Compiled By NAN Business Editor
News Americas, NEW YORK, NY, Fri. July 10, 2020: Here are some of the top business and finance news making headlines across the Caribbean this week.
Concessional financial support for Caribbean countries is imperative as a response to the crisis unleashed by the coronavirus disease (COVID-19) and to confront the economic and climatic vulnerabilities affecting them. So said Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), today during a session of the United Nations High-level Political Forum 2020 (HLPF), which is taking place virtually this July, where she also presented five proposals that would enable these countries to increase their fiscal space.
The event entitled Mobilizing international solidarity, accelerating action and embarking on new pathways to realize the 2030 Agenda and the Samoa Pathway: Small Island Developing States was presided over by Ambassador Munir Akram of Pakistan, who is Vice President of the United Nations Economic and Social Council (ECOSOC), and moderated by Fekitamoeloa ʻUtoikamanu, UN High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS). Participating in the discussion along with Alicia Bárcena were Aiyaz Sayed-Khaiyum, Attorney-General, Minister for Economy and Minister responsible for climate change in Fiji; Abdulla Shahid, Minister of Foreign Affairs of Maldives; Terri Toyota, Head of the World Economic Forum’s Sustainable Markets Group; Karol Alejandra Arambula Carrillo, Executive Director and Founder of MY World Mexico; Marsha Caddle, Minister of Economic Affairs and Investment of Barbados; and representatives of various countries.
In her presentation, Alicia Bárcena specified that Latin American and Caribbean countries are suffering the effects of the COVID-19 crisis through five channels: a drop in trade with their main trading partners, lower prices for commodities, the disruption of global value chains, lower demand for tourism services, and a decline in remittances.
In particular, Caribbean nations currently face three significant vulnerabilities, ECLAC’s Executive Secretary said: a fall in tourism-related visits calculated at between 57% and 75% in 2020, which will entail a loss of between US$22 billion and US$28 billion in income; high exposure to climate change, which is manifested in the 400 disasters that occurred between 1990 and 2019, 90.4% of which were caused by hydro-climatic phenomena (and 2020 is forecast to be a very active year with an estimated 16 named storms expected); and a high level of public indebtedness: 11 countries have a debt/GDP ratio that is above the 60% threshold for sustainability, and three are nearing or have exceeded 100% of their GDP.
“High debt service in Caribbean countries limits their fiscal space for responding to the COVID-19 crisis,” the senior United Nations official emphasized. They are currently spending US$1.2 billion to address the pandemic, but debt service is very high, between 30% and 70% of their revenue, which puts great pressure on their fiscal space, Bárcena added.
Bárcena also underscored that the countries of the Caribbean do not have concessional financial support, and receive very little Official Development Assistance (ODA). “Concessional financial support (to the Caribbean) is an imperative, regardless of whether they are considered to be middle-income countries,” she indicated.
In this area, she explained that ECLAC is proposing five, very concrete recommendations: a debt relief initiative through a debt for climate change adaptation swap, which includes the creation of a resilience fund; a debt service standstill and a change in international financial institutions’ (IFIs) eligibility criteria for granting concessional funding; stage contingency bonds, especially with hurricane clauses; green and blue bonds; and liquidity support via the issuance of Special Drawing Rights (SDRs).
Additional sources of funding must be established to help Caribbean tourism withstand future crises.
That’s among recommendations in a new report on a study on the effects of COVID-19 on national destination management and marketing organisations in member countries of the Caribbean Tourism Organization (CTO) and their early responses to the global pandemic, conducted by the George Washington University International Institute of Tourism Studies (GW IITS) and the CTO.
The survey found that COVID-19 affected the financial health of the tourism organisations, with nearly of all of those polled either had, or expected, cuts to their operating budgets.
“This is an ominous signal,” the report’s authors said, while calling for advocacy on behalf of the destination organisations for financial support in order to remain strong and help to lead tourism’s recovery and rebuilding efforts.
It also said these entities would have to find creative ways to do more with less, especially with regards to marketing.
“Moving forward, destination organisations will need to consider how to diversify their funding sources, which are mainly based on lodging and cruise taxes, to ensure that they can withstand future COVID-19 waves and future shocks to the tourism industry,” GW IITS recommended.
Increased filings for NIS in the COVID-19 pandemic in Eastern Caribbean countries now points to an increase in unemployed people.
Over 3,000 claims have been filed with the NIS in St. Vincent and the Grenadines for employment benefits and displacement supplementary income. This increase in claims suggests that an additional six percent of the labour force is now unemployed.
In Saint Lucia, the corresponding number is 22,000, with 43,000 seeking similar assistance in Barbados. In Antigua and Barbuda, prime minister Gaston Browne has estimated that hotel closures and lockdowns have cost over 20,000 residents their jobs.
Prime Minister of St Vincent and the Grenadines Dr Ralph Gonsalves says the Kingstown-based, One Caribbean, airline could begin regional flights as soon as Sunday, July 12th, as part of its efforts to fill the void left by cash-strapped regional carrier LIAT.
The major shareholder governments of LIAT have, with the exception of Antigua and Barbuda, agreed to place the airline into liquidation. But St John’s has criticised the move and instead is urging support for the idea of a new company, LIAT 2020, to take over the operations of the financially strapped LIAT (1974) Limited, whose other major shareholder governments are Barbados, St Vincent and the Grenadines and Dominica.
Prime Minister Gonsalves, speaking a local radio programme, said he had held discussions last weekend with One Caribbean and a letter was supplied to him from the lessor of their planes.
Digicel Pacific’s chief executive Oliver Coughlan is to head up the company’s operations in the Caribbean and Central America, the telecoms group confirmed.
The Irishman will step into the role being vacated by Jean-Yves Charlier, who is stepping down for family reasons but will remain as a non-executive director.
For about US$30 million, Scotia Bank Belize had been sold, to a company, Caribbean Investment Holdings Ltd., which lists the Belize Bank as one of its assets. This means that Scotia Bank Belize is now owned by Lord Michael Ashcroft.
Ashcroft has won huge judgments in the courts against Belize as a result of legal action that ensued after a UDP government acquired BTL from him, and when a UDP government did not honor a loan (about $33 million) that a previous government (PUP) had guaranteed for a private hospital, Universal Healthcare Services (now Belize HealthCare Partners).
State-run companies under the direct oversight of the A Partnership for National Unity/Alliance For Change (APNU/AFC) coalition Government recorded a deficit of $9.4 billion for 2019, which represents a 14.1 per cent lower deficit than was projected at the time of the 2019 Mid-Year Report.
That’s according to the Finance Ministry’s End of Year Report, which was released last week. According to the report, public enterprises collected $117.9 billion for the year 2019. This, however, falls short of the amount projected at half-year by $9 billion.
Meanwhile, oil giant ExxonMobil has said that around 30 to 35 million cubic feet of natural gas would be required for the gas-to-shore project. Data from Norwegian research company Rystad Energy had indicated that less than 20 per cent of the 1.8 billion barrels of oil equivalent (BOE) discovered last year was gas. The Haimara discovery made by Exxon last year was found to have 207 feet of high-quality gas condensate sandstone reservoirs.
Regional insurance conglomerate Sagicor Financial Company, the ultimate parent for Sagicor Group Jamaica, has acquired nearly US$5 million worth of shares in Playa Hotels & Resorts.
The Sagicor network now holds 16 per cent of Playa shares, mostly through Sagicor Group Jamaica and its managed funds. The 1.5 million Playa shares were purchased mid-June at US$3.75 to US$4 per unit, bringing the shares held by Sagicor Financial and Sagicor Group to 21.5 million units, according to market filings to the US Securities and Exchange Commission. Playa trades on the Nasdaq exchange in New York.
St. Kitts & Nevis
The nation of St. Kitts and Nevis in the Caribbean has dropped rates for its “citizenship by investment” programme.
These modified rates will be available all the way to December 31, whereby families of up to four people can secure citizenship for $150,000, down from $195,000. The decision comes after St. Kitts and Nevis is looking for ways to stimulate and stabilize its economy and get back on track with the growth the country has had over the past five years.
Government and opposition members of the Cayman Islands Legislative Assembly approved changes to the six financial services laws on Wednesday.
The amendments are expected to improve the legal and regulatory framework, in part to prepare for the next round of OECD peer reviews of Cayman’s tax transparency regime and to enable Cayman’s removal from the EU list of uncooperative jurisdictions in tax matters. Among them was the Tax Information Authority Amendment Bill which aims to strengthen the compliance, enforcement and cooperation functions of the Tax Information Authority, which is responsible for the exchange of tax information with other countries.
Barbados is offering remote workers the chance of relocating under new proposals that are being considered by the government.
Prime Minister Mia Amor Mottley of Barbados said she is looking into plans to introduce a “12-month Barbados welcome stamp.” The plan is being considered as short term travel has become difficult due to testing restrictions.
National consultations on the cultivation of cannabis for domestic use and export are taking place in Saint Lucia, as the Caribbean country debates plans to diversify its agricultural industry. Saint Lucia is among an ever-shrinking group of countries in the Caribbean that have yet to enact cannabis reforms, either decriminalization or legalization for medical or adult use.
The World Bank Board of Executive Directors has approved US$16.4 million in additional financing for Dominica to support ongoing projects in the areas of agriculture and infrastructure for climate resilience and economic recovery from COVID-19 impacts.
The additional financing approved includes US$12.8 million for the Disaster Vulnerability Reduction Project, which aims to reduce Dominica’svulnerability to natural hazards and climate change impacts. The funding will be used to rehabilitate and upgrade an important section of the East Coast Road to resilient standards.
Trinidad & Tobago
The World Bank has approved US$20 million for the Trinidad and Tobago COVID-19 Emergency Response Project to respond to the COVID-19 pandemic and strengthen national systems for public health preparedness.
The project will support the Trinidad and Tobago government’s National COVID-19 Preparedness and Response Plan. The Plan focuses on identification and treatment of patients to minimize the spread of the infection and severity of cases. World Bank financing will support procurement of key medical supplies needed for testing and diagnosis, inputs for infection prevention and control in health facilities, and personal protective equipment for staff. It will also support the health system to better manage future infections and provide training on appropriate clinical care and safe waste disposal.