Research & Analysis

Research Publications from The Caribbean Council

For over four decades, The Caribbean Council has been a market-leading source of research and analysis on the Caribbean, Cuba and Central America, providing our subscribers and members with indispensable, weekly digests of political developments, business news and investment opportunities across the region.

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To find out why, follow the links below to read a selection of recent lead articles featured in our research publications, including Caribbean Insight, Central America Briefing and Cuba Briefing.

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The View from Europe and The Business of Tourism are fortnightly columns by David Jessop, Consultant and Non-Executive Director of The Caribbean Council. The columns are free to access and can be read in full, alongside a selection of our publicly available reports and media appearances.

“Caribbean Insight provides an informative, yet concise overview of the principal events in the region. We find it invaluable in keeping us up to date with current affairs and political insights.”

Ruth Euling, Area Sales Director, Latin America and the Caribbean
De La Rue Currency

“Caribbean Insight provides at a glance, a roundup of the macro business issues and opportunities in the Region – allowing a region focused 5 minute, weekly update. I am not sure how one would gather that information effectively without it!”

Charles Whitaker, Partner, Brown & Co

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18th March 2023

The outline of a possible approach to unifying Cuba’s multiple foreign exchange rates and addressing dollarisation has been published in Granma. The much-needed measure is widely believed to be the key determinant in the success or failure of government’s macroeconomic stabilisation reform package. (See Cuba Briefing 2 January 2024).

In a second commentary in a month to be published in the Communist party’s official publication by Joel Marill, an economist specialising in Strategic Macroeconomic Projections at the Ministry of Economy and Planning (MEP), he argues that because the price of currencies is transversal, addressing exchange rate policy in the short term is vital.

Marill writes that the issue forms an important part of the internal debate that is continuing in relation to the package of reform measures agreed in December as necessary to rectify past mistakes and create the conditions for future economic growth.

These discussions, he suggests, are in part focussed on “the implications of an official exchange rate of US$1 to CUP24 and another at US$1 to CUP120” (the Cadeca rate); both of which he describes as  “clearly disconnected from the economic reality” of the informal market (currently at US$1 to CUP325). This he suggests, needs to be “formalised” and used “to stimulate national production and macroeconomic stabilisation.”

To this end he proposes a solution requiring “correct management” and recognition that it will be  “one of the most complex transformations to undertake, in a scenario of currency restrictions and internal macroeconomic imbalances.”

Marill goes on to note that the two official exchange rates mean that national or foreign companies cannot directly access foreign currency. Instead, they must use a “complex and mostly inefficient centralised allocation mechanism” to legally exchange  CUP “which overvalues the Cuban peso.”  This he writes, severely impacts the export sector, limiting its ability to expand production, employment, and to create fresh foreign exchange.

By contrast, Marill argues, the informal exchange market used by the non-state sector and the Cuban population, “offers more flexible access to currency” at high prices, but is based on speculation and uncertainty, and excludes state and mixed companies.

To remedy this, the MEP economist proposes in the short-term the creation of a flexible scheme providing direct and legal access to foreign exchange for MSMEs, and state and mixed companies. This he suggests should be followed in the medium term by an approach that has as its strategic objective the gradual convergence and unification of the exchange rate “through successive iterations.”  An approach, he believes, that would eventually enable the recovery of the “full sovereignty of the peso as the single currency” for internal transactions, creating also a single exchange rate for all external operations.

To achieve this far from easy sequencing and objective, he proposes “first, the relaunch of the official exchange market and, subsequently, the slow devaluation of the official exchange rate.”  He also recommends that the informal exchange market be addressed by “the redirection” of the flows involved towards the formal financial system.

Although an institutionally complex task, he suggests that this could be achieved through three actions:

  • The Central Bank of Cuba (BCC) setting an equilibrium exchange rate that is regularly modified by the movement in the supply and demand for the currencies the financial system receives and by underlying market conditions
  • Providing foreign currency through the financial system to those who presently operate in the informal market
  • And then, when foreign currency flows are oriented towards the formal financial system, granting state-owned companies gradual access to this market based on exports and the capture of foreign currency earnings in the financial system. 

Marell recognises that there are risks attached in relation to money supply, and that there would be constant pressure for the Central Bank to depreciate the exchange rate. He suggests, however, that the monetary and fiscal transformation accompanying the opening of an official exchange market would enable the changes required to deliver the country’s macroeconomic stabilisation programme.

No alternative commentaries have so far appeared in Granma. Both by Marell were published after the appointment  was announced on 2 February of Joaquín Alonso, the Minister President of the Central Bank, as the new Minister of Economy and Planning. Details of Marell’s earlier commentary on the macroeconomic stabilisation process can be found in Cuba Briefing19 February 2024.

The Caribbean Council is able to provide further detail about all of the stories in Cuba Briefing. If you would like a more detailed insight into any of the content of today’s issue, please get in touch.

Photo: cubaniatravel.com

15th March 2024

Prime Minister Ariel Henry has announced his resignation following a meeting of CARICOM leaders and other international allies.

“The government that I am leading will resign immediately after the installation of (a transition) council,” Henry said on Monday in a video address from Puerto Rico, as he thanked the Haitian people for the opportunity he had been granted.

“I’m asking all Haitians to remain calm and do everything they can for peace and stability to come back as fast as possible,” said Henry.

His resignation comes after the government extended a state of emergency in the Ouest Department, home to the capital, Port-au-Prince, to 3 April 2024, following a surge in gang violence.

The state of emergency saw attempts to introduce curfews and protest bans with little effect as gangs ramped up violence, including attacking prisons, freeing an estimated 3,500 prisoners. 

Prime Minister Henry, seen as lacking legitimacy, had faced pressure to resign amid threats of civil war from gang leaders.

“If Ariel Henry does not resign … we’ll be heading straight for a civil war that will lead to genocide,” said the country’s most well-known gang leader, Jimmy “Barbeque” Chérizier, himself a former police officer.

“We ask the Haitian National Police and the military to take responsibility and arrest Ariel Henry. Once again, the population is not our enemy; the armed groups are not your enemy. You arrest Ariel Henry for the country’s liberation,” said Chérizier.

Despite growing pressure, Henry had so far refused to resign. According to reports, the embattled Prime Minister has been unable to return to his country following a trip to Nairobi, Kenya where he signed an agreement with President William Ruto for the deployment of police officers in the UN-backed mission to Haiti.

However, Henry’s plane was forced to land in Puerto Rico as the main airport in Port-au-Prince remains under siege by gangs. Sheila Angleró Mojica, spokesperson for Puerto Rico’s Governor, confirmed Henry’s arrival in San Juan, while Haiti’s closest neighbour, the Dominican Republic confirmed that requests by the US and Henry for permission for his plane to make an “indefinite layover in Dominican territory” were denied.

The US, as well as other countries and institutions, have evacuated non-essential embassy staff from Haiti amidst escalating gang violence. The Pentagon has also confirmed that it has deployed additional personnel to “augment the security” at its Port-au-Prince Embassy.

The escalating violence in the country has caused the international community to step up efforts to intervene. On Monday 11 March 2024, a meeting chaired by current Chairman, Guyanese President Irfaan Ali was convened in Jamaica by CARICOM and international partners including US Secretary of State Antony Blinken in an effort to eke out a way forward for the troubled Caribbean nation.

The “will seek to advance discussions on support for Haiti as well as the way forward for Haitian governance pursuant to Haitian-led and Haitian-owned solutions which have been facilitated under the guidance of the Caricom Eminent Persons Group (EPG),” said a press release from the office of Prime Minister Andrew Holness.

The meeting saw participation from leaders of The Bahamas, Barbados, Dominica, Grenada, Guyana, Jamaica, and St Vincent and the Grenadines, as well as eight international partner countries and the UN invited by the CARICOM Heads of Government.

Of note however was the physical absence of embattled Prime Minister Ariel Henry, who participated virtually. The Jamaica Observer reported that efforts to get Henry a flight from Puerto Rico were eventually “abandoned “as calls intensified for him to resign”.

“We acknowledge the resignation of Prime Minister Ariel Henry upon the establishment of a transitional presidential council and the naming of an interim Prime Minister,” announced President Ali at the post-meeting press conference.

Barbadian Prime Minister Mia Mottley conveyed that key Haitian figures have reached a broad consensus on the immediate formation of a presidential council. This council would play a pivotal role in appointing a Prime Minister, who, in collaboration with the council, would facilitate the formation of a government. Moreover, Mottley emphasised the necessity of establishing a provisional electoral council to move the country closer toward democratic elections.

President Ali said that the presidential council will comprise two observers and seven voting members including political stakeholders, the private sector, civil society and one religious leader. Members of the council will be ineligible to participate in the next election in the country.

Speaking at the press conference, Secretary of State Blinken announced that the US would increase its support for a UN-endorsed multinational security force aimed at assisting Haitian law enforcement in combating gangs, providing a further US$100mn. Additionally, US$33mn in humanitarian aid will be allocated, raising the total proposed US contribution to the force to US$300mn. However, according to a spokesperson for the UN, as of Monday, only less than US$11mn had been deposited into the UN’s dedicated trust fund.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo: /FILE/Haiti Premature

8th March 2024

German pharmaceutical company Bayer announced that it will invest US$200mn in a new plant in El Coyol, Alajuela, Costa Rica. The site is currently installing equipment and acquiring certification to begin production of contraceptives by the beginning of 2025. The aim is to provide access to long-acting, reversible contraception to 100 million women in low-middle income countries by 2030. Further investment in its research and development station in Guanacaste will increase production and the workforce by 18%. Bayer has had a presence in Costa Rica since 1997.

The full publication is available internationally on a subscription-only basis. SUBSCRIBE TO A FREE TRIAL

Photo: Coyol Free Zone

4th March 2024

Jorge Pérez, the Commercial Vice President of Habanos SA, Cuba’s principal tobacco exporter, has said that sales of the joint venture’s cigars rose by 31% to US$721mn in 2023.  He was speaking in Havana during the twenty fourth annual Habano Festival which this year  was attended by more than 2,900 participants from 108 countries.

The growth, according to other Habanos executives, largely reflected market recovery after the COVID-19 pandemic and the increasing demand globally for “limited and exclusive” high end editions.  It also responded, they said, to strong growth in global demand in the luxury market for premium cigars.

Speaking to the media in the margins of the festival, José María López, Habanos’ Vice President for Development, said that the outcome reflected the strong positioning strategy that had been developed for the company’s brands, its policy of permanent innovation including the launch of 31 new products, and improvements to its supply chain. By value, he said, the company’s most important market was China, followed by Spain, Switzerland, Germany, and the UK. In the Americas the principal markets were Mexico, Canada, and Cuba itself. Habanos sales by region were Europe (56%), followed by Asia-Pacific (21%), the Americas excluding the US (13%), and  Africa and the Middle East (10%).

Separately, Luis Blanco, the Agricultural Director of the Tabacuba business group, confirmed that the present planting campaign for the 2024-25 harvest will see about 14,000 hectares planted from which some 20,000 tons of tobacco will be obtained, guaranteeing the industry’s production plans for 2025. He said that the province of Pinar del Río, Cuba’s largest producer, will  plant 10,200 hectares of tobacco, with yields expected to be between 1.37 and 1.4 tons per hectare. In the case of covered tobacco from which the best leaf comes for Cuba’s premium cigars, he confirmed there are no problems with planting.

As reported previously (Cuba Briefing 19 February 2024) to try to achieve the optimum outcome, Tabacuba is now concentrating on having farmers with the best historical results plant in the best soil in the Vueltabajo tobacco massif. In mid-February Granma quoted a local official as saying that the supplies and fuel necessary for growers to conclude the campaign had been received. It additionally quoted Tabacuba as indicating that full recovery of the industry’s infrastructure will take at least two years with the 2024-2025 harvest envisaging 14,000 ha under tobacco, a figure still below that when Hurricane Ian crossed the Western end of Cuba in 2022. Farmers not able to plant tobacco are being encouraged to engage with a Tabacuba programme to plant other crops.

Habanos SA is a 50/50 joint venture between the Cuban state and Asia Uni Corp, a BVI registered company reportedly bringing together a consortium of Asian investors.

The Caribbean Council is able to provide further detail about all of the stories in Cuba Briefing. If you would like a more detailed insight into any of the content of today’s issue, please get in touch.

Photo by: www.cigaraficionado.com

1st March 2024

Weeks after rejecting an IMF call to implement a personal income tax on its citizens, The Bahamas has announced plans for the introduction of a corporate top-up income tax.

Speaking in his midterm budget communication to the nation, Prime Minister Philip Davis said that the country is moving towards implementing the Qualified Domestic Minimum Top-Up Tax (QDMTT).

The tax will target only multinational companies earning over €750mn (US$812.23mn) annually, aiming to generate US$140mn yearly.

“We are talking about very, very big companies. The QDMTT is a way to make sure these very big companies pay at least a minimum amount in taxes on their profits in every country where they do business,” said Davis.

The 15% tax is one of the controversial recommendations from the Organisation for Economic Cooperation and Development’s (OECD) ‘Pillar Two tax framework’ which calls for a common global approach to taxing large multinational companies.

“We have two interrelated goals, to make sure The Bahamas captures the tax revenues of these very large multinationals doing business here, and to use the fiscal space created by the new revenue to, among other things, provide substantial relief for Bahamian taxpayers,” explained the Prime Minister.

He made the argument that if The Bahamas opts not to levy the tax, other jurisdictions would do so.

“May I add here, Madam Speaker, that if we do not implement this Pillar Two tax on that multinational entity that is doing business in The Bahamas; if we don’t collect it here, they’ll have to pay that same tax in their home jurisdiction, and many of the multinationals doing business here prefer to pay us,” asserted the Prime Minister.

“We ought not to allow that opportunity to pas because they have to pay it anyhow. Why should they not pay it in the jurisdiction in which they are operating?” he asked.

Davis insisted that his government would not implement an income tax for domestic companies whose revenues exceed a particular threshold, at least in the near term. He however added that if such a tax were to be introduced, they would follow a “more equitable approach for Bahamian businesses”.

In an interview with the Tribune, Financial Secretary, Simon Wilson admitted that the government does not currently have precise data on the number of Bahamas-based firms affected by the tax, but said that it is expected to be a relatively small figure.

Probable candidates include major hotels and resorts like Atlantis (Brookfield), Baha Mar (Chow Tai Fook Enterprises), Sandals, RIU, and Warwick, all part of international chains. Additionally, Canadian-owned banks such as Royal Bank of Canada, CIBC, and Scotiabank, along with several operators in the international financial services sector, are also speculated to qualify.

The Tribune noted that entities like the Bahamas Telecommunications Company (BTC), affiliated with Cable & Wireless Communications (CWC) and Liberty Latin America, as well as Commonwealth Brewery, primarily owned by Heineken, and major oil companies like Rubis and Esso (Sol Petroleum), might also fall under the tax’s purview.

Some were surprised when the Prime Minister revealed that significant work has already been done to advance the plan of introducing the tax in a relatively short period of time.

“We have issued a consultative green paper on corporate income tax strategies for The Bahamas, and engaged in extensive bilateral discussions with various in-scope companies for Pillar Two in our jurisdiction,” said Davis on local sensitisation efforts.

He also said that the local tax authorities have engaged with international institutions such as the IMF to help guide what will likely be a relatively complicated implementation exercise.

“During the first two weeks of February, policymakers and our technical teams participated in a workshop facilitated by the IMF, in order to discuss policy design elements that would inform the legislative drafting exercise,” revealed Davis.

The government is aiming to have a draft of the new income tax legislation completed by May 2024 ahead of the 2024/2025 budget presentation. In the meantime, the Davis Administration has been exploring ways to have the tax accrue until the required law is passed.

“We have been advised that the retroactive implementation of taxes is not that uncommon in the developed world, and that these large companies who will be impacted would also be aware of it, and there are certain benefits to that approach,” said Financial Secretary Wilson, even as he conceded that work on designing the accrual mechanism remains “a work in progress”.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo: Dante Carrer

23rd February 2024

El Salvador’s Tribunal Supremo Electoral has confirmed Nayib Bukele as President for the next five years. Félix Ulloa will return as Vice President. Bukele received over 84% of the valid votes cast with over 2.7 million. Manuel Flores of the Farabundo Martí National Liberation Front (FMLN) was second with 6.4% of votes. Bukele will have considerable power as his Nuevas Ideas party also garnered 54 of a possible 60 National Assembly seats. Various electoral observers including the Organisation of American States have expressed concerns about delays and “a lack of uniformity” in the final count. Four political parties have presented legal action to nullify the results. The country will return to the polls on 3rd March to vote in mayoral and Parlacen elections.

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Photo:  Latin America News Agency/REUTERS

16th February 2024

The Government of Guyana has revealed that satellite imagery provided by western allies are showing Venezuelan troop movements along the border in the disputed Essequibo region.

Guyanese authorities including Foreign Minister, Hugh Todd, and Foreign Secretary Robert Persaud have argued that the Venezuelan government under President Nicolás Maduro is violating the Argyle peace accord signed in St Vincent in December 2023.

“We are not surprised at the bad faith of Venezuela. We are disappointed, not surprised. Guyana has a history of entering bilateral discussions in good faith. Unfortunately, we cannot say the same thing about our neighbour to the west,” said Persaud in an Associated Press interview.

This latest escalation comes as ExxonMobil has announced plans to drill and appraise seven new wells within the Stabroek Block in 2024.

“The Liza field, the last time I looked, takes you pretty close to that (equidistant) line. We plan to drill two exploration wells west of Liza and Payara. The Trumpet Fish and Redmoth exploration wells are planned more in the middle of the Stabroek Block during the course of this year so it’s not inhibiting that activity in our plans,” said President of ExxonMobil Guyana, Alistair Routledge.

He revealed that the company intended to allocate approximately US$60mn to US$70mn for each exploration well. However, this expenditure might increase if additional data collection and stem drill tests become necessary.

Days later in a statement, Venezuela accused Guyana of granting illegal oil exploration rights and concessions in “a maritime area that is indisputably Venezuelan,” reserving the right to take any diplomatic action necessary.

“We believe that the contract that we have with the country is valid under the local law…also under international law, we have valid rights to the blocks in which we’re participating,” said Exxon’s Routledge even as he acknowledged that the escalation of tensions in Q4 of 2023 “made a lot of people nervous”.

The statement by Venezuela did not refute the military build-up but asserted its right to strengthen border defences. Vice President, Delcy Rodriguez had earlier asserted that Exxon’s plans are tantamount to a breach of the Argyle Declaration.

The country’s Defence Minister, Vladimir Padrino was more forceful in his response to the drilling plans.

“If ExxonMobil has a private security company represented by the Southern Command, and a unit of the Government of Guyana in the maritime space, that by right belongs to Venezuela, they will receive a proportional, forceful and legal response,” he wrote on X, formerly Twitter.

This reaction from Venezuela represents a departure from less aggressive rhetoric in response to earlier drilling by ExxonMobil in the disputed region.

According to a report by Demerara Waves, the company had previously “drilled Ranger, Tarpon and Tanager wells that are west of the Essequibo River with no response by the Nicolas Maduro Administration”.

However, in 2018, Venezuela’s navy intercepted two seismic research vessels, which were collecting data for American companies Anadarko Petroleum and ExxonMobil in the Essequibo Region after Maduro’s unilateral expansion of the country’s maritime border in 2015 when Guyana discovered oil.

Meanwhile, Guyanese President, Irfaan Ali has spoken about his government’s growing investment in the Guyana Defence Force (GDF).

The government has significantly increased funding for the army, doubling the allocation to GY$42.2bn (US$202.18mn). President Ali reiterated his dedication to non-aggression while enhancing vigilance against potential threats through military investments which aim to bolster both human and material resources, strengthen defence cooperation, and intensify surveillance of borders and the Exclusive Economic Zone (EEZ).

Guyana has also been enhancing its defence capabilities by engaging with global partners, notably the US. There have been several high-profile visits by US Defence officials including the Southern Command (SOUTHCOM) Air Force Commander.

“We always need partnership, and partnership has been the foundation for collective security across this Region. We’ve not only had the US, we’ve had the UK, we have the Netherlands, we have forces [in the Region like] French Guiana, and they have been doing their work as part of this collective security,” said GDF Chief Brigadier Omar Khan.

Presidents Ali and Maduro are expected to meet in March for a second summit on the border issue.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo Credit: MARCELO GARCIA/AGENCE FRANCE-PRESSE/GETTY IMAGES

12th February 2024

Cuba’s Council of State has appointed Joaquín Alonso, the Minister-President of the Central Bank of Cuba (BCC), as Minister of Economy and Planning, removing Alejandro Gil from the post.

The decision to appoint Alonso and make other changes was revealed in a Council of State declaration on 2 February, published the following day in Granma under the minimal headline ‘Council of State approved cadre movements.’

Just days before, on 29 January as Minister, Gil had outlined to the Council of Ministers the timetable for implementing approved policy reforms intended to restore economic growth (Cuba Briefing 5 February 2024).

The declaration said that Gil, would be released from his responsibilities as both Deputy Prime Minister and Minister of Economy and Planning. The decision was taken, it said, with the prior approval of the Politburo of the Central Committee of the Cuban Communist Party (PCC) and on the proposal of President Díaz-Canel.

Radio Havana reported that the decision related to “movements of cadres in portfolios of great economic impact.”

Alonso will be replaced by Juana Lilia Delgado as Minister President of the BCC.  Delgado has previously been Director of Operations and General Director of Treasury at the BCC, Vice Minister at the Ministry of Economy and Planning, and worked at Cuba’s Permanent Commission for Implementation and Development.

Alonso, who is 60, reportedly accumulated extensive management experience during his time at the National Bank of Cuba, Banco Popular de Ahorro, Cubalse Commerce and Services Corporation, the non-banking financial institution Casas de Cambio SA, and most recently as Minister President of the Central Bank of Cuba. He also served as provincial vice president of the Association of Economists and Accountants of Cuba.

In a further change, Dr Eduardo Martinez, President of Cuba’s highly successful BioCubaFarma business group, has been appointed Minister of Science, Technology and Environment, in place of  Elba Pérez who had held the position for  over 11 years. Dr Martinez, a deputy to the National Assembly, is respected for the innovative work he led on the development and production of Cuba’s pentavalent vaccine and the national role he played during the fight against COVID 19. 

It was also announced that Alberto López, the Governor of the province of Villa Clara and a National Assembly Deputy, has been appointed as Minister of the Food Industry, replacing Manuel Santiago Sobrino. 

The Council of State noted that “all the colleagues released from their respective positions were recognised for their effort and dedication in carrying out such high responsibilities and in the coming days they will be assigned new missions.”

Although there has been no further official comment on the decision to remove Gil, speculation continues as to whether it relates to the sudden decision in late January to delay at the eleventh hour the implementation of fuel and transport price rises announced in December. The increases formed a key part of an integrated group of measures intended to rectify past mistakes and generate renewed growth.

It is not now clear whether the overall package of measures agreed to late last year will be implemented within the timetable planned. They were first announced by the Prime Minister, Manuel Marrero, in December, although at the time Cuba’s President cautioned that they should only be introduced gradually due to their sensitive nature.

In an apparent expression of concern about the country’s economic and social fragility, and in response to many Cubans’ doubts about the impact of the proposed reforms, Díaz-Canel stressed at that time the need for the new policies to be implemented with great sensitivity. Ministers and government, he said, “must constantly study impacts, states of opinion, and make the necessary corrections.” (Cuba Briefing 2 January 2024).

In recent weeksformer President Raul Castro, PresidentDíaz-Canel, and the Secretary of the Central Committee of Cuba’s Communist Party, Roberto Morales, have all stressed “the decisive importance” of maintaining national unity this year. (Cuba Briefing 8 January 2024).

Gil’s departure from office additionally coincides with government’s recent admission that the 2021 economic ordering task failed, surging inflation, and a growing and huge variance between the official and street rate for the Cuban Peso.

Following his replacement as Minister of the Economy and Planning, Gil noted on X in a tweet addressed to President Díaz-Canel: “It has been a pride and an honour to work alongside you in the service of our people and our Revolution. As always, I’m at your command, to continue, “ to which Díaz-Canel replied by sending a “Grateful hug” to all those replaced, noting that “they gave their energies in very hard years for the country” and wishing success to the new appointees.

The Caribbean Council is able to provide further detail about all of the stories in Cuba Briefing. If you would like a more detailed insight into any of the content of today’s issue, please get in touch.

Photo: Reuters/Amr Alfiky

9th February 2024

Despite incumbent President Nayib Bukele declaring himself the winner of El Salvador’s election, days after polling the final results have not been verified. Problems with electronic voting, voting abroad suffering early closures and local issues have contributed to a chaotic ending. On election night, Bukele stated he had over 80% of the vote and would get 58 of 60 seats in the National Assembly. With 98.7% of votes tallied, Bukele’s Nuevas Ideas party won with 2.67 million votes. The next highest was FMLN with 201,705. The result is likely to be declared official on Friday morning. Regional Presidents and US authorities have called to congratulate Bukele on a re-election which critics say is constitutionally invalid. Some opponents have stated they are considering legal action once the results are published.

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Photo: Salvador Melendez/AP

5th February 2024

Deputy Prime Minister Alejandro Gil, Cuba’s Minister of the Economy and Planning, has said that the Cuban government expects this month to bring forward measures to control Cuba’s increasingly volatile foreign exchange market. In recent weeks the street rate of the Cuban Peso (CUP) has surged to close to CUP300 to US$1, compared to the official rates of CUP24 or CUP123 to the US Dollar. 

Speaking at a meeting of Cuba’s Council of Ministers, during which he outlined an action plan and a timetable for introducing measures aimed at encouraging renewed economic growth while ‘rectifying’ past mistakes, he said that his ministry was developing plans to “resize the exchange market,” and take back “control of the exchange rate in the country.”

“Next month, progress will also be made in the presentation of proposals to resize the exchange market, the intervention of the informal sector, and the control of the exchange rate in the country, which includes the determination of the exchange rate and the formation of prices,” he was reported by Cuba’s Presidency website as having told the meeting. “We are working hard on this because of the impact it has on promoting and stimulating production,” Gil said.

The reference to the informal sector relates to government’s belief that actions by some of those in Cuba’s rapidly developing, independently managed non-state MSMEs are distorting demand for foreign exchange. 

In his reported remarks the minister indicated that emphasis will also be placed on recovering remittance flows. This will involve, Gil said, encouraging their capture, and studying the feasibility of new channels, platforms, and the use of digital scenarios for remittances and banking operations for collections and payments from abroad.

In the first of what is expected to be a monthly update to the Council of Ministers on the progress being made in implementing the reforms announced last year, Gil said that another priority will be the implementation of a new approach to managing the financial resource held by both state and non-state businesses.  This would involve he said a “new mechanism for the allocation and management of liquidity for all economic actors, based on the distortions that exist today, in order to achieve a more harmonious functioning of the economy.” It would enable, he suggested, progress to be made in enabling previously announced plans to encourage “the autonomy of the state company.”

Stressing the importance of what he described as government’s “high-impact plans,” he noted, among them would be a “currency allocation and management mechanism, which includes the resizing of the exchange market.” This, he said “is transversal to the entire economy and we are going to face it this year; the transition from subsidy to products to subsidy to people, which implies a change in the distribution of wealth, that is more fair and equitable; as well as the transformation in the institutional, regulatory and organisational environment of the economy.”

Gil’s remarks suggest that the intention, as previously announced, is that 2024 will be the year when most socialist state enterprises must control their own budgets and are required to operate under central and local government constraints to deliver surpluses, and if relevant to do so by working in conjunction with state and non-state MSMEs.

Previous statements indicate that the government’s longer-term objective is to create a circular domestic economy, making Cuba as far as possible self-sufficient. How rapidly this might happen in the light of shortages of inputs and foreign exchange, uncertainty on the part of managers, continuing migration, and other constraints such as constant power outages, has yet to be clarified.

In his remarks, Gil stressed that the group of economic measures announced in December by the island’s Prime Minister, Manuel Marrero, (Details Cuba Briefing 2 January 2024)are intended to deliver what is necessary to boost productive activity, increase national production, and generate exports and income in foreign currency with the objective of achieving macroeconomic stabilisation.

He also sought to reassure Cubans concerned about large increases in the cost of utilities and transport:   “It is not about raising prices for the sake of increasing them,” he said, “but rather about encouraging savings, making more efficient use of resources, and seeking a more fair and equitable distribution of the wealth that is generated,” he stressed.

 “That is the meaning of the rates and prices that we are updating, because they have been left behind in time, disconnected from costs, and today what is really happening is that waste is being encouraged,” Cuba’s state media quoted him as adding.

In his presentation to the Council of Ministers of an ‘Action Plan for the Implementation of the Government’s Projections to Correct Distortions and Re-boost the Economy’, Gil noted that every included action was linked to government’s macroeconomic stabilisation programme, including “price correction …. because it eliminates or reduces subsidies and increases tax revenue.”

Speaking about increasing and diversifying external income, Gil emphasised that “many of the projections included in the document will have more favourable impacts if more resources are available.” “Having more fuel, more inputs for national production, necessarily involves income in foreign currency, external income that must be encouraged,” he pointed out in a reference to the need to export more, and Cuba’s interest in increasing the role of foreign investment in a broader range of operations in Cuba’s domestic economy and productive sectors.

Among the objectives of government projections, Gil noted, is an increase in national production using installed capacities. In this respect and referring to recently introduced measures to reduce tariffs on imports of raw materials, inputs, and intermediate goods (Cuba Briefing 5 February 2024)  he noted the need for Cuba to address idle capacities in industry, and the importance of products being produced  domestically.

Developing the economy, Gil stressed, means “offering greater well-being to the people, and what we are doing goes in that direction.” The worst risk, he said, would be in not changing and not transforming.

At the Council of Ministers meeting, details of other aspects of the proposed timetable were reported to have been discussed, including plans to update regulations in February to allow the restructuring of the ways in which local development projects are managed.

More generally, the meeting heard that the measures being introduced across the year will be accompanied by several “political processes”.

Reports of the meeting quoted President Díaz-Canel as saying  that the intention is to “confront everything that deviates from the spirit of the Revolution in our society.”  A common thread, he said,  will be the approach proposed by former President Raúl Castro, (Cuba Briefing 8 January 2024), and will be about ‘the decisive importance’ of maintaining Cuban unity, the work of the cadres, ideological work, and facing the problems of the economy.”

Cuba’s President said this will be a large-scale process that will involve “a discussion of partisan militancy, cover all administrative structures, and also groups of workers, students, and the population in communities,” and “therefore the entire Cuban society.” “It is a process,” he indicated, “that will contribute to reaffirming the need and strategic importance of unity, exemplarity and combativeness in the revolutionary ranks.”

Also speaking, Roberto Morales, the Secretary of Cuba’s Communist Party (PCC) and an increasingly high-profile politburo member, said that “the Party will promote discussion of the document: ‘Basic concepts for the correction of deviations and negative trends in Cuban society’.” A practice, he recalled, that is not new in Cuba.

The Caribbean Council is able to provide further detail about all of the stories in Cuba Briefing. If you would like a more detailed insight into any of the content of today’s issue, please get in touch.

Photo: via @PresidenciaCuba

2nd February 2024

The Irfaan Ali Administration has tabled a record US$5.496bn (GY$1.146tn) 2024 National Budget, some 47% higher than the US$3.75bn (GY$781.9bn) passed in 2023.

The massive increase in spending is being funded largely by revenue from the oil and gas sector, which is projected to cover 29% of the budgeted expenditure.

Delivered under the theme “Staying the course: Building prosperity for all,’ Finance Minister Ashni Singh in his fifth budget presentation, said that this latest package was a reflection of the Ali Administration’s commitment to building on the socio-economic advancements since taking office after the 2020 elections.

Singh highlighted the government’s vision for ensuring every Guyanese family has access to essential services and opportunities for economic empowerment.

“Budget 2024 is a budget for all Guyanese, not only public servants who will benefit from salary increases and cash grants… but we cast the budget in a particular frame (wherein) no other time in our country’s history, entrepreneurial opportunities are so abound,” said the finance minister during his presentation.

The budget reiterated Guyana’s robust economic performance, with a 33% real GDP growth last year, primarily fuelled by the expanding oil and gas sector, which along with the support services industry, notably outpaced the declines in gold and bauxite mining.

In 2023, the Natural Resource Fund (NRF) saw deposits amounting to US$1.6bn from petroleum revenue, culminating in a year-end balance of US$1.97bn, including interest earnings. The fund garnered US$1.39bn in profit oil contributions, with US$576.6mn coming from Liza Destiny and US$822.3mn from Liza Unity. Some US$218.1mn also came from royalty payments to the NRF by the Stabroek Block operator, ExxonMobil.

Key allocations in the budget include GY$95.7bn (US$457.67mn) to the energy sector to meet short-term needs, double generating capacity, transition to cleaner energy, and improve the transmission and distribution network. The flagship 300 MW gas to energy project is allocated GY$80bn (US$382.59mn), aiming to halve electricity costs upon completion.

The agricultural sector is allocated nearly GY$97.6bn (US$466.77mn), focusing on drainage, irrigation, and flood management, with significant investments in various sub-sectors to enhance production and support agro-processing.

The budget also addresses infrastructure with GY$204.1bn (US$976.1mn) for roads and bridges, and GY$73.2bn (US$350.13mn) for community roadworks; figures which some have called excessive.

“A nation must invest in ending poverty and its working poor must get a better deal… I feel that that has not happened with the budget, it is important then that we feel that these monies should have been more spread across rather than being given largely to what I regard as 1,000 contractor cronies capitalists,” said Opposition MP Khemraj Ramjattan as he slammed the budget’s large allocations to infrastructure projects.

The health sector allocation stands at GY$129.8bn (US$620.86mn), as the country moves to aggressively address health standards and resources, while the housing sector sees an increase to GY$78bn (US$373.05mn), continuing the construction of affordable homes across income categories. The Finance Minister revealed that some 1,165 homes had been completed, while construction continues on another 1,134.

Education receives GY$135.2bn (US$646.91mn), with GY$4.1bn (US$19.62mn) supporting the University of Guyana as the government moves to increase access by reducing tuition payments. Sports infrastructure is allocated GY$4.6bn (US$22.02mn) in furtherance of the government’s commitment to invest in world-class facilities for citizens.

The government also announced a host of new fiscal measures in the budget, including an increase in the income tax threshold to GY$100,000 (≈US$480) effectively raising the annual Personal Allowance to GY$1.2mn (≈US$5,750) from GY$1.02mn (≈US$4,888).

To encourage individuals to secure life and medical insurance, the allowance for Life and Medical Insurance which permits taxpayers to deduct the premiums paid for life and medical insurance from their taxable income will be increased to 10% of their earnings or GY$50,000 (≈US$240) each month, depending on which is less.

Additionally, duties and Value-added Tax (VAT) will be removed from sport equipment, certain technological items such as cell phone accessories, and firefighting equipment.

Addressing the economic burden of elevated fuel prices, the government plans to maintain a 0% excise tax on petroleum products, while also containing rising freight charges by extending the directive for computing import taxes using pre-pandemic freight costs for another year.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo Credit: News Room Guyana

26th January 2024

Guatemala has a new President in Bernardo Arévalo despite last minute efforts to scupper the change over. Congress met for over 14 hours in an effort to declare Semilla politicians independent and check documentation of incoming diputados. At five minutes to midnight, Arévalo took office with former President Alejandro Giammattei dropping off presidential material at Congress and becoming the first ex-President to miss the changeover. Three days later, the US removed Giammattei and his three adult childrens’ visas for “substantial acts of corruption”. Legal moves after the inauguration has led to Congress having a junta directiva without Semilla on it but their coalition will lead the legislative branch.

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Photo: JOHAN ORDONEZ/AFP VIA GETTY IMAGES

19th January 2024

The International Cricket Council (ICC) 2024 Men’s T20 World Cup is projected to bring in over US$300mn for the Caribbean in the coming months.

Scheduled for 1 to 29 June 2024 across the Caribbean and the US, the ninth edition of the tournament will see several Caribbean countries hosting matches for the highly anticipated event.

“This tournament is projected to yield over US$300mn in direct economic impact for the Caribbean. Moreover, it is anticipated to captivate more than a billion viewers worldwide through television broadcasts, further elevating the global stature of the Caribbean as a sporting and tourist destination,” said Cricket West Indies (CWI) President, Kishore Shallow.

Antigua and Barbuda, Barbados, Guyana, St Lucia, St Vincent and the Grenadines, and Trinidad and Tobago are the six Caribbean countries chosen to host the 55 matches, along with New York City, Dallas, Texas, and Florida in the US.

Dominica had initially been shortlisted to host matches but subsequently pulled out after assessments showed that renovations to the cricket stadium could not be completed in time.

Grand Prairie Cricket Stadium in Dallas is set to host the tournament opener between the USA and Canada on 1 June, while the Kensington Oval in Barbados will host the final on 29 June.

“The ICC Men’s T20 World Cup 2024 marks an exciting expansion of our sport with more teams than ever before set to compete in this event. It’s going to be an incredible spectacle bringing together 20 international teams from Africa, the Americas, Asia, East-Asia Pacific and Europe,” said ICC Chief Executive, Geoff Allardice.

A study of the 2007 Cricket World Cup hosted in the Caribbean, reported that attendance for the tournament averaged 11,176  persons per match. In Guyana, attendees typically formed groups of three individuals and stayed for an average of 7.65 nights. Visitors spent an average of US$1,902 on lodging and US$934 on food and beverages, while total daily visitor spending was estimated at US$191.

Regional organisers are hoping that this year’s tournament can attract similar levels of visitors and spending to provide Caribbean countries with a needed economic boost as they shake of the lingering effects of the COVID-19 pandemic.

“This influx of visitors, heightened tourism, and burgeoning business prospects will create a ripple effect,” predicted Shallow of the upcoming tournament, adding that “the impact on jobs, revenue streams, and the overall quality of life for our citizens will be substantial”.

Additionally, in preparation for the tournament, Caribbean governments are set to inject significant sums into local economies by spending millions to renovate and upgrade stadia in order to meet ICC standards for hosting World Cup matches.

For example, St Vincent and the Grenadines, which will host two Group Matches and two Super-8 Matches, has allocated some US$4.44mn to renovate the Arnos Vale Sporting Complex ahead of the tournament, while Antigua and Barbuda are looking to spend at least US$2.6mn to prepare the Sir Vivian Richards Stadium.

In late 2023, Barbados Prime Minister Mia Mottley signed a US$25mn loan with the African Export-Import Bank (Afreximbank) to renovate and upgrade the Kensington Oval ahead of the cricket World Cup and to help with its future maintenance.

“This region must give our cricketers the best available coaching and technology if they are to be able to resume their global position in cricket,” said Mottley.

The 2024 event will be the third time a men’s World Cup will be held in the West Indies, and the first in 14 years. The Caribbean previously hosted the 2007 ODI World Cup and the 2010 World T20.

“It will also be great to have an ICC event back in the West Indies, which has such a rich history of the game. It has hosted World Cups with great success in the past and this tournament will certainly provide a boost to the game there, especially with the final being played in Barbados,” said ICC’s Allardice.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo Credit: GETTY IMAGES

15th January 2024

A proposed second National Conference of Cuba’s Communist Party (PCC) that was to have taken place during the first quarter of 2024 has been postponed. The decision, which was  endorsed at a plenary meeting of the Central Committee of the PCC held in mid-December, reportedly reflected the need to concentrate on delivery, the “urgencies and priorities of the country,” and to accelerate decision making. The mid-December meeting principally focussed on the steps needed to encourage the better delivery of solutions in ailing sectors of the economy, and was notable for its stress on action rather than debate. Among the less publicised decisions taken was recognition of the need to establish “a close relationship between all economic actors based on the development of the country,” and the creation of “a superior contracting process” between state entities and suppliers to satisfy the demand for food.

The little reported plenary also agreed that fifteen new Economic and Social Policy Guidelines should be adopted in relation to Cuba’s National Economic and Social Development Plan 2030, largely relating to new priorities and updating.  The new measures proposed include promoting the insertion of non-state companies into the national economy and their integration with state companies to improve economic and social outcomes; the creation of new financial mechanisms to stimulate exports, import substitution, and foreign investment; and the promotion of international cooperation directly with Cuba’s provinces. Official reporting also noted that the guidelines should in future seek to promote the de-dollarisation of the economy; developing an exchange market with an economically founded and stable exchange rate; and the introduction of measures aimed at reducing inflationary pressures “to stop the deterioration of the purchasing power of salaries and pensions.”

The Caribbean Council is able to provide further detail about all of the stories in Cuba Briefing. If you would like a more detailed insight into any of the content of today’s issue, please get in touch.

Photo: via Granma

12th January 2024

President-elect Bernardo Arévalo looks likely to take over as the new Guatemala leader on 14 January. This follows months of protests, criminal investigations and high level diplomacy that culminated in blocking attempts to change the August electoral results. Last minute efforts to thwart the peaceful transition of power included the arrest of former interior minister David Napoelón Barrientos for not breaking October protests up, four arrest warrants against electoral magistrates remaining in effect and the Constitutional Court having to remind the Ministerio Publico that they cannot arrest individuals with the right to antejuicio. This thwarted plans to arrest the Vice-President elect, Karin Herrera.

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Photo Prensa Libre: Carlos Hernández

5th January 2024

Trinidad and Tobago has officially been granted a license for the exploration, production, and export of natural gas from the Dragon Gas Field in Venezuela.

Making the announcement about the deal, which was signed in late December 2023, Trinidadian Prime Minister Keith Rowley said that it marks a historic development in the partnership between the two nations, allowing Trinidad and Tobago to access and process Venezuela’s vast natural gas reserves.

“To have entered into this agreement in 2023, to open this door to allow us with the infrastructure on the ground in Trinidad, to access and process the raw material from below the ground in Venezuela, puts the two nations in a position to play a bigger and beneficial role in the world’s economy and for the benefit of the people of Venezuela and Trinidad and Tobago,” said Rowley.

In a statement, the Government of Venezuela announced that its state oil company PDVSA has issued a 30-year license to the Trinidad and Tobago’s state-owned National Gas Company (NGC) to develop the gas field with Royal Dutch Shell as the operator.

“The Dragon Field is set to become one of the most important gas production hubs in the region… With this license, we are consolidating the operational settings for its definitive development, harnessing its full potential for the benefit of our country and the world,” said Venezuelan Oil Minister Pedro Tellechea.

The agreement comes after protracted negotiations which stalled on multiple occasions because of US sanctions on Venezuela.

In January 2023, a two-year Office of Foreign Assets Control (OFAC) waiver was secured by Port of Spain from the US Treasury Department for exploitation of the Dragon oil field with the proviso that Venezuela received no cash payments.

Later in October 2023, some US sanctions were lifted against Venezuela after President Nicholas Maduro signed an electoral deal with the country’s main opposition party.

This led to an amendment to the Treasury waiver which now allows Trinidad and Venezuela to agree their own payment terms.

Trinidad’s Energy Minister Stuart Young noted that the full commercial terms agreed is the culmination of seven years of negotiations which began in 2016 with a government-to-government agreement, followed by a commercial term sheet which was set out in 2018.

In recent months, the Rowley Administration has faced criticism over the apparent inability to close a deal on Dragon following little implementation of these agreements.

“We must recall there was another deal signed in 2018 when Dr Rowley went to Caracas and since then there has not been much movement on the Dragon gas deal which is arguably the centre piece of this Governments energy policy,” said Former Energy Minister Kevin Ramnarine.

“In terms of a next move, it would be useful to know what is the role of the NGC, the role of Shell and PDVSA and who will pay for the development which will run into hundreds of millions of US dollars or more. What will be the exposure of the NGC?” questioned Ramnarine.

The government has moved to clarify some of these concerns following the issuance of the license and the latest agreement on commercial terms.

“We were able to move PDVSA out of the formula which is even better for us now. And the producers will be Shell and NGC,” said Energy Minister Young, announcing some of the changes contained in the new agreement.

“We managed to negotiate that NGC will be in the full value chain and that we’re going to be an equity player in the production and the exportation of this gas to Trinidad and Tobago, at a very competitive price that will benefit both the people of Venezuela and us here in Trinidad and Tobago,” added Young.

During the first phase of the project, it is anticipated that some 185mn cubic feet of natural gas will be generated daily which will be transported through the construction of a 17-kilometre pipeline connecting Venezuela’s Dragon field to Shell’s Hibiscus field in Trinidadian waters, where liquefied natural gas (LNG) and petrochemicals will be produced.

Reuters reported that first output from Dragon could be achieved in two years if positive investment decisions are made in the coming months.

In the earlier stages of negotiations, Venezuela had advocated for a second pipeline linking the Dragon field to Venezuela’s coast to address domestic demand. Although specific details about the gas line were not mentioned in the recent statement, subsequent project phases might encompass this aspect.

The Dragon Gas field is estimated to house approximately 4.2tn cubic feet of deposits. It was discovered by PDVSA over 10 years ago, but infrastructural development came to a halt shortly thereafter when US sanctions began to affect Venezuela’s oil and gas sector.

The deal has largely been welcomed by analysts and the general population as Trinidad and Tobago moves to increase its slowing oil and gas production on which the economy so heavily depends.

This is a lead article from Caribbean Insight, The Caribbean Council’s flagship fortnightly publication. From The Bahamas to French Guiana, each edition consists of country-by-country analysis of the leading news stories of consequence, distilling business and political developments across the Caribbean into a single must-read publication. Please follow the links on the right-hand side of this page to subscribe, or access a free trial.

Photo: Venezuelaanalysis.com

15 December 2023

Despite the last-minute controversies surrounding the latest iteration of a global climate change deal, Caribbean countries may still consider COP28 one of progress. 

Staged in in Dubai over 1 to 12 December 2023, the Conference of Parties to the UN Framework Convention on Climate Change (UNFCCC) known as COP, saw an early breakthrough with an agreement to operationalise the much talked about Loss and Damage Fund which is mean help to shoulder climate change adaption costs, reduce its future impact, and pay for ongoing loss and damage. 

“Today’s news on loss and damage gives this UN climate conference a running start. All governments and negotiators must use this momentum to deliver ambitious outcomes here in Dubai,” said UN Climate Chief and former Dominican Government Minister, Simon Stiell. 

Wealthy countries have so far pledged over US$700mn to the fund, with the United Arab Emirates (UAE) announcing US$100mn on the opening day of the conference. Germany announced US$100mn, France and Italy pledged US$108mn each, while the US and Japan, the world’s third largest economy received significant criticism for their pledges of just US$17.5mn and US$10mn, respectively. 

“This has probably been the most progress we’ve seen in the last 12 months on finance… but we’re not where we need to be yet,” said Barbados Prime Minister Mia Mottley at the conference, which was attended by several CARICOM leaders, adding that the total pledged was a far cry from the US$420bn which is needed. 

She argued that a global 0.1% tax on financial services could raise US$420bn. “If we took 5% of oil and gas profits last year — oil and gas profits were US$4tn — that would give us US$200bn… If we had a 1% tax on the value of shipping — that, last year, the value of that was US$7tn — that would give us US$70bn,” said Mottley. 

Several CARICOM countries used COP as an opportunity to launch their own climate change initiatives as the focus on long-term sustainability deepens. 

At a side-event, St Kitts and Nevis launched its plan to become a sustainable island state. Themed “Moving Toward Sustainability with SISA2040,” the plan will see the country focusing on green energy, including a significant solar and battery energy storage project, and exploring geothermal energy on Nevis. 

Meanwhile, The Bahamas launched the Bahamas Sustainable Investment Programme (BSIP) with a target of establishing a US$500mn funding mechanism to enhance Bahamian infrastructure to withstand climate change and transition to clean energy. It will also support conservation of coastal zones, reduce biodiversity loss, promote regenerative agriculture, carbon sequestration, and participation in natural asset-backed carbon credit programmes. 

At COP, Barbados announced that it will partner with the World Bank Group’s International Finance Corporation (IFC) to develop the country’s first utility-scale onshore wind farm, known as the Lamberts project. IFC will serve as the lead transaction advisor to structure the 30-to-50-megawatt (MW) project as a public-private partnership (PPP) which supports Barbados’ goal to transition to 95% renewable energy by 2030. The US$80mn project, to be mostly owned by a private sector sponsor selected through a competitive tender process, signifies a shift towards involving private enterprise in Caribbean renewable energy infrastructure development. 

Jamaica also signed a financial advisory services agreement 

with the IFC for the development and structuring of the National Broadband Project to allow private investors to build a modern broadband network in the country. 

The Government of Dominica and Dominica Electricity Services (DOMLEC) also used the conference to sign an agreement with Ormat Technologies Inc. and its subsidiaries to develop a 10MW geothermal power plant in Laudat by the end of 2025. Under the deal, Ormat will finance the construction, operate, and maintain the plant and geothermal wells for 25 years, while Dominica will maintain ownership of the wells, lands, and other assets it has invested in. 

The Caribbean Development Bank (CDB) also announced at COP28 that it is leading the development of a regional online monitoring, reporting, and verification (MRV) system for tracking climate finance. This system will help Caribbean countries track and report finance flows for climate-related actions more effectively, reducing duplication among donors, and facilitating efficient use of resources. 

11th December 2023

 The Director of Cuba’s state sugar group, Azcuba, Julio García, has said that the 2023-24 harvest will be “superior” to that of 2022-23, while indicating that government regards the sector’s future as strategic in relation to power generation. 

In 2022-23 the country recorded an all-time production low of about 350,000 tonnes despite a significant restructuring of the sector. 

Speaking on the television and radio programme Mesa Redonda, he gave no indication of expected production levels in the coming campaign. Instead García set out the sector’s plans for recovery, in part with foreign investment, while making clear the many challenges facing the industry if it is to achieve its objective of becoming a profitable, integrated ,agro-industrial sector. 

 García made clear that the coming campaign is expected to guarantee all the sugar necessary for the domestic economy, as well as to produce alcohols and spirits, but said nothing about previously unmet export contracts with China for the supply of sugar. He also stressed the importance of planting a greater area under cane, describing it as “a fundamental step for growth.” 

“We expect a harvest greater than the previous one, with the capacity to ensure the demands of the economy and [to] allocate a part to exports. It will be a short but efficient harvest, in which we must place the worker at the centre of attention. We know that an economic recovery of the country requires the contribution of the sugar sector,” he told viewers. 

In his remarks García stressed the strategic importance of the sector and its restructuring, observing its important contribution to the country’s energy supply. “This is a strategic sector due to its contribution to the energy matrix,” he said, noting that up to 14 % of the country’s energy supply could be achieved using as biomass, sugar cane, other crop residues such as sugar cane straw, and forest residues. 

He also set out the extent to which plans to restructure the industry had been achieved. Today, he said, the sector consists of 56 agro-industrial sugar companies, one sugarcane factory in the Santa Cruz del Sur municipality, and 16 support companies which include 12 distilleries, 11 refineries, as well as 114 derivatives plants and 10 rum factories. 

García said that to “advance and recover,” the sector’s new business model allowed for “obtaining 84% of the foreign currency to buy inputs for sugar cane, such as herbicides and fertilisers.” Listing some of the derivatives the sector produces including electricity, alcohol, rums, sorbitol, cane wax, raw materials for more than 50 medicines, and bioproducts some relating to the planting of sugarcane, he suggested their export development potential “can provide the sources of financing that the sector needs.” 

Azcuba, he noted, had “approved foreign investment negotiating directives” …. “linked to BRICS countries, that are traditional sugar producers, [which can] contribute to the sector with modern technology: mainly Indian, Brazilian and Chinese,” but not mentioning recent Russian interest in the sector. 

Foreign investment, he made clear, will also be essential for 16 products the group has, to make use of planned increases in sugarcane production to develop other product lines such as brandy and wine. Azcuba was also exploring, he said, businesses linked to the modernisation of power plants and studying the development of biofuels. Noting that the entity’s new business model made this easier to do, he said that in the domestic market advantage will be taken “to introduce joint ventures and exporters into the value chain.” 

“Food production is a priority for our sector. Our plants with the greatest strengths are those that have a circular economy model, since they grow cane, manufacture sugar, but they also make alcohol, rum, produce electricity, yeast …. closing the cycle of the circular economy,” he told viewers. 

Despite this, García pointed to multiple challenges still facing the recovery of the sector. 

These included, he said, the fact that low production and shortages of sugar on the domestic market had seen its price there rise to CUP150 per lb, resulting in illegalities and the company having to work with Cuba’s judicial system and introduce video recording systems. 

He also pointed to the need to overcome the failure to date to achieve the required 1.4mn hectares under sugarcane required for future development; having to attend to changing organisational and management capacity as a result of those involved leaving the country or for self-employment or to MSMEs; existing debts to farmers from previous years; shortages of fuel and energy at key moments and undersupply; availability of all of the financing required for inputs when needed; shortages of fertilisers and herbicides; and climate change. 

García also referred to the impact that the excessive burning of cane had on yields and quality; the continuing impact of the embargo on critical items of imported equipment; and the failure to meet “very serious commitments” for contracted exports. He also noted the complexity of pricing of sugar cane because of its inclusion in the state regulated family basket, being able to produce enough food to feed and adequately house workers in the sector and attract better educated younger people into the sector. 

Cuba historically consumes around 700,000 tonnes of sugar each year and has exported under contract about 0.4mn tonnes to China. In 2019 Cuba produced 1.3 mn tonnes of sugar. 

The Caribbean Council is able to provide further detail about all of the stories in Cuba Briefing. If you would like a more detailed insight into any of the content of today’s issue, please get in touch.