• Barbados has been removed from the European Union’s (EU) state-of-play document (Annex II), which means the island has been deemed compliant with tax requirements.
• Barbados was added to the EU list in October 2020 after it received a ‘partially compliant’ rating released by the OECD Global Forum for Transparency and Exchange of Information (Global Forum). It has now been granted a supplementary review by the Global Forum and has therefore been moved to a state-of-play document pending the outcome of this review.
• The state-of-play document identifies cooperative jurisdictions which have made further improvements to their tax policies or related cooperation. It reflects the ongoing EU cooperation with international partners and the commitments of these countries to reform their legislation to adhere to agreed tax good governance standards. For the purposes of the list, the EU requires jurisdictions to be at least ‘largely compliant’ with the international standard on transparency and exchange of information on request (EOIR).
• Minister of Energy and Business, Senator Lisa Cummins, said the announcement followed substantial work by government officials and stakeholders, from last November until now. The minister explained that officials in the International Business Unit, the Barbados Revenue Authority, the Barbados International Business Association, and all of the service providers, including members of the Barbados Bar Association, worked earnestly on this matter.
• Acknowledging that there was still more work to be done going forward, Senator Cummins gave the assurance that government would continue working with the Forum on Harmful Tax Practices, the Organization for Economic Co-operation and Development, and sovereign jurisdictions.

(Source: Caribbean National Weekly)

• British inflation fell by more than expected in January and there were signs of cooling price pressure in parts of the economy watched closely by the Bank of England, adding to signs that further hefty interest rate hikes are unlikely.
• Annual consumer price inflation (CPI) cooled to 10.1% last month, the lowest reading since September, the Office for National Statistics (ONS) said on Wednesday. Economists polled by Reuters had forecast that the annual CPI rate would drop to 10.3% in January, moving further away from October's 41-year high of 11.1% but continuing to squeeze households' living standards.
• Despite the fall, inflation remains higher than in the United States or the eurozone, and many forecasters think it will stay higher as a result of Britain's acute labour shortages and other constraints on the economy such as Brexit.
• Earlier this month, the BoE said it saw signs that the surge in consumer prices had turned a corner and it suggested it was close to ending its run of interest rate hikes.
• Prices of services, which are also in the BoE's spotlight, slowed their rise in January, increasing by an annual 6.0% compared with 6.8% in December. The ONS said transport and hospitality prices helped to drag down inflation last month. Economists said the numbers added to signs that inflation was on course to fall further from its peak last year but could also be heralding the recession expected for Britain's economy in 2023.

(Source: Reuters)

• U.S. household debt jumped to a record $16.90Trn from October through December last year, the largest quarterly increase in 20 years, as mortgage and credit card balances surged amid high inflation and rising interest rates, a Federal Reserve report showed on Thursday.
• Household debt rose by $394Bn last quarter and is now $2.75Trn higher than just before the COVID-19 pandemic began. Mortgage debt increased by $254Bn to $11.92Trn at the end of December. Meanwhile, credit card balances increased by $61Bn in the fourth quarter while auto loan balances rose by $28Bn, the report said.
• Much of the rise in overall debt can be attributed to a tumultuous 2022 in which the U.S. central bank raised its benchmark interest rate from near zero last March to more than 4% by the end of December, the fastest pace of monetary tightening since the early 1980s, as it fought to quash an inflation rate that had surged to a 40-year high.
• Delinquency rates rose too for credit cards, auto loans, and mortgages, although the overall share of debt in arrears by more than 90 days remains below pre-pandemic levels for now. However, younger borrowers appear to be struggling more to make repayments for both credit card and auto loans.
• "Although historically low unemployment has kept consumer's financial footing generally strong, stubbornly high prices and climbing interest rates may be testing some borrowers' ability to repay their debts," said Wilbert van der Klaauw, an economic research advisor at the New York Fed.

(Source: Reuters)

• For January 2023, the All-Jamaica Consumer Price Index (CPI) decreased by 0.6% when compared to the previous month. However, the point-to-point inflation rate for the month was 8.1%, which indicates that inflation has been decelerating over the last two months.
• For January, the decline in monthly inflation was largely driven by the 2.4% decrease in the index of the ‘Housing, Water, Electricity, Gas and Other Fuels’ division and a 0.9% decline in the heaviest weighted division ‘Food and Non-Alcoholic Beverages’ division. The main contributor to the movement in the ‘Housing, Water, Electricity, Gas, and Other Fuels division was lower electricity rates. The decline in the ‘Food and Non-Alcoholic Beverages’ was due to a 5.8% decline in the class ‘Vegetables, tubers, plantains, cooking bananas and pulses’ as a result of an oversupply of some agricultural produce.
• These movements, however, were tempered by increases in the index for the divisions; ‘Restaurants and Accommodation Services’, which increased by 1.3%, and the ‘Education’ division, which increased by 1.4%. 
• The All-Jamaica Consumer Price Index (CPI) was 8.1% for the period January 2022 to January 2023. The main contributors to this increase were the divisions ‘Food and Non-Alcoholic Beverages’, which moved up by 12.7%, ‘Restaurants and Accommodation Services’, which increased by 15.8%, and ‘Personal Care, Social Protection and Miscellaneous Goods and Services up by 7.7%
• On February 20, 2023, the BOJ will have its monetary policy meeting and we anticipate that the bank will continue to hold the rate steady due to the fact that at the bank’s previous meetings, it was deemed appropriate to pause the policy rate increases and watch the pass-through effects on deposit and loan rates.

(Source: STATIN)

• The Government is proposing to spend a total of $1 trillion for the 2023/24 fiscal year. This represents Jamaica’s largest budget in history. Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, made the disclosure as he tabled the Estimates of Expenditure in the House of Representatives on Tuesday, February 14.
• Clarke said the funds are allocated across the main expenditure categories and is comprised of non-debt recurrent expenditure of $665.7 billion, capital expenditure of $75.3 billion, and debt servicing of $280.6 billion. Included in the non-debt recurrent expenditure are allocations to implement the second year of the three-year public-sector compensation restructure and allocations to operationalise the Independent Fiscal Commission.
• Clarke informed that the largest single item of expenditure is the amount of $338 billion for wages and salaries, which includes provisions for the second year of implementation of the public-sector compensation restructuring.
• Debt service at 9.5% of GDP, which reflects amortisation and interest payments, mirrors action taken over prior years to reduce the debt burden. With the tabled debt service services structure, Debt to GDP ratio is projected to be down to about 74.2% at the end of 2023/2024 fiscal year.
• Additionally, Central Government revenue and grant inflows are estimated at $897.6 billion, which, alongside the above-the-line expenditure of $887.7 billion, will generate the required fiscal balance surplus of $9.9 billion or 0.3% of GDP, consistent with fiscal rules.
• The capital expenditure programme for Public Bodies is budgeted at $75.9 billion or 2.6% of GDP, with the National Housing Trust, Clarendon Alumina Production, and National Water Commission accounting for 68% of the capital expenditure.

(Source: JIS News)

• Last week, the local media reported that the government had reached an agreement to authorize an increase in contributions to the National Insurance Board (NIB), the entity that administers the country’s social security system.
• Currently, the total contribution per employed person is 9.8% of salary, with 3.9% coming from the worker and 5.9% from the employer, while self-employed persons contribute 8.8% of their incomes.
• Five years ago, an actuarial assessment of the system with the technical assistance of the International Labour Organization concluded that contributions should be raised immediately to ensure the medium-term viability of the social programs towards 11.8%, of which 8.05% should go to underwrite pension benefits. The report also recommended 200bp increases to contributions every two years until 2036, when they should reach 23.8%.
• Myles LaRoda, minister of state in charge of the NIB, warned that in the absence of a contribution adjustment, the NI Fund would lose $95Mn this year, a situation that he considered “unsustainable”. He indicated that NIB will pay some $27Mn each month in pensions to 44,000 citizens while it collects $23Mn. That is a $48Mn deficit in pensions alone, with the other benefits (unemployment, disability, etc.) making up the rest of the imbalance.
• LaRoda went on to say that contribution hikes are unavoidable given the increase in life expectancy, especially since there has been only one adjustment in the NIB rate during the almost five decades of its existence. The pension system has been in deficit since 2016 and said imbalance has been $276Mn between 2019 and 2021 alone. Under the current parameters, the system will exhaust its reserves by 2028.
• Although the NIB rate increase is a politically sensitive issue, it is believed that it is a much-needed policy move so an official confirmation should be made public in the coming days or weeks.

 (Source: Oppenheimer)

• Brazil's economic activity increased by 2.9% in 2022, according to a central bank index released on Thursday, boosted by the services sector which defied earlier predictions of mild growth, but with recent months' performance showing a loss of momentum.
• After starting the previous year with a forecast of a 0.3% expansion for the Brazilian economy in 2022, private economists surveyed weekly by the central bank now project 3% growth in 2022, on the back of resilient services activity and a stronger labour market.
• The IBC-BR economic activity index, a leading indicator of gross domestic product, rose 0.29% in December from November on a seasonally adjusted basis, surpassing the 0.1% growth forecast by analysts in a Reuters poll. Compared to the same month in 2021, the increase was 1.42%.
• The annual growth of Latin America's largest economy was also aided by increased government spending by former President Jair Bolsonaro, who boosted social expenses ahead of a presidential election.

(Source: Reuters)

• Avian flu has reached new corners of the globe and has become endemic for the first time in some wild birds that transmit the virus to poultry, according to veterinarians and disease experts, who warn it is now a year-round problem.
• Reuters spoke to more than 20 experts and farmers on four continents who said the prevalence of the virus in the wild signals that record outbreaks will not abate soon on poultry farms, ramping up threats to the world's food supply. They warned that farmers must view the disease as a serious risk all year instead of focusing prevention efforts during spring migration seasons for wild birds.
• The United States, Britain, France, and Japan are among the countries that have suffered record losses of poultry over the past year, leaving some farmers feeling helpless. The virus is usually deadly to poultry, and entire flocks are culled when even one bird tests positive.
• "It's a new war," said Bret Marsh, the state veterinarian in the U.S. state of Indiana. "It's basically a 12-month vigil." Indiana lost more than 200,000 turkeys and other birds over the past year, while total U.S. deaths top 58 million birds, according to U.S. government data, surpassing the previous 2015 record.
• Egg prices set records after the disease wiped out tens of millions of hens last year, putting a staple source of cheap protein out of reach to some of the world's poorest at a time the global economy is reeling from high inflation.
• That being said, this avian flu outbreak and the resulting decline in birds may bode well for other segments of the protein industry. Beef producers like Marfrig may experience an increase in demand as consumers seek alternatives to poultry.

(Sources: Reuters & NCBCM Research)

• Sales at retailers rose far more than expected in January as consumers persevered despite rising inflation pressures. 
• Advance retail sales for the month increased 3%, compared with expectations for a rise of 1.9%, the Commerce Department reported Wednesday. On a year-over-year basis, retail sales increased 6.4%, which was exactly in line with the consumer price index move reported Tuesday.
• Inflation, as gauged by the consumer price index, accelerated by 0.5% in the first month of the year, the Labor Department announced Tuesday. The sales report indicates that even with elevated inflation pressures, consumers continued to spend.
• The data comes as the Federal Reserve is grappling with rising prices that appear to be abating but are still well ahead of the central bank’s 2% annual target. There’s evidence that the increases are having an impact, though inflation remains persistent and could be aggravated by the economic reopening in China and rebounding growth across Europe.

(Source: CNBC)

• Radio Jamaica Limited (RJR) recorded a net profit of $381.38Mn for the third quarter that ended December 31, 2022, representing a 252.8% y-o-y increase in profitability. Additionally, the company’s bottom line for the nine months increased by 34.0% to $329.1Mn when compared to the same period in 2021. This result was bolstered mainly by a Bargain Purchase Gain of $434Mn arising from the amalgamation of RJR and 1834 Investments.
• Revenues for the quarter declined by 0.2% yoy to $1.45Bn due mainly to decreases in the Audio/Visual division of $18Mn (-2.9%) and in the Audio division of $4Mn (-1.7%), which was offset by an increase of $19Mn (3.1%) in the Print and Online Division. The nine-month reported revenue was $4.19Bn representing a 2.8% decline relative to the nine months ending December 2021. The Group continued to experience softness in the overall advertising market as businesses continued to be impacted by challenging global and local economic conditions.
• Administrative and selling expenses for the nine months totalled $1.85Bn or 2.2% more than the $1.81Bn for the corresponding period of 2021. Admin costs were higher largely due to increased depreciation charges relating to infrastructure upgrades, 1834 operating costs for December 2022 and one-off consultancy costs. Elevated sales costs resulted from higher distribution-related costs. 
• RJR stock price has decreased by 18.4% since the start of the calendar year. The stock closed Tuesday’s trading session at $1.89 and currently trades at a P/E of 12.9x, which is above the Main Market average of 12.2x.
• RJR has been making continued progress in its digital transformation. The Broadcast division has installed new NextGen TV transmission in Kingston and St. James and continues to expand Over The Air coverage islandwide for the proper functioning of HD TV services. This will improve the quality of their content, making RJR the preferred choice for audio/visual, print, and online services, ultimately driving revenues.

(Sources: JSE & NCBCM Research)