Category: Economy

EMERGING MARKETS-Mexican peso hits 10-week high on recovery hopes

    * Mexico's Q1 economic activity contracts less than expected
    * Brazil's posts record current account surplus in April
    * Investors turn "under-weight" on Brazil's real - JPMorgan
    * Chile's LATAM Airlines files for bankruptcy

    By Susan Mathew
    May 26 (Reuters) - Mexico's peso rose on Tuesday, hitting a
10-week high after economic activity contracted less than
expected in the first quarter, while broader sentiment was
lifted by hopes of a global economic recovery as countries
further eased pandemic-driven lockdowns.
    The peso jumped 1.4%, extending gains to a seventh
straight session after the GDP data, but as a coronavirus
lockdown was applied only in late March, the second quarter is
expected to bear the brunt of the shutdown in business activity.

    "The peso should be well placed to benefit from any
improvement in global growth momentum and EM risk appetite,
helped by its appealing short term valuations improving balance
of payments dynamics," said global FX strategists at JPMorgan.
    Surging copper prices lifted top producer Chile's peso
, while a recovery in oil prices led the Colombian peso
 to its highest since early March.
    Brazil's real surged 1.8% to a four-week high
as central bank data showed the country posted a record current
account surplus in April.
    The real has recently tried to rebound from record lows on
the back of higher commodity prices, but remains about 25% down
on the year amid a federal investigation into President Jair
Bolsonaro as well as a spree of ministerial resignations.
    Bolsonaro has also been criticized for his handling of the
coronavirus outbreak, with Brazil now the second-worst hit
country in terms of the number of infections.
    JPMorgan analysts said investors had turned "under-weight"
on the real for the first time since September 2018, but they
still see the currency outperforming by the end of the year as
financial markets focus on "the significant cheapness of the
currency in the medium run."
    Regional stocks tracked Wall Street higher on hopes the
global economy could emerge from what is expected to be a deep
recession as countries reopened more businesses and on hopes of
a COVID-19 vaccine.
    Brazil's Bovespa hit an 11-week high, while Mexico's
main index rose 1.3%, extending gains to a third straight
session. 
    Chile's LATAM Airlines Group SA filed for U.S.
bankruptcy protection on Tuesday, becoming the world's largest
carrier so far to seek an emergency reorganization amid the
coronavirus outbreak.
    
    Key Latin American stock indexes and currencies at 1056 GMT:
   
     Stock indexes              Latest      Daily % change
 MSCI Emerging Markets            929.68                    2
                                          
 MSCI LatAm                      1785.09                 2.82
                                          
 Brazil Bovespa                 86861.54                  1.4
                                          
 Mexico IPC                     36308.55                 1.33
                                          
 Chile SPIPSA                    3765.02                 0.36
                                          
 Argentina MerVal               41836.79                2.134
                                          
 Colombia Colcap                 1070.37                  1.2
                                          
                                                             
        Currencies              Latest      Daily % change
 Brazil real                      5.3594                 1.79
                                          
 Mexico peso                     22.2375                 1.33
                                          
 Chile peso                        798.7                 0.73
                                          
 Colombia peso                   3723.41                 1.42
 Peru sol                         3.4178                 0.23
                                          
 Argentina peso (interbank)      68.2600                -0.12
                                          
 
 (Reporting by Susan Mathew in Bengaluru)

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Speculators target Hong Kong's currency on outflow concern

HONG KONG (BLOOMBERG) – Fears that capital will flee Hong Kong are visible just about everywhere in the city’s financial markets, yet the currency remains resistant for now.

Speculators are betting on significant depreciation with derivatives, sending a measure of bearishness to near its highest level of the year. Volume on Hong Kong dollar options soared to US$3.7 billion (S$5.26 billion) on Friday (May 22), with a third of the trades betting the pegged currency would hit or break the weak end of its trading band.

Conviction that turbulence will get worse is also evident in the swaps market, where the spread between local and US rates reached levels last seen in the 1990s. One-year forward points closed at the highest since 1999, suggesting a spike in demand to hedge against depreciation in the currency, which remains close to the strong end of its trading band against the greenback.

The sudden bearishness is crashing against the city’s elevated borrowing costs, which have kept the long Hong Kong dollar carry trade profitable since November. Liquidity in the financial system remains relatively tight for now, keeping the city’s interbank rates wide versus those in the US. Plans from some of China’s biggest companies to sell shares in Hong Kong in June should make that more pronounced by increasing the demand for cash.

Hong Kong is the epicentre of escalating US-China tensions following Beijing’s shock decision last week to impose a law to curb dissent in the city. That stoked the Hong Kong dollar’s biggest drop in six weeks and the worst stock rout since 2008. The Trump administration is considering responses that could include revoking Hong Kong’s special trade status, a risk that threatens to undermine the city’s standing as a global financial hub.

The key question is how the Hong Kong dollar’s yield advantage over the greenback can act as a support for the currency.

“Some capital inflows chasing new listings in the city could offset some fund outflows this quarter,” said Ken Cheung, chief Asian currency strategist at Mizuho Bank. “However, the main risk is how the US will deal with Hong Kong’s special status.”

The Hong Kong dollar’s recent strength was upended last week as China confirmed it would effectively bypass the city’s legislature to implement its controversial national security laws, which critics say will erode freedoms of speech, assembly and the press. The currency had traded near the strong side of its narrow band since April largely thanks to a popular trade where hedge funds sold the greenback for the city’s higher-yielding dollars.

As long as that strategy remains profitable and popular, weakness in the currency will be limited. Share sales from NetEase Inc and JD.com in June will mop up liquidity as traders set aside funds to buy stock, driving up borrowing costs in Hong Kong. The premium between one-month Hibor and the US equivalent is near the widest since 1999, meaning traders will still lose money if they sell the city’s currency against the greenback.

June will also be a month when local banks hoard cash to meet quarter-end regulatory checks, driving up demand for Hong Kong dollars. Listed Chinese companies will buy the city’s currency to pay dividends in the summer, also pushing up interest rates. The Hong Kong dollar traded 32 pips from the strong end on Tuesday, down from 78 pips last week.

That delicate balance will depend in part on how the US responds to China’s actions.

“Investors have been quite concerned with capital outflows,” said Carie Li, an economist at OCBC Wing Hang Bank Ltd. “We haven’t seen signs of that yet and I don’t think Hong Kong will see massive fund exodus unless the US makes an extreme response to the law. The panic will likely last for one to two weeks.”

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German economy starting to see light at end of tunnel – Ifo economist

BERLIN, May 25 (Reuters) – The German economy is beginning to see light at the end of the tunnel after the passing of the severest phase of the lockdown imposed to slow the spread of the coronavirus epidemic, Ifo institute’s economist Klaus Wohlrabe said on Monday.

But he said the institute, publishing its monthly business climate survey, still expected that the German economy would contract by a double-digit percentage in the second quarter, with order books in the capital goods industry remaining very bad and businesses still expecting exports to fall.

Nonetheless, the business climate among retailers in particular had improved with the easing of the lockdown measures. The mood in both manufacturing and services had also improved, but was still far from optimistic, he said. (Reporting by Thomas Escritt Editing by Michelle Martin)

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New Brunswick barbershops busy as province enters new phase of COVID-19 recovery

Some New Brunswickers may be a little less shaggy on Saturday.

Barbershops and hair salons are allowed to open in New Brunswick during the “yellow” phase of the province’s COVID-19 recovery plan, announced on Friday by Premier Blaine Higgs.

Blaine Harris, the owner and operator of Lancaster Barber Shop on the west side of Saint John, opened Saturday morning to find customers already lined up outside his door.

Harris, the registrar of the New Brunswick Registered Barbers’ Association, has been a barber for 35 years. He said his business was closed for 10 weeks due to the pandemic.

“It wasn’t too bad,” Harris said. “I have some dogs, so I was out with my dogs every day. It became boring after a while because there was really nothing you could really do.”

Harris said he was confident hair care centres would be allowed to open soon when New Brunswick entered the “orange” phase two weeks ago, so he began preparing his shop.

All customers are required to answer COVID-19-related questions before they can enter Harris’ shop.

The waiting room, which can now hold only six patrons, features a seating area divided into individual chairs by curtains. Patrons are required to sign a registry, take a number and wait to be signalled to the barber chair.

One of his first customers of the day was 10-year-old George O’Hearon, who was seeking his first haircut since March.

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“It’s not as long,” O’Hearon said, describing what he believes is the best part of getting a trim.

RELATED: Gyms hair salons to open as N.B. enters third COVID-19 recovery phase

Harris said he has no problem with the extra safety precautions, but reopening has not come without challenges.

He said suppliers have increased prices dramatically, especially on personal protective equipment (PPE).

“The masks that we’re using right now, before the pandemic, were $30 a box,” Harris began. “Now those masks are $140. And it’s the same brand, the same product, but the suppliers are saying their supply is more expensive.”

RELATED: New Brunswick reverses ban on temporary foreign workers

Harris’ new-look waiting room was jam-packed throughout the morning.

Chris Maguire waited more than two hours for his first haircut since February.

“It’s never been this long,” Maguire said. “It’s heavy, it’s thick. It’s hard to manage. I’ve got to get up earlier in the morning to get ready for work because there are hairs everywhere.

“A little bit more hairspray than normal, that’s for sure.”

The line extended outside, where customers waited patiently on newly-placed social-distancing sidewalk decals.

“It’s a haircut, right?” said Chris Williston, who was already more than 45 minutes into his wait time before he got in the door.

“But this is one of the rewards we get for being good and respecting our social distancing, so I’m pretty excited for it. It’s like a birthday party for me right now.”

Harris said the pandemic shutdown was his longest stretch without cutting hair in his career, so he was more than ready to return to work.

Not all New Brunswick hair professionals believe reopening right now is prudent.

Douglas Black, owner-operator of Egoiste in uptown Saint John, has a compromised immune system.

He believes New Brunswick may be moving too fast.

“I just had hoped we’d have a little slower pace,” Black said Friday.

“I know people are very anxious, and I know they’re missing our services, but it’s a lot all of a sudden, put into the throes of what you have to do in order to make this happen.”

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A look at how Lethbridge retail stores are faring 1 week after Phase 1 relaunch: ‘We’re very busy’

On May 14, most of Alberta began the first of three phases to gradually reopen the economy amid the COVID-19 pandemic.

The exceptions were Calgary and Brooks and Calgary.

“We’re very busy,” said Jeremy Duchan, the owner of Gentlemen Three Menswear in Lethbridge. 

“One of the things that was great with the May 14 restrictions, was that gatherings were allowed to be a little bit larger in size,” he said, referring to the Government of Alberta lifting restrictions in order to allow groups of up to 50 people in outdoor settings while maintaining proper social distancing.

“So that allowed people to re-evaluate their wedding plans,” said Duchan.

Some high schools and post-secondary institutions have decided to host virtual graduation ceremonies, giving graduates a reason to dress up.

Across the street, it’s a different story. The managers of Doug’s Sports, a locally-owned sporting goods company in Lethbridge, said although he is glad they are able to be open, business isn’t as usual.

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“March, April, May and part of June are our Christmas months,” said co-manager JD Clark. “That’s when all the sports are either beginning or ending… so you can imagine our heartache.”

Major and minor sporting events across the world have come to a standstill, taking away the store’s main revenue: team sports gear.

However, the store has been selling some other items to stay in business, such as basketballs, baseball gloves and balls, footballs and soccer balls.

“Yesterday was the best day we’ve had since this whole thing began,” said co-manager Jonathan Bikman, attributing the sales to the warmer weather and the increasing desire of Lethbridge residents to get outside and stay active.

For Big John’s Books, sales also haven’t been up to par, but they’re just glad to see new and familiar faces again, with owner John Pyska saying his favourite part is “definitely the people.”

A set date for Phase 2 has not been determined. Details on each phase and what types of businesses will be reopening can be found here.

 

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EMERGING MARKETS-Brazil's real jumps on central bank reassurance

    * Brazil ready to increase FX intervention -central bank
chief
    * Currencies of oil-exporters Mexico, Colombia rise
    * Argentina creditor says default hard to avoid on Friday 

 (Adds comments, updates prices)
    By Shreyashi Sanyal and Susan Mathew
    May 21 (Reuters) - Brazil's real jumped on Thursday after
the central bank said it remained ready to increase support for
the currency and Mexico's peso hit its highest in nearly two
months as oil prices rallied.
    But as the novel coronavirus speeds through the region,
analysts said the Latin American economy may shrink at a record
pace this year and take at least two more years to recover.
   
    Brazil is seen soon becoming the second-worst hit globally
as the number of cases approaches 300,000, while Mexico reported
a surge in cases after reopening its economy. 
 
    Currencies of Mexico and Colombia both rose
around 1.3% as recovering demand lifted oil prices.

    Brazil's real jumped 2% after central bank President
Roberto Campos Neto said the bank would dip into its large pool
of foreign exchange reserves and continue intervening in the
currency market if needed. The currency has lost close to 30% of
its value against the dollar so far this year.
    Amid increasing political uncertainty in Brazil, the
government's remaining 'super minister,' Economy Minister Paulo
Guedes, has the full support of his team, a senior ministry
official said on Wednesday.
    Mexican President Andres Manuel Lopez Obrador said the
government was open to dialogue about rule changes in the
electricity sector that had sent the stock market plunging.
Mexico's IPC index fell 1%. 
    Most Latam bourses rose with Brazil's benchmark index
 hitting a three-week high.
    "We think Latin America offers the most value in EM equities
– Bovespa likely the best rebound candidate," said Goldman Sachs
strategists in a note.
    "Latin America's underperformance versus the rest of EM
since January has opened up significant value across assets on
both a relative and an absolute basis," they said, also
highlighting tail-winds from an expected pick-up in commodity
prices in the second half of 2020.
    Argentina's peso slid deeper into record low
territory as the government probably cannot avoid defaulting on
a bond payment due on Friday. But one of its creditors, Greylock
Capital, said a deal to restructure $65 billion in foreign debt
should still be achievable.
                
    Latin American stock indexes and currencies at 1946 GMT:
    
      Stock indexes               Latest       Daily %
                                               change
 MSCI Emerging Markets               929.82        -0.18
                                             
 MSCI LatAm                         1675.76         2.32
                                             
 Brazil Bovespa                    83067.44         2.15
 Mexico IPC                        35650.45        -1.05
 Chile IPSA                         3755.08         0.67
                                             
 Argentina MerVal                  41389.04        3.969
                                             
 Colombia COLCAP                    1068.45        -0.36
                                             
                                                        
         Currencies               Latest       Daily %
                                               change
 Brazil real                         5.5776         1.99
                                             
 Mexico peso                        22.9010         1.27
                                             
 Chile peso                           802.7         0.00
                                             
 Colombia peso                      3759.97         1.21
 Peru sol                            3.4108        -0.30
                                             
 Argentina peso (interbank)         68.0800        -0.12
                                             
 
 (Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru;
Editing by Andrea Ricci and Grant McCool)

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New head of WTO must thrive under global pressure and conflict

GENEVA/BRUSSELS (REUTERS) – Against the backdrop of a global pandemic, steep recession, intensifying US-China tensions and rising protectionism, the World Trade Organisation (WTO) needs to name a leader. Only the resilient should apply.

Brazilian director-general Roberto Azevedo surprised the WTO’s 164 members last week by announcing he would quit at the end of August, a year earlier than expected, adding to the tumult facing global agencies amid a backlash against globalisation.

The Geneva-based body ideally needs to find a successor by the time Azevedo leaves, or at least by year end, when it is set to go into overdrive on a series of issues ahead of its biennial conference in 2021.

That’s a tall order for an organisation that hasn’t produced any major international accord in years and decides on a chief by consensus.

Even though the WTO is member-led, a strong, charismatic leader is seen as crucial, particularly when the coronavirus-hit economy faces its worst recession in almost a century and US-China tensions are resurgent.

“These are unprecedented times and the WTO will need a new playbook if it wants to play any serious role in rebuilding the global economy,” said Kelly Ann Shaw, a partner at Hogan Lovells and a former senior White House official who worked for the US Trade Representative during Azevedo’s selection.

“What the WTO really needs is a reformer.”

More than 100 trade barriers have been erected since the coronavirus outbreak. Some states are questioning their reliance on other countries, notably China, for supply. US President Donald Trump has ramped up his criticism of the WTO and the World Health Organisation, which he says are too favourable to China. He described the WTO last week as “horrible”.

The WHO has rejected criticism it is too close to Beijing. The WTO has not commented publicly.

The United States and China, which reached a Phase 1 trade deal in January, appear back at war, with Washington seeking to block chip supplies to blacklisted telecoms equipment giant Huawei Technologies.

Washington already crippled the WTO’s ability to intervene in trade wars in December after blocking appointments to the WTO body that rules on appeals in disputes.

WTO spokesman Keith Rockwell admitted the Director-General’s role was “one of the most difficult and demanding jobs there is” with a “daunting dossier” of issues to tackle.

“But we have clear procedures and I’m sure we will get some outstanding candidates so hopefully things will go smoothly,” he said.

A VIRTUAL BEAUTY PAGEANT

With three of the previous six directors-general from Europe and the others from Thailand, Brazil and New Zealand, there is pressure to choose a leader from Africa, analysts say.

Bill Reinsch, a former US Commerce Department official now with the Center for Strategic and International Studies, said there were four possible contenders from Africa: Hamid Mamdouh, an Egyptian attorney at King & Spalding LLP and former WTO official; Yonov Frederick Agah of Nigeria, a WTO deputy director-general; Eloi Laourou, Benin’s ambassador to the UN and Amina Mohamed, a former Kenyan ambassador to the WTO and now the country’s sports minister.

Agah, Laourou and Mohamed did not immediately respond to requests for comment. Mamdouh confirmed his candidacy to Reuters, saying it was backed by Egypt’s government.

“The issue, as always with Africa, will be whether they can unify behind a single candidate,” Reinsch said.

Previous selections for WTO boss have involved what some former officials describe as a “beauty pageant” involving public events and visits for members to vet candidates.

The coronavirus makes such in-person meetings difficult and virtual meetings in the past month at the WTO have suffered from frozen screens and garbled messages.

Other global bodies like the United Nations have switched to written votes, but WTO members have thrown in the towel, concluding formal decisions could not be made online or in writing.

THE LAW OF THE JUNGLE

The formal nomination of candidates has not yet begun but the WTO will want to avoid a repeat of 1999, when New Zealander Mike Moore and Thailand’s Supachai Panitchpakdi split the vote.

Rohinton Medhora, president of Canada-based think tank the Centre for International Governance Innovation, said there would be a “tremendous clash” if Washington and Beijing proposed candidates or sought to play prominent roles in the selection.

A spokesman for China’s foreign ministry said it would defer to “the relevant departments” on the specific task of searching for a new Director-General and was ready to “maintain close communication and coordination” to ensure a smooth handover.

The US Trade Representative’s office declined to comment, referring to a previous statement from representative Robert Lighthizer saying the United States looked forward to participating in the selection process.

The divisions are not only between Washington and Beijing.

Europe is challenging import tariffs on steel and aluminium imposed on the basis of “national security” by Trump.

National security has also been invoked by Japan in curbs of high-tech exports to South Korea, in a trade dispute between Russia and Ukraine, and a WTO case brought by Qatar against Bahrain, the United Arab Emirates and Saudi Arabia.

“We’re seeing a return to the law of the jungle,” said Roberto Zapata, formerly Mexico’s WTO ambassador and chair of fish subsidy talks. “Members need to adapt the organisation to the current challenges. If not, the WTO could be condemned to irrelevance.”

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CANADA FX DEBT-Canadian dollar climbs as investors bet on economic recovery

 (Adds dealer quotes and details throughout; updates prices)
    * Canadian dollar rises 0.4% against the greenback
    * Canada's annual inflation rate fell by 0.2% in April
    * Price of U.S. oil increases 4.8%
    * Canadian bond yields mixed across a flatter curve

    By Fergal Smith
    TORONTO, May 20 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Wednesday as hopes for a global
economic recovery boosted equity markets and investors shrugged
off domestic data showing deflationary pressures.
    At 3:07 p.m. (1907 GMT), the Canadian dollar          was
trading 0.4% higher at 1.3883 to the greenback, or 72.03 U.S.
cents. The currency, which notched on Tuesday a near three-week
high at 1.3865, traded in a range of 1.3869 to 1.3960.
    "The Canadian dollar continues to benefit from a risk-on
environment and investor optimism, as stocks and commodities
have another solid day," said Michael Goshko, corporate risk
manager at Western Union Business Solutions.    
    U.S. stock markets rose, with the S&P 500 reaching a more
than two-month high, as signs of additional economic stimulus
raised hopes of a swift recovery from the coronavirus-driven
slump.             
    The price of oil, one of Canada's major exports, was
supported by signs of improving demand and a drawdown in U.S.
crude inventories. U.S. crude oil futures        settled 4.8%
higher at $33.49 a barrel. 
    Canada's annual inflation rate fell by 0.2% in April, the
first time it has hit negative territory since 2009, as the
coronavirus pandemic slashed energy prices, Statistics Canada
said.             
    "Contractionary inflation pressures are a given when the
economy comes to a complete standstill under lockdown measures,"
said Simon Harvey, FX market analyst for Monex Europe and Monex
Canada.     
    The Bank of Canada thinks there is likely to be downward
pressure on inflation once coronavirus-related shutdowns are
lifted, Deputy Governor Timothy Lane said, a sign the bank is in
no rush to raise near-record-low interest rates.             
    Since March, the central bank has slashed interest rates to
near zero and begun for the first time a large-scale bond-buying
program.
    Separate domestic data showed that wholesale trade decreased
by 2.2% in March from February, which was a smaller drop than
analysts had expected.                 
    Canadian government bond yields were mixed across a flatter
curve, with the 10-year             down 2.2 basis points at
0.570%.

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Leslie Adler)

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Coronavirus: More Singapore restaurant closures and layoffs to come, survey finds

SINGAPORE – More restaurants and eateries in Singapore will shut their doors if dining-in restrictions are extended past the circuit breaker period, according to a survey by online restaurant reservation platform Chope out on Wednesday (May 20). 

The survey reported that 42 per cent of restaurants, or about two in five, said they would not be able to operate beyond two months at the current rate of cost and revenue, while 81 per cent said they cannot survive beyond six months.

More than 150 dining establishments responded to the survey, which was conducted after a two-month-long circuit breaker shutdown took effect on April 7.

The survey also showed that 42 per cent of restaurants offered delivery for the first time in the light of the tightened measures. 

But takeaway and delivery alone are not significant revenue streams to sustain the businesses, the survey report said. 

“Restaurants have spent enormous effort figuring out how to do deliveries, but the data shows it’s only helping marginally,” said Mr Arrif Ziaudeen, founder and chief executive of The Chope Group.

Some 62 per cent of restaurants that continued to operate on a takeaway and delivery basis have seen significant falls of 50 per cent or more in revenue compared with the same period last year. 

In addition, the revenue generated is not sufficient to offset the losses and restaurants still face the high cost of working with logistics or third-party delivery providers, which remains their biggest challenge, said the report.

About 88 per cent of the restaurants that had delivery and takeaway services prior to this period also said that these measures only contributed less than 10 per cent of their revenue. 

The Government said on Tuesday that dining-in will remain prohibited at food and beverage establishments in the first phase of Singapore’s reopening on June 2, as the Covid-19 situation stabilises.

The survey found that about 11 per cent of restaurants have already retrenched staff, with another 25 per cent considering ceasing employment of more staff if the situation does not improve. 

Around 42 per cent of the eateries have also implemented pay cuts. An earlier survey in March found that nearly 80 per cent said they were reducing casual labour hours and about one-third were imposing compulsory leave for full-time staff.

Meanwhile, 13 per cent also said they have not received rental waivers from landlords, as the equivalent of the property tax rebate given by the Government.

“Covering rent and salaries will require some easing off of dine-in restrictions, balanced carefully against public health concerns,” said Mr Ziaudeen, who co-founded Chope.

“When that happens, we’re confident that diners’ pent up demand will help get restaurants back on track,” he said.

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Kenney government letting Alberta hotels keep tourism levy amounts to help industry weather pandemic

Hotels and other lodging providers in Alberta will be able to keep tourism levy amounts collected between March 1 and Dec. 31, 2020 as part of the provincial government’s plan to help the tourism sector get through the COVID-19 crisis.

“Alberta’s tourism industry is a key contributor to our economy and it creates jobs and revenue that so many communities across our province depend on,” Economic Development, Trade and Tourism Minister Tanya Fir said in a news release in which the new support was announced on Tuesday.

“We’re committed to providing industry the support it needs now so that it can recover and grow.”

The government said the tourism levy measure should free up between $16 million and $27 million in additional cashflow for the province’s hospitality sector. The province also noted that tourism levy amounts collected before March 1 that are being deferred under a previously announced deferral program “can continue to be deferred until Aug. 31, 2020.”

Dave Kaiser, the president and CEO of the Alberta Hotel and Lodging Association, said his organization took part in an industry roundtable with Premier Jason Kenney soon after the pandemic hit the province. He said the issue of cash liquidity was identified as the industry’s No. 1 concern.

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“One of our key asks was for government to leave every tax dollar possible in the hands of our members to support liquidity for their business,” he said on Tuesday. “Today’s announcement directly supports our ask and is positive news for hotels in Alberta.”

Alida Visbach, board chair of the Tourism Industry Association of Alberta, said the move will likely be able to help hotels rehire staff and purchase supplies.

Tuesday’s announcement comes five days after the province officially began Phase 1 of its relaunch plan for Alberta’s economy. The government said Travel Alberta is also working on steps to support local tourism organizations but said those plans will be announced at a later date.

“The tourism industry and our accommodations providers were dramatically and suddenly hard hit by the impacts of COVID-19,” said Royce Chwin, the CEO of Travel Alberta.

“These businesses play a critical role in the traveller experience and will be essential in the restart of Alberta’s visitor economy.”

Despite the tourism levy announcement, the Alberta government said accommodation providers are still expected by law to file returns throughout 2020. It also noted that hotels should expect to “resume regular tourism levy payments in 2021.”

According to the provincial government, the hospitality sector employs about 30,000 Albertans.

 

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