Compiled By NAN Business Editor
News Americas, NEW YORK, NY, Fri. May 15, 2020: Here are some of the top business and finance news making headlines across the Caribbean this week.
The Caribbean and Latin American economy is projected to shrink by 5.4 percent this year according to the World Economic Situation and Prospects (WESP) mid-2020 report, released Wednesday in New York.
The decline in revenues from commodities and tourism has increased the likelihood of debt distress in the countries of this region, the report said. A robust economic recovery in these countries will require strong international cooperation and support from multilateral organizations, including suspension of loan payments, provision of low-interest-rate loans and debt relief, the report, presented by Elliot Harris, UN Chief Economist and Assistant Secretary-General for Economic Development, DESA, and Mr. Hamid Rashid, Chief of the Global Economic Monitoring Branch, Economic Analysis and Policy Division, DESA, said.
This comes as Peter Cerda, the regional vice president for the Americas at the International Air Transport Association (IATA), says Caribbean economies could lose US$740 million and face 23,000 job cuts if borders remain closed through to the end of June. When all of travel and tourism is considered, he says, the cost to the region could reach US$6.5 billion, with over 350,000 jobs at risk. So far, Jamaica has said 153,000 or 90 percent of tourism workers in the country are now without a job because of COVID-19.
Speaking on this week’s Caribbean Tourism Organization (CTO) podcast, COVID-19: The Unwanted Visitor, is predicting that international travel will return to the Caribbean by next month but advises Caribbean governments to cut passenger taxes on airlines if they wish to be competitive when service is restored.
He said the state of the global airline sector, including carriers in the Caribbean is “as bad as one could expect,” and they will need government support to resume any form of service. Cerda also warned that the aviation sector will emerge from the crisis with fewer carriers offering leaner services to fewer routes and flying smaller aircraft, and “when it comes to the Caribbean, it won’t be the same market.”
IATA represents about 290 airlines or 82 per cent of total air traffic, and Certa says with virtually all aircraft grounded and airlines continuing to face financial ruin, the organization has asked all governments, including those in the Caribbean, to, among other measures, provide low interest loans through their lending institutions.
And as Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) stressed on Tuesday that urgent attention should be given to the unique vulnerabilities and challenges faced by Caribbean countries to achieve the 2030 agenda and the Sustainable Development Goals in the context of the COVID-19 crisis and beyond.
Bárcena said the COVID-19 pandemic represents the greatest challenge that the sub-region has faced since the financial crisis of 2008 and a real threat to the region’s sustainable development path in the context of the 2030 Agenda.
Royal Caribbean Cruises this week launched a new $3.3 billion bond offering and said it would use 28 of its ships as collateral, as it looks to stay afloat after the COVID-19 pandemic upended the industry.
The company, which was forced to suspend its cruises globally and cut about 26% of its U.S. workforce, said it would use the proceeds from the private note offering to repay a $2.35 billion 364-day term loan agreement with Morgan Stanley.
Earlier in May, rival Norwegian Cruise Line Holdings Ltd had raised over $2.2 billion through debt and equity offerings, giving it much needed funds to survive for at least the next 18 months. The company used two of its ships and two private islands as collateral for the debt offering.
Richard Branson has agreed to sell shares worth around AU$765 million in his British Virgin Islands-based shell company Vieco 10 space business to raise funds for his struggling airline and leisure businesses.
The businessman, who has previously suggested he would be willing to re-mortgage his private Caribbean island home on Necker Island to raise funds, said the cash would be reinvested into firms including Virgin Atlantic.
Announcing the plans via the New York Stock Exchange, Virgin Group said it would sell 25 million shares via Credit Suisse, with the process expected to cost the business AU$255,400. It comes a week after Virgin Atlantic announced plans to cut more than 3000 jobs and end its operation at Gatwick.
Barbados needs to pay greater attention to investing in digitizing various government agencies so that they can adequately support local entrepreneurs in a digital economy according to Tara Frater, Principal and Founder of FT Legal.
She made the comments during a recent webinar hosted by the Sagicor Cave Hill School of Business, on the topic of ‘Digital Economy – Strategies for Pivoting Businesses.’
“In order for our entrepreneurs to successfully transition to the digital economy in the Caribbean, there has to be that supporting infrastructure and framework by the government and government agencies that provide essential support services,” Frater stated.
Trinidad & Tobago
Trinidad and Tobago’s Finance Minister Colm Imbert says COVID-19 will cost Trinidad and Tobago TT$6billion. Imbert also said Caribbean Airlines is earning no money at this point in time, so that the government has secured a 65 million US dollar loan (TT$442m) to assist the airline, which has also introduced a cargo charter service to meet the growing demand for cargo uplift within the Caribbean region. In addition, the airline also is now offering a barrel and e-container special out of New York, Fort Lauderdale and Miami to Kingston, Guyana, Barbados and Trinidad, that allows loved ones to ship care packages to their families.
Puerto Rico’s Fiscal Agency and Financial Advisory Authority (Afaaf), says the strict lockdown that began in mid-March could cut its tax collections by some $1.5 billion through the next few months alone, as much of the local economy had essentially stopped, according to the Caribbean Business Journal. As a result, Afaaf said the government’s debt-restructuring plan needs to be revised. Based on its baseline scenario, the commonwealth government will only have $193 million to service debt for the current fiscal year to FY 2025.
Caribbean Diaspora media company, has selected Stocks and Securities Limited (SSL) to help it raise US$3.5-million private as the company seeks capital to fund its expansion plans. Already SSL has secured interest by a number of institutional investors such as Pulse Investments, which have publicly declared its intent in acquiring a portion of the company. Of note is the fact that Pulse Chairman Kingsley Cooper is a director in IRIE JAM. IRIE JAM Media broadcast to mainly Caribbean market in the tri-state area of New York, New Jersey, and Connecticut.