Compiled By NAN Business Editor
News Americas, NEW YORK, NY, Fri. March 20, 2020: Here are some of the top business and finance news making headlines across the Caribbean this week.
The Coronavirus is making the Caribbean’s tourism sector ill in just the first quarter of 2020. With over 190 cases of the COVID-19 virus in the region already, 8 deaths, travelers dwindling, and cruise lines shuttered until May, Scott MacDonald, chief economist for the Caribbean at Smith’s Research and Gradings told the Independent that real GDP growth for the region this year may now be 2 percent or lower, down a forecasted 3.7 percent.
The IMF says lower tourism demand due to travel restrictions and “the fear factor” – even after the outbreak recedes – will weigh heavily on economic activity. Commodity exporters will also be strongly impacted and a reduction in remittances is likely to add to the economic strain.
Jamaican tourist minister Edmund Bartlett said his island has lost roughly 50,000 cruise ship passengers in recent weeks – a $4m (£3.1m) blow to the economy.
And St Lucia’s Prime Minister, Allen Chastanet, recently said his government is modelling various scenarios including a potential fall in arrivals of between 50 to 80 percent even as Prime Minister of Barbados Mia Mottley has warned that the economic consequences will be difficult to contain and may affect the positive progress her island has been making with its IMF program.
Several Barbados Hotel and Tourism Association (BHTA) members have predicted even further revenue losses over the next few months and a possible reduction in work hours for some employees.
And many hotels across the region are temporarily closing.
Travel Pulse has reported several closures to date including Half Moon in Jamaica which is closed through May 1st. The RIU Palace Jamaica, RIU Montego Bay and RIU Negril as well as Melia Braco are closing for now.
The Royal Decameron said it won’t accept any new reservations for stays between March 20 and May 31 while the Saint Lucia’s Body Holiday and Rendezvous resorts, which will close their doors to guests from March 20 through May 31 and the Excellence Punta Cana in the Dominican Republic which will close from today, March 20 through June 5th.
As David Jessop a consultant to the Caribbean Council summed it up: “The Caribbean is about to experience an economic shock that will require significant economic adjustments.”
Caribbean Community (CARICOM) finance ministers held talks Monday with the Director of the Western Hemisphere Department of the International Monetary Fund (IMF), Dr Alejandro Werner on the economic fallout from the disease.
The Washington-based financial institution has indicated it would make US$50 billion available through its rapid disbursing emergency financing facilities for low income and emerging market countries.
Meanwhile, RBC Royal Bank has announced plans to provide financial relief to its Caribbean clients impacted by the ongoing novel coronavirus (COVID-19) global pandemic.
Effective immediately, most RBC Personal banking clients in the Caribbean will benefit from an automatic three-month payment deferral on credit facilities. Business and Corporate banking clients are also eligible for the relief program, following individual eligibility assessments with an RBC representative.Automatic payment deferrals will be applied as of March 17, 2020 and remain in effect until June 30, 2020, or until further advised.
To be eligible for the program, Personal banking or Business and Corporate banking client accounts must be current and in good standing as of March 2, 2020. Clients who are already participating in RBC relief programs for other circumstances are excluded from this program.
The relief program is intended to provide flexible solutions and help clients manage through the impacts of COVID-19, such as pay disruption; childcare disruption due to school closures; or dealing with the COVID-19 illness itself.
The Bahamas could suffer a catastrophic 26 percent gross domestic product (GDP) cut if the worst-case coronavirus scenario comes true, an Inter-American Development Bank report revealed this week.
Economists, Henry Mooney and Maria Zegarra, said The Bahamas is so exposed because it is the most tourism-dependent nation in the region. The industry relies on the sector for 48.3 percent of its annual GDP and 56.2 percent of total employment.
Should the worst-case scenario become reality, the report said The Bahamas would suffer the loss of a staggering $3.337bn in economic output based on the $12.739bn current GDP estimates given in the revised mid-year budget forecasts.
As the election drama continues in Guyana, economists are now predicting lowered oil prices would take the bite out of the country’s forecasted oil fortunes.
While oil production is expected to begin and reach 102,000 bpd by midyear, lower oil prices will probably reduce that figure. According to Mauricio Cárdenas, a visiting senior research scholar at the Center on Global Energy Policy at Columbia University, “low prices and political instability will probably delay investment plans by oil companies operating in the country, resulting in lower GDP growth relative to the expected figure of 85 percent, which would have made this very small country (population 800,000) the fastest growing in the world this year.”
Butterfield Bank of Bermuda is doing its part to help in the Covid-19 crisis. The bank says it will automatically defer all residential mortgage and personal loan payments for the next three months to help customers through financial difficulties caused by the crisis.
The bank will also introduce a payment deferral on credit cards for April and May, meaning customers can skip their next two monthly payments without incurring any late fees. Butterfield also said that business customers with remaining loan principal of up to $2 million who are facing difficulties can pay interest only on their next three monthly loan payments with no penalties.
The World Bank Board of Executive Directors on Thursday approved US$70 million in budget support financing to Jamaica to support the country’s reform program and efforts to strengthen and accelerate recent gains in fiscal consolidation and sustainable growth.
The First Economic Resilience Development Policy Loan (ERDPL I) aims to help Jamaica advance its economic reform agenda, while at the same time protecting the poor and vulnerable, including from natural disaster risks.
“Jamaica’s authorities have shown the commitment needed to maintain macroeconomic stability and demonstrated significant progress, including major reduction in public debt,” said Ozan Sevimli, World Bank Resident Representative for Jamaica. “These efforts will contribute to strengthening the country’s capacity to cope with the threats of natural disasters and public health crises.
The operation is designed around three interrelated pillars to address the most important economic challenges Jamaica faces: strengthening fiscal sustainability and inclusion; enhancing fiscal and financial resilience against climate and natural disaster risks; and improving the investment climate for sustainable growth.
The US$70 million budget support operation is financed by the International Bank for Reconstruction and Development. The loan has a maturity of 24 years and a grace period of six years.