SME eSmart- Powering Your Potential Find out more today by calling: (868)-627-8879 ext. 228 or email: esmart@caricris.com

▪ The Government of the British Virgin Islands’ rating reaffirmed at CariAA-

▪ Venture Credit Union Co-operative Society Limited’s rating reaffirmed at CariBBB-

▪ Eastern Credit Union Co-operative Society Limited’s rating reaffirmed at CariBBB-

▪ Trinidad and Tobago Unit Trust Corporation’s initial rating assigned at CariAA

▪ Massy Holdings Ltd. rating reaffirmed at CariAA+

▪ Sagicor Life Jamaica Limited’s rating reaffirmed at jmAAA

▪ National Flour Mills Limited’s rating reaffirmed at CariA-

▪ HMB Limited’s proposed collateralised mortgage obligation rating assigned at CariAA- (SO)

▪ NCB Capital Markets (Barbados) Limited’s initial rating assigned at CariBBB-

▪ Government of Barbados’s local currency rating upgraded to CariBB

▪ PanJam Investment Limited’s initial rating assigned at CariBBB+

▪ Saint Lucia Electricity Services Limited’s rating reaffirmed at CariBBB ▪ TSTT’s existing rating reaffirmed and new proposed bond issue rating assigned at CariA ▪ Jamaica Public Service Company Limited’s initial rating assigned at CariBBB+

OUR UPCOMING WORKSHOPS!

Enterprise Risk Management 26th & 27th June 2019 Jamaica

Benefits of a CariCRIS Rating to a Manufacturing Entity:

Latest Rating Actions by CariCRIS

• Access to an independent assessment of the Company which can lead

to increased efficiencies as a result of improved business operations

• Access to improved terms from suppliers

• Access to improved terms for lines of credit

DATE

WORKSHOP

COUNTRY

Please visit our website at www.caricris.com for the detailed Rationales on these and other ratings

Career Opportunity As we expand our operations through the Caribbean, CariCRIS is

seeking to recruit a high-calibre credit risk professional to join our team

in the following position:

Research & Fixed Income Analyst

Position Summary

Conducts research on the key sectors and industries driving the economies of the Caribbean and

compiles sector studies and industry reports. Also carries out valuation of fixed income securities

using CariCRIS’ proprietary valuation models.

Qualifications & Experience

• First degree in Finance/Economics/Business Management from an accredited University

• Postgraduate qualification/specialization in Finance such as an MBA, or M.Sc. and/or

studying toward the CFA charter would be an asset

• 2-3 years’ professional research experience, preferably in the financial sector

• Good working knowledge of the financial and capital markets of the Caribbean

• Prior experience in the valuation of regional fixed income securities would be an asset

Required Skills

• Strong analytic and critical thinking skills

• Exceptional written, oral, and presentation communication abilities

• Expertise with Microsoft Excel including VBA, PowerPoint and other Office-Related

software

If you are interested in joining the CariCRIS team, please submit a detailed resume and cover

letter by May 31st, 2019 to https://caricris.com/index.php/about/careers.

Tel: 1 868 627-8879 Fax: 1 868 625-8871

Only short-listed applicants will be acknowledged.

CariCRIS’ credit ratings and daily Newswire can also be found on the Bloomberg Professional Service.

REGIONAL

Trinidad and Tobago

Angostura leads trading

Overall stock market activity yesterday resulted from trading in 16

securities of which ten advanced, five declined and one traded firm.

Imbert to make public terms of US$720m loan

The terms and conditions of the US$720 million syndicate loan being

secured by Trinidad Petroleum Holdings will be made public upon

finalisation of legal documents, which is anticipated within the next week

to ten days.

Barbados

‘For sale’

Barbados is to give up its majority ownership of regional airline LIAT

handing it back to Antigua and Barbuda, Prime Minister Mottley

announced in Parliament tonight, ending weeks of speculation triggered

by St John’s revelations of Bridgetown’s plans.

Jamaica

Medical Disposables celebrates profit despite forex volatility

HEALTH care and consumer products distributor, Kingston-based Medical

Disposables and Supplies Limited (MDS), is reporting that the company

was able to generate a year-end profit in spite of the volatility of foreign

exchange fluctuations that squeezed profit margins.

House approves merging PetroCaribe Fund into Consolidated Fund

The House of Representatives yesterday approved a bill amending the

Petroleum Act to integrate the functions of the PetroCaribe Development

Fund (PDF) into Central Government.

Mandela Highway reconstruction 97% complete

The National Works Agency (NWA) is reporting that the Mandela Highway

Realignment and Reconstruction Project is 97 per cent complete.

Jamaica continued

Water hope

A search for precious metals in several areas of the island has produced

an unexpected windfall — the discovery of what is believed to be large

bodies of water which could solve the annual drought problem which

plagues the island.

Hilton makes waves with Oceana plan

The 168-room former Oceana hotel, located in downtown Kingston and

owned by PanJam Investments Limited, will be transformed into ROK

Kingston and open its doors in 2020. The news came as Hilton yesterday

announced the signing of ROK Hotel, Kingston, Tapestry Collection by

Hilton — marking the brand's entry into the Caribbean for the first time.

NWA spending $100 million dollars on drain cleaning for hurricane season

The National Works Agency (NWA) is spending $100 million dollars on drain

cleaning across the island under the Government’s pre-hurricane

mitigation programme.

Indies Pharma debt free and growing

Sales at pharmaceutical firm Indies Pharma Jamaica Limited grew by

nearly one-third for its April 2019 second-quarter from increased business

activity.

Caribbean Industrial buys tools firm in preparation for listing

Flooring contractor Caribbean Industrial Systems (CIS) will seek to raise $65

million in a bond offering as part of a series of financing measures that will

eventually see the company listing on the stock exchange.

LSC expanding lubricants facility at Rockfort

Lubricating Specialties Company (LSC) is adding another 500,000 gallons

in capacity at its facility in Rockfort, Kingston, for which it already has the

green light from regulator National Environment and Planning Agency,

NEPA.

Guyana

Public sector employment declined by 11.1%

Employment in the public sector declined by 11.1 per cent in 2018 due to

lower recruitment in the core civil services.

Guyana continued

DDL urges US to reallocate sugar quotas

With Trinidad and Tobago and St Kitts and Nevis closing down its sugar

industry, Chairman of the Demerara Distillers Limited (DDL), Komal

Samaroo, is urging the United States to reallocate the tariff rate quota it

announced for these countries this year to states to Caribbean states that

are still producing sugar.

Exxon, others investing at Wales Estate

OIL giant ExxonMobil has been leased lands at the Wales Estate to build a

wharf and to establish a manufacturing plant at West Bank Demerara,

being one of a number of investors set to do projects at the former sugar

estate.

The Bahamas

‘No Big Concern’ For the Us$ Peg in Joining WTO

The Central Bank’s governor says the prospect of widening “trade

imbalances” as a result of joining the WTO is “not a major concern” for The

Bahamas’ fixed exchange rate system.

Carnival ordered to pay $20 million criminal penalty

Carnival Corporation has reached a tentative settlement with federal

prosecutors in which the world’s most extensive cruise line eagerly

consented to pay a $20 million in fines for some of its ships persistently

polluting the oceans notwithstanding vowing years ago to discontinue.

St. Kitts and Nevis

St Kitts-Nevis projects decline in revenue for 2019

The government of St Kitts and Nevis is projecting 29 percent drop in

revenue in 2019, according to the Caribbean Development Bank (CDB).

INTERNATIONAL

United States

Trump threatens China with tariffs on further $300 billion of goods

U.S. President Donald Trump threatened to hit China with tariffs on “at

least” another $300 billion worth of Chinese goods but said he thought

both China and Mexico wanted to make deals in their trade disputes with

the United States.

United Kingdom

Advent's latest fund raises $17.5 billion, exceeds target

Advent International, one of the world’s largest buyout firms, said on

Thursday it raised $17.5 billion for its latest fund, surpassing the $16 billion

target it had set.

Aviva to cut 1,800 jobs globally, overhauls UK business

British insurer Aviva will cut 1,800 jobs globally as its new chief executive

seeks to make the group more competitive by restructuring its British

business and reducing costs across the business.

Ford to close Wales engine plant in latest blow to UK car sector

Ford said it would close its plant in Bridgend, south Wales, next year

because of falling demand for some if its engines, putting 1,700 jobs at risk

in a further blow to Britain’s once booming car industry.

Europe

IMF sees euro as undervalued, ECB policy support necessary

The International Monetary Fund believes the European Central Bank must

maintain supportive monetary policy, an EU document seen by Reuters

showed, anticipating the content of a report the IMF will present to euro

zone finance ministers next week.

Consumers, investment, trade boost euro zone at start of 2019

The euro zone economy accelerated in the first three months of this year,

EU statistics agency Eurostat confirmed on Thursday, driven by household

spending, investment and trade.

Europe continued

Investment bank environment still very fragile says UBS

Investment banking conditions have improved over recent months but

remains “very fragile,” UBS Chief Executive Sergio Ermotti said on Thursday,

adding the Swiss lender’s own business was performing in line with the

industry.

Euro strengthens ahead of ECB meeting

The euro rose on Thursday as investors prepared to scrutinise a European

Central Bank meeting, wanting to know how concerned its policymakers

are about signs of a downturn in growth.

ECB pushes back rate hike again as outlook darkens

The European Central Bank pushed back the timing of its first post-crisis

interest rate hike again on Thursday and said it would continue paying

banks for lending in its latest effort to revive a slowing euro zone economy.

China

China's new measures to spur car sales fall short of expectations

China announced a series of measures on Thursday to revive slumping car

sales, but failed to meet market expectations as it included no plans to

relax controls over the issuance of new licenses for traditional-fuel cars in

major cities.

Japan

BOJ's Kuroda warns of potential dangers from excessive credit growth

Bank of Japan Governor Haruhiko Kuroda on Thursday warned of the

potential dangers of heavy money printing, saying that financial bubbles,

when accompanied by excessive lending by commercial banks, tend to

trigger financial crises.

India

India's central bank cuts rates, turns 'accommodative' as economy slows

The Reserve Bank of India cut its policy interest rate by 25 basis points in a

widely expected move on Thursday, while also changing its policy stance

to “accommodative,” after latest data showed the economy growing at

its slowest in over four years.

Global

Oil prices firm but concerns grow about demand

Oil prices rose by more than 1% on Thursday, recovering from a near five-

month low in the previous session but sentiment stayed weak due to rising

U.S. supply and a stalling global economy.

Trade war, no-deal Brexit could push EU into recession

A no-deal Brexit or a trade conflict with the United States could push the

European Union into recession, Jurgen Rigterink, First Vice President of the

European Bank for Reconstruction and Development (EBRD), said on

Thursday.

Russia's Lukoil backs extending global oil cuts to end of 2019

Lukoil, Russia’s second-biggest oil producer, plans to propose that

Moscow extend its participation in a global oil production-cutting deal at

existing terms to the end of this year, its chief executive Vagit Alekperov

told Reuters.

Angostura leads trading Thursday 6th June, 2019 – Trinidad Express Newspaper

Overall stock market activity yesterday resulted from trading in 16

securities of which ten advanced, five declined and one traded firm.

Trading activity on the First Tier Market registered a volume of 350,076

shares crossing the floor of the Exchange valued at $5,897,741.19.

Angostura Holdings Ltd was the volume leader with 110,753 shares

changing hands for a value of $1,771,998.

First Citizens Bank Ltd registered the day's largest gain, increasing $0.46 to

end the day at $38.96.

Conversely, Unilever Caribbean Ltd registered the day's largest decline,

falling $0.21 to close at $25.29.

CLICO Investment Fund was the only active security on the Mutual Fund

Market, posting a volume of 11,270 shares valued at $268,324.00. The

Second Tier Market did not witness any activity. The SME Market did not

witness any activity.

The USD Equity Market did not witness any activity.

<< Back to news headlines >>

Imbert to make public terms of US$720m loan Thursday 6th June, 2019 – Trinidad Express Newspaper

The terms and conditions of the US$720 million syndicate loan being

secured by Trinidad Petroleum Holdings will be made public upon

finalisation of legal documents, which is anticipated within the next week

to ten days.

So said acting Prime Minister Colm Imbert as he addressed an urgent

question from United National Congress (UNC) Senator Wade Mark in the

Senate, at Tower D, International Waterfront Centre, Port of Spain, on

Tuesday.

Imbert said the financing remains confidential subject to disclosure rules

associated with the company's exchange offer under US Security and

Exchange Commission regulations.

Imbert said however he could provide some information.

He said the tenure of the loan facility would range from three to seven

years, and the amount in each tenure bucket would be finalised within

the next seven to ten days.

He said the interest rate on the loan would be better than the rate on the

US$850 million bond that Petrotrin has currently issued.

Pressed by Mark, he said the interest rate would be better than the

existing bonds, and the range of reduction would be between 50 and 175

basis points.

Dividends paid to NGC Meanwhile, in response to another question,

Imbert said Government received $7.628 billion in dividends from the

National Gas Company (NGC) during the period September 2015 and

December 2018.

This comprised $6.1 billion in ordinary dividends and $1.51 billion in special

dividends from the Phoenix Park initial public offering (IPO).

Imbert said the breakdown was as follows: September to December 2015-

$2.17 billion in ordinary dividends and $1.5 billion from the IPO; January

2016 to December 2016-$2 billion; January to December 2017-$1.35 billion;

and January to December 2018-$507 million.

$1.8 million upgrade for Central Market Acting Leader of Government

Business Clarence Rambharat, responding to a question from

Independent Senator Paul Richards, said four measures had been taken

to address issues of poor sanitation at the Central Market in Port of Spain.

Rambharat, deputising for the Rural Development and Local Government

Minister, said the problem emanated from the fish sale section of the

market, which was closed on May 27 for refurbishment.

It will be opened on June 11, he said. Rambharat said the problem also

stems from an issue of productivity, availability of workers and overtime

costs. He said discussions are ongoing with the representative union.

He said 28 short-term workers had been hired to supplement the existing

staff, and they would work at 'straight time' and avoid the overtime costs.

He said, lastly, there was a project to refurbish the Central Mark in the

Development Programme.

He said a request has been made to the Ministry of Finance for the

release of $1.8 million for the purpose of conducting refurbishment works.

<< Back to news headlines >>

Oil prices firm but concerns grow about demand Thursday 6th June, 2019 – Reuters

Oil prices rose by more than 1% on Thursday, recovering from a near five-

month low in the previous session but sentiment stayed weak due to rising

U.S. supply and a stalling global economy.

Benchmark Brent crude was at $61.30 a barrel at 1152 GMT, up 67 cents or

1.1%. U.S. West Texas Intermediate crude fetched $52.05, up 37 cents or

0.7%.

On Wednesday, the two benchmarks hit their lowest levels since mid-

January at $59.45 and $50.60, respectively.

Signs of slowing global economic activity have increased in recent

months, fuelled by trade tensions between the United States and China,

the world’s top two energy consumers.

“Ample supplies come on top of growth concerns related to the trade

dispute escalation and put pressure on oil prices for the time being,”

Norbert Rücker, head of economics at investment bank Julius Baer, said in

a note.

Despite Thursday’s gains, oil markets are moving into “bear” territory,

defined by a 20% fall from peaks reached in late April.

Oil prices rallied strongly in the first five months of the year to a high of

nearly $75 a barrel, supported by supply curbs by the Organization of the

Petroleum Exporting Countries and some non-OPEC producers including

Russia, an alliance known as OPEC+.

U.S. sanctions limiting oil exports from Iran and Venezuela also offered

support.

But surging U.S. crude production has returned to the fore as increased

drilling in the prolific Permian shale basin helped push output to a record

12.4 million barrels per day (bpd) by the end of May.

U.S. commercial crude inventories also rose to their highest since July 2017.

Members of the OPEC+ group are set to discuss whether to extend their

supply curbs further later this month.

President Vladimir Putin said on Thursday that Russia had differences with

OPEC over what constituted a fair price for oil but said Moscow would

take a joint decision with OPEC colleagues on output at a policy meeting

in the coming weeks.

Weak growth is also putting pressure on the outlook for demand.

Morgan Stanley lowered its forecast for growth in oil demand for 2019

from 1.2 million bpd to 1.0 million bpd, and cut its Brent price forecast for

the second half of 2019 to $65-$70 per barrel, from $75-$80.

“Demand is weakening much more rapidly than we had expected,”

Morgan Stanley analysts said in a note on Wednesday.

“We now estimate 2019 to be a year in which supply and demand

broadly balance,” the investment bank said.

<< Back to news headlines >>

Trade war, no-deal Brexit could push EU into recession Thursday 6th June, 2019 – Reuters

A no-deal Brexit or a trade conflict with the United States could push the

European Union into recession, Jurgen Rigterink, First Vice President of the

European Bank for Reconstruction and Development (EBRD), said on

Thursday.

“Right now everybody is talking about U.S.-China relations but even if that

is solved, it could very well be that the next discussion could be between

the U.S. and Europe,” Rigterink told Reuters on the sidelines of a political

and business summit in Slovenia.

“If that’s the case, then obviously this could have a large impact on the

EU, on Europe, not only on the car sector but on many other sectors as

well.”

He said no one knew what the chances of Britain leaving the European

Union without a deal were, but with relatively sluggish growth in most

European economies, a so-called hard Brexit could tip the bloc into

slowdown.

“Even a recession is possible. It might be one possible trigger, there might

be many more which we do not foresee at this time.”

He added that economic fundamentals in Europe were much stronger

than a decade ago and that the banking system was much more

resilient.

<< Back to news headlines >>

Russia's Lukoil backs extending global oil cuts to end of 2019 Thursday 6th June, 2019 – Reuters

Lukoil, Russia’s second-biggest oil producer, plans to propose that

Moscow extend its participation in a global oil production-cutting deal at

existing terms to the end of this year, its chief executive Vagit Alekperov

told Reuters.

Russia and some other non-OPEC members along with OPEC countries

plan to meet in June or July to discuss whether to extend or change the

deal, under which Moscow has pledged to cut its oil production by

228,000 barrels per day (bpd).

“I believe that the level of 228,000 bpd is a relatively small amount and we

saw the effect we got,” Alekperov said, referring to an increase in oil

prices.

“So I will propose maintaining the deal and monitoring (global oil)

inventories, excluding Iran.”

He said the global oil industry, which produces around 100 million bpd, is

still exploiting investments made before a sharp fall in oil prices several

years ago, with no major oil discoveries globally in the recent past.

Given falling production in Venezuela and restrictions on Iranian oil

exports, the global oil industry should be very cautious and safeguard oil

price stability, Alekperov said, including via the production pact.

Alekperov said Lukoil plans to spend $2-3 billion on upstream purchases,

mainly outside Russia.

Lukoil’s oil production, inside and outside Russia, is seen at around 85-86

million tonnes (1.71-1.73 million bpd) this year, he said.

<< Back to news headlines >>

Advent's latest fund raises $17.5 billion, exceeds target Thursday 6th June, 2019 – Reuters

Advent International, one of the world’s largest buyout firms, said on

Thursday it raised $17.5 billion for its latest fund, surpassing the $16 billion

target it had set.

The private equity firm took just over six months to secure the money for its

ninth fund, named GPE IX. It raised $13 billion for its previous global

investment vehicle in 2016.

The strong fundraising underscores how investors are brushing aside

concerns over the private equity sector overheating, as they search for

returns that beat the stock market by a wide margin.

Advent’s fund will focus on business and financial services, healthcare,

industrial, retail and consumer, and technology, media and

telecommunications, areas where Advent has considerable “experience

and knowledge,” the statement said.

In April, Blackstone, the world largest alternative asset manager, raised

over $22 billion in its latest buyout fund, setting it on course to be the

private equity industry’s biggest ever.

In 2018, 1,175 private equity funds raised a combined $426 billion with the

$18.5 billion Caryle Partners VIII fund being the largest. At the beginning of

2019 there were 3,750 private equity funds in market seeking a total of

$977 billion, according to industry tracker Preqin.

Advent, founded in 1984, said its ninth global private equity fund saw

significant demand from existing investors and over 90% of the fund’s

commitments came from limited partners in prior Advent funds.

The fund’s recent global fund investments include Aimbridge Hospitality,

BioDuro, Deutsche Fachpflege Gruppe, INNIO, Laird, Manjushree

Technopack, Prisma Medios de Pago, Walmart Brazil and Zentiva.

<< Back to news headlines >>

Aviva to cut 1,800 jobs globally, overhauls UK business Thursday 6th June, 2019 – Reuters

British insurer Aviva will cut 1,800 jobs globally as its new chief executive

seeks to make the group more competitive by restructuring its British

business and reducing costs across the business.

Insider Maurice Tulloch took over as CEO in March, amid investor concern

that the insurer, which provides pensions as well as car and home

insurance, was failing to cross-sell its products successfully.

Aviva is also facing increased competition from German insurance giant

Allianz, which last week did two deals potentially valued at over 800

million pounds ($1 billion) to cement its position as Britain’s second-biggest

general insurer.

Aviva will cut costs by 300 million pounds a year over the next three years,

it said in a statement on Thursday ahead of its first investor day under

Tulloch.

“We haven’t got everything right, in fact I don’t even think we are close

to reaching our potential,” Tulloch told the investor day, adding that the

firm’s existing management structure “has not allowed leaders to be held

accountable”.

Aviva has split its UK life business away from general insurance, it said on

Thursday, after a review of the combined business following the departure

in April of UK head Andy Briggs, a contender for CEO.

Angela Darlington has been appointed interim Chief Executive Officer of

UK life and Colm Holmes CEO of general insurance across the group,

including Britain.

The changes reverse a management structure introduced by former CEO

Mark Wilson two years ago.

The UK digital business, housed in a former garage in the City of London’s

tech district, will be incorporated into the UK general insurance business, it

said.

Aviva employs 30,000 people and its international markets include

Canada, France, Ireland and Asia.

British union Unite reacted angrily to the global job cuts, saying they had

arranged “urgent discussions” with management.

But Aviva’s shares responded positively to the strategy changes, rising

1.3% to 416.1 pence at 1038 GMT, outperforming London’s FTSE 100 index.

The shares have risen 12% this year, recouping half of last year’s losses.

Panmure analyst Barrie Cornes said Aviva’s shares were “fundamentally

undervalued”, reiterating the firm’s buy recommendation on the stock.

Aviva said it would focus on cutting central costs, as well as consultants

and project expenditure.

The cost base in 2018 was 4 billion pounds, an Aviva spokeswoman said,

making a planned annual cost reduction by 2022 of 7.5%.

Aviva said trading to date had been in line with 2018, with a stronger

performance in Canada, and reiterated its commitment to a progressive

dividend policy.

<< Back to news headlines >>

Ford to close Wales engine plant in latest blow to UK car sector Thursday 6th June, 2019 – Reuters

Ford said it would close its plant in Bridgend, south Wales, next year

because of falling demand for some if its engines, putting 1,700 jobs at risk

in a further blow to Britain’s once booming car industry.

Ford is making cuts in several markets to turn around loss-making

operations and has also repeatedly warned the British government that it

needs free trade to be maintained with the European Union after Brexit.

Production of Ford’s 1.5-liter petrol engine will end in February, whilst a

contract to supply Jaguar Land Rover (JLR) finishes in September 2020, the

U.S. automaker said on Thursday.

“Changing customer demand and cost disadvantages, plus an absence

of additional engine models for Bridgend going forward make the plant

economically unsustainable in the years ahead,” said Ford Europe

President Stuart Rowley.

The Bridgend plant built around 20 percent of Britain’s 2.7 million

automotive engines last year.

Ford operates two factories in Britain making engines, which are exported

for fitting in vehicles in Germany, Turkey, the United States and elsewhere.

They could face delays and extra costs if Britain leaves the European

Union without securing a deal with the EU.

Britain’s biggest trade union vowed to fight the move.

“We will resist this closure with all our might, and call upon the

governments at the Welsh Assembly and Westminster to join us to save this

plant,” said Len McCluskey, head of the Unite union.

Britain’s once thriving car sector, rebuilt since the 1980s mainly by foreign

carmakers, has been suffered slumps in sales, output and investment over

the past two years.

Ford said in January a turnaround of its European operations would

involve cutting thousands of jobs, possible plant closures and

discontinuing loss-making vehicle lines.

Workers have long pushed for Bridgend to produce hybrid technology

and electric vehicle components alongside a new third-party

manufacturer to fill any surplus space but such investment has not been

forthcoming.

“Significant efforts to identify new opportunities have not been

successful,” said Ford.

The announcement is the latest blow to the sector this year after JLR

announced around 4,500 job cuts mainly in Britain, and Honda said up to

3,500 roles would go when it closes its British plant in 2021, in the biggest

blow to the sector so far.

A series of investment decisions are also pending, including whether

Peugeot parent PSA will keep its Ellesmere Port plant open and if JLR will

make electric cars in Britain.

<< Back to news headlines >>

IMF sees euro as undervalued, ECB policy support necessary Thursday 6th June, 2019 – Reuters

The International Monetary Fund believes the European Central Bank must

maintain supportive monetary policy, an EU document seen by Reuters

showed, anticipating the content of a report the IMF will present to euro

zone finance ministers next week.

The fund also intends to repeat its calls for Germany and other euro zone

surplus countries to increase spending, while pushing Italy and other high-

debt states to create more fiscal space by implementing structural

reforms, the document said.

Those moves would help strengthen the euro exchange rate, which the

IMF sees as slightly undervalued, the document said.

Later on Thursday, the ECB is expected to announce new measures to

help the ailing euro zone economy and may even set the stage for more

action later this year.

The IMF will present its annual report on the 19-country euro zone to the

bloc’s finance ministers at a meeting next week in Luxembourg, but the

main issues of the report have been already discussed with euro zone

representatives this week.

The IMF will say that “monetary policy accommodation by the ECB

remains necessary,” said the document which summarizes the content of

the Fund’s report.

The IMF will also recommend that “countries with ample fiscal space

should use it to boost potential growth” — seen as a reference to

Germany, which maintains a large trade surplus.

On the other hand, euro zone countries with high debt, like Italy, “should

create more fiscal space”, the document said.

These moves are expected to favour internal and external rebalancing

which the IMF considers useful as its staff “still see a small undervaluation

of the euro exchange rate,” the document said.

<< Back to news headlines >>

Consumers, investment, trade boost euro zone at start of 2019 Thursday 6th June, 2019 – Reuters

The euro zone economy accelerated in the first three months of this year,

EU statistics agency Eurostat confirmed on Thursday, driven by household

spending, investment and trade.

Eurostat confirmed its earlier estimate that gross domestic product in the

19 countries sharing the euro rose 0.4% quarter on quarter in the January-

March period. It also kept its figure of 1.2% for year-on-year growth.

That follows expansion of 0.2% quarter-on-quarter and 1.2% year-on-year

in the fourth quarter of 2018.

Eurostat said household consumption added 0.3 percentage points to the

quarterly growth result, gross fixed capital formation 0.2 points and net

trade 0.1 points.

Inventory changes had a negative 0.3-point influence, while the impact

of government consumption was zero.

Employment in the euro zone rose 0.3% on the quarter and 1.3% year-on-

year, the same rates as in the fourth quarter of 2018.

The highest rates of job increases were in industry, information and

communication services and in real estate.

<< Back to news headlines >>

Investment bank environment still very fragile says UBS Thursday 6th June, 2019 – Reuters

Investment banking conditions have improved over recent months but

remains “very fragile,” UBS Chief Executive Sergio Ermotti said on Thursday,

adding the Swiss lender’s own business was performing in line with the

industry.

“In March we started to see a normalization of the environment. If I look at

March, April and May the situation has clearly stabilized and improved,

although from a very low base,” Ermotti said at the Goldman Sachs

European Financials Conference in Paris. “The situation is still very fragile.”

UBS in April reported that earnings at its investment bank slipped 64

percent on an adjusted basis during the first quarter, as Switzerland’s

biggest bank brought in less money from both its corporate advisory and

equities business.

Ermotti on Thursday highlighted particularly tough market conditions in

Europe and Asia, key areas for the lender’s investment banking business.

“The performance in Q2 and Q1 of our investment bank was not dissimilar

to the rest of the industry,” Ermotti said, adding that the unit’s new co-

heads, appointed to lead the business after long-time boss Andrea Orcel

quit the bank in September, were leading the business successfully.

“I think Rob Karofsky and Piero Novelli are doing a fantastic job,” he said

of the co-heads. “People understand that [the recent performance] has

nothing to do with management changes. It has to do with the

environment.”

<< Back to news headlines >>

Euro strengthens ahead of ECB meeting Thursday 6th June, 2019 – Reuters

The euro rose on Thursday as investors prepared to scrutinise a European

Central Bank meeting, wanting to know how concerned its policymakers

are about signs of a downturn in growth.

The euro has strengthened recently on the back of dollar weakness

caused by rising bets on a U.S. interest rate cut.

The single currency was 0.2% higher at $1.1239 after brushing a 1-1/2-

month high of $1.1307 earlier this week.

The ECB will try at Thursday’s meeting to give the ailing euro zone a boost

and may set the stage for more action later this year as an escalating

global trade war unravels the benefits of years of monetary stimulus.

It will also give updated staff growth and inflation forecasts.

“What matters during the ECB meeting today is whether the Council will

stick to its view that the economy will recover in the second half of the

year,” Antje Praefcke, an analyst at Commerzbank, wrote in a note to

clients.

“Draghi would have to sound very concerned about the growth and

inflation outlook to cause a reaction in the euro.”

ECB President Mario Draghi is expected to maintain guidance about the

possibility of more stimulus.

Recession fears are sweeping across the world and central banks have in

recent weeks cut rates in what could signal the start of a fresh global

monetary easing cycle.

Japan’s yen approached a five-month high on Thursday after a lack of

progress in U.S.-Mexico trade talks hurt risk sentiment and drove investors

towards safe-haven currencies.

The Japanese yen has been the main beneficiary from a shift towards

assets investors deem safer.

It rose as much as 0.3% to 108.07 yen per dollar, close to its strongest level

since Jan. 10, after negotiations in Washington on Wednesday aimed at

averting U.S. tariffs on Mexican goods showed little sign of progress.

U.S. President Donald Trump unexpectedly told Mexico last week to take a

harder line on curbing illegal immigration or face 5% tariffs on all its exports

to the United States.

The Mexican peso, already saddled with trade concerns, took a hit after

credit ratings agency Fitch downgraded its sovereign debt rating on

Wednesday by a notch from BBB+ to BBB, just two notches above junk

status.

The dollar index against a basket of six major currencies stooped to a two-

month low of 96.749 midweek as benchmark U.S. yields declined sharply

this week to 21-month lows on investor risk aversion and heightened

prospects of the Federal Reserve cutting interest rates.

<< Back to news headlines >>

ECB pushes back rate hike again as outlook darkens Thursday 6th June, 2019 – Reuters

The European Central Bank pushed back the timing of its first post-crisis

interest rate hike again on Thursday and said it would continue paying

banks for lending in its latest effort to revive a slowing euro zone economy.

The moves, which are bolder than analysts had expected until only a few

weeks ago, come as a trade war between the United States and China

overshadows the global economy and especially export-oriented euro

zone countries such as Germany.

Responding to rapidly deteriorating inflation expectations, the ECB

pledged to keep its interest rates at their current, record-low level at least

through the first half of 2020, instead of the end of this year as it had said

only in March.

It will also let banks borrow from the ECB at rate just 10 basis points above

its minus 0.4% deposit rate provided they beat the ECB’s lending

benchmarks in a new targeted longer-term refinancing operation, or

TLTRO.

“For banks whose eligible net lending exceeds a benchmark, the rate

applied in TLTRO III will be lower and can be as low as the average interest

rate on the deposit facility prevailing over the life of the operation plus 10

basis points,” the ECB said in a statement.

With pervasive uncertainty already denting trade, big central banks like

the ECB and the U.S. Federal Reserve appear to have given up on plans

to tighten policy and markets are now positioned for easing.

Attention will now shift to ECB President Mario Draghi’s news conference

at 1230 GMT.

Draghi is certain to maintain a dovish tone and leave open the possibility

of more stimulus.

But the Italian, whose term ends on Oct. 31, cannot afford bigger moves

for now as the ECB’s policy arsenal is nearly depleted after years of

stimulus.

While policymakers say they have plenty of tools left, they have already

pushed their main interest rate below zero and bought some 2.6 trillion

euros worth of bonds, meaning the scope for more stimulus has shrunk,

especially in the case of imported economic weakness.

Economists polled by Reuters expect rates to stay unchanged and expect

a first rate hike only in 2021. They also expect the bank’s next move to

entail policy easing rather than tightening.

RISKS

Draghi’s problem is that the global trade war shows no sign of de-

escalating, while Italy is once again in conflict with the European

Commission, German industry continues to post dismal figures, stock

markets are tumbling, and the threat of a hard Brexit looms.

And on top of it all, inflation expectations, the ECB’s top worry, are

steadily declining, raising the risk that they become dislodged, thereby

perpetuating weak price growth.

Philip Lane’s first policy meeting as ECB Chief Economist is likely to see the

bank’s staff cut some of their inflation projections, reinforcing already

widespread concerns that price growth is too weak.

The ECB targets an inflation rate of just below 2%, but it has undershot this

since 2013 and projections suggest it will continue to miss it for years to

come.

The ECB’s favoured gauge of market inflation expectations fell to its lowest

since 2016 earlier on Thursday while money market pricing showed

investors see almost a 70% chance of a 10-basis point cut in ECB rates by

the end of the year.

Draghi is also expected to stick to his message that the economy’s

rebound is merely delayed and not derailed.

But with record-high employment, solid wage rises and several years of

unexpectedly good economic growth having failed to boost prices, some

may be losing confidence.

“Easy monetary policy will be needed for a long time, and the risks remain

clearly tilted to the downside,” Nordea economist Jan von Gerich said

prior to the rate decision.

<< Back to news headlines >>

India's central bank cuts rates, turns 'accommodative' as economy slows Thursday 6th June, 2019 – Reuters

The Reserve Bank of India cut its policy interest rate by 25 basis points in a

widely expected move on Thursday, while also changing its policy stance

to “accommodative,” after latest data showed the economy growing at

its slowest in over four years.

“A sharp slowdown in investment activity along with a continuing

moderation in private consumption growth is a matter of concern,” the

bank’s monetary policy committee (MPC) said in a statement after

making its third cut since February.

Entering its second term following a landslide election victory last month,

Prime Minister Narendra Modi’s government is expected to launch a fresh

wave of economic reforms to unlock the growth after the unemployment

rate rose to a multi-year-high of 6.1% in the 2017/18 fiscal year.

Asia’s third largest economy grew at a much slower-than-expected 5.8%

in the last quarter, far below the pace needed to generate jobs for the

millions of young Indians entering the labour market each month.

The reduction in the repo rate to 5.75 percent matched predictions by 44

of 66 analysts polled by Reuters. The reverse repo rate was reduced to

5.50 percent. The MPC cut rates by the same amount at its last two

meetings.

All six of the panel voted for a 25 basis points cut, and for the stance to be

changed to “accommodative” from “neutral”.

The MPC said it had factored in global economic conditions, noting that

leading indicators point to slowing growth in the United States, Europe

and China.

“Going by the macro undercurrents, the rate-cutting cycle will continue in

the coming quarters as well,” said Rupa Rege Nitsure, chief economist at

L&T Financial. “Today’s policy actions ... give a clear signal that the RBI will

continue with easy monetary conditions until it sees a definite

improvement in growth-inflation mix.”

Markets reacted to the rate cut and change in stance as the 10-year

benchmark bond yield fell to 6.89% from 7% before the policy

announcement, while the rupee strengthened to 69.28 per dollar from

69.36 earlier.

RBI EXPECTS BETTER POLICY TRANSMISSION

Two new cabinet committees were announced on Thursday to find ways

to spur job creation and investment.

New Finance Minister Nirmala Sitharaman could propose tax cuts to boost

demand when she presents her maiden budget on July 5.

Addressing a press conference after the MPC meeting, RBI Governor

Shaktikanta Das said the government had broadly followed the fiscal

consolidation roadmap over the last five years, and he expected it to

remain fiscally prudent.

The RBI lowered its growth forecast for the 2019/20 April-March fiscal year

to 7%, having previously forecast 7.2% growth.

The outlook for retail inflation in the six months to end-September was

raised to 3.0-3.1%, just up from the outlook of 2.9-3.0% given in April. The

inflation outlook for the back half of the fiscal year in March was put at

3.4-3.7%, down from an earlier projection of 3.5-3.8%.

“The headline inflation trajectory remains below the target mandated to

the MPC even after taking into account the expected transmission of the

past two policy rate cuts,” the MPC said.

While subdued inflation gave the RBI leeway to lower rates, persuading

commercial banks to cut lending rates by a similar scale has been a

struggle, as many are hobbled by bad loans, and also fear losing

customers if they cut deposit rates too far.

A series of defaults by Infrastructure Leasing and Financial Services (IL&FS)

last year, has also stirred major unease over the health of Indian’s non-

banking finance companies, raising fears of a contagion and pushing up

their borrowing costs.

Still, the RBI chief said he was confident that changes in policy rates would

be transmitted more strongly and more quickly to market rates, with the

MPC noting that yields on longer-tenor bonds have begun to reflect

recent rate cuts.

“Our expectation is that as we go forward there will be higher transmission

and then there will be faster transmission also,” Das said.

<< Back to news headlines >>

BOJ's Kuroda warns of potential dangers from excessive credit growth Thursday 6th June, 2019 – Reuters

Bank of Japan Governor Haruhiko Kuroda on Thursday warned of the

potential dangers of heavy money printing, saying that financial bubbles,

when accompanied by excessive lending by commercial banks, tend to

trigger financial crises.

Speaking ahead of the Group of 20 finance leaders’ gathering in the

southern Japan city of Fukuoka this weekend, Kuroda said the G20

members must focus on implementing the financial reforms they launched

in 2009 to prevent another financial crisis.

“Financial bubbles tend to associate with financial crises when

accompanied by excessive credit creation,” Kuroda said in a speech to a

symposium hosted by the Institute of International Finance in Tokyo.

“Our experience of Japan’s crisis in the late 1990s and of the last global

financial crisis in the late 2000s reminds us that the most important role of

financial regulation and supervision is to address market failures in order to

prevent financial crises,” he added.

Major central banks, including the BOJ, have struggled to dial back their

massive crisis-mode stimulus programmes as Sino-U.S. trade tensions and

slowing global demand cloud the outlook for their economies.

Some market players and academics worry that prolonged, heavy money

printing by the central banks could sow the seeds of a bubble by

prompting financial institutions to take on excessive risk.

“Now that the regulatory reform agenda is nearly complete, we must turn

our focus onto the full, timely, and consistent implementation of the

agreed reform in order to achieve the goal of maintaining global financial

stability,” Kuroda said.

Kuroda also said central banks must be mindful of the risk that the rapid

evolution of information technology, such as the widening use of

smartphones, could magnify market failures by concentrating data to a

small number of financial institutions.

“The degree of market failures could be magnified by our current

evolution in information and communications technology,” he said.

“Although the key role of financial regulation and supervision remains

unchanged, we should leverage innovative technology in financial

supervision,” Kuroda said.

Financial innovation and the change it causes on the role regulators play

are among key topics of debate at the two-day meeting of G20 finance

ministers and central bank heads, which kicks off on Saturday.

<< Back to news headlines >>

China's new measures to spur car sales fall short of expectations Thursday 6th June, 2019 – Reuters

China announced a series of measures on Thursday to revive slumping car

sales, but failed to meet market expectations as it included no plans to

relax controls over the issuance of new licenses for traditional-fuel cars in

major cities.

Beijing has been trying to boost consumption of goods ranging from eco-

friendly appliances to big-ticket items such as cars to fire up growth, as

the world’s second-largest economy is expected to slow further in 2019

amid a bruising trade spat with the United States.

Auto industry executives have expected China’s car market, the world’s

biggest, would return to growth this year thanks to government support

after sales contracted for the first time last year since the 1990s.

The National Development and Reform Commission (NDRC), China’s state

planner, said in a statement it is stopping local governments from

imposing new restrictions on car purchases and cancelling existing ones

that apply to new energy vehicles.

The measures, which apply to 2019-2020, include support to encourage

car purchases in rural areas. The NDRC statement also called for more

local governments to allow pickup trucks to enter their cities.

Financial magazine Caixin, citing an NDRC document, reported in April

that China is planning to increase the number of newly issued car licenses

in major cities including Beijing, Shanghai and Guangzhou by 50 percent

this year from 2018 levels, and double that next year.

The NDRC, however, did not mention such steps on Thursday.

“The (April) draft was quite strong so I am quite disappointed about the

policies,” said an industry association official who declined to be named

as she was not permitted to speak to the media.

Yale Zhang, head of Shanghai-based consultancy Automotive

Foresight, said the document would likely support some new energy

vehicle sales, but would not have a big impact on combustion engine

cars.

“Now the question comes to whether local governments are willing to

support auto sales.”

BREAKING MARKET BARRIERS

Vehicle sales in China fell 14.6% in April from the same month a year

earlier, marking the 10th consecutive month of decline.

Automakers have been lowering prices after the government introduced

tax cuts to spur consumer spending, but customers are holding off

purchases in the hope of more favourable policies.

“This document has positive impact on the industry in the long term, but

will not boost sales very quickly,” said the industry association official.

Yet, the measures, which were unveiled after mainland markets shut,

helped boost shares of Hong Kong-listed automakers. Shares in Geely

Automobile Holdings rose by more than 3% after the announcement,

while BYD Co Ltd climbed as much as 5.2%.

Some local governments had already started to offer supportive policies

in the run-up to NDRC’s announcement.

Authorities in the big southern Chinese cities of Guangzhou and Shenzhen

said that they will increase quotas for new car registrations from this month

till the end of next year which will allow at least 180,000 more car sales.

The NDRC said the new moves “strive to break the market barriers that

restrict consumption and protect consumers’ legitimate interests.”

<< Back to news headlines >>

Trump threatens China with tariffs on further $300 billion of goods Thursday 6th June, 2019 – Reuters

U.S. President Donald Trump threatened to hit China with tariffs on “at

least” another $300 billion worth of Chinese goods but said he thought

both China and Mexico wanted to make deals in their trade disputes with

the United States.

Tensions between the world’s two largest economies have risen sharply

since talks aimed at ending a festering trade war broke down in early

May.

While Trump said on Thursday that talks with China were ongoing, no

face-to-face meetings have been held since May 10, the day he sharply

increased tariffs on a $200 billion list of Chinese goods to 25%, prompting

Beijing to retaliate.

“Our talks with China, a lot of interesting things are happening. We’ll see

what happens... I could go up another at least $300 billion and I’ll do that

at the right time,” Trump told reporters, without specifying which goods

could be impacted.

“But I think China wants to make a deal and I think Mexico wants to make

a deal badly,” said Trump before boarding Air Force One at the Irish

airport of Shannon on his way to France for D-Day commemorations.

In Beijing, China’s Commerce Ministry struck a defiant tone.

“If the United States wilfully decides to escalate tensions, we’ll fight to the

end,” ministry spokesman Gao Feng told a regular news briefing.

“China does not want to fight a trade war, but also is not afraid of one. If

the United States wilfully decides to escalate trade tensions, we’ll adopt

necessary countermeasures and resolutely safeguard the interests of

China and its people.”

The Commerce Ministry also issued a report on how the United States has

benefited from years of economic and trade cooperation with China,

saying U.S. claims that China has taken advantage in bilateral trade were

groundless.

“Since the new U.S. administration took office, it has disregarded the

mutually beneficial and win-win nature of China-U.S. economic and trade

cooperation, and has advocated the theory that the United States has

‘lost out’ to China on trade,” the ministry said in a research report.

“It has also taken the trade deficit issue as an excuse to provoke

economic and trade frictions.”

Adding to concerns China may target U.S. companies in the trade war,

the ministry last week said it was drafting a list of “unreliable entities” that

have harmed Chinese firms’ interests.

Gao said the list did not target specific industries, companies or

individuals, and details would be disclosed soon. Companies that abide

by Chinese laws and market rules had nothing to worry about, he added.

The International Monetary Fund warned on Wednesday that escalating

tariff threats were sapping business and market confidence and could

slow global growth that is currently expected to improve next year.

U.S. Treasury Secretary Steven Mnuchin is scheduled to meet People’s

Bank of China Governor Yi Gang this weekend at a gathering of G20

finance leaders in Japan, the first face-to-face discussion between key

negotiators in nearly a month.

Mexican and U.S. officials are also set to resume their talks in Washington

on Thursday aimed at averting an imposition of tariffs on Mexican goods.

After saying that “not enough” progress on ways to curb migration was

made when the two sides met on Wednesday, Trump told reporters on

Thursday that Mexico had made progress in the talks but needed to do

more.

He reiterated that 5% tariffs on all Mexico’s exports to the United States

due to start on Monday would go ahead if progress was not made. The

tariffs can rise to as much as 25% later in the year.

“Mexico was in yesterday. They’re coming back this morning... I think a lot

of progress was made yesterday, but we need to make a lot of progress,”

Trump said.

“They have to step up and they have to step up to the plate — and

perhaps they will.”

<< Back to news headlines >>

Public sector employment declined by 11.1% Thursday 6th June, 2019 – Guyana Chronicle

Employment in the public sector declined by 11.1 per cent in 2018 due to

lower recruitment in the core civil services.

“There was lower recruitment in the core civil services by 0.5 per cent,

which represented 63.1 per cent of total public sector employment,” said

the Bank of Guyana (BoG) in its 2018 annual report.

In the rest of the public sector, employment fell by 29.4 per cent.

Employment in public corporations contracted on account of lower

recruitment by the Guyana Sugar Corporation (GuySuCo) and financial

institutions by 39.2 per cent and 0.6 per cent respectively.

Despite the decline in employment, employment costs increased by G$5

million, moving to G$59.4 million. This reflected developments in wages,

salaries, and benefits of public servants.

Aside from the downfalls in 2018, the government had awarded public

servants salary increases ranging from 0.5 per cent for the highest scale,

that is $1 million and above per month, to 7.0 per cent on the lowest

scale, that is up to $100,000 per month.

Public servants who earned salaries between G$100,000 and G$299,999

per month gained an increase of 6.5 per cent, while those earning salaries

between G$300,000 and G$499,999 per month gained an increase of 5.0

per cent.

The salary increases were retroactive from January 1, 2018 and was free of

income tax. The public sector monthly minimum wage increased to

G$64,200 per month. The income tax threshold remained at G$60,000.

Although private sector employment data is unavailable, developments

were mixed in the private labour market.

According to BoG, the distribution, construction, transportation and

storage and other services industries experienced job creation.

Conversely, the local gold mining and fishing industries experienced

reduced employment

Meanwhile, industrial unrest decreased in 2018; the number of strikes

decreased to approximately 44 from 110 in 2017.

GuySuCo accounted for most of the strikes, which were related to wages,

working conditions and other disputes.

When compared with 2017, there were lower total man-days lost by 58.0

per cent to 10,449 from 24,892 and wages lost fell by 56.9 per cent to

G$28.7 million from G$66.5 million.

The reduced loss of man-days and wages in 2018 was attributed to the

downsized operations at Rose Hall, Wales, Skeldon and Enmore sugar

estates.

<< Back to news headlines >>

DDL urges US to reallocate sugar quotas Thursday 6th June, 2019 – Guyana Chronicle

With Trinidad and Tobago and St Kitts and Nevis closing down its sugar

industry, Chairman of the Demerara Distillers Limited (DDL), Komal

Samaroo, is urging the United States to reallocate the tariff rate quota it

announced for these countries this year to states to Caribbean states that

are still producing sugar.

The tariff rate quota announced by the United States Trade

Representative (USTR) for 2019 for individual countries included 7,371

tonnes for Trinidad & Tobago and 7,258 tonnes for St Kitts & Nevis.

“Interestingly, these countries have ceased sugar production quite some

time ago. A case could be made to reallocate these quotas to countries

in the Region, which are still producing sugar,” Samaroo told a gathering

at Capitol Hill during a forum to celebrate Caribbean Legislative Week on

Wednesday.

Samaroo said this is particularly relevant in light of the movement towards

a CARICOM Single Market and Economy that will eventually allow for free

movement of people within the Region. “Today, I take this opportunity to

urge the United States, through its Members of Congress and officials of

the Executive Branch, to work with the CARICOM Region to have these

country-specific tariff quotas transferred into a regional quota,” he told

the forum.

Earlier this week, the Sugar Association of the Caribbean stated in a press

release that presently, more than two-thirds of sugar consumed in

CARICOM comes from extra-regional sources, duty free, displacing

market opportunity for over 200 thousand metric tonnes of CARICOM

sugar, which is forced onto the low value global market. The association

urged policy changes, noting that these are required to secure the

integration of the sugar market within the CARICOM Single Market &

Economy (CSME).

“A failure to achieve this threatens a major agricultural sector of the

Region’s economy, hundreds of thousands of Caribbean jobs and

questions the effectiveness of the single market in meeting its stated

objectives.” The regional body said CARICOM industries investments are

set to deliver to market nearly 300,000 metric tonnes of food grade sugar

within the next 18 months, matching the Region’s demand.

According to SAC Chairman, R. Karl James, “SAC Directors are squarely

focused on how regional integration can benefit industrial users and

consumers of sugar through competitive longer-term pricing strategies,

which are not directly impacted by cyclical global sugar price surges.”

James continued, “Utilisation of our sugar in most of our products would

reduce this risk alongside the processing and import costs associated with

importing sugar from outside the Region. This would bring CARICOM in line

with other regional sugar markets.”

END OF SUGAR PROTOCOL

Meanwhile, giving a background of the crisis in the industry, Samaroo

noted that in recognition of its importance to the Region, sugar was the

subject of special trade arrangements until just over a decade ago (2006)

when the EU Sugar Protocol ended. He told the gathering that the USA

imports sugar on a duty-free basis from the Caribbean countries under the

tariff-rate quotas established in 1990 by the Farm Bill.

RUM INDUSTRY

Samaroo said the most lasting impact of the sugar industry in the

Caribbean was the creation of the regional Rum Industry. He said that for

over three centuries the Region has been producing rum from the

molasses by-product of sugar production, shipping bulk rum to Europe

where it was bottled branded and sold. From 1745, for 225 years, rum was

served as part of a daily ration to the men who served on the British Royal

Navy, until that practice ended on July 31, 1970.

According to him, from 1975 to 2000, the Caribbean exported rum to the

EU under the Rum Protocol of the Lome’ Convention, a trade and aid

agreement between the European Union and the African Caribbean and

Pacific States. In addition, from January 1, 1984, under the Caribbean

Basin Economic Recovery Act (CBERA), rum from the Region benefitted

from duty-free access to the US market. “We support the extension of

CBERA. It enabled our initial market access into the US and continues to

provide a valuable preference against third country low-value products,

which often originate in countries where the raw material inputs are

subsidised, leading to artificially low product pricing,” Samaroo told the

forum. He said the US Rum Market is dominated by supplies from USVI and

Puerto Rico to the extent of about 80 per cent of total market as these

territories benefit from the Rum Excise Tax Cover-Over that provided for

generous support and subsidies.

CHALLENGING OUTLOOK

Noting that the outlook of Caribbean rum brands in the US market remains

challenging, Samaroo said the region’s strategy is directed at the

premium and super premium segment of the market and this is where

there has been some success. “But these segments are small and still

developing requiring significant investment to keep it growing. As a whole,

however, our total branded volume has not grown substantially over the

past decade and our bulk rum business, so important in financing our

brand building, has plummeted in the face of tremendously subsidised

products.”

In addition, he said there is a plethora of new brands entering the market,

some with very dubious provenance. “We also see a dramatic increase in

the trade of ethyl alcohol and worry that this is finding its way into rum in

violation of international trade rules. Our response to these challenges has

been to present ourselves as quality premium products. Our products

have authentic provenance, they are fermented and distilled in the

country of origin, and we follow common rules and regulations as to what

can be called rum.

Rum has become the Region’s largest agriculture-based export earner, in

the face of significant reduction in earnings from sugar which has been

facing major marketing and production challenges. For example, in

Guyana, based on information in the 2018 Central Bank report, while in

2016 export earnings from sugar was two times that of rum, in 2018 sugar

earned only 56 per cent of what the rum industry earned from exports.”

Touching the Region’s economy, Samaroo said there is need to broaden

the base on the regional economy, noting that the agriculture potential

must be fully exploited, and investments made in agro-processing so as to

move higher up the value chain. He said similar strategies must be

pursued in the forestry and mineral sectors.

“The newly emerging oil and gas industry in Guyana would most certainly

provide an increased revenue stream, which, once well managed, can

help to create a competitive environment for the other sectors of the

economy to develop in a sustainable manner, becoming globally

competitive, and contributing to growth and improvement in the quality

of life of its people.”

<< Back to news headlines >>

Exxon, others investing at Wales Estate Thursday 6th June, 2019 – Guyana Chronicle

OIL giant ExxonMobil has been leased lands at the Wales Estate to build a

wharf and to establish a manufacturing plant at West Bank Demerara,

being one of a number of investors set to do projects at the former sugar

estate.

Over 200 acres of land of the 8,352 acres of lands at the Wales Estate has

been set aside for an “industrial park”, of which Exxon has already

surveyed some 50 acres for their project.

Another company is also scheduled to set up a juice processing plant

while another will be setting up a coconut farm and processing plant.

The projects are being done as part of the National Industrial and

Commercial Investments Limited (NICIL) Special Purpose Unit (SPU)

diversification of the former sugar estate, which closed in December 2016.

Exxon will be setting up the wharf on the eastern side of the public road,

which is expected to stretch along the Demerara river shoreline from as

far as the estate’s former wharf, all the way to the Wales Community

Centre Ground.

The Exxon project could get off the ground within a few months. This was

confirmed by Officer-in-Charge of the Wales Estate, Charles Browne.

“It’s basically a done deal. Exxon, in partnership with a local business, is

setting up a factory for the fabrication of pipes and valves, and other

components to use out in the ocean. They will be doing that right here.

With them being here setting this up, they don’t want to use the bridge so

that’s why they had to get a wharf. It will stretch a long way,” Browne

explained.

He added: “The preparations are in place, they visited three times. I know

the surveyor has already surveyed the industrial plot for them, 50 acres of

it. And on their last visit two or three weeks ago, they were examining

where they would enter with these big container trucks and I also know

they already have a drawing for the wharf.”

Works at the plant is expected to begin in the not-too-distant future.

“They didn’t give a finishing period but they gave starting information. As

soon as they sign the lease they would bring contractors to start land

clearing and come with specialised machinery to level and compact the

land, which could happen at the end of June, but it would be weather

dependent.”

The diversification of the Wales Estate is currently being conducted by the

National Industrial and Commercial Investments Limited (NICIL) under their

Special Purpose Unit (SPU)

Under the ‘Sugar Industry Privatisation and Diversification’, NICIL invited

expression of interest for lands at the Wales Estate, which closed in

December 2016.

A number of companies, both local and overseas, have come forward

and submitted proposals.

“You can practically say all of the land has been provisionally allocated,

which means that some of the people are not yet on stream but persons

have sent in their expression of interest and it has been approved. There

have been applications from many people both local and overseas,”

Browne noted.

“Normally, they come in, they have the land surveyed. They pay the

surveying fees and then they take possession of the land, signing their

agreement. There are some overseas people that still need to come in

and finalise, but they were here several times already so we know they’re

serious but some have already begun.”

Aside from Exxon Mobil, most of the industrial park lands are being leased

to companies that have already leased lands in the estates. At least one

such company has already shipped a number of components for their

plant to Guyana.

“For the juice processing plant that will be set up, some of the equipment

are already here at Wales but just haven’t been set up. One container

has already reached and four more arrived last Monday. They’re trying to

set up the factory and get going by the time the next dry weather comes

around which is around September-October,” Browne explained.

<< Back to news headlines >>

‘No Big Concern’ For the Us$ Peg in Joining WTO Wednesday 5th June, 2019 – Tribune 242

The Central Bank’s governor says the prospect of widening “trade

imbalances” as a result of joining the WTO is “not a major concern” for The

Bahamas’ fixed exchange rate system.

John Rolle told Tribune Business that the Central Bank would remain in

control of monetary policy should this nation become a full World Trade

Organisation (WTO) member, including the credit growth needed to “fire

up” import demand.

He added that the regulator was “still in a comfortable position” to

manage any post-WTO fall-out, with The Bahamas’ external reserves that

support the one:one peg dollar standing at $1.582bn in April 2019

following 13.6 percent month-over-month growth.

Asked whether the findings of the Chamber of Commerce-commissioned

Oxford Economics study, which suggested that import volumes would

increase post-WTO accession to a level that may ultimately drain the

external reserves, were cause for alarm, Mr Rolle said the issue was “not a

direct concern”.

He explained: “When you look at imports, it’s an income-determined

decision. In the Bahamas we know that depends on how the Bahamian

income performs; they will import more or less.

“Cost of imports is a factor, but also income levels. To the extent WTO has

a positive impact on personal earnings, that also provides the fuel to

finance any increase in imports.”

Mr Rolle said the Central Bank’s primary focus was on credit demand

stimulated by increased household and business earnings, and he added:

“We don’t lose any control over that. We continue to manage the credit

flows to make sure... it’s sustainable.

“Domestic credit growth remains in our control. That’s not a major

concern. From the monetary policy side we are still in a comfortable

position to manage what happens. Sometimes these analyses take a very

static view.”

The Central Bank governor was responding after the Oxford Economics

study, which assessed the potential impacts from becoming a full WTO

member, found that growing “trade imbalances” may require The

Bahamas to assess the merits of the fixed exchange rate that underpins

the one:one US dollar peg.

This resulted from its forecast that imports will increase post-WTO accession

as the lowering/elimination of many import tariffs makes them relatively

cheaper for businesses and consumers.

With exports and foreign direct investment (FDI) inflows unable to fully

compensate for the drawdown on foreign currency to purchase these

items, the Oxford Economics study said this could widen The Bahamas’

merchandise trade deficit by up to 2.3 percent of GDP over the next

decade and represent a significant drain on the external reserves.

Assessing a scenario where The Bahamas became a full WTO member

without undertaking broad-based policy reforms to improve the business

climate, Oxford Economics estimated that import volumes would increase

by 9 percent over the four years from 2020.

With exports rising by 3 percent over the same period, the study found: “In

light of the relative scale of the estimated impacts on merchandise

imports relative to exports, the trade deficit in goods would widen

significantly as a result of WTO. Our results show the deficit widening by

around 2.3 percent of GDP relative to baseline levels, where it remains

over the medium term.”

While this would be partially offset by trade in services, Oxford Economics

forecast that the current account deficit would still be larger by a sum

equivalent to 2 percent of GDP come 2029.

“While we expect that additional FDI inflows would fund over half of the

gap that is expected to open in the current account, the remaining

shortfall could still have negative repercussions on the foreign exchange

situation. Over the period 2020-2025, the implied shortfall in funding

averages around $100m a year,” the report said.

“There are no universally applicable measures for assessing the adequacy

of reserves, but it is clear that this scale of shortfall would have the

potential to deplete all of the Central Bank’s estimated ‘useable’ external

reserves of $522m over this timescale. That said, the Central Bank has

been successful in increasing the stock of reserves in recent years through

proceeds from external bond issues and other sources.

“Still, it is clear that the authorities would need to think carefully about

strategies to handle the increase in foreign currency demand that would

accompany trade liberalisation and whether the associated costs are

worth the benefits to the economy from maintaining the currency peg.”

However, in a scenario where The Bahamas undertook fundamental

economic reforms to accompany WTO accession, Oxford Economics said

the current and merchandise trade deficits would be lower due to

stronger foreign direct investment (FDI) inflows and foreign currency

export earnings.

“The impact on the current account is more muted, with the deficit

levelling off at around 1.3 percent of GDP above baseline levels over the

medium term (compared to 2.1 percent of GDP in the [other] scenario),”

Oxford Economics said.

“This reflects both the larger size of the economy (which boosts GDP in the

denominator) and an additional boost to exports of services, reflecting

increased domestic investment in the sector.

“The more muted impact on the current account means that associated

repercussions on the foreign exchange situation would be less acute than

in the [other] scenario, at least initially. Our estimates indicate that

increased FDI inflows broadly counterbalance the widening of the current

account in the years 2020-2025,” the report added.

“However, the continued widening of the current account in subsequent

years would eventually outpace these FDI inflows, implying that foreign

exchange policies may still need to be reviewed later on.”

<< Back to news headlines >>

Carnival ordered to pay $20 million criminal penalty Wednesday 5th June, 2019 – Caribbean News Now

Carnival Corporation has reached a tentative settlement with federal

prosecutors in which the world’s most extensive cruise line eagerly

consented to pay a $20 million in fines for some of its ships persistently

polluting the oceans notwithstanding vowing years ago to discontinue.

Senior US District Judge Patricia Seitz approved the settlement after

Carnival Chief Executive Officer (CEO) Arnold Donald stood up in open

court and acknowledged the company’s accountability for breaching

probation which stems from Carnival’s prior environmental court case.

Arnold uttered, “The company pleads guilty,” six times in a full courtroom

that included other senior Carnival executives, including Carnival

Chairman Micky Arison, a billionaire who also owns the Miami Heat. “We

acknowledge the shortcomings. I am here today to formulate a plan to fix

them.” Arnold continued, “The proof will be in the pudding, won’t it?” Seitz

responded. “If you all did not have the environment, you would have

nothing to sell.”

The company admitted breaking conditions of its probation from a 2016

criminal conviction for its Princess Cruise Lines ships role in illegally

dumping oily waste and concealing the crime. The cruise line paid a $40

million fine and was put on five years’ probation in that matter, which

affected all nine of its cruise brands and 105 ships worldwide.

Now Carnival has admitted that in the years after its ships have

committed environmental crimes such as dumping “grey water” in

prohibited areas such as Alaska’s Glacier Bay National Park and

consciously permitting the plastic to be dumped along with food waste in

The Bahamas, which poses a serious threat to marine life.

Carnival also admitted falsifying compliance records and other

administrative breaches such as having clean-up teams visit its ships

shortly before scheduled inspections.

The judge at a prior hearing threatened to ban Carnival from docking at

US ports because of the violations and announced she might hold

executives individually responsible for the probation breaches.

“The concern I have is that senior management has no skin in the game,”

the judge declared, continuing that future infringements might be met

with incarceration and criminal penalties for executives. “My goal is to

have the defendant change its behaviour.”

Arison signed the proposed settlement in which Carnival vowed there

would be further audits to monitor for infractions, a revamping of the

cruise line’s compliance and training programs, a reliable system for

reporting environmental crimes to state and federal agencies and

enhanced waste management methods.

The settlement also would set September 13 and October 9 deadlines to

produce a better compliance plan and make other adjustments, subject

to penalties of $1 million daily if those deadlines are not met. If the second

round of deadlines is not met, the penalties could soar up to $10 million

each day.

Other recommended changes include a reduction by the company in

the use of single-use plastic items across its whole fleet and production of

“tiger teams” intended to make corrections in the cruise line’s food and

beverage methods and how waste is managed at sea. The case is being

turned over to US District Judge Ursula Ungaro, who jointly presided over

Monday’s hearing with Seitz, who is retiring in a few months.

Three people who declared they were victims of Carnival’s environmental

crimes attended the hearing. Their lawyer, Knoll Lowney, displayed doubt

that the company will honour its commitment this time. “Time and time

again, Carnival has shown its contempt of environmental laws and the

rule of law,” he declared. “Here we are again.”

As widely reported, Carnival’s cruise ships illegally dumped more than

500,000 gallons of treated sewage and 11,000 gallons of food waste

mixed with aluminium, plastics and other physical objects into the sea

throughout its first year on probation. The bulk of the illegal dumping took

place in the waters of The Bahamas.

The Court so far has authorised the filing of only court-appointed monitors

to report concerning Carnival’s first year of pollution. The 2018-2019 report

unquestionably reveals further illegal discharges and pollution violations.

The Bahamas, near Miami is a flag state where hundreds of cruise ships

are registered. The bulk of cruise ships owned by Royal Caribbean fly the

flag of the Bahamas to avoid US income taxes as well as wage/labour law

and safety regulations of the US. The Bahamas, in essence, has no means

in place to require compliance with international pollution laws when

vessels flying the flag of The Bahamas pollute the waters of The Bahamas.

The cruise line flags at least five of its vessels in The Bahamas, including the

Carnival Sensation, Carnival Inspiration, Carnival Imagination, Carnival

Triumph and Carnival Fascination. (The majority of the Carnival-owned

ship such as the Carnival Conquest and the Carnival Elation stated above

are registered in Panama so that the company can avoid US taxes, safety

regulations and labour laws. Similar to The Bahamas, Panama has a slight

concern in requiring compliance with international pollution regulations

such as maritime pollution or MARPOL).

As Carnival proceeds to complete the cruise port in Grand Bahama, it’s

noted that the US federal district judge in Miami presiding over the

pollution case called Carnival a “recidivist criminal” which has been

involved in worldwide pollution and repeatedly lied about it.

<< Back to news headlines >>

St Kitts-Nevis projects decline in revenue for 2019 Wednesday 5th June, 2019 – Caribbean News Now

The government of St Kitts and Nevis is projecting 29 percent drop in

revenue in 2019, according to the Caribbean Development Bank (CDB).

In its outlook for St Kitts and Nevis for 2019, the Barbados-based financial

institution also said the Timothy Harris-led Team Unity government “is

targeting a lower primary surplus for 2019.”

“With total revenue expected to decline by 8.1 percent and total

expenditure likely to grow by 5.7 percent, the primary surplus is projected

to fall to 2.1 percent of Gross Domestic Product. The decline in revenue is

due to a projected 29.1 percent drop in non-tax revenue – mainly

Citizenship by Investment (CBI) receipts – although this will remain the

main revenue category,” the CDB said on the outlook for 2019.

The outlook is contained in St Kitts and Nevis Country Economic Review for

2018.

CDB said capital expenditure is expected to increase by 21.8 percent,

with one-third of the funds being earmarked for improving the public

infrastructure.

“Major proposed investments include the rehabilitation of the main roads

on both islands, the upgrade to the airport and the construction of the

second cruise ship berth in St Kitts and the expansion of the hospital in

Nevis,” CDB said.

According to CDB, the domestic banking system in St Kitts and Nevis

“remains under pressure from worsening asset quality.”

“The ratio of non-performing loans (NPLs) to gross loans increased from

16.5 percent in September 2017, to 24.9 percent in September 2018. Net

of loan loss provisions, NPLs as a percentage of banks’ capital rose from

33.4 percent to 55.7 percent putting banks’ solvency at higher risk.

“Against the backdrop of worsening credit quality, domestic banks raised

their precautionary liquidity provisioning by increasing their liquid assets as

a proportion of total assets to 58.6 percent. The regulatory capital of

banks in terms of their risk-weighted assets increased slightly from 19.2

percent to 19.8 percent,” the CDB said.

<< Back to news headlines >>

Medical Disposables celebrates profit despite forex volatility Wednesday 5th June, 2019 – Jamaica Observer

HEALTH care and consumer products distributor, Kingston-based Medical

Disposables and Supplies Limited (MDS), is reporting that the company

was able to generate a year-end profit in spite of the volatility of foreign

exchange fluctuations that squeezed profit margins.

“We were able to weather the volatility in foreign exchange fluctuations

over the past year, through a combination of the tireless effort of the

entire team in ensuring that we not only maintain the MDS standard, but

continue to reinvent ourselves in a dynamic market,” General Manager

Kurt Boothe said.

Despite the challenging financial climate, the company managed to

generate profit before tax of $123.3 million, which was $13.7 million or 12.5

per cent above the previous year ended March 31, 2018.

“The nature of the Jamaican economy leaves businesses, and the wider

economy, highly sensitive to movements in the price of the Jamaican

dollar, but we were able to overcome the challenges,” Boothe said.

In a release to shareholders this week, MDS noted that total non-

operational expenses of $63.3 million, increased by $31.1 million or 96.8

per cent.

“The increase was as a result of the significant loss on foreign exchange of

$23.3 million calculated on the cost of goods purchased, due to the

devaluation of the Jamaican dollar to the United States currency. This was

an increase of $25.9 million when compared to the previous year ended

March 31, 2018,” the company noted.

“We will be implementing cash reserve strategies, and we are in active

discussions with our banking partners along the lines for forecasting in

order for us to be proactive rather than reactive, to combat any negative

market shocks which may arise, so we can weather any storm ahead of

time,” Boothe added.

He stated that, notwithstanding, the material foreign exchange losses

incurred during the year, the company still managed to generate profit

before tax of $123.3 million, which was $13.7 million or 12.5 per cent above

the previous year ended March 31, 2018.

The Bank of Jamaica has announced that the public should continue to

expect an active foreign currency market, and should adapt to the new

realities.

“It is no longer a market in which the exchange rate drifts in one direction

only, and as long as prevailing economic conditions remain as positive as

they are, it is normal and to be expected that the exchange rate will keep

fluctuating in both directions,” the central bank said in an earlier release.

Last year MDS continued its rise, reporting that it had crossed the $2-billion

threshold in revenues for the first time in the company's history. The

business, which is listed on the Junior Market of the Jamaica Stock

Exchange (JSE), made profits in excess of $100 million, following record

gains during financial year 2017/2018.

MDS products span pharmaceuticals, vaccines, injectables, hospital

supplies, medical disposable items, medical sundries, consumer products,

and beauty items.

The company continued to show robust growth in a number of areas.

MDS reported gross profit of $548.5 million for the year ended March 31,

2019, which represented growth of $87 million, or 19 per cent compared

to the year ended March 31, 2018.

“Operating expenses of $361.9 million increased by $42.1 million or 13.2

per cent, due mainly to the costs associated with our sales growth. These

operational expenses include salaries, commissions and related expenses,

general insurance expense, delivery expenses, information technology

consultancy fees, security expenses and utility expenses,” the company

said.

Another mitigating factor which affected year-end profits for MDS this

year was its payment of tax remission for the first time. The company is in

now its sixth year since being listed on the Junior Market.

As a result, MDS is now subject to 50 per cent tax remission as of

December 24, 2018. As such, profit after tax grew by $3.2 million or 2.9 per

cent from $109.6 million for the financial year ended March 31, 2018, to

$112.8 million at the end of the current financial year.

Total assets grew by 21.4 per cent or $200.8 million from $1.45 billion to

$1.65 billion. The company's inventories and receivables balance

increased as a direct result of the increased business opportunities, which

are reflected in the overall increase in sales revenue. These assets were

supported by shareholders' equity of $759.2 million and liabilities of $889.7

million, which grew by $86.1 million or 12.8 per cent and $114.7 million or

14.8 per cent, respectively.

The company distributed dividends of 10.4 cents per share during the

current financial year.

Sales revenue for the fourth quarter was $641.3 million, compared to

$559.5 million in the fourth quarter of the prior year, an increase of $81.8

million or 14.6 per cent. Sales in this quarter were $102.6 million or 19 per

cent higher than that of the third quarter.

Gross profit for the period was $182.4 million compared to $131.8 million in

the corresponding period in the previous year, an increase of $50.6 million

or 38.4 per cent. Gross profit in this quarter was $57.9 million or 46.4 per

cent higher than that of the third quarter.

<< Back to news headlines >>

House approves merging PetroCaribe Fund into Consolidated Fund Wednesday 5th June, 2019 – Jamaica Observer

The House of Representatives yesterday approved a bill amending the

Petroleum Act to integrate the functions of the PetroCaribe Development

Fund (PDF) into Central Government.

Pursuant to a Cabinet decision, the PetroCaribe Development Fund was

established as a body corporate by the Government in December, 2006,

by way of an amendment to the Petroleum Act.

The body corporate was set up to manage the proceeds which accrued

to Jamaica under the Energy Co-operation Agreement PetroCaribe,

between the government of Jamaica and the Bolivarian Republic of

Venezuela.

The new bill has now given effect to a recent Cabinet decision to repeal

that amendment of 2006, so as to reintegrate the Fund into Central

Government.

Previously, the PDF received broad policy directions from the finance

minister, but was largely an independent and self-financing entity, with

local funds that not only serviced Jamaica's oil debt to Venezuela but

could be invested mainly through loans to development projects.

It is understood that the fund pumped more than $330 billion into the local

economy through project financing, equity investments and social and

economic development grants.

The change in status of the PDF from a public body corporate into a

central public body was included in the government's agreement with

the international Monetary Fund (IMF).

<< Back to news headlines >>

Mandela Highway reconstruction 97% complete Wednesday 5th June, 2019 – Jamaica Observer

The National Works Agency (NWA) is reporting that the Mandela Highway

Realignment and Reconstruction Project is 97 per cent complete.

The highway, which spans St Andrew and St Catherine, is a key

thoroughfare that links Kingston with Jamaica's northern, western and

southern regions.

Senior NWA Communications and Customer Services Officer, Ramona

Lawson, told JIS News that although the roadway is open to vehicular and

pedestrian traffic, corrective and tidying up works are continuing, primarily

in the region of Tom Cringle Drive.

“These include the construction of a roundabout for large articulated

vehicles accessing locations along the roadway, as well as extending the

service road east of Tom Cringle Drive to serve entities located in that

area of the project. These activities will continue into the summer,” she

outlined.

Meanwhile, Lawson is urging persons using the highway, particularly

pedestrians, to adhere to the safety guidelines.

“We continue to implore pedestrians to use the overpass bridge, which is

equipped with pedestrian facilities to include sidewalks, pedestrian

crossings and the necessary safety signs,” she said.

Lawson said the NWA has noticed, “with some trepidation”, that a

number of pedestrians, including students, refuse to obey these

instructions and have been attempting to cross six lanes of traffic, citing

this practice as “very dangerous”.

She said the agency is keen and focused on reinforcing and improving

safe access to the corridor, particularly for pedestrians, while reminding

motorists that the traffic signals at the crossing by the Fresh River Bridge

have been decommissioned.

The US$64-million Mandela Highway Realignment and Reconstruction

Project involves road construction works comprising extensive soft soil

treatment, construction of a 3.5-kilometre six-lane corridor with a two-lane

overpass bridge, two new three-lane bridges at Fresh River, a two-lane

service road adjacent to the main roadway to facilitate the development

of Caymanas Estate, and upgrading of the Six Miles Interchange.

The development is part of the Government's ongoing legacy road

projects being implemented by the NWA.

It represents a continuation of works to improve the island's road network

in order to enhance the quality of life of citizens and stimulate economic

growth and development.

The project falls under the Major Infrastructure Development Programme

(MIDP), and is being executed by China Harbour Engineering Company

Limited (CHEC).

<< Back to news headlines >>

Water hope Thursday 6th June, 2019 – Jamaica Observer

A search for precious metals in several areas of the island has produced

an unexpected windfall — the discovery of what is believed to be large

bodies of water which could solve the annual drought problem which

plagues the island.

Geophysx Jamaica is conducting a search for precious metals, including

gold, in sections of six parishes across the island, and Robert “Bobby”

Stewart, the man leading the company, says its detailed hunt has led to

the finding of large areas of possible potable water.

“We have been tasking various radar satellites to model the island and we

have done a lot of specific tasking to our needs of the island, which gives

us various ways of seeing what's under the surface. And in going through

that work in the past month we have realised that we have been able to

see what seems to be deposits of water,” Stewart told the Jamaica

Observer.

“It's a special radar band, and in seeing that we have offered our

assistance to the Government, for free, to help them find new sources of

water,” added Stewart.

He said the company has already created maps in the area around Port

Royal and stretching to Portmore, St Catherine, where there are possible

water sources.

“We will end up doing the island and giving the Government some maps

that show them areas that have potential and which seem to show water.

This will give the Government the ability to zone in on areas quicker

because right now it is more trial and error and it is very expensive to drill

for water,” added Stewart as he provided further details following an

announcement by Minister of Transport and Mining Robert Montague

during his contribution to the sectoral debate on Tuesday.

Montague told the House of Representatives that through a partnership

with Geophysx Jamaica, the Government was updating its geological

maps so when new investors come to search for minerals, they do not

have to reinvent the wheel.

“Furthermore, Stewart recently handed to me a digitally generated map

of Jamaica, done by satellite, showing where water is being held

underground. This map will be forwarded to the National Water

Commission (NWC).

“The use of the technology and the analysis came as a result of his duty to

his country. He simply wanted to help us in this water crisis. The same

methods used to seek minerals should be able to locate water. He

accepted the challenge and the maps are ready at no cost to the

people of Jamaica,” added Montague.

Officials of the NWC have repeatedly argued that Jamaica needs a more

reliable source of adequate water rather than an increase in the man-

made raw water storage capacity.

New sources of water could provide the answer for the repeated

attempts to prevent the seasonal shortage of potable water which has

affected the island.

Geophysx is in the second year of its search for precious metals in areas

where it has acquired exclusive licences to conduct operations.

The company has already invested almost $200 million in its explorations

and Stewart said the results so far have been very encouraging.

“We are finding multiple minerals. We are finding copper, zinc, lead, and

there is evidence of precious metals including gold, as well, but primarily

we are not focused on one element,” said Stewart.

<< Back to news headlines >>

Hilton makes waves with Oceana plan Wednesday 5th June, 2019 – Jamaica Observer

The 168-room former Oceana hotel, located in downtown Kingston and

owned by PanJam Investments Limited, will be transformed into ROK

Kingston and open its doors in 2020. The news came as Hilton yesterday

announced the signing of ROK Hotel, Kingston, Tapestry Collection by

Hilton — marking the brand's entry into the Caribbean for the first time.

Juan Corvinos, vice-president, development, Caribbean and Latin

America, Hilton, revealed the strategy behind the move.

“Strategically focused on our expansion across the Caribbean and Latin

America, we value the opportunity presented with Tapestry Collection by

Hilton,” the vice-president explained. “With Tapestry Collection, we open

the door to owners with unique, upscale hotels who seek to maintain their

property's distinctive character, but also seek the benefits of the Hilton

engine and our award-winning Hilton Honors programme.”

Stephen Facey, chairman and chief executive officer of PanJam,

welcomed the exciting new joint venture between the two organisations.

“As Hilton continues to expand its presence throughout the Caribbean,

we are excited to have the opportunity to support their growth and debut

the Tapestry Collection brand in the region,” the chairman stated. “We

recognise the value in collaborating with a well-respected global

hospitality company such as Hilton, particularly as we work together to

introduce travellers to authentic Kingston experiences, while offering them

the brand's upscale accommodations.”

The property, currently known as Caribbean Place and, located at

Ocean Boulevard on the Kingston waterfront, is a multi-purpose complex

which, according to Hilton's press release, “will include retail, on-site

entertainment, and commercial office spaces”.

In May of 2018, the Jamaica Observer reported that some shareholders of

PanJam Investments Ltd were expressing reservations in the company's

decision to develop hotel accommodations in the multi-purpose building,

which also comprised office space. At the time, Chief Operating Officer

Paul Hanworth, justified the company's decision.

“There is no doubt that there are those who continue to believe that

downtown Kingston has no future. We don't share that view,” he was

quoted as saying in the report. “We think that the waterfront in any city is

the most valuable space, and I think you're going to find in the years to

come that that will prove to be true. We are and will always be a leader

in the development of real estate in Jamaica, and we think this is part of

that leadership.”

It would seem that Hilton currently shares the optimism and belief in the

downtown section of the city expressed by Hanworth, a year ago.

The Hilton press release made special mention of attractions in the area,

explaining that the National Gallery of Jamaica and the world-famous

historical site, Port Royal will be within reach of the hotel's guests, while the

building itself overlooks the Kingston Harbour, the seventh-largest natural

harbour in the world.

“With its deep roots in the community, the ROK Hotel, Kingston will offer

guests an authentically local experience, coupled with the warm and

welcoming hospitality of Jamaica,” affirmed Jenna Hackett, global head,

Tapestry Collection by Hilton.

ROK Kingston will include a fitness centre, a large pool deck on the first

floor, “flexible space for meetings and events”, lounge area, bar,

restaurant and cafe.

The hotel will be a participant in the award-winning Hilton Honors guest

loyalty programme, providing members who book directly with “instant

benefits, including a flexible payment slider that allows members to

choose nearly any combination of points and money to book a stay,

exclusive member discounts, free standard Wi-Fi, and access to the Hilton

Honors mobile app.”

As news of the deal between PanJam and Hilton spread on Wednesday it

was shared by Delano Seiveright, senior advisor/strategist with the Ministry

of Tourism, who posted the news on Facebook and referenced the

growing renaissance of downtown Kingston.

“Downtown Kingston in transformation phase...new GraceKennedy HQ,

new Ministry of Foreign Affairs building, new entertainment and dining

options including Ribbiz on the waterfront, new commercial

developments coming along, and much more,” wrote Seiveright.

Tapestry Collection by Hilton is a “portfolio of upscale, original hotels”

launched in 2017. They are one of Hilton's 17 world-class brands,

representing more than 5,700 properties globally.

The Oceana hotel was constructed in 1977 and was eventually leased to

the Ministry of Health in 1997. The property was sold by the UDC to King

Church Property Holdings Ltd a consortium representing Canadian

developers, Downing Street Realty Partners and Jamaica Property

Company Ltd, which was a member of the Pan Jamaica Group Of

Companies. In 2017, PanJam, a subsidiary of Jamaica Property Company

Ltd acquired Downing Street Caribbean Place Ltd and took full control of

the property.

<< Back to news headlines >>

NWA spending $100 million dollars on drain cleaning for hurricane season Tuesday 4th June, 2019 – Jamaica Gleaner

The National Works Agency (NWA) is spending $100 million dollars on drain

cleaning across the island under the Government’s pre-hurricane

mitigation programme.

According to NWA Communication and Customer Services Manager,

Stephen Shaw, drain cleaning works have already begun in several

parishes, while programmes are currently being finalised to treat with

other locations.

Shaw explains that the drain cleaning contracts include both de-bushing

works as well as the carting away of material removed from the channels.

Activities under the programme will continue over the next few weeks

The NWA explains that government’s pre-hurricane mitigation programme

is the first of three routine drain-cleaning activities which the agency

undertakes during each calendar year.

The agency will again carry out maintenance works on sections of the

island’s drain network during the next six months as well as after the

hurricane season ends.

<< Back to news headlines >>

Indies Pharma debt free and growing Wednesday 5th June, 2019 – Jamaica Gleaner

Sales at pharmaceutical firm Indies Pharma Jamaica Limited grew by

nearly one-third for its April 2019 second-quarter from increased business

activity.

Earnings per share at the company climbed to three cents in the quarter,

up from two cents a year earlier. Over six months, profits equated to six

cents per share, up from four cents.

The debt-free company also operates with a relatively high working

capital ratio, with $8.99 of current assets to every $1 of liability.

“Indies Pharma Jamaica Limited retired all its loans, when compared to

the equivalent period in 2018. The company currently has no debt, which

indicates its good financial health and shows that it is in a good position

for future growth,” said Vishnu Muppuri, co-founder and chief operating

officer at the company.

Indies Pharma paid off $53 million in loans with the bulk going to First

Global Bank and the remaining $1.1 million to National Commercial Bank

Jamaica, its financial report indicates. The company, which went public in

2018, held some $190 million in debt at its listing on the junior stock market.

The debt reduction resulted in a 70 per cent drop in liabilities year on year.

The company generated $197 million in revenues for the second quarter,

up 29 per cent. Its gross profit hit $133 million compared with $95.3 million

a year earlier. Its profit before tax totalled $32 million, compared to $37

million in 2018. Profit after tax was recorded at the same $32 million, up 18

per cent from $27.7 million in 2018, as newly listed companies on the JSE

Junior Market qualify for 10 years of income tax breaks.

The company, which set up a new headquarters in Montego Bay,

incurred an 80 per cent rise in expenses during the quarter at $99.8 million,

compared to $54.6 million a year earlier.

Shareholder equity increased by $276.2 million to $646.7 million, as a result

of the company’s junior market listing on the Jamaica Stock Exchange, as

well as the rise in retained profits.

The husband-and-wife team of Dr Guna and Vishnu Muppuri hold 664.7

million shares and 378.1 million shares, respectively, in Indies Pharma. Their

combined stake amounts to roughly 78 per cent of the 1.3 billion shares

issued by the pharmaceutical distribution company. The company paid

dividends of $106.6 million in February.

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Caribbean Industrial buys tools firm in preparation for listing Wednesday 5th June, 2019 – Jamaica Gleaner

Flooring contractor Caribbean Industrial Systems (CIS) will seek to raise $65

million in a bond offering as part of a series of financing measures that will

eventually see the company listing on the stock exchange.

CIS plans to list within two years, and is laying the groundwork for

expansion as part of that goal, but is yet to determine whether it will be

doing an initial public offering of shares. It will use the bond proceeds and

other cash resources to fully acquire a tools store, Airmark Equipment and

Supplies.

“Airmark will complement our CIS operations,” said CIS chief executive

Andre Hutchinson in a Financial Gleaner interview on Monday. Both

companies are based in Kingston.

Hutchinson, a former trader with financial firms JMMB and Proven, said the

bond is expected to close within the coming days. Stocks & Securities

Limited is acting as the lead broker.

“SSL was able to facilitate the uniqueness of the transaction,” said

Hutchinson.

The bond will replace the bridge loan used to acquire Airmark last month,

he added.

CIS, which operates in Jamaica and Guyana, provides services which

seals floors, walls and roofs with resin to prevent bacteria build-up in

restaurants and factories. This is an important step for certification in

HACCP and International Organisation for Standardisation.

CIS acquired Airmark to create a retail outlet for the company. It will sell

tools and equipment offered by Airmark but also cross-sell CIS sealing

products and services to thousands of clients.

“The great thing about Airmark is that we acquired 11,000 new clients and

now we can market coating options, paints, rollers and accessories to

support the construction industry. To support do-it-yourself operations and

we expect revenue to double in the next year,” Hutchinson said.

“This gives us access to equipment, licences and distribution deals. We

can offer equipment for sale, rental and repair,” he said.

Airmark was founded in 1996 by Calvin and Christine Williams, according

to Companies Office of Jamaica records. The founders fully sold the

business to CIS and with it increased the workforce from four to nine

workers with an additional 12 part-time contractors. Efforts to speak to the

Airmark founders were unsuccessful. They were said to no longer operate

from the office, which is located at Shortwood Road.

CIS started operations in 2012 with shareholders Andre Hutchinson,

Gordon Hutchinson, Fay Hutchinson, Leslie Campbell, Gary Harris and

Evans Maitland. It expanded into Guyana over six years ago, to focus on

projects in that market.

Now it is also looking to grow the overseas operation by doing a similar

acquisition of a tools company in Guyana. CIS, however, wants to acquire

a company that already has a retail presence in order to further grow

revenues.

“We expect overall revenues to double by next year,” he said without

disclosing numbers. “And we still are hunting for more deals.”

As for the prospective listing of CIS on the stock market, Hutchinson says

the target date is by the first quarter of 2021, but the company is still

weighing how it will enter the market.

“We are not sure at this time whether we will list ordinary or preference

shares,” he said.

<< Back to news headlines >>

LSC expanding lubricants facility at Rockfort Wednesday 5th June, 2019 – Jamaica Gleaner

Lubricating Specialties Company (LSC) is adding another 500,000 gallons

in capacity at its facility in Rockfort, Kingston, for which it already has the

green light from regulator National Environment and Planning Agency,

NEPA.

LSC operates the former Shell lubricants facility, a 1.2-million capacity

plant at Rockfort, under lease. It currently has 23 tanks there – six steel

tanks for storing raw material and another 17 horizontal tanks for storing

lubricant additives – and NEPA has granted a permit for an additional 22

steel tanks.

LSC Managing Director Neil Crooks says the company is now in a position

to add ­manufacturing capacity across the network.

“This installation will now give us additional storage, plus the

manufacturing side of it, and holding tanks that will complete the make-

up of Rockfort to make it a fully functional business,” said Crooks.

“Initially, when the matter was covered, it was the same capacity, but

how the facility was configured, it was not totally amenable to the

manufacturing,” he told the Financial Gleaner.

The indicative cost for the expansion, he said, is around US$5 million, which

translates to about $665 million at spot exchange rates.

The cost would be finalised closer to the start of construction, scheduled

for the third quarter and wrapping by the first quarter of 2020.

“We have an aggressive time line of six months. We’re aware that in

Jamaica we have to make some allowances,” Crooks said.

LSC also operates a manufacturing facility in May Pen, Clarendon. The

company is already known to manufacture lubricants on behalf of the

Top One brand, but Crooks says they also quietly ­manufacture for other

big brands.

“Our position is to really support our clients in the market that supply both

regional and local markets. We are clear in our role that we’re not a

brand marketer, but we make products on behalf of our customers,” he

said.

“We’re trying to make it an attractive option to do manufacturing here in

Jamaica rather than manufacturing out of the USA or one of those South

American countries.”

LSC currently employs 40 workers but expects that number to climb to

about 75 on a phased basis.

The company is one of two lubricants manufacturers in Jamaica, the

other being the Paramount/Allegheny plant at Waltham Park Road in

Kingston. Both companies make lubricants for heavy industry and

speciality customers. Paramount has the capability to produce food-

grade lubricants.

<< Back to news headlines >>

‘For sale’ Wednesday 5th June, 2019 – Barbados Today

Barbados is to give up its majority ownership of regional airline LIAT

handing it back to Antigua and Barbuda, Prime Minister Mottley

announced in Parliament tonight, ending weeks of speculation triggered

by St John’s revelations of Bridgetown’s plans.

But the announcement puts the Mottley administration’s for regional

aviation into sharp focus, amid speculation it may back the startup of a

rival carrier involving Barbadian investors and a multilateral lender,

Barbados TODAY has learned.

Mottley confirmed to the House that Barbados has accepted an offer

from Prime Minister Gaston Browne to take up most of its 49.4 per cent

stake in LIAT.

But she did not specify what percentage of shares is to be sold to Antigua

and Barbuda which currently holds 34 per cent ownership, followed by St

Vincent and the Grenadines and Dominica to make up 94.7 per cent of

the total. Private shareholders and staff own the remaining 5.3 per cent.

The Prime Minister disclosed that Attorney General Dale Marshall is to

head the negotiating team to settle terms with St John’s.

She told lawmakers: “We have accepted an offer from a sister Caribbean

state, Antigua and Barbuda, to re-enter into negotiations with them to see

whether a deal could be concluded with respect to Antigua and

Barbuda taking up our shares in exchange for them taking up our

responsibilities as a shareholder within the context of LIAT.

“This would require negotiations on the part of both countries and

therefore we will be writing Prime Minister Browne to indicate that just as

he has established a negotiating team, the Government of Barbados will

establish a negotiating team that will meet with his negotiating team to

settle the terms if we can, with respect to the conclusion of the transfer of

the shareholding.”

Mottley’s comments have come several weeks after Browne publicly

announced that Barbados had agreed to sell all but ten per cent of its

stake in LIAT.

Browne said then: “An offer was made for Antigua and Barbuda to

acquire the LIAT shares owned by Barbados, through a take-over of the

liability of Barbados to the Caribbean Development Bank (CDB).”

Confirmation of the sale decision comes after months of wrangling with

Eastern Caribbean governments over their failure to take up an offer to

pump money into the cash-strapped carrier that remains a vital link in

inter-regional travel, trade and tourism.

Leeward Islands Air Transport, created by Kittitian Sir Frank Delisle, began

life in 1956 with a single plane ferrying passengers between Antigua and

Montserrat. A newly organised LIAT 1974 Limited saw ownership pass to

Eastern Caribbean governments.

Mottley maintained that due to the country’s current economic position, it

was simply not in a financial position to support LIAT.

She said Government had made a decision to “take a step back”.

Mottley told Parliament: “There is only so much that Barbados can

responsibly do at this time given our current circumstances.

“Therefore notwithstanding our absolute commitment to regional air travel

given the fact that studies have recommended a different model of

restructuring for LIAT and given the inability of the Government of

Barbados to do for LIAT in the next five to ten years what we have done

for LIAT in the last five to ten years when we moved significantly to assume

major shareholder responsibilities, we have taken the determination and

decision as a Cabinet that it is time for us to step back while at the same

time allowing other governments to continue with their proposals to

restructure LIAT in the way which they have determined.”

While not revealing the full details of the transaction, Mottley made it

clear that Barbados would still serve as a minority shareholder and would

provide a revenue guarantee on particular routes.

The Prime Minister said that the regional carrier, which serves 15

Caribbean destinations with close to 500 flights, was in urgent need of an

overhaul.

She said: “The current model which LIAT has within the 1974 limited is not

an attractive model and what is needed is significant restructuring.

Indeed a new model of governance, a new financial model and a new

operational model in order for it to be able to extract greater benefits and

provide the services which it does.”

The Prime Minister wished the Antiguan government well in its attempts to

restructure the regional airline and said Barbados would still play a vital

role as a minority shareholder, and ensure that routes provided are

commercially viable so that it does not place pressure or burden on the

overall finances of the airline.

But the decision to sell is also said to have been sparked by largely

Antigua’s resistance to Bridgetown’s suggestions for a leaner and more

efficient airline, which currently has some 660 workers at its Antigua

headquarters, sources close to the plans have told Barbados TODAY.

Aviation experts said the ratio of workers per aircraft for LIAT’s fleet of

French-Italian-made ATR turboprop planes is between two and three

times what is required for a profitable airline.

The 48-seat ATR 42 plane ought to have 25 workers per plane and the 68-

seat ATR 72 should carry a ratio of 35 workers per plane, the sources said.

But with 660-odd workers at its flight operations, engineering, call centre

and customer relations departments in Antigua, its commercial office in

Barbados and stations on its 15-destination network, the airline’s ten

aircraft shoulder a ratio of 66 workers per plane. Experts suggested to

Barbados TODAY this ratio is unsustainable.

Mottley gave an assurance that once the discussions were completed

Barbados and Antigua and Barbuda, the Government will report to the

Barbadian people.

But in speaking at the annual luncheon of the Barbados Employers’

Confederation (BEC) in early May, Prime Minister Mottley said she was

primarily focused on ensuring reliable and affordable regional transport,

as she confirmed receiving Antigua and Barbuda’s expression of interest

in purchasing her country’s shares in LIAT.

In comments that raised questions of Barbados’ possible shift towards its

own carrier, she said then: “Let’s just say we agree on the mission, and the

mission is that there must always be reliable affordable access for travel in

the region as there must be nationally. And I can assure you and the

country that we are working on this every day.

“But you also have to take the reality of an existence as you find it and

then determine whether the modality that you have is the best

mechanism by which to deliver on that objective.”

Barbados TODAY has learned that much of the work towards a national

flag carrier hinges on attaining category one status with the United States

Federal Aviation Administration (FAA).

A requirement for reaching this status, which would allow Barbados to

operate routes into the United States mainland and its Caribbean territory,

Puerto Rico, is the establishment of a civil aviation authority which

Government is working towards creating.

Mottley told journalists last month that a bill to establish the regulator is

now being drafted and is expected to be taken to Parliament for

approval by September or October.

She declared that the issue of the absence of a Civil Aviation Authority

had been outstanding for too long given its importance.

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