By NAN Business Editor
News Americas, NEW YORK, NY, Fri. June 25, 2021: Here are the top Caribbean business news headlines making news this week.
The COVID-19 pandemic pushed 4.7 million people out of the middle class and into vulnerability or poverty in Latin America and the Caribbean (LAC) last year, likely reversing decades of social gains, according to a new World Bank report. The impact was even more dramatic if the effect of a massive, temporary social transfer program in Brazil is excluded from the projections. Without that offset from Brazil, a total of 12 million people across the region slipped from the middle class in 2020.
The same holds true for poverty. Regionwide, there were 400,000 less poor in 2020, but without the offset from Brazil, an estimated 20 million people fell into poverty in 2020, with another 1.4 million increase due to population growth , according to The Gradual Rise and Rapid Decline of the Middle Class in Latin America and the Caribbean.
Over the past two decades, the number of people living in poverty in the region fell by nearly half. The middle class (per capita daily income between $13 and $70 per day) surpassed the vulnerable (living on $5.50 to $13 per day) and poor (below the $5.50 per day poverty line) as the largest single group in 2018, but growth stalled in recent years and the region has been one of the hardest hit in health and economic costs during the Coronavirus pandemic. In 2020 the middle class fell to 37.3% of the population, the vulnerable class rose to 38.5% and the poor made up 21.8% of the population in LAC.
“The Latin America and the Caribbean region is at a crossroads, and the reversal of hard-won social gains is at risk of becoming permanent unless bold reforms are carried out,” said World Bank Vice President for Latin America and the Caribbean Carlos Felipe Jaramillo. “The emergency cash transfer supports that helped lessen the impact of the pandemic will not be sustainable for too long, so the region needs to move forward with policies that will ensure a strong recovery and bring about a more sustained, resilient and inclusive growth that will combat persistent poverty and inequality.”
This came as United Nations Secretary-General António Guterres has called for debt relief extension for Caribbean and other middle-income countries, saying that innovative measures to address debt are required to help the world’s more than 100 middle-income countries expand their economies and exit the COVID-19 pandemic.
In addressing a high-level UN General Assembly meeting on these nations, which account for more than half of the UN’s 193 member-states, Guterres underlined the need for financing to help them recover in the wake of the global crisis.
He said that middle-income countries should have their debts suspended into 2022 to cope with the social and economic impact of the virus.
The UN Secretary General said many were already dealing with mounting debt before the pandemic, “which has only further aggravated the situation.
And as the International Monetary Fund (IMF) this week said that the coronavirus (COVID-19) pandemic has inflicted another major shock on the economies of the Dutch Caribbean islands of Curaçao and Sint Maarten.
The Washington-based financial institution, which has concluded a May 13 to June `17 mission, said that despite the substantial response measures financed by The Netherlands, the economic contraction in 2020 was severe.
It said that before the pandemic, both countries had already experienced major economic shocks. Curaçao suffered spillovers from the crisis in Venezuela, leading to a decline of the oil refining sector, a major economic pillar, and contributing to a protracted recession.
Sint Maarten has not fully recovered from catastrophic hurricanes in 2017. In both countries, the real gross domestic product (GDP) in 2019 was lower than in 2010. The IMF said that the pandemic caused a collapse of tourism and inflicted a major blow to the economy despite significant support measures.
TRINIDAD AND TOBAGO
Finance Minister Colm Imbert says the state-owned Caribbean Airlines (CAL), which earlier this week announced that it would be retrenching up to 450 employees, would need at least TT$110 million to meet severance payments.
CAL on Monday announced a loss of TT$172.7 million as well as a 75 per cent decline in revenue, compared to the same period in 2020. In a statement, the airline, which has been hard hit by the coronavirus (COVID-19) pandemic, said that the figures represented its unaudited financial results for the first quarter of 2021. It has also announced a significant reduction in its workforce with at least 450 jobs being lost.
CAL said that the losses follow a similar downturn in 2020, which saw an operating loss of TT$738 million compared to operating profits for 2018 and 2019.
ANTIGUA & BARBUDA
The Antigua and Barbuda government says it does not anticipate any mass dismissal from the public service should the island acquire a loanof more than US$100 million from the International Monetary Fund, (IMF) to help shore up its economy as a result of the impact of the coronavirus (COVID-19) pandemic.
Prime Minister Gaston Browne, responding to a question from the Opposition Leader, Jamal Pringle, also hinted that St. John’s would be better off acquiring a US$50 million loan from the Barbados-based Caribbean Development Bank, (CDB).
Earlier this month, Prime Minister Browne confirmed that his administration is holding talks with the IMF as the island explores its options in the event that it should require funding to deal with the impact of the COVID-19 pandemic.
Browne said however that his administration has already made it clear to the Washington-based financial institution that ST. John’s ‘would want to introduce “our own homegrown programme, but to get their funding just in case we end up in a situation in which everything comes to a halt because of the protracted situation with COVID.”
The World Bank Board of Executive Directors approved a US$100 million COVID-19 Response and Recovery Development Policy Loan Thursday for Barbados. The operation will support the country’s COVID-19 relief efforts and promote a resilient economic recovery from the crisis.
“The COVID-19 pandemic has severely affected Barbados, which had been successfully implementing its economic reform program,” said Tahseen Sayed, World Bank Country Director for the Caribbean. “There have been serious impacts on key sectors such as tourism, leading to an increase in unemployment, with disproportionate effects on women. The World Bank’s assistance will contribute to the country’s efforts for a resilient and inclusive socioeconomic recovery.”
The pandemic has had severe socioeconomic impacts in Barbados due to the heavy dependence on tourism, which accounts for about 40 percent of jobs, more than half of which belong to women. The economy contracted by an estimated 18 percent in 2020, and unemployment claims reached roughly one third of the workforce last year.
Belize is looking at the possibility of debt for climate swap initiatives as it seeks to deal with the economic impact caused by the coronavirus (COVID-19) pandemic.
The government is collaborating with the Commonwealth Secretariat in examining financial instruments available in the Caribbean with the London-based Secretariat holding a webinar with key stakeholders from Belize and other Caribbean Community (CARICOM) states.
Earlier this month, Prime Minister John Briceño warned that bondholders would be shooting themselves in the feet if they refuse to renegotiate an extension of the grace period regarding a coupon payment missed last month.
But less than 48 hours after making the threat, a group of creditors said they will support the government’s proposal. The creditor committee including the US-based GMO and Greylock as well as the London-based Abrdn, had last week rejected Belize’s proposal to restructure a US$550 million Superbond that emerged from 2006-07 restructuring and now contributes to a 133 per cent debt-to-GDP (gross domestic product) ratio that the International Monetary Fund (IMF) deems unsustainable. Late last month, the government formally informed bond holders that it would not be able to make a scheduled seven million US dollars coupon payment to its international bondholders that was due on May 20.”
Bahamas Prime Minister Dr. Hubert Minnis says Royal Caribbean and Carnival cruise lines have agreed to a new combined investment of US$350 million in the Grand Bahama Shipyard.
Minnis told Parliament that to understand the scale of this investment, the original investment and other investments to date in the Shipyard have totalled approximately US$250 million dollars.
The government said that the proposed infrastructure works will replace the two damaged docks with larger docks and Minnis said that the new docks will be capable of handling and servicing the largest ships in the world.
He said once the expansion is completed, the shipyard will be the largest civilian shipyard in the Americas.