assets shrank for a second straight week as foreign central banks once again sharply cut their use of currency swaps and U.S. banks further dialed back their use of Fed repurchase agreements.
The size of the Fed’s balance sheet - composed of assets ranging from U.S. Treasury bonds and mortgage-backed securities to loans to banks and state governments - fell to $7.13 trillion on June 24 from $7.14 trillion a week earlier, data released by the Fed showed on Thursday.
The Inter-American Development Bank (IDB) has granted $400 million in financing for Panama and $250 million for Costa Rica to help counteract the economic effects of the COVID-19 pandemic in the two countries.
Both loans are in line with a rapid financing program approved by the International Monetary Fund (IMF) in April to cover emergency healthcare costs and contribute to macroeconomic stability in the medium term.
To receive the money, the Panamanian government agreed to implement measures to ensure a stable balance of payments and a sustainable public debt-to-GDP ratio. It also agreed consented to "ensure fiscal sustainability" after the healthcare crisis is over.
Chile's Finance Ministry said Thursday that it has presented a bill to Congress that allows the central bank to buy debt issued by the treasury in the secondary market as a way to help underpin the financial system when exceptional circumstances, such as a pandemic, strike.
The purpose of the measure is to boost the central bank’s capacity to mitigate risks and secure stability in the financial system in critical economic situations like the one brought about by the coronavirus pandemic. It is not meant to be used to finance government expenditures.
The new ability is expected to improve the bank’s capacity to influence the long-term interest rate through non-conventional policies. Through purchases of public debt in the secondary market, the central bank would inject liquidity into the financial system and ensure the normal functioning of internal and external payments.
Oil prices rose on Tuesday after a volatile session sparked by confusion over the status of the U.S.-China trade deal.
Brent crude rose 80 cents, or 1.86%, to $43.88 a barrel, having skidded to a session low of $42.21. West Texas Intermediate was up 81 cents, or 2%, at $41.55 a barrel after touching a low of $39.76.
U.S-China relations have reached their lowest point in years since the coronavirus pandemic that began in China hit the United States hard. President Trump and his administration have repeatedly accused Beijing of not being transparent about the outbreak.
The German economy will shrink by 6.5% this year due to the coronavirus pandemic, the government’s council of economic advisors said on Tuesday, adding that the slump will be prolonged if the number of new infections jumps.
The bleak outlook came after the premier of Germany’s most populous state, North Rhine-Westphalia, put the Guetersloh region back into lockdown until June 30 following a coronavirus outbreak at a meatpacking plant there.
The Ministry of Industry, Commerce, Agriculture and Fisheries has developed a National Five-Year Manufacturing Growth Strategy for Jamaica, aimed at achieving $81 billion per annum in manufacturing output by 2025.
“This translates to an approximate annual average growth rate of three per cent over the five-year period,” said Portfolio Minister, Hon. Audley Shaw.
The key objectives being proposed are enhanced workforce productivity via a core training curriculum for manufacturing; improved cost competitiveness, including access to finance; expanded infrastructure, including provision of suitable factory space and addressing transportation logistics challenges; facilitation of market expansion; and incorporation of innovation strategies.
Minister Shaw said that the expected results from the implementation of the five-year manufacturing growth strategy include, inter alia, increased jobs in the manufacturing industry; increased foreign and local direct investment; increased attractiveness of Jamaica as a location for manufacturing; increased ability for local manufacturers to supply products into the domestic market, thereby reducing the level of the country’s imports; and increased export sales of manufactured goods.
The EX-IM Bank will be disbursing at least $8.1 billion in loans to micro, small and medium-sized enterprises (MSMEs) this fiscal year. This is an increase over the $6 billion in financing to the MSME sector for 2019/2020.
Minister of Industry Commerce, Agriculture and Fisheries, Hon. Audley Shaw, said that the increased support “is particularly within the context of the challenges being faced by MSMEs because of the COVID-19 pandemic”.
Minister Shaw said that the EX-IM Bank’s programmes will seek to incorporate new and innovative approaches, including the increased use of trade credit insurance, receivables financing, digitisation and e-commerce, and trade credit guarantees.
In addition, the Bank will continue to work closely with its public- and private-sector counterparts to support the provision of business advisory services geared at allowing MSMEs to pivot to increased exports as well as navigate through the crisis to recovery.
