By NAN Business Editor
News Americas, NEW YORK, NY, Fri. June 18, 2021: Here are the top Caribbean business news headlines making news this week.
The economies of member states of the Eastern Caribbean Currency Union (ECCU) suffered significant setback last year mainly due to the impact of the coronavirus (COVID-19) pandemic, the St. Kitts-based Eastern Caribbean Central Bank (ECCB) has said.
In the latest publication of its 2020 Annual Economic and Financial Review, the ECCB said that the ECCU countries, namely Antigua and Barbuda, Dominica, Grenada, St. Lucia, St. Vincent and the Grenadines, St. Kitts-Nevis, Montserrat and Anguilla recorded economic contraction of 14 per cent.
ECCB Acting Deputy Director and economist at the Research Department, Beverley Labadie, said the tourism industry which is a major money earner for the countries, registered the highest decline of 65.4 per cent.
Labadie said that with many individuals losing part or all of their livelihoods during the period, governments have had to provide financial assistance and that resulted in increased expenditure.
She said the governments also recorded decrease revenues. In light of this reality and that it is hardly surprising that all eight ECCU countries registered contractions in economic activity.
The economist said that over the past two decades, before 2020, the last time the region registered a sharp downward spike was in 2009, when economic activity fell by about six per cent.
The news comes as a senior official of the International Monetary Fund (IMF) Wednesday said that member countries of the Organisation of Eastern Caribbean States (OECS) facing financial constraints will have to pre-prioritise their spending and rely on concessional borrowing to support their coronavirus (COVID-19) related needs.
Addressing the virtual Fifth Sitting of the Organisation of Eastern Caribbean States (OECS) Assembly, the Deputy Director in the IMF’s Western Hemisphere Department, Dr. Nigel Chalk, said he was also indicating that given the large economies of scale regional collaboration is essential to ensure sufficient vaccine supply and distribution in the sub-region.
St. Maarten will shortly receive the fifth tranche of liquidity support for an amount of NAf. 39 million because the country has sufficiently complied with the condition to fix good governance at the Princess Juliana International Airport and to safeguard the reconstruction project.
Dutch caretaker State Secretary of Home Affairs and Kingdom Relations Raymond Knops made the announcement in a letter that he sent to the Second Chamber of the Dutch Parliament on Thursday.
The NAf. 39 million will be transferred to St. Maarten “as soon as possible.” “This is most urgent because, also in light of the in St. Maarten’s current highly negative liquidity position, the St. Maarten government without liquidity support won’t be able to pay out the civil servants’ salaries at the end of June.”
Since early 2020, St. Maarten, just like Aruba and Curaçao, has been receiving liquidity support from the Dutch government in the form of zero-per cent interest loans.
Sagicor Group Jamaica has announced it is structuring a US$285 million sale and leaseback of the combined heat and power plant in Clarendon owned by the US-based New Fortress Energy Inc.
The transaction, which is subject to regulatory approval, will be the largest corporate financing deal in Jamaica’s history. Sagicor Group Jamaica said as anchor investors, its entities will invest US$100 million in the transaction. It added that Sagicor Investments Jamaica will act as the lead arranger for the balance of US$185 million from local, regional, and international investors.
Barbados estimates that the coronavirus (COVID-19) pandemic has set back tourism dependent countries by as much as 20 years and is calling for natural disaster clauses to be written into agreements between small island developing states and their borrowers.
Barbados’ Prime Minister Mia Mottley agreed with the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva that the tourism-dependent countries have been among the hardest hit by the pandemic that has severely impacted regional economies as well as a trail of death and high numbers of patients in hospitals.
TRINIDAD & TOBAGO
The Trinidad and Tobago government Tuesday defended its decision to seek a multi-million dollar loan from China rather than from the International Monetary Fund (IMF) saying Beijing was not imposing any stringent conditionalities on the oil rich twin island republic.
Finance Minister Colm Imbert told a news conference that the Chinese overall loan of US$204 million was being provided at two per cent, while the IMF is providing the assistance at just over one per cent.
“The Chinese loan is at a very attractive interest rate of two per cent. The IMF is 1.05 per cent. So there isn’t much to choose between them and therefore if one has to make a judgement call, you getting a loan at two per cent and you getting a loan at one per cent,” Imbert said.
ANTIGUA AND BARBUDA
The Medicinal Cannabis Authority, (MCA) has awarded its first licence to Grow Antigua and Barbuda, a consortium that includes the Antigua and Barbuda government, the Rastafarian Movement and the private sector.
MCA chairman, Daven Joseph, who spoke at the ceremony where the first licence was handed over to the company, said “the total number of persons that are predicted to be employed in these five businesses …will be more than 200”.
Joseph said the projection is for the industry to contribute at least 10 per cent to economic output in the next five to 10 years. He said the government intends to have local content and local ownership in every enterprise established in the cannabis industry.
Prime Minister Gaston Browne said he had always maintained that the first cannabis licence to be granted here had to include the members of the Rastafarian community. Browne said that given that global medicinal marijuana sector is valued in excess of EC$30 billion it was necessary for the island to be ahead of the curve.
TURKS & CAICOS
Total deposits in banks in Turks and Caicos Islands increased by 2.6 per cent to $1, 4billion last year, with customer deposits accounting for the dominant share of banks’ funding base and remaining the main source of credit financing.
According to the Financial Service Commission’s (FSC) just-released financial stability report for 2020, the banking sector’s balance sheet expanded by 1.5 per cent in 2020, ending the year at $2 billion.
The 42-page report noted that the distribution of credit remained relatively stable throughout 2020, adding that private sector credit was concentrated in four main economic sectors, namely household, construction and land development, tourism, and professional and other services.
Tax advocates say agreement by finance ministers of the G7 countries on a minimum corporate tax rate of 15% for their largest multinationals will be a major and lasting blow to jurisdictions that have no corporate income tax, like the Cayman Islands, and countries with low tax rates. That’s because offshore subsidiary will face a minimum 15% rate on profits, regardless of where they were earned.
For example, if the Cayman subsidiary of a US corporation pays less than the 15% minimum – which is likely because the rate in Cayman is 0% – then the US can tax the offshore profits to bring the corporation’s overall tax rate, including US and foreign taxes, to 15%.