How Abu Dhabi airports is facilitating inbound, outbound repatriation flights for Etihad
Abu Dhabi Airports, in partnership with Etihad Airways, is facilitating a significant number of special flights from the UAE capital to 14 destinations, and repatriation flights for UAE nationals and residents to Abu Dhabi from 12 destinations, until May 30.
“The health and safety of passengers, staff and stakeholders are our top priority. We are continuing to comply with the directives of the UAE authorities including the Abu Dhabi Government, General Civil Aviation Authority, Department of Health, and Ministry of Health and Prevention in order to implement a comprehensive suite of measures across Abu Dhabi International Airport and facilitate these important flights,” Abu Dhabi Airports said in a statement.
“Thermal screening is taking place at passenger and staff entrances and Covid-19 Polymerase Chain Reaction (PCR) testing is available for all passengers and employees. We are also conducting regular risk assessments in coordination with Etihad Airways medical teams and enforcing strict social distancing guidelines at all times.”
Additionally, all workspaces and common areas throughout the airport continue to be sterilised with the support of the recently launched specialised CoDI BOT UGV robots, deployed in partnership with Tawazun Strategic Development Fund and designed to sterilise staff areas, cargo facilities and passenger aircraft cabins.
“We will continue to coordinate with the authorities and our industry partners to offer all the support necessary to bolster our collective efforts to protect public health at this critical time,” it said.
Dubai leads GCC stock market fall in early trade
The UAE and other GCC stock markets fell on Thursday morning, in line with decline in other global markets.
Dubai bourse led the regional fall, losing 1.8 percent to 1,886.5 points in the morning trade. Blue-chip property and banking scrips pushed the Dubai index lower. Emirates NBD lost 2.6 percent, Dubai Islamic Bank dropped 1.5 percent, Emaar Properties sank 2.5 percent and Emaar Development dipped over one percent.
Out of 24 traded stocks, only two were trading in positive territory.
Abu Dhabi Securities Exchange also lost 0.33 percent to 4,045, led by First Abu Dhabi Bank, Abu Dhabi Islamic Bank and Aldar Properties. FAB on Wednesday announced exposures to global commodities trading firm Phoenix Commodities, which went into liquidation last week.
The regional bourses took the cue from the global markets on Thursday. Asian markets were also lower on Thursday morning. The S&P 500 and Dow slipped on Wednesday as Federal Reserve Chairman Jerome Powell warned of an extended period of weak growth and stagnant incomes, while he also dismissed speculation over negative interest rates.
The region’s largest bourse, Saudi Arabia’s Tadawul, also dipped by 0.15 percent within a few minutes of opening the trade.
Both Bahrain Bourse and Muscat Securities Market were down 0.4 percent while Boursa Kuwait was unchanged in the morning trade.
GCC to survive oil shock
The GCC countries will massively tap their fiscal and sovereign wealth reserves to the tune of half a trillion dirhams to cover budget deficit this year due to low oil income and to offset impact of coronavirus on their economies, says a latest report.
Fitch Ratings expects around $140 billion (Dh513.8 billion) in drawdowns from fiscal reserves and sovereign wealth funds by GCC countries in 2020 compared with only about $10 billion last year. The region will also raise an additional $48 billion (Dh176 billion) in foreign debt this year, the report said.
“Wider fiscal deficits will lead to higher debt and drawdowns of fiscal reserves. In 2020, we expect the GCC funding mix to shift in favour of drawdowns from fiscal reserves. We anticipate that the GCC to issue around $48 billion in foreign debt this year, of which $30 billion has already been issued, roughly in line with last year,” said Krisjanis Krustins, analyst at Fitch Ratings, said.
The reserve drawdown is likely to be led by Kuwait, Saudi Arabia and Abu Dhabi. “For Abu Dhabi, Kuwait and Qatar, sovereign wealth fund assets will remain sufficient to cover years of spending and nearly a decade in non-oil deficits, although in Kuwait’s case accessing the bulk of SWF assets will require parliamentary approval. Economic contraction will even increase the headline ratio of sovereign net foreign assets to GDP,” Fitch Ratings said.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, also said GCC funding requirements will rise significantly in 2020 as fiscal deficits widen.
“Saudi Arabia still has buffers, although will find it hard to make progress with its transformation plan with the lower oil price outlook. The UAE, Kuwait and Qatar have ample reserves and generally lower debt levels to withstand the weak oil price environment. Nevertheless, among the stronger sovereigns in the region, Kuwait is forecast to see a marked deterioration in its fiscal position with oil income dominating revenues,” she said in a recently-issued note.
Fitch said oil production cuts announced by some of the GCC nations this week will deepen their fiscal deficit and hinder growth in 2020, according to Fitch Ratings.
“We now expect most GCC sovereigns to post fiscal deficits of 15 to 25 percent of GDP in 2020, with only Qatar’s deficit staying in the single digits at eight percent of GDP. This assumes an average Brent oil price of $35 per barrel and full compliance with the Opec+ deal to limit production. This also assumes that the additional cuts announced by Saudi Arabia, Abu Dhabi and Kuwait will last until the end of the year,” said Krustins.
UAE can face problems in post-covid-19 phase
Mariam bint Mohammed Saeed Hareb Al Mheiri, Minister of State for Food Security, on Tuesday confirmed that the UAE food security is maintained and its food system is capable of facing the potential challenges of the post-Covid-19 phase.
In the session entitled, “Implications of Covid-19 on the UAE: Risks and Opportunities”, she said the current situation will change the world’s perspective on food security. The session took place on the second day of the UAE Digital Government Meeting, “Preparations for thep-Covid-19 phase”. to develop the UAE’s strategy for the post-Covis-19 period.
Al Mheiri stressed that, despite the challenges of coronavirus pandemic, it also offers many opportunities for the food sector in the UAE, which proved to be highly equipped and resilient. The UAE successfully secured food supplies in all the country’s markets, thanks to the efforts and cooperation of all stakeholders.
Al Mheiri highlighted the main pillars of food security in the post-Covid-19 phase, including increasing local food production as a top priority, especially as the local production is of high quality, easily provided to local markets, and helps overcome imports challenges. She added that in the post-Covid-19 phase, governments will focus on adopting modern agricultural technologies and utilising renewable natural resources in food production.
The second pillar is providing a business-friendly environment that attracts foreign investments, as the coming period will witness increasing partnerships to launch investment incentives packages and promote agricultural and food projects that cater to the plans of increasing local production.
The third pillar is developing various criteria for evaluating external agricultural investment opportunities, including the ease of product access to the markets of the investing countries and the commitment to external agricultural investment and product export. These projects aim to support the food security system in countries with limited natural re-sources, thus changing the external agricultural investment landscape.
Abu Dhabi per capita income substantially higher
Abu Dhabi’s per capita income is substantially higher than its sovereign peers including the GCC countries, according to Moody’s Investors Service.
The UAE capital boasts per capita income of $153,682 (Dh564,000) as compared to $64,199 (Dh235,600) for Hong Kong, $74,357 for Norway, $55,730 for Saudi Arabia, $53,651 for Sweden and $66,652 for Kuwait.
With an estimated nominal GDP of $244 billion as of 2019, Abu Dhabi makes up about 60 percent of the UAE economy and is bigger than both Qatar and Kuwait, said Thaddeus Best, an analyst at Moody’s Investors Service.
However, the rating agency warned that its oil income will shrink 30 percent this year in the wake of crash in crude prices and outbreak of coronavirus.
Moody’s estimated Abu Dhabi ran a modest budget deficit of 0.3 percent of GDP in 2019, a significant reversal from the 6.4 percent deficit of 2016, due to increasing oil prices.
“Our baseline oil price forecast of $35 a barrel in 2020 and $45 per barrel in 2021 imply oil revenues will be 30 percent and 19 percent below estimated 2019 levels, respectively. Nonetheless, we understand that the government is planning to implement cuts to aid payments, grants and other transfers, in order to reduce the impact on the overall deficit,” he said in annual credit analysis report.
It forecast Abu Dhabi’s budget deficit to increase to 6.3 percent of GDP in 2020, narrowing to 5.1 percent of GDP in 2021
The UAE capital also compares favourably to its direct peers in terms of economic strength, primarily due to one of the highest wealth levels in our rated universe and a high level of competitiveness. The emirate benefits from a relatively effective institutional framework, supported by strong fiscal policy effectiveness and a strong and credible currency peg managed by the central bank of the UAE.
Businesses told to get ready for digital economy-driven recovery
The UAE private sector should be prepared for the evolving digital economy phase that will drive the recovery from the Covid-inflicted setback, the UAE Minister of Economy Sultan bin Saeed Al Mansouri said on Tuesday, while stressing the need for striking a balance between health and economy by easing lockdown measures gradually.
The minister said the UAE has developed a systematic response plan for economic sustainability and business continuity and asserted that the future of the economy would “rely on encouraging national industries, securing the provision of necessities, exploring the diversification of industrial imports, and aligning economic policies with global changes in the short and long term.”
“The UAE economy, which has strong fundamentals that enhance its ability to overcome crises and achieve leadership, has a competitive resilient economy that is linked with other global markets and not immune to global repercussions,” Mansouri said.
He called for a gradual opening of the economy and businesses, while adhering to the precautionary measures and providing stimulus plans as part of a long-term plan to accelerate recovery and advance growth.
He said the economic strategy framework consists of two main phases. The first one is the short-term phase, which includes the gradual opening of the economy and businesses while adhering to the precautionary measures, providing massive stimulus plans of total Dh282.5 billion to the sectors most affected by the crisis, supporting SMEs, and linking the funds to beneficiaries through effective schemes and plans. The second phase is the long-term stimulus package to accelerate recovery, advance growth, transform challenges into opportunities to achieve sustainable economic growth, and encourage investment in sectors with high potential, most notably digital economy.
ECI recovers payments from US firm
The UAE’s federal export credit company – Etihad Credit Insurance (ECI) – has helped Safetex Group to recover a multi-million payments from Hollander, the largest worldwide producer of utility bedding products, located in North America.
The US company has more than 100 years of history and owns the number one brand of down and feather bedding.
Safetex’s Emirates Fiber Industries plant in Ras Al Khaimah – the first to produce polyester staple fiber in the UAE via an automatic plant – was well positioned to supply Hollander’s growing orders. Safetex gave Hollander an open account with a limit of $1 million. So what could go wrong?
Hollander filed for bankruptcy at the Southern District of New York. “On the midnight of May 18, 2019, I got a call from an Etihad Credit Insurance risk specialist, saying that Hollander filed for Chapter 11. That was a shocking news because all those days, I was talking to them, discussing new orders and shipments,” recalled Muhammad Saleem Ahmed, Chairman and CEO of Safetex Group.
Fortunately for Safetex, its business transactions were already insured by ECI. Haitham Al Khazaleh, Risk Director of ECI, said: “Emirates Fiber had a multi-million-dollar annual business transactions with this buyer in the US, which is covered through a revolving limit by ECI. As the buyer entered into the Chapter 11 proceeding, ECI followed up immediately and worked with different legal partners in the US to secure part of the debt and make sure Emirates Fiber is considered a secured creditor. As a result, Emirates Fiber was able to recover a very important portion of the debt during the process and ECI has indemnified the difference and remaining unpaid balance.”
“It could have been a huge setback enough to make us go bust. That coverage from ECI saved us from an impending fall at that time,” Ahmed said.
ECI said that many overseas defaults are not being taken to court. Since credit transactions are often not covered, uninsured companies see the fact that litigation costs would only expend much of the sum at stake.
Massimo Falcioni, CEO of ECI, highlighted that collecting payments is SMEs’ single biggest challenge in managing cashflow, while non-payments and bad-debts are two of the top reasons why businesses fail. And considering the COVID-19 implications in businesses, companies should be taking action in protecting their receivables, now more than ever.
“It is ECI’s mandate as a federal company to support UAE businesses with solutions that meet their growth objectives locally and internationally,” Falcioni said.