• Jamaica Producers Group Limited (JP) and PanJam Investment Limited have announced the successful completion of the amalgamation process, which was approved by the shareholders of both companies on December 22, 2022. The amalgamation agreement between the two Jamaican conglomerates, saw JP transfer its material businesses to PanJam in exchange for JP receiving a 34.5% ownership stake in PanJam.
• The amalgamation creates a formidable player in the Jamaican investor landscape with diverse interests in real estate and infrastructure, specialty food and drink manufacturing, agri-business, financial services, and a global services network of interests in hotels and attractions, business process outsourcing, shipping, logistics, and port operations, in locations across the world. With effect from April 1, 2023, PanJam will change its name to Pan Jamaica Group and will hold the combined businesses.
• Jeffrey Hall, who was appointed Chief Executive Officer of Pan Jamaica Group on April 1, 2023, highlighted that the company is pleased to have completed the transaction which represents an important milestone for both companies. The newly appointed President of Pan Jamaica Group, Joanna Banks, had the same sentiments about the amalgamation.
• The amalgamation will see the two companies combining their strengths and expertise to capitalize on new opportunities whilst creating greater value for stakeholders.

(Source: JSE)                

• Fitch Solutions is forecasting that the Mexican budget deficit will widen modestly from 3.4% of GDP in 2022 to 3.8% in 2023. 
• Mexico is an unusual case in that the deficit barely widened in response to the COVID crisis (from 1.7% in 2019 to 2.8% in 2020), as President Andrés Manuel López Obrador’s (AMLO) government refrained from rolling out significant income support schemes.
• Mexico’s fiscal position has, however, deteriorated somewhat, driven by a ramp-up in public investment, an uptick in debt servicing costs and a modest increase in social spending that largely reflects an increase in pension payments and the rollout of some cost of living support.
• Fitch, therefore, anticipates that these trends will remain in place ahead of elections scheduled for July 2024, with a decline in oil-related revenues set to exacerbate the deterioration.
• Owing to the widening budget deficit, Fitch also anticipates that Mexico’s debt-to-GDP ratio will increase modestly from 50.0% of GDP in 2022 to 50.6% in 2023, with strong nominal economic growth helping to prevent a larger jump.

(Source: Fitch Solutions)

• The Caribbean Development Bank (CDB) has announced that it has committed US$100 million in support to The Bahamas as the country charts a path to economic recovery and resilience following the back-to-back disasters of Hurricane Dorian and the COVID-19 pandemic.
• The Bank’s Board of Directors approved the policy-based loan (PBL), the first in a proposed two-part series of PBLs, with a second tranche of US$25 million expected to be appraised in the 2023/24 fiscal year.
• CDB Director, Economics Department Ian Durant noted the programme of assistance will help the Bahamian economy to get back on track after the devastating impacts of Hurricane Dorian in 2019, and the COVID-19 pandemic in 2020.
• “While The Bahamas was recovering from the impact of Dorian, the pandemic created an additional shock on the tourism-dependent economy of The Bahamas. These shocks led to an unprecedented crisis that inflicted severe costs on the economy and people of The Bahamas. Central Government indebtedness rose sharply, and policy momentum aimed at fiscal consolidation and unlocking higher medium-term growth was interrupted,” said Durant.
• Despite this, he said the Government has been “making credible efforts towards restoring fiscal sustainability by implementing measures to increase revenue and reduce expenditure to bring its fiscal responsibility framework back on track” and it was against this background that CDB was lending its support.
• The loan will provide support to the government as it undertakes a programme of policy, legislative, and institutional reforms aimed at strengthening fiscal discipline and boosting revenue mobilisation while safeguarding the vulnerable.

(Source: Eyewitness News)

• The International Monetary Fund trimmed its 2023 global growth outlook slightly as higher interest rates cool activity but warned that a severe flare-up of financial system turmoil could slash output to near recessionary levels.
• The IMF said in its latest World Economic Outlook report that banking system contagion risks were contained by strong policy actions after the failures of two U.S. regional banks and the forced merger of Credit Suisse. However, the turmoil added another layer of uncertainty on top of stubbornly high inflation and spillovers from Russia's war in Ukraine.
• "With the recent increase in financial market volatility, the fog around the world economic outlook has thickened," the IMF said as it and the World Bank launch spring meetings this week in Washington. "Uncertainty is high and the balance of risks has shifted firmly to the downside so long as the financial sector remains unsettled," the Fund added.
• The IMF is now forecasting global real GDP growth at 2.8% for 2023 and 3.0% for 2024, marking a sharp slowdown from 3.4% growth in 2022 due to tighter monetary policy. Both the 2023 and 2024 forecasts were marked down by 10 basis points from estimates issued in January, partly due to weaker performances in some larger economies as well as expectations of further monetary tightening to battle persistent inflation.

(Source: Reuters)

• China is negotiating a compromise plan with other major creditors that could help break a logjam in debt-relief talks for struggling developing nations, the Wall Street Journal reported on Tuesday.
• The Wall Street Journal said the new plan if agreed upon, could see China drop its demand for multilateral lenders such as the World Bank and International Monetary Fund to join it in taking losses in any debt-restructuring deals that have stood as an obstacle to reaching workouts for countries like Zambia and Ghana.
• Specifically, the new plan could help break an impasse that has held up an agreement between China and other government creditors to restructure the debts of Zambia. It will serve as a model for multibillion-dollar debt-relief deals for other developing countries in financial distress.
• Negotiations could then move on to the details of Zambia’s debt restructuring, such as extending repayment deadlines and lowering interest rates. China continues to oppose taking losses on the face value of its loans, people close to Beijing’s decision-making told the paper.

(Source: Reuters)

• In demonstratively supporting its strategic growth agenda, Future Energy Source Company Limited (FESCO) introduces its cooking gas brand FESGAS and advises that it has acquired the assets related to the liquefied petroleum gas (LPG) business of Wilson Beck LPG Limited (WB). The transaction was completed on Wednesday, April 5, 2023. This asset purchase supports the advancement of FESCO’s goal of entering the cooking gas market under the FESGAS brand.
• FESCO’s Managing Director, Jeremy Barnes commenting on the acquisition highlighted that the assets acquired are appealing for many reasons, including the plant’s capacity and throughput.
• WB began distributing cooking gas in April 2020 from its business location in Bernard Lodge, St. Catherine and at the same location began its LPG filling plant operation in May 2021.
• According to WB’s Managing Director, Gregory Beck, the move will see FESCO inheriting a state-of-the-art LPG filling plant at Bernard Lodge, St. Catherine as well as a loyal group of gas dealers from the distribution network in south-eastern Jamaica. The plant will give FESCO the ability to immediately start supplying consumers and take advantage of the groundwork that has been completed over the last couple of years.
• FESCO will launch its LPG business within the first quarter of its next fiscal year (June 2023). This acquisition will bolster revenue growth as it allows the company to expand its value-added products and improve operational efficiency, which ultimately increases shareholders’ value. 

(Source: JSE)                

• The Central Bank is reporting that Jamaica’s inflation rate is decreasing. Data from the Statistical Institute of Jamaica (STATIN) show that the rate, which peaked at 11.8% in April 2022, fell to 7.8 % in February 2023.
• Speaking during a Jamaica Information Service ‘Think Tank’ on Wednesday (April 5), Bank of Jamaica (BOJ) Senior Deputy Governor, Dr. Wayne Robinson, said this has resulted from the BOJ’s monetary policy actions, as well as lower imported commodity prices.
• Robinson indicated that “we actually responded very swiftly, early and decisively to the increase that we’ve been seeing which was actually spurred by rising inflation globally”. He further added that “as a result of our policy actions, along with the fact that we have been seeing a lowering of the prices of some international commodities over the past 10 months, we have been seeing a general reduction in the rate of inflation.” Despite the decrease, the BOJ has indicated that 7.8% is still too high, and the utilisation of its monetary policy is crucial in controlling inflation.
• The policy relates to the broad set of actions or tools that the Bank has at its disposal to manage inflation. These have included raising the policy interest rate that the BOJ pays on the current account balances of deposit-taking institutions (DTIs), including commercial banks, building societies and merchant banks; reducing the volume of Jamaican dollar liquidity in the banking system; and stronger intervention to sell US dollars in the foreign exchange market, which, along with the other two actions, have kept the Jamaican dollar stable, thereby limiting the inflationary effect of imported price increases.
• Deputy BOJ Governor, Research and Economic Programming Division and Financial Stability, Robert Stennett, explained how the Central Bank’s monetary policy works. “They can be broken into three broad-based categories; one is interest rates. The Central Bank has the ability to influence interest rates. The second tool is really the ability to control money supply within the financial system, and finally, there is communication, where we keep the stakeholders abreast of our actions,” he outlined.
• The BOJ has reaffirmed its commitment to taking the necessary monetary policy actions to restore inflation to the Government of Jamaica-established target range of 4 to 6%. Inflation is projected to return to this range during the final three months of 2023, between October and December. 

(Source: JIS News)

• After keeping its repo rate fixed at 3.50% at its meeting on March 31 2023, Fitch expects that the Central Bank of Trinidad & Tobago (CBTT) will leave the policy rate unchanged for the remainder of 2023.
• Prior to October 2022, the government of Trinidad & Tobago (T&T) had worked to lower the burden of high inflation with subsidies. The CBTT has not pursued a rate hiking cycle during the COVID recovery like some of its Caribbean neighbours and despite climbing inflation, which has worsened after the removal of government subsidies, the CBTT still held its policy rate at 3.50%.
• While the Central Bank of Trinidad & Tobago has taken account of the significant rise in inflation and the interest rate differential, it has indicated that it will keep rates lower in order to support borrowing and the continued post-pandemic economic recovery.
• The CBTT also cited concerns about spillovers from the US banking sector crisis and damaging effects on the island’s growth and therefore did not want to add additional pressure to the banking system.
• Given these factors, Fitch forecasts that headline CPI will average 8.0% in 2023, and end the year at 4.8% y-o-y as demand softens. However, risks to their forecast are towards higher interest rates if energy prices do not come down, but remain elevated through 2023.

(Source: Fitch Solutions)

• Brazil's government expects monetary policy next year not to be as restrictive as in 2023, an economy ministry official said on Monday, April 10, stressing that a new fiscal framework proposed by the administration would help bring interest rates down.
• Brazil's finance ministry unveiled a proposal for new fiscal rules to balance limits on spending growth with the government's vow to boost social programmes and public investment, lifting local markets after months of uncertainty.
• The new rules would allow public spending to grow between 0.6% and 2.5% per year above inflation. Spending growth would also be limited to 70% of revenue growth in the prior 12 months. The full text of the proposal is expected to be released sometime this week.
• Economic Policy Secretary Guilherme Mello noted that central bank chief Roberto Campos Neto had praised the proposed framework, despite him saying the new fiscal rules would not mechanically affect interest rates. "From the moment the monetary authority recognizes the quality of the fiscal framework, the prospect of monetary easing emerges," Mello said in an interview with Globo News.
• Currently, Brazil’s Central Bank, The Banco Central do Brasil (BCB) has been closely watching core inflation, which at 7.9% has been consistently higher than headline inflation (5.6%) (which has cooled largely due to a drop in fuel prices).
• Given where core pressures sit, economists expect that BCB will be cautious about lowering interest rates despite political pressure to cut borrowing costs, and therefore share the same sentiments that the effect of the new fiscal framework in creating a less restrictive monetary policy is still yet to be seen.

(Sources: Reuters & Fitch Solutions)

• Oil prices rose on Tuesday, April 11 on expectations that inventories in the U.S., the world's biggest crude consumer, are expected to fall and on signs that demand in emerging markets remains healthy. Crude futures likely received a boost from gains in Asian equity markets as regional central banks are expected to keep their interest rates steady.
• In March, strong fuel demand in India, the world's third-biggest oil consumer, also supported prices. Last month, fuel consumption jumped by 5% from a year earlier to a record 4.83 million barrels per day. The country continues to be the main destination for Russian Urals crude amid the resorting of global oil trade flows in the wake of the invasion of Ukraine.
• Oil futures have climbed more than 5% since the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia surprised the market last week with a new round of production cuts starting in May. On the U.S. supply front, industry data on U.S. crude stockpiles are due on Tuesday. Five analysts polled by Reuters estimated on average that crude inventories fell by about 1.3 million barrels in the week to April 7.
• Oil prices fell on Monday after rising for three straight weeks, after U.S. jobs data pointed to a tight labour market, heightening expectations of another Federal Reserve rate hike that could curb oil demand.
• Rate hike expectations boosted the U.S. dollar index on Monday and Tuesday, which weighed on oil prices as dollar strength makes oil more expensive for other currency holders. Further, a U.S. inflation report to be released on Wednesday could help investors gauge the near-term trajectory for interest rates.

(Source: Reuters)