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▪ Massy Holdings Limited’s rating reaffirmed to CariAA+

▪ Venture Credit Union Co-operative Society Limited’s rating reaffirmed at CariBBB-

▪ Eastern Credit Union’s rating downgraded to CariBBB-

▪ Government of the British Virgin Islands’ rating reaffirmed at CariAA-

▪ Republic Bank Limited’s rating reaffirmed at CariAA+

▪ The Pegasus Hotels of Guyana Limited’s initial rating assigned at CariBBB-

▪ Sagicor Life Jamaica Limited’s rating reaffirmed at jmAAA

▪ NCB Capital Markets Limited’s initial issue rating assigned at CariBBB-

▪ Government of Barbados rating downgraded to CariBBB-

▪ Saint Lucia Electricity Services Limited’s rating reaffirmed at CariBBB

▪ Endeavour Holdings Limited’s rating reaffirmed at CariA+

▪ Gulf City Limited’s rating reaffirmed at CariA+

▪ National Flour Mills Limited’s rating reaffirmed to CariA-

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REGIONAL

Trinidad and Tobago

$20.6m Republic shares traded

Overall market activity resulted from trading in 14 securities of which five

advanced, four declined and five traded firm.

More staff cuts at BPTT

BP Trinidad and Tobago (BPTT) yesterday confirmed that its operations will

be affected by the three per cent staff cuts designed to make BP's

upstream operations to make the division more efficient and flexible.

BP projects higher future cash from T&T... Energy Minister laments energy

tax regime

BPTT's standardized measure of discounted future net cash flows for 2017

was updated to US$3.3 billion in the company's annual report released

earlier this month.

Farmers mired in debt - Lowest rice production in years

Grappling with millions of dollars in debts, local rice farmers say they have

experienced their lowest yields ever and are blaming the government

and the National Flour Mills.

Barbados

CCJ’s First President Says a Barbados Withdrawal from the Court Would Be

Retrograde Step

Former president of the Caribbean Court of Justice (CCJ) Michael de la

Bastide says if Barbados withdraws from the appellate jurisdiction of the

court it will undermine the standing of the court in the eyes of the region’s

people.

Past BIBA president now Spain’s honorary consul in Barbados

A new Honorary Consul of the Republic of Spain in Barbados has been

appointed.

Jamaica

More Robust Reduction in Interest Rates Needed to Spur Growth

Despite the Bank of Jamaica (BOJ) reducing interest rate five times since

last July, Governor Brian Wynter says further and more robust downward

adjustments may be needed to overcome the sluggishness of the

economic recovery.

Jamaican Economy Expands 1.2% In March Quarter

The mining and quarrying industry, which grew by 25.5 per cent,

contributed the lion's share to a 1.2 per cent expansion of the Jamaican

economy during the March 2018 quarter.

NHT Automates Debt Management, Collections Rise

The National Housing Trust, NHT, says new loan management software

resulted in more than a $1-billion boost in collections of mortgage

payments, while cutting loan defaults to new lows.

Poverty Down

Finance Minister Dr Nigel Clarke yesterday informed Parliament of a 19 per

cent decline in the rate of poverty in Jamaica in 2016, which he

described as “the largest annual reduction” in a decade

Unemployment continues to decline

Jamaica's unemployment rate continued its downward trend to record

3.1 percentage points, lower than the rate recorded in January 2017.

Guyana

Govt. to hire international law firm to negotiate future oil contracts

What’s done is done. The APNU+AFC Government has been taking that

approach in the handling of the concerns being raised about existing oil

contracts. The Coalition has been firm that there will be no reviews or

renegotiations.

Antigua and Barbuda

Faster money transfers now available

The Eastern Caribbean Currency Union (ECCU) launched its Electronic

Funds Transfer (EFT) project in Antigua and Barbuda yesterday. The EFT

allows all customers of all local commercial banks to transfer money in a

single day, faster and more cost efficient than a wire transfer.

British Virgin Islands

New carrier, fees, and bank being introduced at airport

The BVI Airports Authority will be introducing a number of initiatives to

boost revenue, which has been declining at the Terrance B Lettsome

International Airport.

Cuba

Two million foreign vacationers visit Cuba by mid-May.

The arrival of two million tourists to Cuba so far this year reflects the

continued confidence of tour operators, travel agencies, airlines and

vacationers in the Caribbean destination, according to a report on

Monday by the tourism ministry.

Grenada

IMF concludes mission to Grenada

An International Monetary Fund (IMF) staff team visited Grenada during

May 2-15 for the 2018 Article IV consultation and held discussions with the

Grenadian authorities, business community, and social partners.

The Bahamas

$70m Aliv Exit Delay on Cabinet Queries

The Government’s exit from its $70m majority ownership of Aliv has been

delayed by the Cabinet’s desire for “clarity and comfort” on the chosen

route.

Gov't Hotel Exit Depends If Buyer 'Still Interested'

Completion of the Government's 26-year bid to exit hotel industry

ownership now depends on whether the Bahamian purchaser of its last

property "is still interested".

DPM 'Hopeful' GDP Growth Will Escape Oil Price Shocks

The Deputy Prime Minister is expressing confidence that The Bahamas will

meet its 2.5 per cent GDP growth target despite rising oil prices, adding:

"Hopefully we'll be able to ride it out."

RBC Mortgage Lender 'Not Where We Need It'

Royal Bank of Canada's (RBC) mortgage lending arm "is still not where we

need it to be", the bank's top regional executive has conceded, despite

improvements elsewhere in its portfolio.

St. Lucia

Saint Lucia recognized as “Best Island in the Caribbean”

Saint Lucia has been recognized as the “Best Island in the Caribbean” by

Global Traveler at their Sixth Annual Leisure Lifestyle Awards.

St. Kitts and Nevis

Agriculture planning for hurricane season

With the start of the 2018 hurricane season several days away, the

Department of Agriculture on St. Kitts is currently in the process of planning

mitigation efforts so as not to have a long-term effect should a major

storm hit St. Kitts and Nevis.

Other Regional

Britain’s House of Lords approves bill paving way for beneficial ownership

registers in overseas territories

As the upper chamber of the British Parliament on Monday passed the

amended Sanctions and Anti-Money Laundering Bill with the inclusion of

the imposition of public registers on the British Overseas Territories (BOTs),

Lord Ahmad of Wimbledon, the BOT minister, said it was not what he had

hoped would happen.

C'bean health ministers attending WHO assembly

Caribbean Community (CARICOM) health ministers are attending the 71st

World Health Assembly here discussing various public health issues and its

effects on the global population.

INTERNATIONAL

United States

Stock futures dip as Trump's comments spark trade talk uncertainty

U.S. stock index futures were lower on Wednesday on fresh uncertainty

over U.S.-China trade talks and ahead of a Federal Reserve report that

would be watched for cues on pace of future interest rate hikes.

United States continued

Coming back to life: Dollar surge raises hopes for volatile FX

The U.S. dollar’s unexpected surge over the past month is encouraging

currency traders to pray for a return of lucrative but long-dormant price

volatility on the main foreign exchanges, although early signs on that are

strangely subdued.

United Kingdom

Sterling slides to new 2018 low on weak UK inflation

Sterling fell to a new 2018 low on Wednesday after weaker-than-expected

UK inflation cast doubt on whether the Bank of England (BoE) will raise

interest rates this year.

Europe

Euro zone likely to delay some banking decisions to December

The euro zone is likely to push back some of the key decisions on

completing its banking union to December from June because of lack of

trust between governments, made no easier by the emergence of a

Eurosceptic coalition in Italy, officials said.

Euro plunges as risk aversion, Italy concerns weigh

The euro fell to near three-month lows against the Swiss franc on

Wednesday as fresh data indicating a slowdown in European business

activity cast a shadow over the timing of the central bank’s rate hike,

while concerns over Italian politics rose.

European shares rise as Italy recovers and China tariff cut boosts autos

European shares touched their highest level since the start of February on

Tuesday as automaker and bank stocks climbed and Italian shares

recovered as the anti-establishment coalition’s government formation

process stalled.

China

China central bank aims to improve information disclosure and

transparency

China’s central bank pledged on Wednesday to improve its information

disclosure as part of steps to make its policy-making process more

transparent.

China continued

China Inc returns to U.S. soybean market as trade tensions ease

China’s state grain stockpiler has returned this week to the U.S. soybean

market for the first time since early April, a sign Beijing is preparing to

resume purchases as trade tensions between the world’s top two

economies ease, two sources said.

Japan

Nikkei posts biggest fall in 2 months as trade worries return

Japan’s Nikkei share average suffered its biggest fall in two months on

Wednesday, as comments from U.S. President Donald Trump rekindled

worries about trade friction, hurting steelmakers and shippers among

others.

Global

Denmark begins global legal campaign to recoup tax fraud billions

Denmark has opened a global campaign to recoup billions of crowns it

alleges were paid out in fraudulent tax refunds between 2012 and 2015.

French unemployment edges up, dampening Macron's hopes

French unemployment rose slightly in the first three months of the year,

confounding economists’ expectations for a decline and suggesting

President Emmanuel Macron’s policies to boost jobs and growth are

struggling to find traction.

Trade and growth fears prompt dash for safe havens

Investors sold equities on Wednesday and raced to buy Japanese yen

and government bonds from the United States and Germany on fears

that setbacks to U.S-China trade talks would undermine increasingly

fragile-looking world growth.

Oil falls as concern mounts over OPEC supply, softer global growth

Oil fell on Wednesday, under pressure from a potential increase in OPEC

crude output to cool the market’s recent rally and cover any shortfalls in

supply from Iran and Venezuela.

Britain’s House of Lords approves bill paving way for beneficial ownership

registers in overseas territories Tuesday 22nd May, 2018 – Caribbean News Now

As the upper chamber of the British Parliament on Monday passed the

amended Sanctions and Anti-Money Laundering Bill with the inclusion of

the imposition of public registers on the British Overseas Territories (BOTs),

Lord Ahmad of Wimbledon, the BOT minister, said it was not what he had

hoped would happen.

He said in the House of Lords that the standards of the BOTs’ financial

services on beneficial ownership information surpass international

standards and admitted that, by accepting a policy of imposition, the UK

government was disenfranchising the local democratically elected

governments.

He accepted, too, that the creation of public registers before it becomes

a global standard could have a negative impact on the territories’

economies and pointed in particular to the territories still recovering from

last season’s hurricane damage. Ahmad said the Conservative

government had wanted to work with the territories to progress issues on

beneficial ownership and not to legislate for them without their consent.

He said that imposing public registers on overseas territories before it is

international standards now carries with it the risk of a flight of business to

less regulated jurisdictions where law enforcement will not have access to

the information that it currently does with the systems established in the

territories.

Ahmad also criticised comments made in the House of Commons about

tax havens, as he supported the territories’ work on transparency and said

that they were important financial centres to the world economy. He

noted that the territories have been cooperative and warned that the

open public register was not a panacea to the problem of global illicit

finance.

Nevertheless, despite his feelings and arguments, he said the Commons

had made a decision that had to be respected and that the UK would

now seek to assist the territories in establishing the public registers.

During the debate many of the peers present for the debate spoke in

support of the territories and warned of a catastrophe for financial

services in the BOTs with the imposition of registers before they are the

common standard. Lord Naseby, who set down an amendment that was

withdrawn, pointed to the Cayman Islands specifically when he said

Westminster telling them what to legislate was a constitutional problem.

He spoke of Premier Alden McLaughlin’s consultation with lawyers while

he was in London last week and added that in all likelihood the islands

have a good legal case.

Lord Neuberger said that the regulatory standards in the territories were

much better than the UK and also pointed out the inequity of imposing

the register on the BOTs and not the Crown Dependencies. Several Lords

agreed that the UK government should not be imposing laws on the

territories, especially when they would have such unfair consequences.

Several of the lawyers among the lords also suggested offering their legal

services to the BOTs to represent them in a judicial review.

Several of the lords agreed the imposition was unjust, but despite their

sympathies, the amendment was supported by the upper house without

any changes.

<< Back to news headlines >>

C'bean health ministers attending WHO assembly Tuesday 22nd May, 2018 – Jamaica Observer

Caribbean Community (CARICOM) health ministers are attending the 71st

World Health Assembly here discussing various public health issues and its

effects on the global population.

The assembly, which has brought together delegations from the 194

member-states of the World Health Organisation (WHO), is taking place

against the backdrop of a new outbreak of Ebola in central Africa.

During the assembly, the Pan American Health Organisation (PAHO) said

a range of issues will be discussed including, WHO's work-plan for the next

five years.

“This plan will ultimately seek to save 29 million lives by 2023 through a

series of strategic actions designed to support countries in achieving the

health targets of the ([United Nations] Sustainable Development Goals

(SDGs),” PAHO said.

The World Health Assembly will also discuss WHO's role in health

emergencies, polio, physical activity, vaccines, the global snakebite

burden and rheumatic heart disease, among other issues.

PAHO said the Americas region will participate in the Assembly through

their country delegations, as well as a delegation from PAHO, the regional

office of WHO in the Americas, led by the director, Dr Carissa F Etienne.

The World Health Assembly is the supreme decision-making body of WHO.

We are transforming how we work to achieve our vision of a world in

which health is a right for all. We are changing the way we do business…

too many people are still dying of preventable diseases, too many people

are being pushed into poverty to pay for health care out of their own

pockets and too many people are unable to get the health services they

need. This is unacceptable,” said WHO Director General, Dr Tedros

Adhanom Ghebreyesus.

“This is a pivotal health assembly. On the occasion of WHO's 70th

anniversary, we are celebrating seven decades of public health progress

that have added 25 years to global life expectancy, saved millions of

children's lives, and made huge inroads into eradicating deadly diseases

such as smallpox and, soon, polio,” said Ghebreyesus, who is attending his

first Assembly following his election last year.

<< Back to news headlines >>

Stock futures dip as Trump's comments spark trade talk uncertainty Wednesday 23rd May, 2018 – Reuters

U.S. stock index futures were lower on Wednesday on fresh uncertainty

over U.S.-China trade talks and ahead of a Federal Reserve report that

would be watched for cues on pace of future interest rate hikes.

Earlier optimism of trade talks progressing reversed on Tuesday after U.S.

President Donald Trump said he was not pleased with recent trade talks

between the United States and China and also raised doubts about the

upcoming North Korea summit.

The comments tempered expectations that the United States and China

would be able to avert a damaging global trade war.

The Federal Reserve’s May meeting minutes, scheduled for release at 2:00

p.m. ET, will be scrutinized for indications of how many rate hikes are likely

this year.

The U.S. central bank lifted borrowing costs in March and policymakers

are split between those who expect another two rate hikes this year and

those who forecast three, in the backdrop of low unemployment,

moderate growth and rising inflation.

At 7:28 a.m. ET, Dow e-minis 1YMc1 were down 182 points, or 0.73 percent.

S&P 500 e-minis ESc1 were down 16.5 points, or 0.61 percent and Nasdaq

100 e-minis NQc1 were down 64.5 points, or 0.93 percent.

U.S. 10-year Treasury yields US10YT=RR fell to eight-day lows as investors

shunned risk. Twenty-eight of the 30 Dow Jones Industrial Average .DJI

components were trading premarket and all indicated a lower open.

Target (TGT.N) sank 5.6 percent after the retailer’s quarterly profit rose less

than expected as increasing investments dented margins.

Tiffany (TIF.N) jumped 11.7 percent after the jeweller’s quarterly results

blew past estimates and the company also raised its full-year profit

forecast and announced a $1 billion share buyback program.

On the economic front, new home sales numbers for April are expected

to fall to 679,000 units, from 694,000 units the month before. The data is

expected at 10 a.m. ET.

<< Back to news headlines >>

China central bank aims to improve information disclosure and

transparency Wednesday 23rd May, 2018 – Reuters

China’s central bank pledged on Wednesday to improve its information

disclosure as part of steps to make its policy-making process more

transparent.

The People’s Bank of China (PBOC) has been trying to communicate

more effectively with markets when it issues new policies and give more

context and details to global investors often puzzled by China’s opaque

policy-making process.

“We will continuously improve the central bank’s credibility and

transparency,” the PBOC said in a notice published on its website.

The central bank would “strengthen its policy interpretation and

information disclosure, deliver its policy intentions in a timely way and

reasonably guide market expectations”, it said.

The central bank said it would issue data on bank lending, internet

finance and payments system in a timely manner and get its message

across through media briefings and interviews.

The PBOC would also closely monitor media reports and public opinion to

prevent its policy intentions from being misread by the financial market, it

added.

The central bank reaffirmed that it would maintain its prudent and neutral

policy while preventing financial risks.

The PBOC has in recent years gained more policy influence, even though

the central bank still lacks the independence of institutions such as the U.S.

Federal Reserve and needs cabinet approval to change interest rates or

the value of the yuan.

<< Back to news headlines >>

Denmark begins global legal campaign to recoup tax fraud billions Wednesday 23rd May, 2018 – Reuters

Denmark has opened a global campaign to recoup billions of crowns it

alleges were paid out in fraudulent tax refunds between 2012 and 2015.

Tax authorities claim a total of 2.3 billion Danish crowns ($361.36 million) in

the 50 cases and will seek to open “a large number” of additional cases

to bring total claims to around 11 billion crowns, Tax Minister Karsten

Lauritzen told reporters in Copenhagen.

“The likelihood of getting the money back increases now that we are

launching these civil court cases against those who have participated,

knowingly or unknowingly,” Lauritzen said.

Denmark’s State Prosecutor for Serious Economic and International Crime

said in 2015 that tax authorities may have paid almost a billion dollars in

fake tax refunds. Further investigation showed the amount was actually

around two billion dollars.

The money was claimed as refunds for tax deducted from stock

dividends. Foreigners living outside Denmark are exempt from the 27

percent tax and are entitled to a rebate.

Cases are being brought in the United States, Britain, Canada, Malaysia

and Luxembourg, according to media reports. Lauritzen declined to

confirm that information.

The new court cases come in addition to a continuing criminal

investigation, which so far has led to confiscation of assets worth 2.7 billion

Danish crowns, mostly in Germany.

In a related criminal case, the Danish high court on Wednesday

sentenced a former employee at the tax authorities to five years in prison

for corruption and dividend tax fraud. A friend of his was sentenced to

four-and-a-half year in prison.

<< Back to news headlines >>

French unemployment edges up, dampening Macron's hopes Wednesday 23rd May, 2018 – Reuters

French unemployment rose slightly in the first three months of the year,

confounding economists’ expectations for a decline and suggesting

President Emmanuel Macron’s policies to boost jobs and growth are

struggling to find traction.

Data from the national statistics office INSEE showed the ILO jobless rate

rose to 9.2 percent in the first quarter, up from 9.0 percent in the last

quarter of 2017. Economists polled by Reuters had forecast a rate of 8.8

percent. FRUNR=ECI

While disappointing for a government that has banked on bringing high

unemployment down via faster growth and tweaks to employment law,

analysts suggest France may now be hampered by a wider loss of

momentum across the euro zone.

“The first quarter data showed a slowdown in France but actually the

country’s loss of inertia wasn’t a one-off, it was across Europe generally,”

said Lorne Baring, chief investment officer at B Capital SA.

“The question now is whether the second quarter brings France, and

Europe as well, back towards the improving trend or if it confirms a

slowdown is under way.”

At the end of last year, in the months after Macron’s election victory,

France looked to be in a strong position, with growth picking up and

business and consumer confidence at or near highs.

But first quarter growth of 0.3 percent came in below expectations and

manufacturing surveys and other indicators have since pointed to a

slowdown in momentum.

“DISRUPTIVE FACTORS”

A survey of French purchasing managers on Wednesday showed business

activity slowed more than expected in May, although the month was

affected by a high number of holidays.

IHS Markit said its composite PMI, which covers the services and

manufacturing sectors, fell to 54.5 points from 56.9 in April, hitting its lowest

level since January 2017.

“There have been short-term disruptive factors,” said IHS Markit chief

economist Chris Williamson, adding that companies remained upbeat

about prospects for now. “So, we remain positive about the outlook.”

Part of the problem for the euro zone is a raft of political uncertainty, both

at home and abroad.

While Germany continues to grow, weaker global trade and the looming

prospect of a tariff battle with the United States have hit output. The rate

of growth halved in the first quarter of the year.

Italy, the euro zone’s third largest economy, has still not appointed a

prime minister since elections in March, and the candidate proposed by

the populist coalition seeking to take office is an entirely unknown

quantity.

Yields on Italian debt have climbed — reflecting the higher risk of holding

Italian assets — on the back of the political instability and the

Euroscepticism of both the anti-establishment 5-Star Movement and the

far-right League.

<< Back to news headlines >>

Euro zone likely to delay some banking decisions to December Wednesday 22nd May, 2018 – Reuters

The euro zone is likely to push back some of the key decisions on

completing its banking union to December from June because of lack of

trust between governments, made no easier by the emergence of a

Eurosceptic coalition in Italy, officials said.

All EU finance ministers except Britain, which will leave the EU next year,

are to discuss a proposal to divide the process into two stages when they

meet in Brussels on Thursday.

That would allow them to make progress on plans to reduce banking

sector risk while disentangling those negotiations from details over the

even more politically delicate question of how to share risk across

countries.

“In the process of deepening the monetary union, the most important

obstacle is the lack of trust,” one senior euro zone policy-maker said. “It is

more about the political risk than financial considerations. It is more about

being afraid of own political constituencies than pure arithmetic of

financial exposures.”

The banking union is intended to make the financial sector more robust by

setting up one set of rules for all banks to follow, one supervisor — the

European Central Bank — and one resolution procedure with money to

back it in case a bank fails. It will apply automatically to the 19 countries

that use the euro, and other EU member states also have the right to join.

To finish it, governments have to agree on a pan-European bank deposit

guarantee scheme so that all citizens have the same level of protection

for their savings. Governments also need to backstop the single resolution

fund (SRF), financed by banks themselves, with loans from the euro zone

bailout fund ESM in case a major banking crisis drains the SRF too quickly.

Both the deposit guarantee plan and the SRF backstop have caused

controversy, mainly between northern European countries led by

Germany and the south, where Italy’s banking sector is seen as the

biggest challenge. The group led by Germany and the Netherlands is

worried that some banks in the south may have taken too many risks with

lending and does not want to share responsibility for their deposits until

such risks are reduced.

TWO STAGES

Under the two-step approach prepared for the ministers’ discussions on

Thursday, the euro zone would move on risk sharing and risk reduction in

parallel, but with more emphasis on risk reduction.

In June the euro zone would address the risks in banks with the

implementation of guidelines on bad loans from the Single Supervisory

Mechanism, agreeing on tools to measure risk and the European

Commission’s risk reduction package.

As part of risk sharing, euro zone leaders would agree at their summit on

June 28-29 that the ESM could, in principle, be a backstop for the bank

resolution fund, and set a date for starting a political discussion on the

deposit guarantee plan.

On the risk reduction track, there is already broad agreement among

euro zone policy-makers that risks in banks should be measured using the

capital, leverage, liquidity coverage and net stable funding ratios.

There is also broad agreement in principle, though with further work on

detail needed, that regulators should look at non-performing loans, assets

whose value is based on management assumptions, and a bank’s total

ability to absorb losses.

In December, leaders would agree to reduce risks further through a

framework for bank insolvency and restructuring, a finalization of the

policy on binding loss-absorption capacity requirements, the Commission

package on bad loan reduction, anti-money laundering steps and

benchmarks for risk indicators.

In risk sharing, December could bring details on the ESM acting as a

backstop for the bank resolution fund, changes to the treaty that set up

the ESM, and agreement on the principles of the euro zone deposit

guarantee scheme.

<< Back to news headlines >>

Euro plunges as risk aversion, Italy concerns weigh Wednesday 23rd May, 2018 – Reuters

The euro fell to near three-month lows against the Swiss franc on

Wednesday as fresh data indicating a slowdown in European business

activity cast a shadow over the timing of the central bank’s rate hike,

while concerns over Italian politics rose.

The euro’s weakness also spilled over to the dollar, falling half a percent

on the day, but broader risk aversion kept the dollar on the back foot

against the franc and the Japanese yen.

The yen surged 1.2 percent against the dollar, set for its biggest daily rise in

more than a year, as a wave of caution swept currency markets a day

after U.S. President Donald Trump tempered optimism over progress made

in trade talks with China.

Carry trades, where investors borrow in relatively low yielding currencies to

invest in higher-yielding ones, came under pressure with the euro/swiss

franc falling to its lowest levels since early-March.

The euro has unwound all of its rally against the franc since the Italian

elections as the prospect of a spendthrift coalition government taking

shape in Rome unnerved investors.

“The euro is coming up against some structural headwinds as the PMI

data shows no signs of picking up while the Italian situation is also

weighing on sentiment,” said SEB senior currency strategist Richard

Falkenhall.

DERIVATIVES

Currency derivative markets are signalling further weakness for the euro

with one-year risk reversals on the single currency — a gauge of demand

for options on a currency rising or falling — dropping to a seven-month

low on Wednesday.

One-year risk reversals fell to minus 0.4 after being in positive territory as

recently as Monday, indicating that demand for euro puts has surged to

protect downside risks, according to traders.

Morgan Stanley strategists said the euro’s recent weakness could prompt

overseas investors to hedge their bond and equity investments in Europe,

which could add further downside pressure on the euro.

“The euro/Swiss franc cross encapsulates the growing risk premium that

investors are placing on the euro in recent days and we may see further

downside for now,” said Alvin Tan, a currency strategist at Societe

Generale in London.

While the dollar against a basket of its rivals rose 0.4 percent to 94.00, it

weakened 1.2 percent and 0.6 percent against the Japanese yen and

Swiss franc respectively.

Stocks tumbled and the yen gained broadly after Trump said on Tuesday

he was not pleased with recent trade talks between the United States and

China, the world’s two biggest economies.

The euro fell to a six-month low after German PMI data fell to a 20-month

low indicating that economic momentum in Europe’s biggest economy

was faltering.

The euro/Swiss franc fell 0.7 percent to 1.1601 francs per euro, its lowest

level since March 6.

The currency pair, a proxy for risk appetite within Europe, has fallen nearly

3 percent since May 14 as concerns of a fiscally profligate new coalition

government in Rome has raised concerns of a showdown with the

European Union.

The likelihood of a government comprised of the anti-establishment 5-Star

Movement and the far-right League has pushed Italian 10-year yields up

nearly 60 basis points since the start of May. The bulk of that move has

been over the past week.

The safe-haven yen also rose against other currency crosses and surged

against the Turkish lira, amid talk of Japanese retail investors selling the lira

as stop-loss levels were hit.

The yen tends to rise in times of market turbulence since Japan is the

world’s largest creditor nation and traders tend to assume Japanese

investors would repatriate funds at times of crisis.

Investors are now looking to the release on Wednesday of the Fed’s

minutes from its most recent meeting, when it kept interest rates steady.

In its post-meeting statement issued in early May, the Fed also said

inflation had “moved close” to its target and that “on a 12-month basis is

expected to run near the Committee’s symmetric 2 percent objective

over the medium term.”

<< Back to news headlines >>

Trade and growth fears prompt dash for safe havens Wednesday 23rd May, 2018 – Reuters

Investors sold equities on Wednesday and raced to buy Japanese yen

and government bonds from the United States and Germany on fears

that setbacks to U.S-China trade talks would undermine increasingly

fragile-looking world growth.

The yen JPY=EBS rose more than 1 percent against the dollar, U.S. bond

yields, which move inversely to price, fell to eight-day lows.

World shares meanwhile slipped half a percent to a two-week low as

weak euro zone data added to negative sentiment following U.S.

President Donald Trump’s comments on the crucial trade talks.

Investors were also eyeing Turkey and Italy, with the former seemingly

headed for a full-blown economic crisis as the Turkish lira plunged to new

record lows.

Italian borrowing costs resumed their rise to hit new multi-month highs on

fears that an incoming coalition will sharply boost government spending.

The risk-off mood was initially triggered by Trump saying he was not

pleased with progress on trade talks with China.

The comments tempered optimism that China and the United States

would be able to avert a damaging global trade war. U.S. Treasury

Secretary Steven Mnuchin had said at the weekend the “trade war” was

“on hold”.

Trump also floated plans to fine China’s ZTE Corp and cast doubt on a

planned June 12 summit with North Korean leader Kim Jong-Un.

Those developments are set to weigh on Wall Street later in the day, with

S&P500 and Dow Jones futures down 0.6-0.8 percent.

In Asian trading, MSCI’s ex-Japan Asian equity benchmark fell 0.3 percent

and Japan’s Nikkei lost 1.2 percent to reach 1-1/2-week lows.

European shares also fell, with one pan-European stock index down 1

percent.

“People have realised the risk of trade war remains with us,” Swiss wealth

manager Prime Partners chief investment officer Francois Savary said.

“Increase in trade was a major reason behind the synchronised global

growth and if you blow this up you limit the opportunities for the world

economy,” he said.

Such worries were underscored by flash Purchasing Managers’ Index (PMI)

data, which showed on Wednesday that the euro zone economy was

slowing more sharply than previously expected.

The data, along with the global sentiment setbacks, sent euro zone bond

yields broadly lower, while U.S. Treasury yields slipped to an eight-day low

after retreating sharply on Tuesday from near seven-year highs. They are

now on the cusp of slipping back under the psychologically significant 3-

percent level.

“Italy’s political impasse continues, French and German PMIs were soft

and global risk sentiment has taken another knock,” Societe Generale

analysts said.

Prime Partners’ Savary was more sanguine on the data, noting that

growth, while slowing, remained healthy. But he warned that trade issues

alongside geopolitics, especially the reimposition of Iran sanctions, could

have economic consequences associated with potentially higher

inflation.

Oil prices came off 3-1/2-year highs hit on concerns over supply from

Venezuela and Iran. Brent futures were down 1 percent, inching further

from the $80 per barrel milestone.

Lower U.S. yields sapped some of the appetite for the dollar, taking it

more than 1 percent lower against the yen, heading for its biggest daily

loss in a year.

Bond and currency traders worldwide are now waiting for U.S. Federal

Reserve minutes from its last meeting, to glean clues on how many more

times the central bank might raise interest rates in 2018. The minutes are

due later on Wednesday.

Against a basket of currencies, the dollar rose 0.2 percent and the euro

bore the brunt with a 0.4-percent loss.

The single currency also fell against another “safe” asset, the Swiss franc,

touching a near two-month low.

ITALY, TURKEY

One reason for the euro’s woes is Italy, where an incoming coalition

government comprised of the two anti-establishment parties - the League

and 5-Star - looks likely to implement big-spending policies.

That could add to the country’s big debt pile and see Rome clash with

the European Union.

Italian bonds fell in value, reversing the modest gains seen on Tuesday

and 10-year yields rose 11 basis points (bps) to a new 14-month high. The

premium investors demand to hold Italian debt versus safer German

bonds rose sharply to 192 bps. The spread was about 120 bps at the start

of May.

Italian stocks tumbled 1.8 percent and are so far suffering their biggest

monthly losses since mid-2016. Investors are watching to see if the

Eurosceptic Paolo Savona would be appointed to the economy minister

position.

“It is a major blow for Europe potentially,” Savary said. “As long as

(coalition partners) play the game of speaking unwisely, bond yields can

go higher.”

Elsewhere, emerging markets remained under heavy pressure, with

currencies down 0.3-0.6 percent across the board. The selling storm was

concentrated on Turkey where the lira fell more than 3.5 percent, bringing

losses just in May to more than 16 percent.

Turkish bond yields have jumped to almost 15 percent, more than 250 bps

up from the end of April, with an emergency interest rate rise looking all

but certain.

“I doubt (the Turkish central bank) have time to wait until June 7 for the

scheduled meeting – the lira is in freefall and concrete steps are urgently

required to slow down this quite rapid rate of depreciation,” Rabobank

analyst Piotr Matys said.

<< Back to news headlines >>

European shares rise as Italy recovers and China tariff cut boosts autos Wednesday 23rd May, 2018 – Reuters

European shares touched their highest level since the start of February on

Tuesday as automaker and bank stocks climbed and Italian shares

recovered as the anti-establishment coalition’s government formation

process stalled.

The pan-European STOXX 600 rose 0.3 percent, extending Monday’s gains

as carmakers rose on a cut to Chinese tariffs.

Volkswagen, BMW and Daimler were among the biggest boosts to the

STOXX, up 1.5 percent to 2.5 percent, after China said it would cut the

import duty on passenger cars and auto parts from July 1.

Europe’s autos sector climbed 0.9 percent and Italy’s Fiat Chrysler also

rose 1.6 percent.

The latter helped Italy’s FTSE MIB gain 0.5 percent and recover after being

dragged down by political risk during the last sessions.

Italian bank stocks also rose 1.6 percent as plans by anti-establishment 5-

Star and the far-right League to form a government seemed to stall.

President Sergio Mattarella sought further consultations over their

proposed prime minister, a political novice.

Some investors were doubtful a coalition government would be able to

go ahead with big spending plans that have spooked markets, sending

Italian bond yields to their highest in more than a year.

“I don’t know how long this coalition will last. There’s an awful lot of

negativity around it but I would be surprised if the coalition can go any

meaningful distance,” said Christopher Peel, chief investment officer at

Tavistock Wealth.

“Certainly, Italy is a problem but geopolitical tension seems actually lower

now than I can remember in a long time,” he added.

French telecoms stocks were also key players during the session after the

head of the country’s telecoms regulator reignited talk of possible

mergers in the sector, in comments to Le Monde newspaper.

Bouygues, Orange and Iliad rose 4.1 percent, 4.5 percent and 7.3 percent

respectively.

Shares of SFR’s parent company Altice surged 19.2 percent but the move

also reflected a technical adjustment of their price following the

separation of Altice NV from Altice USA.

<< Back to news headlines >>

Nikkei posts biggest fall in 2 months as trade worries return Wednesday 23rd May, 2018 – Reuters

Japan’s Nikkei share average suffered its biggest fall in two months on

Wednesday, as comments from U.S. President Donald Trump rekindled

worries about trade friction, hurting steelmakers and shippers among

others.

The Nikkei tumbled 1.2 percent to 22,690, after sliding to 22,650 earlier, the

weakest intraday level since May 11.

Trump on Tuesday said he was not pleased with recent trade talks

between the United States and China, checking hopes that the world’s

two biggest economies were on course to hammer out a deal. U.S.

Treasury Secretary Steven Mnuchin has earlier said that trade war is “on

hold”, sending the Nikkei over the psychologically important 23,000 level

on Monday.

Trump’s latest remarks followed Beijing’s announcement that it would cut

import tariffs for automobiles and car parts.

“I don’t think we need to worry too much about trade war hitting the

market harder than now because China is seen compromising as it tries to

defuse trade tensions with the U.S.,” said Isao Kubo, equity strategist at

Nissay Asset Management.

“That said, although investors do not expect that tension will deteriorate

dramatically from the current state, there is still lingering uncertainty and

that’s keeping activity in check.”

Shippers were under pressure, with Mitsui OSK Lines and Kawasaki Kisen

dropping 2.8 percent and 2.9 percent, respectively.

Steelmakers fell 1.4 percent, with JFE Holdings shedding 3.5 percent.

The broader Topix skidded 0.7 percent to 1,797, with small shares

outperforming large cap shares.

Topix Small eased 0.1 percent, compared to a 0.9 percent fall in Topix

Core 30. So far this week, the Topix Small is down 0.2 percent whereas the

top 30 firms are down 1.4 percent.

The Nikkei volatility index jumped to three-week high of 16.41.

<< Back to news headlines >>

Sterling slides to new 2018 low on weak UK inflation Wednesday 23rd May, 2018 – Reuters

Sterling fell to a new 2018 low on Wednesday after weaker-than-expected

UK inflation cast doubt on whether the Bank of England (BoE) will raise

interest rates this year.

Annual consumer price inflation cooled to 2.4 percent, its weakest

increase since March 2017.

Sterling slumped 0.6 percent after the data to $1.3347, its lowest since

Dec. 21 and government bond prices rallied, pushing five-year gilt yields

to their lowest since May 14.

Worries about Brexit and a recent run of weak economic data means

markets are now not even pricing in a full 25-basis-point hike by the end of

2018.

“All bets are off for an interest rate rise this year,” Fexco Corporate

Payments head of dealing David Lamb said.

“And if the UK economy continues to stagnate as it did in the first quarter

of 2018, the window for raising rates will remain closed,” he said.

A broad rally by the dollar has helped cause what had been one of the

best-performing major currencies to give up all its 2018 gains.

BoE policymaker Gertjan Vlieghe told the Treasury Committee of

parliament on Tuesday that policy rates are set to rise 25 to 50 basis points

every year over three years.

But a surprise drop in consumer price inflation in early 2018, partly blamed

on bad weather, and weak economic growth figures have called into

question whether the BoE will tighten monetary policy at all this year.

This month, the BoE refrained from an interest rate hike that had at one

point been widely expected.

“It is starting to appear the weaker CPI is more structural and not just

because of the bad weather,” Mizuho head of FX hedge fund sales Neil

Jones said.

“Brexit uncertainty continues to weigh and may indeed put the BoE on

hold throughout the summer and beyond,” he said.

Risks around the sort of relationship Britain can agree with the European

Union after leaving the bloc continue to weigh on the pound.

Britain’s foreign minister Boris Johnson said the country must ditch EU tariff

rules as quickly as possible and run its own trade policy, Bloomberg

reported on Tuesday.

UK gross domestic product figures due out on Friday will also be scoured

for clues on monetary policy.

<< Back to news headlines >>

Coming back to life: Dollar surge raises hopes for volatile FX Wednesday 23rd May, 2018 – Reuters

The U.S. dollar’s unexpected surge over the past month is encouraging

currency traders to pray for a return of lucrative but long-dormant price

volatility on the main foreign exchanges, although early signs on that are

strangely subdued.

Extra volatility - how much markets fluctuate up or down - opens up

pricing gaps and anomalies that give traders more opportunities to make

money, brokers more volume, and seeds greater demand for hedging

services from multinational companies and cross-border investors.

But recent years have seen big currency swings evaporate as record-low

interest rates converged towards zero and central bank money-printing

weakened the cues exchange rates take from monetary policy trends

and economic divergence.

That in turn has hammered profits at hedge funds and banks’ FX trading

divisions, though some are asking whether the dollar’s blistering 5 percent

rally since mid-April will mark a turn for vol, as known in market parlance.

“FX is back to life. We will have to wait through a few more months of low

volatility but the time will come and it is getting more attractive,” said

Andreas Koenig, head of global FX at Amundi Asset Management.

So far there is little sign of this. Markets broadly look at two gauges of

currency volatility — a daily swing in actual spot prices and an implied

gauge derived from options markets on what traders expect volatility to

be.

Three-month implied volatility EUR3MO= in the euro has completely

unwound its February surge and is heading back below 6, levels not seen

since 2014, while actual currency market swings remain comparatively

elevated.

Realised moves in the euro remain elevated with daily volatility creeping

up to around 5.5 and nearly doubling from the start of the year, a function

of the dollar’s rally that has taken currency markets by surprise.

And there lies the rub. Despite the dollar’s rise, which has drawn

comparisons with earlier cycles of a surging dollar and increased volatility

in early 2015 and late 2016, traders remain sceptical this move signals the

return to more volatile markets.

“It doesn’t feel at this stage like the beginning of a larger structural move

higher,” said Richard Bibbey, HSBC’s global head of FX cash trading, while

adding that quiet currency markets were a “cyclical” rather than

structural issue.

There are many in the market who say the recent dollar spike may be

temporary, because it has been caused by speculators unwinding record

bets against the greenback rather than a structural shift in the global

economy. What about volatility in other asset classes? U.S. Treasury bond

volatility .MERMOVE is back towards record lows. In contrast, the S&P 500's

.SPX volatility in the first 90 trading days of 2018 was the highest start to a

year since 2009, while price swings of crude oil and metals are far higher

than for the dollar.

ANAESTHESIA

Even major events in the $5 trillion-a-day foreign exchange markets, still

the world’s biggest, in the last three years including the Brexit referendum

and the removal of the cap on the Swiss franc, have failed to inject

meaningful volatility.

Broader FX volatility indicators also remain subdued - Deutsche Bank’s

Currencies Volatility Index .DBCVIX has ticked higher but remains near

January’s record lows, thanks to the anaesthetising effect on markets from

unconventional easing pursued by global central banks.

JP Morgan said the world’s top three central banks pumped in a record

$2 trillion last year as part of its policy support to markets. This year,

injections are set to drop to a quarter of that amount, followed by net

withdrawals from 2019.

“Implied currency market volatility has dropped as traders are

comfortable collecting premiums from selling options in the knowledge

that central banks will provide a backstop to markets,” said Neil Mellor, a

senior strategist at BNY Mellon. “That may be changing.”

WASTED CAPITAL

Rock-bottom volatility has seen revenues from trading currencies at the 12

biggest banks fall last year to a decade low of $7 billion, industry analytics

firm Coalition says. At its peak in 2008, revenues were double those levels.

Bank forex trading desk heads say investor activity has retreated in recent

weeks after a first-quarter bump. Cash currency trading volumes were

down 30 percent in April compared with January this year, one head of

trading at a U.S. bank in London said on the condition of anonymity.

In comparison, FX trading volumes surged in the first quarter, according to

data from various sources, including Thomson Reuters (TRI.TO) and EBS.

As volatility has subsided, so has the ability of large speculators to profit

from betting on currency moves. Hedge funds trading currencies have

made 1 percent each year since 2013 - just a quarter of the average of

overall hedge fund returns of 4.15 percent, according to Hedge Fund

Research.

Even big investors who would have taken a punt on the yen or euro a

decade ago now avoid direct currency investments, seeing them only as

an asset class to hedge against, said Bob Michele, JP Morgan Asset

Management’s fixed income chief investment officer.

“Because these are low-volatility markets you might sit on stuff a long

period of time and the valuations never change. It’s effectively wasted

capital,” Michele said. “We don’t see a lot of business coming into our FX

group.”

DISCONNECTED

What markets really need is a shake up in the consensus view of a long

cycle of benign economic conditions consisting of synchronised growth,

limited inflation risks and a slow tightening of monetary policy for volatility

to return.

Others see a return of volatility as a matter of time as interest rate

differentials between the U.S. and the rest of the developed world widen

further.

“The question is: have currencies returned to focus on interest rates? I am

not sure we are confident of that yet, but there is a very clear interest rate

advantage in holding dollars,” said James Binny, global head of currency

at State Street Global Advisors.

<< Back to news headlines >>

Oil falls as concern mounts over OPEC supply, softer global growth Wednesday 23rd May, 2018 – Reuters

Oil fell on Wednesday, under pressure from a potential increase in OPEC

crude output to cool the market’s recent rally and cover any shortfalls in

supply from Iran and Venezuela.

Across the broader financial markets, investors dumped equities and other

industrial commodities in favour of Japanese yen, U.S. and German

government bonds and gold, as concern mounted that setbacks to U.S.-

China trade talks would undermine increasingly fragile-looking world

growth. [MKTS/GLOB]

Brent crude LCOc1 futures were last down 56 cents at $79.01 a barrel by

1153 GMT, while U.S. crude CLc1 fell 41 cents to $71.79 a barrel.

Oil prices have gained nearly 20 percent so far this year, with Brent briefly

rising above $80, driven primarily by coordinated supply cuts by the

Organization of the Petroleum Exporting Countries and partners including

Russia.

The price has also been affected by rising geopolitical tensions that could

dent global output just as demand is set to hit 100 million barrels per day in

the final quarter of this year, according to the International Energy

Agency.

In addition, the United States plans to reimpose sanctions on major oil

producer Iran, while an economic crisis has decimated Venezuela’s crude

output.

Based on the prospect of a shortfall in supply relative to demand, investors

had driven their bets on a sustained rise in the price of oil to record highs

earlier this year.

But with so much uncertainty over how sanctions might affect Iranian

supply, fund managers have cut their holdings of crude futures and

options by more than 10 percent in the last seven weeks to the lowest

level this year.

“It does seem like any move above $80 attracts selling interest right now

and that could potentially lead us to a period of consolidation, where I

think $77.50 or even $75 might be in focus,” Saxo Bank senior manager

Ole Hansen said.

“We still have the unquantifiable impact of U.S. sanctions against Iran.”

OPEC may decide to raise oil output as soon as June due to worries over

Iranian and Venezuelan supply and after Washington raised concerns the

oil rally was going too far, OPEC and oil industry sources familiar with the

discussions told Reuters.

“If there is a confirmation of easing OPEC+ supply restrictions, the $100+ a

barrel theme will have to move from ‘lack of prompt supply’ to ‘lack of

spare capacity’,” said Petromatrix strategist Olivier Jakob.

Rising supply in the United States, where shale production is forecast to hit

a record high in June, has limited the upward move in prices.

U.S. crude and distillate stockpiles fell last week, while gasoline inventories

increased unexpectedly, data from the American Petroleum Institute

showed on Tuesday.

<< Back to news headlines >>

China Inc returns to U.S. soybean market as trade tensions ease Wednesday 23rd May, 2018 – Reuters

China’s state grain stockpiler has returned this week to the U.S. soybean

market for the first time since early April, a sign Beijing is preparing to

resume purchases as trade tensions between the world’s top two

economies ease, two sources said.

The renewed interest in the oilseed, used in animal feed, follows Beijing’s

pledge at the weekend to buy more U.S. goods from its top trading

partner, including agricultural products. China made the pledge to avert

a trade war that could damage the global economy.

As the two sides stepped back from a full-blown trade war, Washington

also neared a deal on Tuesday to lift its ban on U.S. firms supplying

Chinese telecoms gear maker ZTE Corp, and Beijing announced tariff cuts

on car imports.

State grains buyer Sinograin asked about U.S.-origin soybean prices this

week after being largely absent for the last six weeks, two sources with

knowledge of the matter said.

“Sinograin is in the market today asking U.S. suppliers to make offers for

shipment of old crop as well as new crop beans for shipment August

onwards,” said a source who works at a private soybean crushing

company in China.

Sinograin’s requests for prices were interpreted as a sign that government

curbs on buying American goods had been lifted.

“It is a clear message to even private companies that it is okay now to

import U.S. beans,” the source said.

Soybeans are America’s top agricultural export to China, worth $12 billion

last year.

Two other sources briefed on the matter said state grain trader Cofco

[CNCOF.UL] was also now permitted to buy U.S. soybeans, with the

restrictions put in place during high trade tensions removed.

It’s not clear how or when the government communicated this, and

Sinograin, Cofco and the Ministry of Agriculture and Rural Affairs did not

respond to requests for comment.

A Ministry of Commerce spokeswoman said the ministry has not told state

companies to increases purchases of U.S. soybeans.

One of the sources said Cofco had not yet made any purchases after

buying large volumes earlier in recent months.

The sources declined to be named as they are not authorized to speak to

the media.

BROADER PICK-UP

Traders also reported a pick-up this week in enquiries for other grains,

including U.S. distillers dried grains (DDGS), a by-product of making corn

ethanol, as improving trade relations rekindled the broader U.S.-China

grain trade.

A trader at an international trading firm said he received three enquiries

for DDGS from China in recent days, the first in a while.

“We have got more enquiries on U.S. products, including DDGS this week

from Chinese traders, following the developments last week and over the

weekend,” he said.

In November last year, Beijing removed a value-added tax on imports of

U.S. DDGS, but it kept in place an 80 percent import duty, which

prevented a big surge in Chinese buying.

U.S. Gulf export prices for the new soybean crop also rose on Tuesday by

4-5 cents a bushel, on a cost, insurance and freight (CIF) basis, which a

U.S. trader said may indicate a revival in demand from China, the top

importer of the oilseed.

The trader said exporters were lining up supplies to load vessels in October

to December, with the next U.S. crop hitting the market around

September.

RELIEF TO FARMERS

The news of China’s return to the market will come as a big relief to U.S.

farmers, who saw orders cancelled and business dry up as Washington

and Beijing lobbed trade-tariff threats at one another.

The global commodities market and trade flow of goods from sorghum

and corn to pork have been roiled by the dispute.

Beijing had warned in April it would hit U.S. imports of soybeans and other

agricultural products with an additional 25-percent duty, after the United

States had threatened to apply a similar tariff to some 1,300 Chinese

products.

<< Back to news headlines >>

Govt. to hire international law firm to negotiate future oil contracts Wednesday 23rd May, 2018 – Kaieteur News

What’s done is done.

The APNU+AFC Government has been taking that approach in the

handling of the concerns being raised about existing oil contracts. The

Coalition has been firm that there will be no reviews or renegotiations.

However, the government has vowed to ensure that the nation benefits

from the establishment of better financial regimes in future oil contracts in

order that higher revenues can be secured.

To this extent, Minister of Natural Resources, Raphael Trotman recently

announced that the government will be hiring an international law firm to

help with the negotiations of future oil contracts.

Minister Trotman’s comments came recently before the Parliamentary

Sectoral Committee on Natural Resources.

Minister Trotman told the Committee that the “time is coming soon when

we will have to issue some new licences but we will do so with the benefit

of the services of an international law firm…They have worked up a list of

international law firms and we are going to choose one of those soon.”

Minister Trotman said that Guyana seems to be on the radar of most

major oil companies around the world.

The Minister told the committee, “We have received applications from a

number of companies.

Minister Trotman said that some of these companies are “Total—the

French major, ENI—the Italian major and Chevron—the American major.

We are in discussion with Petrobras of Brazil; and, there are applications

from Repsol and a few others.

Several recommendations were made to the coalition government for it

to ensure that the remaining oil blocks are auctioned. However, based on

the utterances, Trotman said that the government will not go down this

path.

At one of his weekly Press Conferences, Opposition leader, Bharrat

Jagdeo acknowledged that Petroleum Advisor to President David

Granger, Dr. Jan Mangal’s recommended that the best approach to the

remaining oil blocks would be to auction them.

“You don’t need to bring anyone in to tell you what your advisor already

said, ‘Auction the blocks’. That is the best way that the government gets

value,” Jagdeo stated.

Auctioning of oil blocks is nothing new in the oil industry because countries

believe it brings the best value for money since operators compete to

secure rights. Last year, Mexico moved to liberalize its industry by placing

19 oil and gas blocks for auction. The South American country is eyeing

earnings of $93B from auction.

In the case of Guyana, considered a frontier oil nation, experts believed

that auctioning the blocks prior to oil discovery would not have attracted

great interest from firms. Guyana opted to allocate the blocks to investors

based on one-on-one negotiations.

Mangal noted that this creates the serious risk of corruption due to the

lack of transparency and accountability.

When ExxonMobil and its partners publicly announced the discovery of oil

off shore Guyana in 2015, the game changed. According to Mangal,

Guyana should no longer be awarding petroleum acreage via one-on-

one negotiations after the Liza discovery in 2015.

<< Back to news headlines >>

$70m Aliv Exit Delay on Cabinet Queries Tuesday 22nd May, 2018 – Tribune242

The Government’s exit from its $70m majority ownership of Aliv has been

delayed by the Cabinet’s desire for “clarity and comfort” on the chosen

route.

Gowon Bowe, pictured, one of the advisers to the planned sale, told

Tribune Business that Cabinet ministers had submitted “detailed questions

that needed answering” on the private placement offering model that

was originally selected as the Government’s exit route.

He disclosed that the queries had focused on whether a private

placement to Bahamian institutional investors was “the only option”

available to the Government, and how this “fits in” with the laws and

regulations governing such offerings.

The Government would exit 51.75 per cent ownership in Aliv, the second

mobile operator, by selling off HoldingCo, the vehicle that holds this equity

stake, and Mr Bowe said the advisers were now awaiting “clear

instructions to proceed” from the Minnis administration.

He added that the Government had been warned it can ill-afford to

cause “confusion and ambiguity” among institutions already approached

as potential investors, with lengthy delays also likely to cause a reduced

appetite for participation.

Mr Bowe said he and fellow offering advisers would be “happy with

[Cabinet] consensus”, and did not require unanimity, as they were ready

to move “with haste” in placing HoldingCo’s shares once the go-ahead

was received.

The Government inherited the private placement model from the Christie

administration, which had given its approval to the structure pre-general

election.

“Ultimately I think the Cabinet, whilst they had agreed to primarily on the

same basis they had in place, a number of questions came out from them

that they wanted comfort on,” Mr Bowe told Tribune Business.

“As they started to think about it, detailed questions came up that we

had to answer. We said to them that given the question process we need

clear instructions to proceed, because we can’t cause confusion and

ambiguity with the people [investors] involved with this. We’ve

approached them on one model and process.”

The structure agreed with the Christie administration was a private

placement model, where HoldingCo’s shares would be sold to a targeted

group of ‘sophisticated’ institutional investors.

Those institutions are the likes of Bahamian pension funds,

investment/mutual funds and credit unions - entities covering thousands of

members, and thus ensuring the broadest possible Bahamian ownership

and spread of benefits.

Other ‘exit’ routes, such as an initial public offering (IPO), were rejected on

the basis that Aliv, as a start-up operation that will incur initial heavy losses

while it completes its infrastructure build-out, was not appropriate for retail

(individual) investors.

This view has been met with some public opposition, and Tribune Business

sources have suggested some well-placed government members were

keen on an initial public offering (IPO). Mr Bowe said one Cabinet

question was whether the private placement is “the only option available

to them”.

“It’s been around providing the evidence and supporting details around

the various options and considerations presented to the previous

Cabinet,” he explained of the ‘question and answer’ moves. “They want

to be clear how the chosen path fits in, and there are no other options

around given the laws and regulations that exist.

“The original [Christie] Cabinet decision and instructions have not

changed. It’s just the Cabinet wanted clarity and to be properly briefed.

Whilst from a commercial and economic standpoint we’d like to be out

the gate and doing the placement, we are respectful of the fact the

Government is the shareholder and it’s in their prerogative to make sure

they understand.

“It comes down to HoldingCo and the administration communicating so

there’s clarity in purpose. There’s been no objection to the information

feedback. It’s just making sure they have the answers to the questions

they have.”

The Government’s investment in Aliv, via HoldingCo, was always intended

to be temporary. It was made to ensure the new mobile operator had the

necessary financing to get its operations off the ground and was not

delayed in meeting its infrastructure build-out and licensing obligations.

Its replacement by private investors, though, has been more than two

years’ in the making. The Government’s exit was delayed by last year’s

general election and, despite Prime Minister Dr Hubert Minnis’s

confirmation early in his administration that it would see the process

through, this has yet to occur.

The Government has already cited the HoldingCo sell-off, and potential

reduction of its equity interest in the Bahamas Telecommunications

Company (BTC), as two events that would help it achieve the objective of

creating a ‘shareholder society’ and spreading wealth

creation/accumulation more widely among Bahamians.

It also represents ‘low-hanging fruit’ for the cash-strapped Public Treasury,

as the potential $70 million proceeds - if fully placed - will represent a

major one-time cash injection that can significantly reduce an annual

deficit currently exceeding $300 million. It will thus finally enable the

Government to realise the fees paid by Cable Bahamas, Aliv’s controlling

shareholder, for winning the licence.

“I will be happy with consensus; I don’t need unanimity,” Mr Bowe said of

the Cabinet. “What we need, by consensus, is that everyone who is a

decision-maker in this process, the Cabinet, understands this is the route

being taken.

“We’ve articulated to them that the more time passes, the more anxiety

comes about in terms of clarity on the road ahead. Once there’s

confirmation of the original decision or instructions otherwise are sent out,

we will mobilise with haste to get it done.

“A lot of the leg work has been done, more information [on Aliv] is

available. The framework already exists, and the build-out of the structure

is easy enough once everyone is of the same accord.”

<< Back to news headlines >>

Gov't Hotel Exit Depends If Buyer 'Still Interested' Tuesday 22nd May, 2018 – Tribune242

Completion of the Government's 26-year bid to exit hotel industry

ownership now depends on whether the Bahamian purchaser of its last

property "is still interested".

Dionisio D'Aguilar, pictured, minister of tourism, told Tribune Business he

planned to check with the Lighthouse Yacht Club and Marina's potential

buyer to see if they still wanted to pursue the deal given the length of time

that has "elapsed" since the initial offer was submitted.

"Someone has offered to buy the property," he confirmed of the last Hotel

Corporation-owned resort. "Their bid was submitted to the Cabinet and

approved, but I need to confirm they are still interested.

"There has been an offer made and an offer accepted, but I need to

make sure the buyer is still interested given the time that has elapsed

between when the bid was made and when the bid was accepted. Let

me see if he's decided to buy it."

Both Mr D'Aguilar and Frederick McAlpine, the Hotel Corporation's

chairman, confirmed that the prospective purchaser of the still-closed

Andros resort is a Bahamian. They declined to name them, but the latter

described the buyer as "familiar with the hotel business", having worked on

other boutique Family Island properties.

Besides the wait for Cabinet confirmation on the Lighthouse Club deal, Mr

McAlpine said the Hotel Corporation Board was also awaiting sign-off on

plans to transition into a Tourism Development Corporation - a change

that has been "in the works" for almost two decades.

Mr McAlpine, the Pineridge MP who has gained a reputation for speaking

out against his own government and party, said the failure to complete

this transformation has placed The Bahamas "behind" regional

competitors, leaving the Government less able to participate in and

guide the direction of tourism industry development.

"It's in the works to be sold," Mr McAlpine said of the Lighthouse Club. "It's

still awaiting confirmation from the Cabinet. We recommended that it be

sold and we're moving towards that, hopefully soon. We forwarded our

recommendation and are just waiting to hear from the Cabinet of the

Bahamas in that regard."

Confirming that the chosen purchaser planned to "refurbish and rebuild"

the Fresh Creek property, which has been closed ever since Hurricane

Matthew's devastation of October 2016, Mr McAlpine said of the buyer: "It

is a Bahamian who is familiar with the hotel business.

"They are very familiar with the hotel business because they have also

done work with other hotels on the Family Islands. We wanted to choose

someone who at least is familiar with being able to deal with it as a

project."

Mr McAlpine told Tribune Business that the Hotel Corporation had

managed to save taxpayers some $250,000 by terminating the Lighthouse

Club's 20-plus staff and paying them due severance, after the Christie

administration kept them on despite the hotel being closed.

"We were paying people for a year who weren't working because of the

closure of the hotel, and we were able to terminate them without any

problems," he said. "We gave severance to probably 20-plus staff and

were saving the Corporation thousands of dollars because we no longer

had to pay them. We were paying over $250,000 to keep them on staff."

Numerous attempts to sell the 20-room Lighthouse Club, whose amenities

include a 30-slip marina, pool and tennis court on 11 acres of beachfront

land, have been made before with little success.

The last Ingraham administration was trying to negotiate a sale to Illinois-

based Scheck Industries when it left office in May 2012, in a bid to end

financial bleeding that was costing the Hotel Corporation some $500,000

per year.

Under the proposed agreement with the then-Ingraham administration,

land and investment incentives would have been released to Scheck in

accordance with "timeframes and milestones for development".

The company had proposed a $15 million investment in the first phase,

and construction and full-time jobs of 50-plus, but nothing further was

heard of Scheck once the Christie administration took office.

Tribune Business then revealed in 2014 that rival Bahamian-led bids with

strong Andros connections were battling to acquire the Lighthouse Club.

Prescott Smith, owner of Stafford Creek Lodge, confirmed he was heading

one group, while Vanlock Fowler, owner of Nassau-based All Purpose

Steel Company, confirmed he was part of another.

Again, though, no deal was closed. The property remains shuttered, with

the Matthew-related damage not repaired, resulting in the Minnis

administration offering the assets on an 'as is' basis when it began

marketing the Lighthouse Club for sale last September.

The land upon which the Lighthouse Club sits is more valuable than the

buildings and, together with the sale, Mr McAlpine said the Hotel

Corporation's Board had also submitted plans and timelines for

transforming itself into a Tourism Development Corporation.

"We're looking forward to moving from a Hotel Corporation to a Tourism

Development Corporation," he told Tribune Business. "That should also be

a primary goal to realise.

"That has been put to Cabinet, and we're awaiting their approval. The

Hotel Corporation has done its due diligence and everything we have

done has been forwarded to Cabinet. That was my hope; to transform or

go through the metamorphosis from a Hotel Corporation to a Tourism

Development Corporation, which has been in the works for 20 years."

Mr McAlpine said he was unsure whether the Hotel Corporation and

Tourism Development Corporation would exist as separate, standalone

entities, or if one will be the subsidiary of the other, as the corporate

structure has yet to be determined.

"I'm hoping we can transition to the point where everything comes under

the Tourism Development Corporation rather than the Hotel Corporation

but, for legal purposes, we may have to have the two," he revealed.

"With the Tourism Development Corporation, we can do more to develop

tourism. We have to encourage tourism development and be part of it,

whether it's eco-tourism or boutique hotels. We can have a say in the

development of the industry and the things being done."

A Tourism Development Corporation has been planned since the 2002-

2007 Christie government, but has yet to come into fruition under three

successive administrations. Its role would likely involve attracting investors,

and even partnering with them in joint ventures, given the significant

landholdings it will inherit from the Hotel Corporation.

The latter's remaining assets include about 3,200 acres of undeveloped

land in Eleuthera, in the area of Winding Bay and Half Sound, plus

property on Andros. "We still own a lot of property in Eleuthera and

Andros," Mr McAlpine confirmed. "We'll be selling the land and using the

land for development of other things."

He added that Prime Minister Dr Hubert Minnis had identified the Tourism

Development Corporation's creation as an early goal and said: "This has

been in the making for a very long time. A lot of work has been done on

its development.

"It's the future. We're behind in this regard. Many of the countries in the

region have developed Tourism Development Corporations to develop

their industries. It's something that's needed and needed to move us

forward.

A successful sale of the Lighthouse Club would seemingly mark the end of

a 26-year process, begun under the first Ingraham administration in 1992,

with the sales to Sandals and SuperClubs Breezes, to extricate the

Government from the business of hotel ownership. It will also mark the end

of an inglorious chapter under the Pindling administration when millions of

taxpayer dollars were wasted in trying to prop up failing, loss-making

hotels.

<< Back to news headlines >>

DPM 'Hopeful' GDP Growth Will Escape Oil Price Shocks Tuesday 22nd May, 2018 – Tribune242

The Deputy Prime Minister is expressing confidence that The Bahamas will

meet its 2.5 per cent GDP growth target despite rising oil prices, adding:

"Hopefully we'll be able to ride it out."

KP Turnquest, pictured, conceded to Tribune Business that increased

energy costs, with global oil prices hitting the $80 per barrel mark last

week, could throw the Government's economic growth and fiscal

consolidation plans off course.

However, he expressed optimism that a healthy foreign direct investment

(FDI) pipeline, combined with external reserves just shy of $1.6bn at end-

March 2018, would help cushion any reduction in consumer spending and

confidence.

"That is obviously something we're watching," he said of rising oil prices. "It

could have an effect on our consolidation plans, so we have to manage

it is as an outlier and build in as many contingencies as we can.

"Where we have a rise in oil prices it affects the amount of investment

dollars and consumer confidence. Those are factors we have to watch,

but hopefully the oil price will not rise too much further and we will be able

to contain the risk in the envelope we have developed."

Many analysts are predicting that prices will continue to rise past $100 per

barrel, driven by supply cuts from key Oil Producing and Exporting

Countries (OPEC) members, particularly Saudi Arabia and Russia.

Much of the world's oil reserves are located in volatile and politically

unstable regions, such as the Middle East and Venezuela, and Donald

Trump's decision to withdraw the US from the Iran nuclear deal has helped

spark last week's price surge amid fears of supply interruptions following

the renewed imposition of sanctions.

The Bahamas relies 100 per cent on imported fossil fuels for virtually all its

energy needs, making it especially vulnerable to upward movements in

global oil prices - something acknowledged by Mr Turnquest.

"In an open economy these are risks we are constantly faced with," he

told Tribune Business. "We don't control them. It only gives credence to the

fact that during periods of declining oil prices we ought to be investing in

alternative energies and encouraging persons to invest in alternative

energies, as well as energy efficient equipment.

"Fortunately for us we have very healthy reserves, so hopefully we will be

able to ride it out, hope it's a temporary issue and get back to more

normal prices in short order. It does have an affect on the reserves, but we

have no concerns at the moment."

Mr Turnquest conceded that further, sustained oil prices will cause

investors and consumers to "pull back" due to the resulting uncertainty. Yet

he added: "At the moment we have very healthy investments in the

ground, so we have confidence that we'll be able to meet that [2.5 per

cent] growth or not be too much off.

"We feel pretty confident where we are, fingers crossed and all that."

<< Back to news headlines >>

RBC Mortgage Lender 'Not Where We Need It' Tuesday 22nd May, 2018 – Tribune242

Royal Bank of Canada's (RBC) mortgage lending arm "is still not where we

need it to be", the bank's top regional executive has conceded, despite

improvements elsewhere in its portfolio.

Rob Johnston, head of RBC Caribbean Banking, said that while the bank

has "looked at" removing bad debt from its balance sheet, it has enjoyed

success with debt restructuring - except at BISX-listed Finance Corporation

of The Bahamas (FINCO).

"Our business clients are enjoying some of the economic activity that is

coming back into The Bahamas," he said. "That portfolio for RBC is really

strong. Our corporate portfolio is very strong. In fact, we have absolutely

no delinquency in our corporate portfolio.

"Our personal banking business in The Bahamas bank is very strong and,

again, we are not concerned at all. Where we have not been able to

make the same progress is with our clients who are dealing with FINCO.

Our mortgage experience is still not where we need it to be, and there

are a number of reasons why."

Mr Johnston added: "We are working with the judiciary, the Government

and other stakeholders to try and help clients get that part of their stability

where they want it to be. People don't want to be worrying whether they

are going to lose their home.

"We are not in the business of taking people's homes from them. We want

to help people find ways to make ends meet but also honour their

obligations. That's that fine balance that we are prepared to, at the

individual client level, find the right answer."

Tribune Business reported last month that RBC FINCO reported a 67 per

cent year-over-year slump in 2018 first quarter profits. Mr Johnston told

Finance Corporation of The Bahamas (FINCO) shareholders at the time

that recurring non-performing loan woes were largely responsible for the

two-thirds drop in total comprehensive income.

Non-performing loans rose by more than $5m in the three months to end-

January 2018 to hit $126m, which Mr Johnston said represented a 6 per

cent year-over-year rise and 4 per cent increase on the $120.87m at year-

end 2017.

Mr Johnston said RBC has looked at moving bad debt off its books. "We

are looking at it. I wouldn't be genuine if I didn't. You have to look at

options. To date we haven't made that choice," he said.

"We have found that we have been successful structuring facilities for our

individual clients. We have been on occasion required to take possessions

of homes, and we have been able to sell them into the market. Selling

parts of a portfolio is a viable option and we have looked at it."

<< Back to news headlines >>

Saint Lucia recognized as “Best Island in the Caribbean” Tuesday 22nd May, 2018 – St. Lucia News

Saint Lucia has been recognized as the “Best Island in the Caribbean” by

Global Traveler at their Sixth Annual Leisure Lifestyle Awards.

Global Traveler is a monthly publication that attracts some 300,000

readers and connects with U.S.-based frequent, affluent, international

travellers who have an average net worth of $2 million. The awards

cocktail took place on the rooftop of Sofitel Los Angeles, Beverly Hills. This

award marks the destination’s second ‘Best Island in the Caribbean’

honour in the 6-year life of the Global Traveler Leisure Lifestyle Awards,

Saint Lucia having won the inaugural award in 2013.

Saint Lucia registered a record-setting year in 2017, with year-to-date

numbers for 2018 improving over the same period last year.

First quarter figures for 2018 show a 17.8% increase in stay-over arrivals and

a 13.5% increase in cruise arrivals over last year’s record.

Remarking on Global Traveler award, Minister for Tourism Hon. Dominic

Fedee stated, “This is an award of recognition to the hard work and

dedication of every hospitality worker and to every Saint Lucian. It is the

Saint Lucian story and its majesty which continues to attract visitors to the

destination making it a world-class holiday and business destination for

travellers.”

Global Traveler also highlighted Saint Lucia as a ‘dream come true’ port

of call for cruise visitors. The award survey was conducted in the Global

Traveler magazine through an insert in subscriber copies, as a direct mail

questionnaire, online and in emails. Saint Lucia beat out nine other

destinations for the top honour, including Aruba, Grand Cayman, Saint

Vincent and the Grenadines, the Bahamas, Curaçao, Nevis, Jamaica the

British Virgin Islands and the U.S. Virgin Islands.

“We believe Saint Lucia is a unique Caribbean destination which offers

something to every traveller and this award is in recognition of our

destination’s appeal. We will continue to find creative ways to present

Saint Lucia in the marketplace as we seek to increase market penetration,

awareness and visitor arrivals,” stated the Executive Chairperson of the

Saint Lucia Tourism Authority Agnes Francis.

Each year, Global Traveler awards the GT Tested Reader Survey awards,

the Leisure Lifestyle Awards and the Wines on the Wing awards.

<< Back to news headlines >>

Agriculture planning for hurricane season Tuesday 22nd May, 2018 – SKN Vibes

With the start of the 2018 hurricane season several days away, the

Department of Agriculture on St. Kitts is currently in the process of planning

mitigation efforts so as not to have a long-term effect should a major

storm hit St. Kitts and Nevis.

The federation is still rebounding from the effects left by Category Five

Hurricanes, Irma and Maria. Last year the sector recorded over $10 million

in damage from the passage of the storms.

Agriculture Director, Melvin James revealed that the Department has

established a working committee that will be discussing the way forward

in dealing with the passage of hurricanes during the 2018 season.

“In our last senior management meeting, we agreed that we will be

forming a committee for hurricane mitigation. That committee will be

meeting within the next two weeks and we will put out our detailed plans

to assist the industry and farmers.”

The 2018 hurricane season starts on June 1 and will run until November 30.

Last year, St. Kitts and Nevis got the tail end of the two hurricanes which

left substantial damage to the islands. According to government

estimates, the storms left over $100 million in damage.

Director James told SKNVibes that they have already formulated what the

committee will be, and their first meeting will be held shortly.

Not disclosing what plans they have for farmers to mitigate against major

crop damage and losses, the Director noted that they have divided up

the island into blocks and will allocate resources and make

recommendations when and where necessary.

“The general recommendations for farmers are things like always monitor

the weather reports. Even when planting you look at the period that the

crop is going to be in the field; we look at the storage capacity that is

both the individual and the department capacity.”

Further, he urged farmers to look at the type of crop that they can plant

below ground rather than above during the season.

“We also want to give more specifics and that is what we are going to be

able to do in the near future,” James stated.

Hurricane experts at the Colorado State University are predicting that the

2018 Atlantic Hurricane Season will be similar to 2017 or above normal.

The experts predict that there will be 14 named storms for the season.

According to officials, there were 10 hurricanes out of a total of 17 storms

that were named last year.

<< Back to news headlines >>

Past BIBA president now Spain’s honorary consul in Barbados Tuesday 22nd May, 2018 – Nation News

A new Honorary Consul of the Republic of Spain in Barbados has been

appointed.

She is Connie Smith, managing director of Tricor Caribbean Limited and a

past president of the Barbados International Business Association (BIBA).

She replaces Mandy Chandler who served in that capacity from April

2009 to August 2017. Like Smith, she is an experienced business executive.

Smith was recently presented with her Exequatur by Chief of Protocol,

Philip St Hill, in a brief ceremony at the Ministry of Foreign Affairs and

Foreign Trade, Culloden Road, St Michael.

In congratulating the new appointee, St Hill assured her that the Ministry

stood ready to lend support to her assignment. He also provided an insight

into the Barbados-Spain relationship, saying: “We haven’t had a lot of

what you would term active relations and technical cooperation projects

…, but the friendship continues and I know that we have a very active

consultation for elections to international bodies. Barbados has benefited

from the support of Spain and I believe Spain has, in the past, also

benefited from Barbados’ support.”

St Hill hailed the signing of a Double Taxation Agreement (DTA) with Spain

in 2010 as a significant milestone and said it bore with it the hope that it

could “be used as a basis for the generation of more business contact

and business relations between the two countries”.

Assuring the new Honorary Consul she was ideal for the position, given her

background in the business arena, he added: “We would hope that

during your tenure we could move forward in these areas of business.”

The Chief of Protocol also alluded to Barbados’ concerns about the

European Union’s blacklisting and stressed the signing of the DTA with

Spain had been instrumental in ensuring Barbados was earlier dropped

from Spain’s blacklist, something he hoped would continue indefinitely.

Expressing the hope that there would be the signing of some technical

cooperation agreement in the future, he said Barbados would be aiming

for the continued expansion of bilateral relations “not limited to any one

sector or any one area”.

Dean of the Consular Corps, Selwyn Smith, also welcomed Smith to that

body and provided a brief overview of its role and function and the

expectations that might come with her role. He noted that she had the

potential, like Sir Trevor Carmichael, Peter Laurie and himself, to find

herself “doing several decades of service” to the Corps.

Smith, in her response, thanked the Protocol Chief and the Foreign Affairs

and Foreign Trade Ministry for the confidence reposed in her.

“I confirm here and now, the assurance that I would do my very best to

provide the greatest level of cooperation with the Barbados authorities in

all issues related to my new responsibilities, following in the footsteps of my

predecessor Mandy Chandler.

“In this globalised world, bilateral relations among states have to be fluid,

quick and efficient. Please rest assured that in my new capacity and

being aware of the limits of my mandate, I will do whatever it is in my

power to contribute at the local level to maintain a good working

relationship between Barbados and Spain,” she pledged.

She noted also that she looked forward to Barbados negotiating and

having a Bilateral Investment Treaty with Spain to complement the Double

Taxation Treaty already in place.

The new Honorary Consul further noted that the Ambassador of Spain to

Barbados, Javier Carbojosa, who is resident in Trinidad, was due to visit the

island and was looking forward to meeting with local authorities to discuss

points of mutual interest and benefit to both countries.

Smith’s appointment took effect from May 10, 2018.

< Back to news headlines >>

CCJ’s First President Says a Barbados Withdrawal from the Court Would Be

Retrograde Step Tuesday 22nd May, 2018 – Caribbean 360

Former president of the Caribbean Court of Justice (CCJ) Michael de la

Bastide says if Barbados withdraws from the appellate jurisdiction of the

court it will undermine the standing of the court in the eyes of the region’s

people.

And he is hoping that the threat to withdraw would not become reality.

Barbados was the first Caribbean country to adopt the CCJ as its final

court of appeal. But at a political meeting last weekend, Prime Minister

Freundel Stuart signalled that if his Democratic Labour Party is returned to

office, “Barbados will be withdrawing from the Caribbean Court of Justice

as its final court of appeal.”

Speaking to Guardian Media yesterday, de la Bastide, the first CCJ

president, said if Barbados withdraws from the court it will be a

“retrograde step,” for that country and one that will “seriously undermine

the standing of the court” in the region.

“One hopes it does not come to pass,” de la Bastide said.

Stuart made it clear Barbados will not return to the Privy Council as its final

court of appeal, but offered no alternative to the CCJ, prompting de la

Bastide to ask: “Is he going to make the Barbados Court of Appeal the

final court?”

The former CCJ president said he hopes that if Stuart wins the election, he

does not carry out his threat.

Apart from Barbados, the only other CARICOM countries that have signed

on to the appellate jurisdiction of the court are Dominica, Guyana and

Belize. The others still retain London’s Privy Council as their final appeals

court. (Adapted from Trinidad Guardian)

<< Back to news headlines >>

More Robust Reduction in Interest Rates Needed to Spur Growth Wednesday 23rd May, 2018 – Jamaica Gleaner

Despite the Bank of Jamaica (BOJ) reducing interest rate five times since

last July, Governor Brian Wynter says further and more robust downward

adjustments may be needed to overcome the sluggishness of the

economic recovery.

Last week, the central bank reduced the policy rate the interest rate paid

on overnight deposits at the BOJ by 25 basis points to 2.50 per cent.

"This policy change reflects the bank's assessment that inflation over the

next three quarters will fall below the lower end of the bank's target of 4-

6.0 per cent before increasing towards the centre of the target in the

March 2019 quarter," Wynter said.

The central bank now announces its policy rate decisions on a pre-set

schedule. The next decision will be announced on June 27.

Since the switch to the overnight interest rate as the policy rate in July

2017, the BOJ has implemented five cuts, totalling 125 basis points.

"There is reason to be concerned, however, that the adjustment has not

so far been enough to stimulate economic activity to levels consistent

with the inflation target," said Wynter at his quarterly briefing at the central

bank on Monday.

BOJ switched to inflation targeting over the medium term last September,

with the target currently at 4-6 per cent.

Wynter noted that the economy has continued to show signs of gradual

but sluggish recovery. The central bank reported that for the March 2018

quarter, output is estimated to have expanded in real terms by 1.0 per

cent to 2.0 per cent, compared to 0.1 per cent during the corresponding

period last year, and 1.1 per cent in the December 2017 quarter.

The estimate for the March 2018 quarter reflects some growth in net

exports.

Wynter said the most recent information from the Statistical Institute of

Jamaica indicates that headline inflation at April 2018 was 3.2 per cent,

lower than the 3.9 per cent the month before and the 5.2 per cent

recorded for December 2017.

Inflation was lower than the target mainly because of a sharper-than

anticipated decline in agricultural prices since January, reflecting the

recovery in output, as well as an unusually sharp decline in electricity costs

in April.

The BOJ is projecting acceleration in economic growth over the next two

years. Along with projected growth in output, labour market conditions

are expected to continue to improve and may, at some point, support

wage-related inflation in Jamaica if labour productivity does not improve,

Wynter said.

Noting that the risks to the inflation forecast are skewed to the downside,

the governor said the major ones are weaker-than-anticipated domestic

demand conditions and slower-than-anticipated global economic

growth.

"The latter risk is associated with nascent geopolitical tensions and

protectionist policies that have surfaced over the last six months or so," the

governor said.

He did not specify the risks, but among them are United States President

Donald Trump's decision to hike tariffs on steel and aluminium imports,

new sanctions that are an emerging threat to the operations of Russian-

owned bauxite/alumina operations in Jamaica, and threats to abandon

the North American Free Trade Agreement.

Tensions have been caused by, among other things, Trump's decision to

exit the international nuclear deal, which gave Iran relief from sanctions in

exchange for halting its nuclear programme.

Wynter said there is also an upside risk to inflation from higher-than-

projected crude oil prices, "but our current assessment is that crude oil

prices are likely to eventually fall as geopolitical uncertainties wane and

the impact of excess supplies prevails on the market".

Adverse weather may also cause domestic agricultural prices to rise faster

than anticipated, he said.

<< Back to news headlines >>

Jamaican Economy Expands 1.2% In March Quarter Wednesday 23rd May, 2018 – Jamaica Gleaner

The mining and quarrying industry, which grew by 25.5 per cent,

contributed the lion's share to a 1.2 per cent expansion of the Jamaican

economy during the March 2018 quarter.

For fiscal year 2017-18, however, the growth rate was anaemic as the

economy expanded by just 0.8 per cent, according to preliminary data

released by the Planning Institute of Jamaica (PIOJ) on Tuesday.

Notwithstanding that, all industries expanded during the quarter,

according to PIOJ Director General Dr Wayne Henry, who said the positive

out-turn largely reflected rising external demand from Jamaica's main

trading partners, which supported increased exports of some goods and

services, particularly tourism.

The economy's performance was also attributed to increased hotel room

and air-seat capacity, which facilitated growth in stopover visitor arrivals;

and increased capacity utilisation, especially in the mining and

manufacture industries; major infrastructure works, including road

rehabilitation and expansion projects, and the construction and

renovation of hotels, residential and commercial buildings, said Henry, in

his quarterly press briefing at the PIOJ's offices in New Kingston.

The goods-producing sector grew by an estimated 3 per cent with all

industries registering improvements in real value added during the review

quarter.

"This performance largely reflected the impact of increased demand,

improved weather conditions and increased capacity utilisation," Henry

said.

The agriculture, forestry and fishing industry grew by an estimated 0.5 per

cent and was facilitated by improved weather conditions relative to the

corresponding quarter of 2017. The largest contributor was traditional

export crops, which grew by 2.2 per cent largely due to a 13.5 per cent

increase in banana production.

Growth in the mining industry was attributable to a 28.7 per cent increase

in total bauxite production, reflecting higher alumina and crude bauxite

production.

Alumina production was 27.1 per cent higher, reflecting the resumption of

productive activity at the Alpart alumina refinery in St Elizabeth since

October 2017, while crude bauxite production grew by 27.7 per cent due

to more conducive weather conditions.

The manufacturing industry grew by an estimated 1 per cent, while

construction was up by 1.5 per cent.

The services industry was estimated to have grown by 0.7 per cent during

the quarter, reflecting real value-added increases in all industries.

Electricity and water supply expanded by 0.4 per cent; transport, storage

and communication by 0.8 per cent; finance and insurance services by 1

per cent, and the wholesale and retail trade, repair and installation of

machinery industry by 0.6 per cent.

The hotels and restaurants industry grew by an estimated 1.6 per cent,

largely reflecting increased arrivals from Jamaica's primary source market,

the United States. Total arrivals of stopover and cruise tourists increased by

6.6 per cent to 1.29 million visitors.

Henry said the PIOJ is projecting growth within a range of 1.5 per cent to

2.5 per cent for the June quarter, noting that prospects for the economy

are generally positive based on the anticipated strengthening of most

industries.

The growth projection for fiscal year 2018-19 is within the range of 2 per

cent to 3 per cent, an out-turn largely predicated on the anticipated

recovery in the agriculture industry, as well as expansion in output in the

mining and quarrying industry.

Henry said that since the resumption of production at Alpart, now owned

by JISCO, the refinery has been operating at half its capacity but the

ongoing upgrade of existing equipment should lead to an increase in

capacity utilisation.

<< Back to news headlines >>

NHT Automates Debt Management, Collections Rise Wednesday 23rd May, 2018 – Jamaica Gleaner

The National Housing Trust, NHT, says new loan management software

resulted in more than a $1-billion boost in collections of mortgage

payments, while cutting loan defaults to new lows.

In the fiscal year ending March 2017, mortgage collections climbed to

$20.1 billion, or seven per cent more than the $18.75 billion reported in the

previous year.

The collections nudged the housing agency just above the targeted

collections of $20 billion set for the 2017 fiscal year, by 0.5 per cent.

"The overall improved performance of this portfolio was supported by the

implementation of the debt management software," NHT said in its

financial report tabled in Parliament earlier this month.

The agency spent US$381,000, or around $48 million, on the software to

manage collections on a mortgage loan portfolio that was valued at $162

billion in 2017. The software was acquired from an American company

called Fiserv Inc.

NHT told the Financial Gleaner that it implemented the software in early

December 2016 as a means of automating the management of the

delinquency portfolio.

Since then, the default rate has fallen to "an all-time low of 9.9 per cent,"

whereas the range is generally between 11 per cent and 15 per cent, the

housing agency told the Financial Gleaner.

The NHT portfolio comprised some 108,309 mortgage loan accounts last

year. At year ending March 2017, the agency reported a surplus of $24.2

billion, which was 34 per cent higher than the previous year.

<< Back to news headlines >>

Poverty Down Wednesday 23rd May, 2018- Jamaica Observer

FINANCE Minister Dr Nigel Clarke yesterday informed Parliament of a 19

per cent decline in the rate of poverty in Jamaica in 2016, which he

described as “the largest annual reduction” in a decade

In a statement to the House of Representatives, Dr Clarke said that a

dramatic fall in the incidence of poverty “must be considered good news

by all Jamaicans”.

Copies of the newest version of the Jamaica Survey of Living Conditions,

from which Dr Clarke extracted the information, were not available, but

copies of the minister's statement were handed out to the press.

Opposition spokesman on Finance Mark Golding, in responding to the

minister, said that the positive momentum was inherited from the previous

People's National Party Government and continued through the calendar

year of 2016.

“Of course, we are very pleased that the good work that we did to

reorient the economy, stabilise the macro-economy, bring in high levels of

additional investment, and turn the country to consistent growth has

played out [and], as we expected, [have a positive impact on] the

poverty data,” Golding stated.

Dr Clarke had been expected to make a statement on the regulations to

the newly passed Public Procurement Amendment Act, which would

have addressed issues such as the differential treatment of Jamaican

businesses under the delayed procurement policy. However, Leader of

the House Karl Samuda told members that the minister would make a

statement on the poverty data, instead. No explanation was given for the

delay in tabling the regulations.

In his statement, the minister announced that the Planning Institute of

Jamaica (PIOJ) yesterday released results of a survey conducted annually

by the Statistical Institute (STATIN), which had captured data on living

conditions of Jamaicans.

He said that, normally after STATIN's survey, the PIOJ releases individual

poverty rates it has calculated from the data, based on consumption and

expenditure, covering a one-year period.

According to Dr Clarke, the results released by the PIOJ showed that

poverty, in an absolute sense, declined from 21.2 per cent for calendar

year 2015 to 17.1 per cent in calendar year 2016, a fall of four percentage

points, which represents a 19 per cent drop in the incidence of poverty,

which he described as “the largest annual reduction in 10 years”.

He said that, based on the information, the poverty rate had fallen to its

lowest since 2009.

Clarke added that rural poverty had declined from 28.5 per cent in 2015

to 20.5 per cent in 2016, a fall of eight percentage points, representing a

30 per cent drop in the incidence of rural poverty.

He said that in the Kingston Metropolitan Area, according to the figures,

poverty declined from 14.3 per cent to 11.9 per cent, representing a 17

per cent fall in the rate or incidence of poverty.

But he said that for other towns, disaggregated data showed that there

was an increase in the proportion of individuals in poverty from 14.7 per

cent to 16 per cent.

“It is an indicator of the general imbalance in the distribution of growth

and development that is possible and points to the need for direct

targeting to reach all vulnerable groups,” Dr Clarke said.

He added that the declines in poverty recorded in the information were

consistent with rising employment, low inflation, and a sharp jump in

agricultural output of 12 per cent in 2016 relative to 2015.

“It is my view that this news, which I am happy to present to the

Honourable House today, is received warmly, positively, and

enthusiastically by all members. Much work is being done and it is bearing

fruit, and work remains to be done,” he concluded.

FINANCE Minister Dr Nigel Clarke yesterday informed Parliament of a 19

per cent decline in the rate of poverty in Jamaica in 2016, which he

described as “the largest annual reduction” in a decade.

<< Back to news headlines >>

Unemployment continues to decline Wednesday 23rd May, 2018- Jamaica Observer

Jamaica's unemployment rate continued its downward trend to record

3.1 percentage points, lower than the rate recorded in January 2017.

Data provided by the Statistical Institute of Jamaica (STATIN) for the

month of January 2018 showed that Jamaica's unemployment rate was

9.6 per cent, the lowest unemployment rate recorded since October

2007.

The number of Jamaicans employed increased by 22,600 people relative

to January 2017. However, there was a decline in the labour force by

21,200 people to 1,335,100.

Director general of Planning Institute of Jamaica (PIOJ), Wayne Henry,

said while the country's working-age population grew by 1,100, there was

an increase of 22,300 in the number of people outside the labour force.

He was speaking at the PIOJ's press briefing on Jamaica's economic

performance for the period January to March.

The main reasons cited for this increase in people outside the labour force

were 17,000 more people indicating that they “did not want work”; 5,800

more saying that they were “at school part-time” and 4,600 more people

indicating that they were “at school full-time”.

Total number of employed people as at January 2018 stood at 1,206,600.

An examination of the employed labour force by industry group revealed

that 10 of the 16 sixteen industry groups recorded higher employment

levels. The largest increases in employment levels were recorded in

wholesale and retail trade (up 7,900 people); construction (up 7,300

people); hotels and restaurants (up 6,400 people); and other community,

social and personal service activities (up 3,900 people).

JAMAICA'S POVERTY RATE FALLING

During 2016, the country recorded a full recovery from the job losses

which followed the 2008 global economic crisis. The development was

accompanied by a decline in the overall poverty rate to 17.1 per cent, a

reduction of 4.1 percentage points relative to 2015.

It also represents the second downward movement recorded for national

poverty rates since 2007.

Henry noted that the decline in the poverty rate for 2016 could be

attributed to Jamaica's GDP growing by 1.4 per cent in 2016; low inflation

of 1.7 per cent in 2016, representing the lowest rate in 45 years; increased

employment and higher remittance receipts of US$65.5 million to

US$2,291.5 million in 2016.

With respect to regional distribution, there were declines in the poverty

rate for the Kingston Metropolitan Area — which fell 2.4 percentage points

to 11.9 per cent — and rural areas, which recorded an eight-percentage

point decline to 20.5 per cent. Other towns, on the other hand, registered

an increase of 1.3 percentage points to 16.0 per cent.

The PIOJ also noted that agriculture, which accounted for 7.3 per cent of

GDP in 2016, comprises a significant part of the rural economy and

positively impacted poverty.

<< Back to news headlines >>

IMF concludes mission to Grenada Tuesday 22nd May, 2018- Caribbean News Now

An International Monetary Fund (IMF) staff team visited Grenada during

May 2-15 for the 2018 Article IV consultation and held discussions with the

Grenadian authorities, business community, and social partners.

A concluding statement described the preliminary findings of IMF staff at

the end of the official staff visit (or ‘mission’), as part of regular

consultations under Article IV of the IMF’s Articles of Agreement, in the

context of a request to borrow from the IMF, as part of discussions of staff

monitored programs, or as part of other staff monitoring of economic

developments.

Grenada’s economy made important strides in recent years, achieving

an impressive debt reduction of 37 percentage points of GDP since 2013,

improving the framework for fiscal policy, strengthening the financial

system, upgrading governance, and creating a better business

environment. The authorities are to be commended for continued

progress in these areas while collaboratively consulting with social

partners.

The focus now should turn toward making growth more broad-based,

raising potential growth, further reducing unemployment, and efficiently

using the hard-earned fiscal space to make the economy more

prosperous and resilient to economic shocks and natural disasters.

Recent Developments and Outlook

1. The Grenadian economy grew by an estimated 4.5 percent in 2017,

driven by strong activity in construction, tourism, and education sectors.

Weather-related weaknesses in agriculture have, however, been a

headwind. Unemployment, while falling, remains high (23.6 percent in

2017). Inflation is low, falling below 1 percent, supported by the peg to the

US dollar. The 2017 current account deficit increased by 3.5 percentage

points of GDP to 6.75 percent of GDP, reflecting rapid import growth.

FDI is estimated at 8.5 percent of GDP, driven by tourism and proceeds

from the Citizenship-by-Investment (CBI) program. Bank credit has recently

shown signs of incipient growth as non-performing loans continue to

decrease helped by economic growth and increase in property prices. In

contrast, credit union lending (which now makes up a quarter of total

credit), grew briskly by some 20 percent.

2. The fiscal situation improved further in 2017, with the government

overperforming the targets of the Fiscal Responsibility Law (FRL). The

primary surplus increased to 5¾ percent of GDP (the FRL floor is 3.5

percent of GDP) supported by buoyant tax revenues due to the strong

economy, improved tax administration, and better compliance.

Recurrent spending was contained, while targeted social spending was,

appropriately, increased. However, a shortfall in grant financing and

bottlenecks in project execution combined to keep capital outlays well

below budgeted levels.

Public debt fell to 71 percent of GDP at end-2017 (from 82 percent of GDP

in 2016) reflecting the strong fiscal position, the completion of the final

phase of bond restructuring, and the lowering of interest costs from

restructuring some of the expensive domestic debt. Progress has also

been made in addressing external and domestic arrears, but negotiations

with three bilateral creditors aimed at fully regularizing arrears have yet to

be concluded.

3. Staff’s outlook anticipates continued compliance with the FRL and

further progress on supply-side reforms. In 2018 and 2019, the economy is

projected to grow by 3½ percent benefiting from supportive global

economic conditions, continued strength in construction, and a tourism

sector that has shown itself to be competitive within the ECCU. Thereafter,

growth is expected to ease to the long-term potential rate of 2¾ percent.

Inflation should edge up in 2018 reflecting recent global energy price

increases but stabilize at 2 percent in the medium term.

The primary fiscal surplus is expected to remain high in the near term,

supporting rapid debt reduction, although once the public debt ratio falls

below 55 percent of GDP (projected for 2020), the FRL would allow for a

reduction in the surplus. The external current account deficit is projected

to increase to 7 percent of GDP in 2018 mostly from recent increases in

energy costs but would decline thereafter as the energy prices moderate.

4. There are two-sided external risks linked to uncertainty about the growth

outlook for advanced economies, potential shifts in global financial

conditions, and CBI inflows. A recently-announced natural gas discovery

could represent a positive impetus if it proves to be commercially viable.

On the other hand, pressures on correspondent banking relationships

could affect financial intermediation, and natural disasters are an ever-

present risk for Grenada.

An adverse court judgment in the Grenlec power company case could

potentially have fiscal implications as could the realization of fiscal risks

from the Petrocaribe arrangement. The potential implementation of new

initiatives on health care and pensions, the forthcoming cycle of public

wage negotiations, and the availability of financing could all pose

downside risks to the fiscal outlook if not properly managed.

Fiscal policies

5. Maintaining the FRL’s rules-based framework is essential to support

policy credibility and economic growth. Compliance with the FRL has

been key to the public debt reduction, strengthening confidence and

building credibility. The Law has also underpinned advances in

accountability and transparency including: the recently-created fiscal

responsibility oversight committee (FROC); an improved presentation of

the 2018 budget; and the publication of a statement of fiscal risks and a

fiscal compliance report.

6. Nonetheless, there is scope to strengthen implementation of the FRL

including by: (i) further clarifying the FRL’s remaining ambiguities and

ensuring consistency with other laws; (ii) closely monitoring the 2018

budget execution to ensure that it conforms to all FRL rules; and (iii)

improving budget implementation, notably for projects funded by grants.

7. Careful preparation is needed for a responsible transition to the next

phase of the FRL. When the debt falls below the target of 55 percent debt

to GDP the FRL, as drafted, envisions a recalibration of the rule-based

parameters that would allow for a relaxation of the fiscal rules. It would be

desirable that any effort to use that fiscal space be gradual and

consistent with the country’s fiscal needs and absorptive capacity. The

IMF can provide technical advice in the coming months to map out

options and trade-offs in recalibrating the rule-based framework.

8. Structural fiscal reforms are essential to support fiscal goals and to

create an environment for more vibrant, job-rich, and inclusive growth.

The FRL’s 9 percent of GDP wage bill ceiling and the forthcoming cycle of

wage negotiations should be underpinned by the government’s 2017-19

Public Sector Management Reform Strategy. The implementation of that

strategy needs to be accelerated. Broadening the use of, and increasing

the reporting of, quantitative performance targets and output indicators

of ministries would improve transparency and accountability and

encourage efficiency.

Public investment management would benefit from an overhaul,

particularly to address institutional problems in project implementation

(including weaknesses in securing land), improve project management,

and ensure adequate support by technical (particularly engineering)

services and personnel. Establishing and monitoring of a physical asset

registry would facilitate management of government investments.

Addressing future aging costs, including those that may arise from new

policy initiatives on health care and pensions, and couching those costs

firmly within the existing fiscal framework represents an important area for

future work. The authorities’ continued commitment to the FRL’s rules as

guiding principles for tackling such costs is encouraging. However, a

comprehensive approach should be pursued, including addressing the

existing imbalances in the pension system through parametric reforms that

have been identified in recent actuarial reviews.

The targeting of social assistance programs to the poor and vulnerable

could be further enhanced by integrating certain social assistance

programs that are currently outside of the scope of the core SEED

program within the comprehensive targeting system established for the

SEED program, drawing on data from the Grenada Living Conditions

Index.

Continued reforms of state-owned enterprises (SOEs) and statutory bodies

are needed to further strengthen productivity and effectiveness and

minimize fiscal risks. The inclusion of key performance indicators in the

reporting requirements is commendable. The second phase of reform – to

review the tariffs and fees of SOEs to reflect cost recovery and investment

needs – should proceed expeditiously.

Revenue mobilization and administrative efficiency of the Inland Revenue

Division (IRD) and Customs and Excise Division (CED) could be

strengthened by addressing staffing constraints and putting in place

better human resource and risk management, compliance, and

enforcement systems. Reducing the stock of outstanding tax arrears,

aggressively enforcing procedures for their clearance, and replacing the

outdated technologies used by the IRD are key tasks. The CED should take

the lead in identifying priorities and implementing the WTO’s Trade

Facilitation Agreement. There is significant scope to enhance efficiency in

customs clearance by increasing communication with importers and fully

deploying the automated system for customs data.

In line with prior technical advice from the IMF, further revenue reforms

should be centred on the principles of base-broadening, increasing

fairness, and simplifying the tax system. These principles should also apply

in the context of the potential lowering of the corporate and personal tax

rates whose possibility was announced in the 2018 budget speech.

Improvements in transparency are crucial to underpin efficient and

responsible fiscal policy. For this, it would be essential to (i) strengthen the

FROC’s capacity, including in the context of the envisioned

memorandum of understanding between the FROC and the Ministry of

Finance; (ii) better account for public debt and contingent liabilities

(including those from the Petrocaribe arrangement); and (iii) further

improve mechanisms for recording and saving the proceeds of CBI inflows

to address future contingencies.

9. While Grenada’s public debt situation has greatly improved, the

government should step up work to capitalize on these gains. Priorities

include: (i) resolving remaining bilateral debt arrears; (ii) more actively

undertaking asset/liability management so as to minimize the cost of

existing debt; and (iii) continuing to strictly adhere to the payment

schedule for all debts and contribution payment liabilities.

Financial sector

10. A sound financial system is key to sustainable growth. There is scope to

upgrade financial oversight, particularly for the nonbanks, which are

under the purview of the local regulator. While banks (which are

supervised at the ECCU level) maintain relatively solid capital buffers and

their non-performing loans continue to decrease, the rapid lending

growth in credit unions and the situation of insurance companies both

warrant close monitoring with a view to assessing and pre-empting

emerging financial stability risks.

Furthermore, the forthcoming new prudential regulations on provisioning

and valuation for banks by the ECCB and introduction of IFRS9 would

pose additional requirements on the capital of financial institutions.

11. There is need to enhance monitoring and oversight capacity of the

nonbank financial regulator (GARFIN), including by collecting more

granular loan data and undertaking regular stress testing. The ECCU is

taking steps toward the regional harmonization of regulations of the non-

bank financial sector and an acceleration of this process would help

reduce potential financial stability risks.

12. Ensuring compliance with AML/CFT regulations at all levels is critical for

Grenada’s continued stable access to cross-border payments. While

banks in Grenada have not had a meaningful loss of correspondent

banking relationships (CBRs), there are risks that non-bank financial

institutions may lose access to bank payments systems due to AML/CFT

concerns. A proposed legislation to formalize the annual registration of

entities for AML/CFT purposes will be helpful in capturing risks early.

Supply-side reforms

13. While the recent recovery has been a very positive development,

growth has not been sufficiently broad based, being underpinned mainly

by construction activity and tourism. Also, high unemployment and

external deficits indicate that productivity and competitiveness remain

pressing issues. Further improvement in the business climate and

institutional implementation capacity are needed to boost inclusive

growth, employment, and resilience to shocks along the following

dimensions:

Inclusive growth policies. The 2014-18 Growth and Poverty Reduction

Strategy is set to expire and its implementation has been slower than

expected. The strategy should be followed by a successor medium-term

plan that would operationalize progress toward the long-term 2030

Development Plan. The latter is being elaborated, drawing on the

Sustainable Development Goals. The plans should provide strategic

direction and specific, time-bound deliverables.

Sectoral policies. There is scope for better capitalizing on Grenada’s

comparative advantage in a range of areas:

(i) tourism, by further enhancing its links with other sectors (medical

tourism, agri-tourism, and sports and maritime tourism) and realizing

ongoing efforts to extend new hotel development to the North;

(ii) agriculture, whose productivity would benefit from better land use

policies, infrastructure, logistics, and enhanced market access (including

to hotels and ports);

(iii) energy: the recent oil and natural gas discovery, if significant, would

require a suitable framework to manage these resources, while

development of renewable energy (particularly wind, geothermal, and

solar) should be accelerated and incentivized;

(iv) blue economy: the government is encouraged to push ahead with its

blue growth agenda to maximize the significant opportunities that the

ocean offers to support Grenada’s structural transformation.

Competitiveness. Policies should be targeted at raising productivity,

reducing economic costs (notably in energy and telecommunications

sectors), ensuring that growth in nominal wages in both public and private

sectors is appropriately contained, and maintaining a prudent overall

fiscal position (in line with the FRL).

Business environment. Enhancing corporate governance and

transparency, developing a credit registry, further enhancing access to

finance, and improving property rights and registration, including in land

titling, would catalyse the financing of growth and development.

Employment. Addressing pronounced skills mismatches in the labour

market requires upgrading education and training programs and tailoring

them to sustainable private sector job creation. There is a need for (i)

increased focus of primary education on weak mathematics and English

scores; (ii) greater priority for vocational education, as well as efforts to

ease the school-to-work transition; (iii) flexibility in training to better mirror

emerging employment opportunities, including in the rapidly expanding

construction and hotel sectors; and (iv) leveraging the presence and

ongoing expansion of St. George’s university.

Climate resilience. Increasing resilience will be key to the durability of

economic growth and development in Grenada. The authorities should

be commended for pro-active leadership on those issues, including at the

Caribbean-wide level. The recent creation of a new Ministry dedicated to

climate resilience, adoption of an Updated National Climate Change

Policy, National Adaptation Plan, and Integrated Coastal Zone

Management Act, and Grenada’s planned participation in the IMF’s

Climate Change Policy Assessment initiative will all help solidify the

country’s international leadership positions in this area.

The views expressed in the statement are those of the IMF staff and do not

necessarily represent the views of the IMF’s Executive Board. Based on the

preliminary findings of this mission, staff will prepare a report that, subject

to management approval, will be presented to the IMF Executive Board

for discussion and decision.

<< Back to news headlines >>

Two million foreign vacationers visit Cuba by mid-May. Tuesday 22nd May, 2018- Caribbean News Now

The arrival of two million tourists to Cuba so far this year reflects the

continued confidence of tour operators, travel agencies, airlines and

vacationers in the Caribbean destination, according to a report on

Monday by the tourism ministry.

The figure was reached on May 18, 15 days later when compared to the

same period last year but amidst Washington reinforcing the economic,

commercial and financial embargo against the island.

The press note by the tourism ministry said that this has also been

achieved despite the US anti-Cuba media campaign aimed at placing

obstacles for people from visiting and the impact of Hurricane Irma last

September.

Tourism authorities noted that, although the decision of many travellers

was influenced by the perception of the damage inflicted by the

hurricane, tourism sites have recovered and now have a renewed image

of its hotel and recreational facilities, in particular the keys to the north of

the island.

The communiqué added that there has been in an increase in visitors from

Canada and the traditional European markets and a sustained growth

from Russia, Mexico, Argentina, China and Brazil.

US citizens are still prohibited in visiting Cuba as tourists.

The first four months of the year saw a decrease of seven percent in

visitors to Cuba compared to the previous year, but tourism authorities

reaffirmed their optimism for a record five million vacationers by the end

of 2018.

Tourism is one of the main components of the Cuban economy.

<< Back to news headlines >>

$20.6m Republic shares traded Wednesday 23rd May, 2018 – Trinidad and Tobago Guardian

Overall market activity resulted from trading in 14 securities of which five

advanced, four declined and five traded firm.

Trading activity on the First Tier Market registered a volume of 521,901

shares crossing the floor of the Exchange valued at $22,674,188.18.

Republic Financial Holdings Limited was the volume leader with 200,798

shares changing hands for a value of $20,607,164.58, followed by JMMB

Group Limited with a volume of 155,096 shares being traded for $268,588.

NCB Financial Group Limited contributed 68,752 shares with a value of

$378,136, while FirstCaribbean International Bank Limited added 50,560

shares valued at $448,978.40.

Trinidad Cement Limited registered the day’s largest gain, increasing $0.32

to end the day at $3. Conversely, First Citizens Bank Limited registered the

day’s largest decline, falling $0.21 to close at $34.78.

Clico Investment Fund was the only active security on the Mutual Fund

Market, posting a volume of 11,102 shares valued at $223,561.30. It

advanced by $0.03 to end at $20.14.

In Tuesday’s trading session the following reflect the movement of the TTSE

Indices:

• The Composite Index advanced by 0.62 points (0.05 per cent) to close

at 1,244.60.

• The All T&T Index advanced by 1.36 points (0.08 per cent) to close at

1,727.96.

• The Cross Listed Index declined by 0.02 points (0.02 per cent) to close at

102.37.

<< Back to news headlines >>

More staff cuts at BPTT Wednesday 23rd May, 2018 – Trinidad Express Newspapers

BP Trinidad and Tobago (BPTT) yesterday confirmed that its operations will

be affected by the three per cent staff cuts designed to make BP's

upstream operations to make the division more efficient and flexible.

Reuters wire service yesterday quoted a BP spokesman as saying that the

energy giant would cut about 540 jobs from the company's 18,000-strong

total upstream workforce. The cuts will take place by the end of the year.

In a statement yesterday, BPTT said the staff cuts are part of the ongoing

process across BP to modernise its business to adopt more efficient ways

of working and also to further simplify our organisation and increase

efficiency. There is no headcount target for BPTT and largescale impact is

not expected.

BPTT said that it continues to focus on the efficiency of our capital spend

to maintain competitiveness in a rapidly changing world, without

compromising safety, which remains BP's number one priority.

<< Back to news headlines >>

BP projects higher future cash from T&T... Energy Minister laments energy

tax regime Wednesday 23rd May, 2018 – Trinidad Express Newspapers

BPTT's standardized measure of discounted future net cash flows for 2017

was updated to US$3.3 billion in the company's annual report released

earlier this month.

Up from US$909 million in 2016, and US$1.8 billion in 2015, BP cautioned:

'Future net cash flows have been prepared on the basis of certain

assumptions which may or may not be realized. These include the timing

of future production, the estimation of crude oil and natural gas reserves

and the application of average crude oil and natural gas prices and

exchange rates from the previous 12 months. Furthermore, both proved

reserves estimates and production forecasts are subject to revision as

further technical information becomes available and economic

conditions change. BP cautions against relying on the information

presented because of the highly arbitrary nature of the assumptions on

which it is based and its lack of comparability with the historical cost

information presented in the financial statements.'

While BP's prospects remain bright, Energy Minister Franklin Khan on May

11 lamented the generous 2014 tax concessions that hurt revenue of the

country's largest spender, the Government. The UK-based oil and gas

giant did no wrong, Khan stressed, but generous tax concessions to the

company decimated government revenue. Khan spoke at the Energy

Ministry head office on the Port of Spain waterfront during the launch of

the Extractive Industries Transparency Initiative (EITI) 2016 report.

"For 2016, the report shows that we received total receipts of $8.8 billion,

compared to a staggering $28.6 billion in 2014. Two years from $28.6 billion

to $8.8 billion and 2017 was even lower than the $8.8 billion. How does a

government survive, (when) it's virtually a monoproduct economy, with

such a precipitous drop in revenue? This is a 70 per cent decline. This is not

only due to lower prices and lower production but also very generous tax

concessions,' he said.

"In 2014, the then Government agreed to the grant of accelerated

allowances which entitled companies to write off development costs

against revenue in three years with a whopping 50 per cent in year one,

30 per cent in year two, and 20 per cent in year three, as compared to a

period of five years as before. Companies were also allowed to write off

100 per cent of exploration costs in the year incurred. The combination of

these allowances and the loss relief of 100 per cent of losses, contributed

to the substantial reduction in Government's take from the sector,' said

Khan.

He added: "It's a fact, because price didn't drop by 70 per cent.

Production obviously didn't drop by 70 per cent so the most significant

contributor to precipitous drop in revenue was generous tax concessions.'

Govt in talks with BP, Shell

He said this situation remains untenable. 'As a consequence, the

Government is in discussions, as we speak, with two of the major gas

producers: bpTT (70 per cent BP, 30 per cent Repsol) and (Royal Dutch)

Shell to ensure a more equitable sharing of revenue earned from the

monetisation of our hydrocarbon resources is attained. As I have always

maintained, the State has a sovereign right to an equitable share of the

economic rents derived from its wasting resources,' he said.

Khan said for the third year running, the National Gas Company (NGC) is

the largest taxpayer contributing $5.7 billion to Government revenue,

followed by EOG Resources with payments of $1.3 billion and BPTT with

payments of $480 million. Khan said: 'This statistic is most revealing. The

obvious question is how can EOG with a production of 400 to 450 million

standard cubic feet of gas per day (mmcf/d) contribute $1.3 billion in

taxes and other receipts to Government whereas bpTT, with five times the

production in the amount of 2.2 billion cubic feet (Bcf) per day,

contributed a mere $480 million or one-third of EOG's contribution?"

Khan said: "BPTT did no wrong, you know. But what this has exposed is the

fundamental flaws in the extractive industry, there cannot be taxation

based solely on profits."

He said: "This wide disparity in revenue has indicated, among other

matters, a lack of consistency in royalty regime and is the justification for

the introduction of 12.5 per cent royalty rate across the board for gas. The

positive impact on revenue has already been realised as royalty receipts

from gas for first quarter calendar 2018 amounted to $534 million, which

was substantially higher than quarterly payments in the previous year. And

I would add that most of that payment came from BPTT so we have put

some balance back into the taxation system'

<< Back to news headlines >>

Farmers mired in debt - Lowest rice production in years Wednesday 23rd May, 2018 – Trinidad and Tobago Guardian

Grappling with millions of dollars in debts, local rice farmers say they have

experienced their lowest yields ever and are blaming the government

and the National Flour Mills.

Figures from NFM show that farmers produced only 126 tonnes of rice for

2018, compared to 2,800 tonnes in 2014. At present there are 30 rice

farmers in T&T compared to more than 10,000 in the 1970’s and 80’s.

Richard Singh who cultivates lands in central Trinidad said the farmers are

so frustrated that many of them were abandoning their estates. They have

scheduled an emergency meeting at Warrenville today to discuss the

productivity crisis.

“Every quarter we have to pay ADB (Agricultural Development Bank).

Flour Mills (NFM) supposed to pay us but they have not done so. The

government owes us and they jamming us with heavy interest. I am owing

$2.7 million to ADB but I have paid back $1.3 million. I never had loans

before,” Singh said.

Another farmer from southeast Trinidad, who spoke on condition of

anonymity, said he was able to plant only 350 acres out of 647 acres.

“I just did not have money to do full-scale cultivation. Our loans are

accruing interest. For this year I paid $600,000 in interest and I am still

owing $1.7 million to the ADB,” he said, adding that the last time rice

farmers got seeds from the government was in 2014.

“Back then the seeds did not germinate successfully. Because of seed

quality, we are losing hundreds of thousands of dollars. We cannot see our

way because of late payment by the NFM,” the farmer added.

Agricultural economist Omardath Maharaj said according to UN

ComTrade statistics, T&T imported 37,843 tons of rice in 2014 at a value of

approximately$ 143 million.

“In that year, total exports of the commodity was estimated at 336 tons at

a value of $ 0.767 million. Annual paddy production averaged 2,569 tons

per annum between 2007 and 2014,” jr said.

Maharaj said there was a need for revitalization, as farmers had invested

downstream by bringing three of the more popular rice brands to

market—Island Grain, Moruga Hill Rice, and Navet Lagoon Rice.

He called on the government to support production, milling, packaging,

and marketing of locally-grown rice. One of the main challenges is the

ability of the NFM to efficiently mill and convert all locally cultivated

paddy into a finished rice product, he said.

Maharaj said there should be the development of a niche market for

local rice.

“Trinidad and Tobago may not be able to compete with regional rice

producers such as Guyana and Suriname in terms of volume, parboiled

and white rice,” he said.

“However, we can develop and service a regional niche market for

healthy, natural foods such as our brown rice. We can also bring more

arable and currently idle and under-performing land assets into

production with new rice varieties, methodologies, and extension support

to increase productivity and income at the farm level.”

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New carrier, fees, and bank being introduced at airport Tuesday 22nd May, 2018 – BVI News Online

The BVI Airports Authority will be introducing a number of initiatives to

boost revenue, which has been declining at the Terrance B Lettsome

International Airport.

The airport is expected to receive additional revenue through a

prospective aircraft carrier slated to begin operations in the territory.

The new carrier is projected to bring a 25 percent increase in revenue to

the airport.

Director of Finance for the Airports Authority, Canya Stoddard made the

announcement when she appeared before the Standing Finance

Committee recently.

Increased fees

According to the 2018 report on the deliberations of the Committee, other

initiatives to boost airport revenue include increasing certain fees at the

airport.

The BVIAA will be imposing administrative fees for ‘simple airport

infractions’ such as security breaches, speeding on ramps, and being on

ramps without a jacket.

“The increased fees were approved by Cabinet but the fees were not

gazetted,” the Standing Finance report said.

Commercial bank

Another revenue-boosting initiative is to have a commercial bank at the

airport.

The bank will be used to ‘attract persons from neighbouring communities

and outer islands to the airport’. The BVIAA hopes this will further cause

persons to utilise other airport products or services.

While addressing the Standing Finance Committee, the BVIAA’s Director

of Finance said the airport has been losing revenue even before the

September 2017 hurricanes.

She said the net loss in 2016 was $1.1 million. The airport recorded

additional losses of $1.2 million in 2017, pre-hurricanes Irma and Maria.

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Faster money transfers now available Wednesday 23rd May, 2018 – The Antigua Observer

The Eastern Caribbean Currency Union (ECCU) launched its Electronic

Funds Transfer (EFT) project in Antigua and Barbuda yesterday. The EFT

allows all customers of all local commercial banks to transfer money in a

single day, faster and more cost efficient than a wire transfer.

This was disclosed by the Marketing Manager and Public Relations Officer

of the Antigua Commercial Bank, Shantia Edwards, in an exclusive

interview on OBSERVER AM yesterday.

Edwards, who is part of the Antigua and Barbuda Bankers Association,

said: “Banking is dynamic, and we know customers have various needs, so

we are always here to be more efficient; more cost effective and have

your funds available to you in quick time.”

She explained that the EFT will accommodate swift payments through the

Automated Clearing House (ACH) network. She added that the ACH is

“the electronic payment network that allows the clearing of electronic

payments between financial institutions.”

According to Edwards, customers would only need to send instructions to

their bank to authorise payments. She highlighted that with the EFT, the

banks will then send the funds, through the ACH network, to the bank of

the individual or business that the customer wishes to pay. She added that

the EFT will allow the payment to be available the same day.

Edwards disclosed that the EFT, which was also launched yesterday in St.

Kitts and Nevis, will be implemented throughout all countries of the ECCU

by next month, June.

When the EFT is available in other countries, there can be a transfer of

money to these countries in a single day as well, she added.

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