Compiled By NAN Business Editor
News Americas, NEW YORK, NY, Mon. May 4, 2020: Here are some of the top business and finance news making headlines across the Caribbean this week.
Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), has stressed that Caribbean countries must increase their fiscal space and need more favorable financing conditions, notwithstanding their income per capita income levels, in order to face the pandemic’s effects.
Bárcena made the comment on a virtual call with Caribbean prime ministers, premiers, finance ministers, financial secretaries, and other high-level government representatives from 15 countries this week.
Bárcena further noted that the impact of the COVID-19 pandemic in the Caribbean countries has translated into both domestic and external challenges, the most significant of which include revenue and income losses, a drop in investment, rising unemployment, increased indigence and poverty, the failure of small and medium sized businesses, and challenges to the financial system.
Given the nature of the assistance offered to the Caribbean by international financial institutions and development agencies for facing the pandemic in the short term, increased public debt is inevitable and the recovery path of Caribbean countries will be more difficult than those of other economies given the characteristics of their productive structure and in light of the ever-present threat posed by the upcoming hurricane season, the Executive Secretary of ECLAC stressed.
Last week, Bárcen recommended that countries in the Caribbean and Latin America prepare for what she called “the post-COVID-19 world,” given their dependence on imported manufactured goods.
Her advice came amid the report, ‘Assessing the Effects of COVID-19 to Plan the Recovery,’ from ECLAC last week which said the effects of COVID-19 will cause the biggest recession that the Caribbean and Latin American region has suffered since 1914 and 1930.
“To have an impact in the new global economy, the region must move towards greater regional integration in terms of production, trade and technology,” Bárcen advised, while forecasting a sharp increase in unemployment is forecast, with negative effects on poverty and inequality in the post-covid-19 era.
The International Monetary Fund, IMF, says the Caribbean is looking at its deepest recession in over half a century.
In a blog posted on its website Wednesday, the IMF said a sudden stop in tourism caused by border closures and lockdowns aimed at containing the coronavirus pandemic will cause a 6.2% contraction of the Caribbean economy this year.
The IMF added that the region has seen massive cancellations of hotel bookings and temporary resort closures, fueling unemployment, and the experience from previous crises suggested that the recovery could be delayed. It said a steep drop in commodity prices had lowered exports and fiscal revenues in commodity export countries such as Guyana, Suriname, and Trinidad and Tobago, while energy companies could scale back production plans in anticipation of weaker energy demand as global manufacturing activity contracts.
Remittances – financial transfers from citizens living abroad – were expected to fall sharply since the United States, Britain and Canada were also in deep recession, it said. Remittances average about 7% of the region’s economic output but exceed 15% of gross domestic products in Haiti and Jamaica.
And given the deepening crisis, IDB Invest’s Board this week said it has increased its lending capacity to support new and existing clients who experience short-term financial or operational issues as a result of the health pandemic and economic downturn. The goal is to finance interventions that alleviate healthcare constraints, maintain jobs, restore supply chains and sustain sources of income, especially for MSMEs. IDB has increased its COVID-19 response to $7 billion in financing, which includes an additional $500 million in long-term investments and $1.5 billion in trade finance operations.
Caribbean Born Economist
Meanwhile, Caribbean-born economist, Marla Dukharan says “the overdependence on tourism / financial services / oil and gas across the region, makes diversification critical.” While she acknowledges that this takes time, she advises governments that in the meantime they can borrow big and secure about a year of runway for public and private sector payroll – say about 25-40% of GDP via a 15-20 year local currency sinkable bond, issued in small denominations to encourage as wide as possible participation, especially from small investors, which reduces the risk that this instrument will be restructured in a default/restructure scenario.
“This approach could ease the pressure on foreign exchange reserves and the exchange rate, versus printing,” she states in her monthly newsletter. “The commercial banks are best placed to lend the appropriate portion of these funds to businesses which were operating well before the sudden-stop, in order to maintain their payroll. The sinking fund will be credited with the businesses’ repayment for these loans.”
Oil shipments from nascent crude producer Guyana’s prolific Liza field could be affected by a growing storage glut that has contributed to plunging global crude prices, the country’s director of energy said. “No shipment from the Liza Destiny has been affected due to COVID-19 presently,” Director of Energy Mark Bynoe told state newspaper Guyana Chronicle in a report published on Wednesday, referring to the respiratory disease caused by the coronavirus. “However, going forward, as entities begin to run out of storage capacity due to an over-supplied market and depressed demand, shipments could be impacted.” Guyana has no onshore oil storage infrastructure, meaning an inability to find customers or floating storage aboard crude tankers could force a production cut at the Liza project.
A Jamaican company that makes toilet paper has made history by exporting its product to the United States.
Quality Incorporations VII Ltd. is meeting demand for toilet paper in retail outlets in the United States since the COVID-19 pandemic. Quality Incorporations VII Ltd. manufacturing, distribution, and administrative offices are based in Kingston with close to 75 employees. They have been manufacturing toilet paper in Jamaica since 2004. Their toilet paper is sold all across Jamaica in retail and wholesale outlets. The historic toilet paper export moment was applauded by the Jamaica Manufacturers & Exporters Association (JMEA) on their Twitter page.
St. Maarten’s finance minister has proposed a stimulus package to soften the blow of the island’s loss of income from the covid-19 pandemic, but that money depends on provision from The Netherlands, which may be a grant or a loan. Sint Maarten has requested more than $100 million to fund direct relief programs such as payroll and income support. The Sint Maarten Hospitality and Trade Association, the island’s largest lobbyist group, is advocating for lower tariffs and endorses the proposed income support. In a survey of more than 600 companies done by the SHTA, its estimated at least 11,000, 25% of the island’s population, could become unemployed.
Turks & Caicos
The Turks and Caicos Islands Government has established a Coronavirus Business Assistance Grant, making it possible for eligible small businesses (MSMEs) and self-employed persons to access cash grants to assist with the expected economic fallout from the Coronavirus (Covid-19) pandemic. The cash grant may be available to eligible small businesses and self-employed persons as follows: Self-employed persons: $1,200; Micro Enterprises: $2,000 (1 to 5 employees); Small Enterprises: $3,500 (6 to 19 employees) and Medium Enterprises: $5,000 (20 to 25 employees). To view eligibility criteria and submit an online application form visit gov.tc/trade/stimulus.
St. Lucia, Grenada, Dominica
The IMF Executive Board has approved three requests from Dominica, Grenada, and St. Lucia for emergency financial assistance to help address the challenges posed by COVID-19.
The approval of the Board will make available a combined US$65.6 million in emergency financing to help the three countries deal with the challenges posed by COVID-19. Disbursements to all three countries are set at the maximum available access under the RCF instrument of 100 percent of quota for Grenada US$ 22.4 million; St. Lucia US$ 29.2 million and Dominica US$14 million.
Saint Vincent and the Grenadines
The World Bank says it has activated US$4.5 million to provide immediate funding for Saint Vincent and the Grenadines’ response to the COVID-19 (coronavirus) pandemic, aimed at strengthening the capacity of the health system.
The financing will be used to improve the ability to isolate patients, increase testing capacity, and purchase critical supplies, including personal protective equipment, mobile isolation units, testing equipment, reagents, gloves, and masks. It will also support preparedness and response capacity for other public health emergencies by increasing access to medical equipment and expanding the capacity of hospital units.
Crowley Logistics has joined Caribbean Produce Exchange, Inc. (CPE), the leading Puerto Rico distributor of fresh produce and consumer products, and Puerto Rico farmers, to ship a container filled with fresh fruits, plantains and other “Son de Aquí” local products to the Puerto Rican and Hispanic communities of New York City impacted by the COVID-19 pandemic.
The container included 16,000 pounds of fruit and produce, such as pineapples from Manatí, Santa Isabel papayas and Guánica green plantains. The shipment for distribution through Baldor Specialty Foods’ facility in the South Bronx. The food will be distributed to seniors and low-income families and at community centers that serve vulnerable populations in the city through a partnership with City Harvest, a non-profit food rescue mission. In addition, employees who work as first-line responders for Baldor and other first-responders will be receiving fresh produce as part of this donation.
The container, provided and shipped from San Juan, Puerto Rico, by Crowley Logistics, which is the island’s longest serving U.S. shipping and logistics solutions company and part of Crowley Maritime Corp., also included a variety of Wana Bana tropical fruit purées ideal for children, senior citizens and people with diabetic conditions.
The International Monetary Fund said on Wednesday its executive board had approved $650 million in emergency financial assistance to help the Dominican Republic respond to the coronavirus pandemic.
The emergency assistance will help the Caribbean nation meet urgent balance of payments needs and support essential health expenditure to combat the COVID-19 disease caused by the virus and mitigate its economic damage, the IMF said. It was the 40th such request approved, the IMF said. More than 100 of its 189 members have requested emergency aid to respond to the pandemic.