New Zealand steps up financial fight against coronavirus

WELLINGTON (Reuters) – New Zealand authorities increased financial aid for markets and bailed out the national airline on Friday, strengthening its efforts to prevent the economy from sinking into recession because of the coronavirus outbreak.

The Reserve Bank of New Zealand (RBNZ) offered term loans to banks for up to 12 months to increase the amount available to lend to households and businesses. It also said it would provide liquidity to the FX swap market and the government bond market.

“We are operating in extraordinarily fluid times,” Finance Minister Grant Robertson said in a news conference announcing a $514 million lifeline for Air New Zealand, which comes on top of a NZ$600 million aviation industry support package unveiled earlier in the week.

Robertson said the government was monitoring other essential businesses and would step in if needed.

“We are taking a look at what are the large and network important businesses within New Zealand and making sure they are secure,” he said. “We are making sure we are thinking about them as we go into a high period of uncertainty.”

The number of confirmed COVID-19 cases in New Zealand rose by more than a third on Friday to 39. There have been no reported deaths.

New Zealand has shut its borders for all foreigners and enforced tough restrictions on public gatherings in an effort to stop the spread of virus.

On Friday, its biggest city Auckland shut all public libraries, pools and recreation centers for two weeks to beat the spread of the virus.

The country’s $200 billion economy is expected to take a deep hit from the impact of the virus with a near-certain recession that would result in several job losses and businesses to shut.

The government on Friday allocated NZ$100 million to help redeploy affected workers.

The latest financial measures follow the RBNZ’s 75 basis point interest rate cut earlier the week, which came with an assurance that rates will remain at that level for at least 12 months. Separately, the government has outlined a NZ$12.1 billion fiscal stimulus package.

Neighboring Australia has also announced sizeable fiscal and monetary stimulus to prop up its economy.

“The measures highlight the strong institutional capacity of both New Zealand and Australia to develop emergency fiscal responses during an unprecedented global shock,” ratings agency Moody’s said in a note.

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