3rd November 2023

The Jamaican government is preparing to raise new debt in the international market to retire existing global bonds totalling US$1.76bn.

The bonds earmarked include three specific notes maturing over the next five years, with bondholders set to have the option to cash out their bonds.

This includes two notes with a maturity date in 2025, one totalling US$254mn and carrying an interest rate of 7.625%, and the other note amounting to US$85.2mn with a 9.25% interest rate.

The third note, scheduled to mature in 2028, has an outstanding balance of US$1.42bn and bears an interest rate of 6.75%.

The buyback offer was to conclude on 27 October, with the settlement expected to occur on 2 November 2023.

The sum accounts for roughly 13% of Jamaica’s overall debt, which amounted to US$13.8bn (JM$2.15tn) in July 2023. This US$1.76bn in bonds corresponds to approximately 21% of the foreign debt stock of the country.

While the government has not disclosed exactly how much Jamaica is looking to raise from the new bond offering, the Ministry of Finance did indicate that the new bonds will be listed in Europe on the Euro MTF Market of the Luxembourg Stock Exchange.

Citigroup will act as global coordinator in addition to being joint lead managers and joint bookrunners with BofA Securities. Deutsche Bank Luxembourg will serve as the designated paying agent for Luxembourg.

“As described in the ‘use of proceeds’ some of the net proceeds of this offering are intended to be used to fund Jamaica’s purchase of certain outstanding notes of Jamaica,” read part of the prospectus issued by the Ministry.

This initiative is part of a strategic effort to systematically reduce the country’s debt load by replacing older bonds with what is hoped to be more cost-effective issuances following two recent credit rating upgrades. In September, S&P Global elevated Jamaica’s debt rating from ‘B+’ to ‘BB-‘ and maintained a “stable” outlook. Just one month later in October, Moody’s rating agency boosted Jamaica’s rating from ‘B2’ to ‘B1’ and changed the outlook from “stable” to “positive.”

Despite these upgrades, there remains uncertainty about what interest rate the new bond offerings will attract.

While the Finance Ministry’s prospectus highlighted the updated credit ratings as a reflection of Jamaica’s creditworthiness and its ability to make timely payments on long-term bonds, it included the caveat that, as per a standard indemnity clause, these ratings may fluctuate in the future, potentially influencing the trading price of Jamaican debt securities, including the mentioned notes.

“Jamaica’s credit ratings may not improve and they may adversely affect the trading price of Jamaica’s debt securities including the notes, which could potentially affect Jamaica’s cost of funds in the international capital markets and the liquidity of, and demand for Jamaica’s debt securities,” stated the document.

Moreover, the prospectus stipulated that the ongoing Russia-Ukraine conflict might exert a notable adverse impact on Jamaica’s economy and its ability to secure external debt funding in the future.

Caveats notwithstanding, several market players including NCB Capital Markets (NCBCM) have expressed optimism about the move and the country’s recent economic performance.

“Jamaica’s commitment to fiscal consolidation, debt management, and economic growth, have put it on a positive path for the future, as captured by the recent credit upgrades… The efforts at keeping debt sustainable are also reflected in the refinancing of USD-denominated debt with local currency debt and maturity extension that is underway, if rendered successful,” said a recent NCBCM article titled ‘Jamaica’s Fiscal Discipline Paying Dividends’.

The financial firm emphasised that the continued push to reduce debt to the target of 60% of GDP and reduce the interest burden should provide the Jamaican Government with the fiscal space to invest more in infrastructure and public services.

One of the country’s last significant efforts to refinance its debt came in September 2019, when the Andrew Holness Administration moved to replace US$3bn in sovereign bonds.

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.

20th October 2023

Tensions are rising in the regional aviation sector after Caribbean Airlines (CAL) announced that it is moving to significantly expand its operation in the Caribbean.

The Antigua and Barbuda Government has declared its intention to oppose CAL’s expansion, specifically on routes previously serviced by LIAT (1974) as the Gaston Browne Administration continues efforts to revitalise the airline.

LIAT (1974) is owned by the governments of Antigua and Barbuda, Barbados, Dominica and St Vincent and the Grenadines. In July 2020, it initiated an administration process due to mounting debt and the repercussions of the COVID-19 pandemic.

In his 2023/2024 National Budget Address, Trinidadian Finance Minister Colm Imbert announced that the state-owned airline plans to lease 12 new passenger aircraft to respond to increasing demand across the region given the exit of LIAT.

“The airline thus intends to expand its fleet to meet this growing demand through the lease of four additional ATRs and three additional B 737-8s… CAL also plans to lease five Embraer E-175 regional jets to service the intra-regional demand and to establish bases and hubs across the region to promote efficiency and cost-reducing measures,” said Imbert.

In April 2023, CAL filed an application to the US Department of Transportation to operate under the Air Transport Agreement between the US and Trinidad and Tobago specifically referencing Puerto Rico and the US Virgin Islands, routes formerly serviced by LIAT from its Antigua base.

According to the application’s operational forecast, CAL aimed to serve 5,339 passengers traveling to and from Puerto Rico, generating an estimated revenue of US$0.69mn in 2023 had the service commenced as planned, and 21,356 passengers in 2024, raising US$2.8mn in revenue.

In response to repeated criticisms about the lack of a proper regional air cargo network, CAL is also moving to expand its cargo services, aiming to lease two ATRs and two B 737-800s to grow its cargo operations.

Antigua and Barbuda’s government has taken exception to CAL’s announcement, stating that it threatens the role LIAT played in inter-regional travel as the country works with international Nigerian carrier, Air Peace to save the significantly down-sized carrier.

“We have been working with Air Peace with the expectation that it will bring capital, expertise and of course a great deal of interest in ensuring that our LIAT survives and we believe that it is a better notion, a better approach than the plans announced by CAL through a parliamentarian in Trinidad and Tobago,” said Lionel Hurst, Chief of Staff to Prime Minister Browne, in a post-cabinet news briefing.

Hurst said that CAL’s proposed expansion makes it clear that the revival of LIAT, which is intended to take off by the 2023 winter season, is not an objective of Trinidad, whose leaders are determined to capture the aviation services his country once exported.

“CAL essentially intends to take from Antigua and Barbuda the aviation services that we have been providing by way of LIAT for more than 60 years. So, we are going to continue to fight this approach of trying to take from Antigua and Barbuda the important role which LIAT did in not only providing service to inter regional travel in the Caribbean, but more importantly for Antigua and Barbuda all those jobs, more than 600 jobs,” argued the Chief of Staff.

While Antigua and Barbuda takes aim at Caribbean Airlines, InterCaribbean Airways, another carrier seeking to fill the void left by LIAT continues its expansion in the regional market.

In recent months, the Turks and Caicos based airline has done some expansion of its own. In June, InterCaribbean added an additional seven ATR-42s bringing its ATR fleet to 10 aircraft. In September 2023, a Bombardier CRJ700 with seating for 70 passengers was introduced into service. The airline said that it plans to retire its Embraer 120 aircraft by the end of 2023, replacing them with these newer and larger airplanes to cater to the growing regional demand.

The airline is also bringing its subsidiary company Flight Support to its new Southern Caribbean hub in Barbados to provide above – and below-wing support by its own staff in a bid to end the practice of outsourcing. “We are thrilled to be able to manage our full operations in Barbados finally,” said Chairman Lyndon Gardiner.

While these recent developments in the Caribbean aviation space have largely been welcomed by governments and consumers, the carriers have yet to reach the level of connectivity offered by LIAT pre-pandemic. Moreover, ticket prices, and government taxes, charges and fees remain prohibitive.

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.

6th October 2023

The Keith Rowley Administration has tabled a TT$59.209bn (US$8.7bn) 2023/2024 national budget in Parliament.

The budget includes Total Revenue of TT$54.012bn (US$7.98bn), based on a projected oil price of US$85 per barrel, and natural gas of US$5 MMBtu. The shortfall under expenditure will lead to a TT$5.197bn (US$767.72mn) fiscal deficit (2.7% of GDP).

Some TT$16.709bn (US$2.47bn) is expected to come from oil revenue, TT$35.547bn (US$5.24bn) from non-oil revenue and TT$1.756bn (US$259.98mn) in capital revenue.

“I am confident that the estimates under this budget framework will materialise and ensure that the economic recovery is anchored on sound and stable macroeconomic conditions,” said Finance Minister Colm Imbert as he announced the major budgetary allocations.

Education and Training has been granted the highest allocation with TT$8.022bn (US$1.19bn), followed by Health, which will receive funding to the tune of TT$7.409bn (US$1.09bn), and National Security which has been allocated TT$6.912bn (US$1.02bn). Social Development has been allotted TT$5bn (US$740.26mn), while the Ministry of Works and Transport is set to receive TT$3.394bn (US$502.09mn).

Additionally, public Utilities will get TT$3.018bn (US$446.5mn), Rural Development and Local Government TT$1.825bn (US$269.77mn), while the Ministry of Agriculture has been promised TT$1.442bn (US$213.04mn) and Housing TT$1.165bn (US$172.12mn).

Touting the reduction in the unemployment rate to 3.7% between April and June 2023, from 4.9% from January to March 2023, Imbert noted that approximately TT$1bn (US$147.82mn) in back pay will be paid to the 37,000 public-sector workers who accepted the 4% wage increase offered by government.

In terms of economic policy, he announced that the government will seek to bring closure to the ongoing debate about the national minimum wage by legislating an increase, while moving ahead with its plan to increase the retirement age from the current 60 years to 65.

 “I propose to increase the minimum wage by 17%, or TT$3 (US$0.44) per hour, from TT$17.50 (US$2.59) to TT$20.50 (US$3.03) per hour. This measure will benefit approximately 90,000 persons in the workforce and will require an amendment to the Minimum Wages Act via a Minimum Wage Order,” said the finance minister.

The government also revealed that collection of property taxes will begin in 2024. Imbert said that based on progress in the compilation of the Valuation Roll, the Ministry expects that at least 50% of all residential properties will pay the 3% property taxes totalling somewhere between TT$540 (US$79.82) and TT$1,080 (US$159.64) annually.

In an effort to combat the growing crime problem, Imbert announced that the Police Service will triple the annual intake of new recruits from 300 to 1,000 for 2024 and will be given TT$80mn (US$11.83mn) in additional funds for new vehicles and equipment. Some TT$90mn (US$13.3mn) has also been budgeted to procure four container scanners for the Port of Port-of-Spain.

Despite an increase of TT$64.2mn (US$9.4mn), the Rowley Administration has again come under fire for the size of its budgetary allocation to Tobago. The Tobago House of Assembly (THA) expressed disappointment with the island’s budget allocation of TT$2.585bn (US$382.1mn) for 2024, which falls far short of their requested TT$4.54bn (US$671.1mn). 

“We could have all stayed at home, turned off our televisions and practically predict what the THA would be allocated… It does not even inch close to the middle percentile of the range recommended by the Dispute Resolution Commission and agreed to by Parliament in 2001,” said THA Chief Secretary Farley Augustine.

Opposition Leader Kamla Persad-Bissessar also criticised the budget, calling it “painful” and arguing it failed to address crime and the cost of living. She accused Imbert of manipulating fiscal statistics to create a false sense of economic security and questioned the budget’s lack of diversification and continued reliance on the energy sector.

On the other hand, the Trinidad and Tobago Manufacturers Association (TTMA) has expressed optimism about the benefits for local manufacturers in the 2024 budget, including the introduction of e-payment options, expansion of the foreign exchange framework at the Exim Bank, and the introduction of Small and Medium-sized Enterprises forex facilities. TTMA Head, Roger Roach welcomed the push for growth led by the non-energy manufacturing sector, supported by an enabling environment for business competitiveness.

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.

22nd September 2023

The Government of The Bahamas has recorded stronger than expected economic performance in 2023 Q2, beating many analysts’ projections.

In its Quarterly Economic Review for June 2023, the Central Bank of The Bahamas (CBOB) reported that the domestic economy continued its positive growth trend in the second quarter, indicating a transition back to pre-pandemic conditions.

“Tourism output continued to record robust growth, supported by healthy gains in both the high value-added air segment and sea traffic, as the demand for travel in major source markets persisted,” said the report.

Foreign arrivals increased by 45.2% to 2.4mn compared to the same period in 2022. Sea arrivals expanded by 55.3% to 1.9mn passengers and high-value-added stopover tourism strengthened by 15.7% to 0.5mn visitors.

New Providence and the Family Islands both experienced significant increases in tourist arrivals. Traffic in Q2 to New Providence surged by 37.7% to 1.1mn visitors compared to the 0.8mn passengers in the same period in 2022.

“The dominant sea component expanded by 54.4%, while air traffic increased by 13.4%. Likewise, visitor arrivals to the Family Islands advanced by 52.7% to 1.2mn, surpassing the 0.8mn gain in the corresponding period of 2022, on account of advances in sea passengers, by 56.6%; and air passengers, by 22.4%” highlighted the CBOB, adding that Grand Bahama saw a 46.4% growth in tourists.

This robust tourism performance has buoyed the overall economy, leading the Davis Administration to project that the government will come close to its revenue and tax forecasts for the 2022/2023 fiscal year ended June 2023, despite challenges with value-added tax (VAT) collection.

Total revenues and total tax revenues are at 91.4% and 90.7% of their annual targets, respectively, with just one month of the fiscal year to be reported. For the 11 months ended May 2023, total revenue was US$2.613bn, US$244.5mn below the budgeted US$2.857bn, while tax revenue fell US$237.3mn short of the US$2.537bn budget target.

“I think we will come very close on the revenue side… There’s still some postings to be done, but we will come very close,” said Financial Secretary Simon Wilson.

He however acknowledged that issues related to real estate transactions and payment delays are likely to see VAT revenue for the full fiscal year fall as much as US$164mn below the target of US$1.411bn, adding that steps are being taken to improve revenue processing efficiency going forward.

The report also noted that The Bahamas’ national debt increased by US$306.2mn during the period, primarily due to net borrowing activities.

“Proceeds of borrowings during the period totalled US$468mn via US$108mn in Bahamas Registered Stock, US$100mn in Central Bank advances and US$260mn in drawings from international development agencies… Repayments totalled US$161.8mn owing to repayments of US$100mn for Central Bank advances, US$58mn for Bahamas Registered Stock and US$3.8mn for domestic bank loans,” said the report.

The Financial Secretary defended the government’s decision to borrow the US$260mn from multilateral lending agencies like the Inter-American Development Bank (IDB) to repay loans from other foreign debt calling it “good cash flow management” since multilateral loans come at a rate of 4% to 5% interest compared to the current going rate of 10.5% to 11% on the country’s present bond market yield curve.

In recent months, the approved 2023/2024 national budget has come under scrutiny due to what analysts say are overly optimistic revenue estimates. For example, 2023/2024 VAT revenue has been projected to reach US$1.591bn, nearly US$180mn more than last year’s US$1.411bn estimate. Mr Wilson has countered by insisting that the compliance and enforcement efforts of tax authorities make the new projection attainable.

He stressed the importance of the 2023/2024 fiscal year to rebuilding market confidence in The Bahamas. The impending cruise passenger tax hikes are critical to the government reaching the lower US$131.1mn deficit target by the end of June 2024 to lay the foundation for a projected US$109.2mn surplus in 2024/2025.

The cruise tax hikes (US$5 increase for passengers leaving via Nassau and Freeport and US$7 for those leaving private islands), which take effect from January 2024 are expected to nearly triple revenue from US$50.642mn to US$145mn. The government is betting on revenue increases like this to improve the country’s credit rating which has been hit with several downgrades, taking it into ‘junk’ status.

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.

8th September 2023

Anguilla is reaping unexpected riches from its “.ai” domain as AI development surges, with tech start-ups increasingly attracted to this domain for their businesses. Vince Cate, who manages the Anguilla domain, noted the significant change since November 2022, with ChatGPT driving AI progress. Anguilla earns revenue from domain registrars, such as Hover, paying US$140 for every two-year .ai domain registration. The past year saw Anguilla’s domains double to nearly 300,000, with domain revenue projected to hit US$25mn to US$30mn in 2023, compared to US$8.3mn in 2022. This could constitute 25% of Anguilla’s total annual revenue, estimated at US$107mn.

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.

21st July 2023

Moody’s Investors Service has upgraded Trinidad and Tobago’s credit rating outlook to positive from stable, while affirming the country’s long-term issuer and senior unsecured ratings at Ba2.

The international credit ratings agency noted that the positive outlook reflects the expectation that the country’s fiscal consolidation momentum triggered by windfall gains from energy prices will be sustained through structural spending and revenue measures.

“The positive outlook reflects improved prospects that Trinidad and Tobago’s (T&T) fiscal consolidation momentum triggered by energy price windfall gains will be more sustained than projected in Moody’s baseline scenario, despite lower gas prices, owing to the implementation of structural spending and revenue measures aimed at reducing fiscal accounts’ sensitivity to energy prices,” said Moody’s.

The agency also noted the potential for economic expansion, supported by increased oil production and diversification efforts.

“A sustained return to economic expansion after several years of contraction, supported by the projected increase in oil production starting this year would also enhance economic resiliency, as would continued diversification efforts in the non-energy sector. The government’s adopted structural fiscal and economic reforms are reflected in an improving institutions and governance strength assessment as a driver of this action,” wrote Moody’s in its report.

In a statement, Finance Minister Colm Imbert said that he considers the upgrade a welcomed development because it acknowledges the positive outcome of the efforts of the country throughout the several different shocks that have taken place over the recent years, such as oil and gas prices shocks and the severe adverse effects of the COVID-19 pandemic.

“This improvement in our outlook is a first step in the convergence and harmonisation of our international credit ratings. It is also clear that our credit rating dynamics and momentum are now positive, which is of significant importance in a world of more elevated interest rates. Better credit ratings will positively influence the cost of funding for the Government and State Enterprises and the economy of T&T as a whole,” argued the Finance Minister.

In its rationale, Moody’s acknowledged the Rowley Administration’s plans to “slow the weakening energy production trend” has the potential to improve the country’s economic growth prospects, by expanding oil production and the onboarding of several gas projects such as Shell’s Manatee field.

“Part of the government’s strategy to mitigate the declining domestic gas supply trend is to promote T&T’s role as regional energy hub by collecting, processing, and re-exporting natural gas from other Caribbean countries. This strategy builds on T&T’s comparative advantage as the only Caribbean nation with significant LNG and ammonia/methanol production capacity in place to supply world markets,” said Moody’s.

Of particular interest is the ongoing negotiations with the US Government and Venezuela on the development of the Dragon gas field.

“The two-year licence granted by the USA, Government of (Aaa stable) to T&T in January 2023 to develop the 4.2tn cubic foot (tcf) Dragon gas field offshore Venezuela, Government of (C stable) via an Office of Foreign Assets Control (OFAC) waiver from sanctions represents an important development that will test the viability of this strategy,” Moody’s stated.

Trinidadian Energy Minister, Stuart Young, recently held meetings with Shell’s Executive Vice President of LNG, Cederic Cremers during an energy conference in Canada. The discussions with Shell focused on topics including the development of the Dragon Gas field in Venezuela, the restructuring of Atlantic LNG, and Shell’s operations in T&T.

Young also met with Methanex’s Chairman and CEO to explore the potential of T&T as a bunkering port for methanol as a cleaner fuel for shipping, given that the company has two plants in the country and is the world’s largest producer and trader of methanol.

Moody’s upgrade of the economy comes on the heel of a relatively positive IMF Article IV review for 2022, which put projected 2023 real GDP growth at 3.2% and anticipated lower inflation.

On 30 June 2023, the T&T Central Bank held the repo rate at 3.50%, keeping the rate unchanged since June 2020. The Bank said that inflation trended downward over the first five months of 2023, with the Index of Retail Prices slowing to 5.7% in May 2023, compared with 6.0% one month prior and 8.7% in December 2022. Private sector credit showed a year-on-year growth rate of 6.5% in April 2023, while business credit expanded by 6.4%.

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: Trinidad & Tobago Guardian

10th July 2023

The Caribbean is set to benefit from a suite of reforms to international financing announced by the World Bank Group.

Ajay Bango, the new President of the Group announced what he termed as an expanded toolkit for crisis preparedness, response, and recovery, at the recently held Summit for a New Global Financial Pact in Paris, France.

These measures include pausing debt repayments, redirecting financing, linking crisis preparedness and financing, backstopping development projects with private sector support, and building enhanced catastrophe insurance without debt.“The World Bank Group aims to create a world free of poverty on a liveable planet. We work to make people better prepared for threats of any kind by sharing our expertise, building resilience, and insuring against risks,” said the Bank in a statement.

The introduction of Climate Resilient Debt Clauses will pause debt repayments of vulnerable countries in times of crisis or catastrophe to allow them “to focus on meeting the urgent needs of their people instead of on loan repayments”. The Bank will also allow countries to quickly redirect borrowed funds to emergency response.

“The World Bank Group will put in place a new rapid response option, offering all client countries the ability to immediately repurpose a portion of their lending portfolio for emergency needs when a crisis occurs – for example to redeploy undisbursed funds in longer-term infrastructure projects for immediate disaster response,” announced the international institution.

Pledging to step up the expertise and analytical support available to countries to design a crisis preparedness and response financing strategy, the Bank aims to leverage its different operating arms to “backstop” development projects.

“The Multilateral Investment Guarantee Agency is partnering with the private insurance industry through the Insurance Development Forum, a public-private partnership, to design an innovative parametric insurance product, and the International Finance Corporation has designed a private sector-led crisis response solution to support financial institutions in addressing the impact of natural disasters due to climate change,” the Group revealed.

Another potentially important element of the toolkit relates to the possibility of enhanced catastrophe insurance. The Bank said that it aims to build on its catastrophe insurance solutions such as Cat Bonds and give all countries the option of embedding catastrophe insurance into lending products. Additionally, there are plans to work with donors to ensure that these insurance products are affordable to the poorest countries.

Outside of the World Bank toolkit, the summit also had other areas of progress that will potentially benefit the Caribbean. For example, four other multi-development banks have agreed to incorporate natural disaster clauses into their loan agreements, so too has several large economies which lend to other countries.

IMF Managing Director, Kristalina Georgieva reported that it has met its US$100bn of re-channelled excess Special Drawing Rights (SDR) allocated in 2021 to help developing and lower income countries.

“The target for such rechannelling was set at US$100bn. And I can announce today that we reached that target. Now, we must lift our ambition. On SDR channelling, we started with a request for countries to channel 20% of their 2021 allocation. Then we went to 30%. And now we are moving to an ask of 40%.

Today we have close to US$60bn in pledges to be channelled through the Resilience and Sustainability Trust (RST) and through the Poverty Reduction and Growth Trust (PRGT),” said Georgieva at the summit.

These measures represent a win for developing countries including those in the Caribbean and will galvanise the efforts of Barbados Prime Minister Mia Mottley as she continues to push her Bridgetown Initiative for global financial reform on the world stage.

“Global problems like the climate crisis show us that we simply cannot address modern issues with institutions, which were created for a very different world nearly 80 years ago. Change is needed… Don’t leave Paris without understanding there must be transformation, not reform. Step up the pace and let’s get going,” said Prime Minister Mottley as she addressed over 50 world leaders and hundreds of stakeholders at the Paris summit.

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 via VOA News

23rd June 2023

Caribbean leaders have used a recent meeting with US Vice President Kamala Harris to secure pledges of support on several issues affecting the region.

“Strengthening the US-Caribbean relationship is a priority for me, as it is for President Joe Biden,” said Vice President Harris at the 8 June 2023 meeting in The Bahamas attended by CARICOM leaders and President Luis Abinader of the Dominican Republic.

Harris announced that the US will spend in excess of US$100mn in the region to crack down on weapons trafficking, help alleviate Haiti’s humanitarian crisis and support climate change initiatives.

Of this, some US$20mn will be spent through USAID to help Caribbean businesses develop and adopt technologies related to renewable energy, another US$15mn will go toward boosting emergency response and preparedness across the region, with more funded expected to go to climate change adoption.

“We have discussed, for example, powerful storms that can wipe out economic progress, low-lying islands that face erosion, flooding, and deadly storm surge from rising seas,” said Harris, adding that “Caribbean nations are on the front lines”.

She noted that these discussions resulted in the launch of the US-Caribbean Partnership to Address the Climate Crisis known as PACC 2030 at the 2022 Summit of the Americas, to help accelerate the Caribbean’s transition to clean energy and to promote energy security and climate resilience.

“Renewable energy is important, not only because of its economic benefits, but also because of its benefits to the environment. As one of the most vulnerable countries in the world – a country that has become a leading voice on the issue of climate change – it is critical that we practice what we preach on climate change,” said Bahamian Prime Minister Philip Davis, who co-chaired the meetings.

The Vice President also announced that the US has launched a diplomatic campaign to push for the reform of multilateral development banks, in order to improve low-cost financing to Caribbean countries.

“We seek the availability of low-cost concessional financing to nations in the Caribbean. And we believe addressing the climate crisis should be a critical part of the mission of the World Bank… More broadly, new debt must include disaster clauses to allow a pause on debt payments immediately following a natural disaster. And three, we want the banks to better mobilise the private sector in support of these goals,” said Harris.

She emphasised that because of the potential positive impact on countries in the Caribbean, the US is pushing to achieve these key reforms by the G20 meeting this fall.

In recent months, the Caribbean has also intensified calls for the US to help address the trafficking of illegal firearms primarily from US states, as the region grapples with a surge in violent gun-related crime. In response, the US said that it will divert resources to strengthen its response to weapons smuggling.

“I am pleased to announce that the US Department of Justice will create a new position, a Coordinator for Caribbean Firearms Prosecutions, which will help maximise information sharing between our countries to support the prosecution of traffickers. This effort will be aided by the bipartisan Safer Communities Act, which President Biden signed last year, and includes new federal criminal offenses for firearms trafficking and straw purchases”, revealed Vice President Harris.

Additionally, the State Department has pledged to help enhance the forensic capabilities of the region, bolster local law enforcement agencies, and back a unit located in Trinidad and Tobago focused on assisting islands in resolving firearm-related cases.

The US, in collaboration with the UK, will create a programme in the Eastern Caribbean to guide and support local judges and prosecutors, aiming to enhance the prosecution of gun-related offenses in response to the backlog of cases.

Haiti will benefit from US$53.7mn in new humanitarian US aid as the country continues to confront unrest and the impact of natural disasters. Harris said that the Biden Administration will also support the extension of HOPE-HELP trade preferences for Haiti, which are due for renewal in 2025.

“Both the Heads of State and Government of the Caribbean and the US acknowledged that the Meeting ventilated issues critical to the current and future prosperity and security of the region and committed to ongoing dialogue and concerted action towards mutual benefit,” said a communique issued by the CARICOM Secretariat at the end of the meeting.

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.

(AP Photo/Kristaan Ingraham)

9th June 2023

The Philip Davis-led Administration has tabled a US$3.5bn national budget in the nation’s parliament for the upcoming fiscal year.

Prime Minister Davis, who is also Minister of Finance, announced a projected deficit of US$131.6mn for the period, but emphasised that there will be no new taxes or tax increases. Recurrent revenue is estimated to be US$3.3bn, recurrent expenditure at US$3.1bn, and capital expenditure at US$364.6mn. The government aims to generate more revenue through improved tax compliance and enforcement without raising taxes.

Davis expressed confidence in achieving a balanced budget by 2024/2025, noting that revenue receipts have been strong due to legislative reform, effective policies, improved economic conditions, and better collection efforts, while public spending is on track.

The prime minister revealed several initiatives, including financial support for the Shantytown Action Task Force, ongoing development of a new health facility in Grand Bahama, the establishment of a new hospital in New Providence, and further enhancements to the infrastructure of clinics on the Family Islands.

Other plans include funding for a School for the Creative and Performing Arts, support for the National Youth Guard Programme, the consolidation of National Health Insurance and the Prescription Drug Plan into a unified health policy, and the acceleration of a rent-to-own programme and other home ownership concessions.

He also announced an increase in the monthly constituency allowance and the constituency capital grant from US$2,500 to US$3,500, while the capital grant will be raised from US$100,000 to US$150,000 per year.

The speech outlined several measures to enhance the growth of the local capital market including the implementation of a competitive bidding system for primary market issuances of Bahamas registered stocks, and elimination of the tax imposed on businesses’ interest income derived from holding government securities.

Davis emphasised that the budget does not compromise the fiscal outlook. “Barring the advent of unforeseen developments, we are still on track to achieve a balanced budget by 2024/2025,” said the Prime Minister.

He highlighted that due to the country’s net borrowing activities, central government net debt increased over the first three quarters of the current fiscal year by US$290.8mn to reach US$11.1bn. However, the significant post-COVID-19 economic rebound saw the debt to GDP ratio decrease to 83.5% in March 2023 from 87.3% at the end of June 2022.

Davis said that the government is awaiting approval from the Inter-American Development Bank (IDB) on two policy-based guarantee instruments that will enable the country to borrow money at more favourable rates and is considering debt-for-nature swaps to have a portion of foreign debt forgiven in exchange for conservation commitments.

“A key component of the government’s fiscal strategy is to use access to CDB [Caribbean Development Bank] and IDB financing to lower our overall funding cost, by leveraging the institutions’ AAA credit rating. Reduced borrowing costs and improved debt tenor are tools which should improve the overall debt profile of the nation,” he said, adding that the strategy includes a shift towards domestic borrowing and away from costly external commercial debt.

Meanwhile, Leader of the main opposition FREE National Movement (FNM), Michael Pintard said that the budget undelivered on promises made.

“This is a government that promised that it would improve the ease of doing business. What has happened is, in fact, quite the opposite,” said Pintard attacking the budget. He highlighted the government’s failure to address issues such as the reform of state-owned enterprises and the projected depletion of the National Insurance Board fund. Pintard also criticised the lack of a comprehensive plan for the future of energy, expressing concerns about financial arrangements with fossil fuel companies instead of transitioning towards solar energy.

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Photo via Minister Davis Linkedin