Americas: COVID-19, low oil prices hit Ecuador, Fitch cuts sovereign credit rating to ‘CCC’

Sectors: all; mining
Key Risks: business and economic risks; sovereign default

In Ecuador, plummeting oil prices and the ongoing COVID-19 outbreak will continue to heighten sovereign default and business disruption risks. On 20 March authorities announced that Canada’s Lundin Gold’s Fruta del Norte gold mine and Chinese consortium CRCC-Tongguan’s Mirador copper mine were temporarily scaling down operations amid a nationwide 14-day state of emergency declared on 16 March over COVID-19. The country’s largest mines will reportedly operate ‘at the bare minimum’ at least as long as the measures remain in place. Meanwhile, on 19 March Fitch Ratings cut Ecuador’s sovereign credit rating two notches to ‘CCC’ from ‘B-’ citing greater risks to sovereign debt repayment capacity following the recent plunge in oil prices, the impossibility to access capital markets and the potential for further delays in the disbursement of IMF funds. Further downgrades, business disruption and protracted emergency measures should be expected.

Asia-Pacific: Countries across Asia Pacific implement lockdown measures

Sectors: all
Key Risks: business and economic risks; travel disruption

Countries across the Asia Pacific region have implemented new lockdown measures as part of efforts to curb the spread of COVID-19. On 23 March Australia implemented new lockdown measures in which supermarkets, pharmacies, freight and retail will continue to trade, while cafes and restaurants will only be able to offer takeaway and delivery services. Prime Minister Jacinda Ardern said New Zealand will move to its highest alert level, with all non-essential services, schools and offices to be shut over the next 48 hours. The Philippines was the first Asia Pacific country outside of mainland China to adopt lockdown measures, but as COVID-19 cases have increased Malaysia, Indonesia, Vietnam, Thailand and Cambodia have also adopted lockdown measures of varying severity. Further lockdown measures across the Asia Pacific region are likely as the number of confirmed COVID 19 cases continue to increase.

Eurasia: Uzbekistan implements travel restrictions; Kazakhstan state handouts; Russia mulls Moscow shutdown

Sectors: all
Key Risks: economic risks; travel disruption; contract frustration

Uzbekistan’s authorities sealed off Tashkent, apart from the transport of goods and for people with residence permits in the city adding to already implemented restrictions on international travel. There are 47 confirmed cases of COVID-19 in the country, which is likely to grow as the authorities increase testing. Kazakhstan’s president ordered that a system be established for paying those who have lost their jobs due to the COVID-19 outbreak and ordered that the payment of all principal and interest on loans of people affected by the crisis be suspended, but gave no timeline. He warned that the state could crack down on non-bank financial organisations making high-interest loans to people. Meanwhile, Russian media reports that Moscow is considering a partial lockdown of the capital, as many bars and restaurants close. Extensive restrictions are likely in the coming weeks.

Europe: EU expected to approve membership accession talks with Albania and North Macedonia

Sectors: all
Key Risks: political instability

The European Union is expected to agree on 24 March to launch accession negotiations with Albania and North Macedonia, according to a draft of the declaration of the document. France vetoed doing so in October 2019 but agreed to proceed after EU leaders revisited enlargement criteria to punish candidate member states for backsliding. Albania must still pass significant electoral, judicial and anti-corruption reforms for its talks to proceed, and see the ruling party and opposition reconcile. The move will boost North Macedonia’s incumbent Social Democratic Union ahead of elections originally scheduled for 12 April but delayed over COVID-19 – a delay expected to last at least one month. North Macedonia at present is likely to make progress faster than Albania but both risk backsliding and the actual process of EU accession talks will likely take a number of years.

MENA: Beirut halts all repayments, talks on 27 March; Tripoli war escalates; Iraq protests halted

Sectors: all
Key Risks: credit risks; political instability; civil unrest; war on land

Lebanon’s Finance Ministry will discontinue repayments on all future foreign currency Eurobonds after Beirut defaulted on US$1.2bln Eurobonds on 9 March. The announcement was expected as Beirut has US$1.3bln maturing in two tranches over April and June. An investor presentation should be held on 27 March. Missile strikes on Tripoli’s Old City indicate that the Libyan National Army’s offensive to take Tripoli will escalate despite a night-time curfew imposed by the UN-backed Government of National Accord to tackle COVID-19. Anti-government protests which have continued since 1 October are being widely dispersed by Iraqi Security forces and arrests of protesters will continue to increase after a nationwide curfew was imposed to halt the spread of COVID-19. A reduction in protests will relieve pressure on Adnan al-Zurfi’s bid at government formation and enable the government to legitimately quash the ongoing protest movement.

Sub-Saharan Africa: Deadly protest overshadow Guinea constitutional referendum 

Sectors: all
Key Risks: civil unrest; political instability

The opposition FNDC claimed that 10 people were killed in clashes on the outskirts of Conakry and in central Guinea on 22 March as a constitutional referendum and legislative elections went ahead despite the COVID-19 outbreak and widespread calls for another delay. Opposition supporters, which followed a call to disrupt elections, attacked several polling stations and burned electoral material in several cities and parts of Conakry. The referendum, originally scheduled for 1 March, was previously postponed due to international concerns over irregularities in the electoral register. The proposed changes would allow President Alpha Conde, who has been in power since 2010, to stand for two more six-year terms in the presidential elections in late 2020. Given an opposition boycott, the new constitution is all but guaranteed to pass, increasing the risk of further violent protests.