• On Tuesday, October 8, Dr. the Hon. Nigel Clarke, Minister of Finance and the Public Service, presented the First Supplementary Estimates for the fiscal year 2024/25 in the House of Representatives. These estimates outline an increase in total government expenditure and payments of approximately $40.7Bn, which will be funded mainly through additional projected revenues and grants from both non-tax and tax sources.
• Clarke advised the House in his presentation that the increased expenditure is entirely due to recurrent budgetary expenses, where both debt and non-debt expenses have risen.
• Recurrent programme expenditures increased by $31.3Bn, reflecting an additional $11.8Bn, to initiate post-Hurricane Beryl recovery. There was also an increase in Shared Prosperity through Accelerated Improvement to our Road Network (SPARK) Project. The increased provisions are for designing, ordering pipes and other preparatory activities. Wages and salaries are also slated to increase by $11.6Bn, primarily due to higher than originally programmed third-year costs under the implementation of the restructured public-sector compensation system. Additionally, interest payments are estimated to be $9.6Bn higher than originally budgeted, reflecting increased interest payments on the domestic debt.
• The increased recurrent expenditure is partially offset by a $12.1Bn reduction in capital expenditure. The reduction in capital expenditure reflects a drop in the contingency provision for capital programs due to post-Beryl spending and preparations for the SPARK programme.
• The Minister emphasised that the hurricane significantly influenced these adjustments, leading to deviations in macroeconomic indicators from those expected during the budget preparation. The most notable change is the projected real GDP growth, which is now estimated to decline from a 1.8% expansion to a contraction of 0.2% for the fiscal year.

(Source: JIS)

• Gaming and lottery company Supreme Ventures Limited (SVL) has retained a 'good' credit rating from the Caribbean Information and Credit Rating Services (CariCRIS).
• SVL’s corporate credit rating was reaffirmed at CariA (Local Currency Rating) and CariA- (Foreign Currency Rating) on the regional rating scale and jmAA- (Local Currency Rating) and jmA+ (Foreign Currency Rating) on the Jamaica national scale.
• The regional scale local currency rating reflects the obligor's strong creditworthiness relative to other borrowers in the Caribbean. Meanwhile, the national scale local currency rating indicates high creditworthiness compared to other borrowers in Jamaica.
• CariCRIS has given the ratings a stable outlook, indicating its expectation that the Group will sustain strong financial performance, with ongoing profitability and robust debt protection metrics. This outlook is bolstered by the proactive execution of strategic growth initiatives aimed at enhancing revenue generation across SVL’s core business areas, even amidst increasing operating expenses. Furthermore, favourable economic conditions in Jamaica, the Group's main market, combined with expansion initiatives in Ghana and Guyana, are anticipated to further enhance performance over the next 12 to 15 months.
• An upgrade of the Government of Jamaica’s (GOJ’s) credit rating, which would enhance the overall credit risk profile; an increase in earnings from operations in Guyana to over 15% of SVL’s annual profits; and sustained revenue growth of more than 12% over the next 12 to 18 months are all factors that could result in a rating upgrade.
• However, the downside risks to the rating include a decline in the GOJ’s credit rating within the next 12 to 15 months, a reduction in SVL’s revenue by more than 12%, and a breach of financial covenants.

 (Source: Caricris)

• Trinidad And Tobago (T&T) is in advanced negotiations to acquire the gas-rich Loran field from Venezuela, Energy Minister Stuart Young has revealed.
• The Loran-Manatee cross-border reservoir was discovered in 1983 and is estimated to contain ten trillion cubic feet (tcf) of natural gas. Loran, located on Venezuela's side of the border, is said to comprise 7.3 tcf of gas, while Manatee, situated on T&T's side, is estimated to hold 2.7 tcf.
• On August 16, 2010, the governments of Trinidad and Tobago and Venezuela executed a unitisation agreement to explore and develop the Loran-Manatee field. However, by government-to-government agreement dated October 15, 2019, the unitisation agreement was terminated, separating the development of the Manatee field from the Loran field.
• During the 25th anniversary and restructuring event of Atlantic LNG on September 27, 2024, Trinidadian Prime Minister Dr Keith Rowley mentioned ongoing negotiations with Venezuela regarding the Loran gas field. 'And, of course, Minister Young will tell you quietly if you talk to him that the conversations about Loran, which is 73% on that very same field, to use the same infrastructure that brings forward the Manatee portion, that discussion is well advanced,' Rowley said.
• Furthermore, in July, Shell Trinidad and Tobago Ltd (Shell), a subsidiary of Shell plc, announced that it had taken a final investment decision (FID) on the Manatee project.
• 'That work is far advanced now, and it holds out for us the prospect of bringing gas here to at least maintain the levels which we are now because if we don't add new gas to the mix coming in, we are not only talking about decline but even holding our production where we are now-we need a strong stream of gas coming in to maintain the levels at which we are now. Manatee does that for us,' Rowley said.
• Overall, these energy projects will help meet the increasing demand for natural gas globally, while also addressing the energy needs of Trinidad and Tobago given its declining energy production. Real GDP growth in T&T is forecasted to come in at 2.1% in 2024 and 2.0% in 2025, down from Fitch Solutions’ 2023 estimate of 2.5%. The growth will be supported by a strong non-energy sector given the continued declines in the energy sector. As such, as these energy projects come on stream, T&T could grow beyond the 2.0% forecasted for 2025.

(Sources: Trinidad Express Newspaper & NCBCM Research)

• China's export growth slowed sharply in September while imports also unexpectedly decelerated, undershooting forecasts by big margins and suggesting manufacturers are slashing prices to move inventory ahead of tariffs from several trade partners. Export momentum had been one bright spot for the Chinese economy, which has struggled to gain traction due to weak domestic demand and a property market debt crisis, adding to the urgency for stronger stimulus.
• Outbound shipments from China – the world's second-largest economy – grew 2.4% year-on-year last month, the slowest pace since April, customs data showed on Monday, missing a forecasted 6.0% increase in a Reuters poll of economists and significantly below the 8.7% rise recorded in August.
• Imports edged up 0.3%, missing expectations for a 0.9% rise and softer than the 0.5% growth previously. The weak data does not bode well for exports in coming months as just under a third of China's purchases are parts for re-export, particularly in the electronics sector.
• China's overall trade surplus narrowed to $81.71 billion in September from $91.02 billion in August and missed a forecast of $89.80 billion. Manufacturing activity shrank sharply in September, according to a recent factory owners' confidence survey, with new export orders falling to their worst in seven months.
• Analysts have attributed previous months' strong export performance to factory owners slashing prices to find buyers. "Export growth in the fourth quarter is still likely to remain positive, but in the context of slowing external demand, the downside risk of exports is large," said Wang Qing, chief macro analyst at Oriental Jincheng, adding that manufacturing activity was way below the average for the last 10 years.

(Source: Reuters)

• Countries are likely to default more frequently on their foreign currency debt in the coming decade than they did in the past due to higher debt and an increase in borrowing costs, S&P Global Ratings warned in a report on Monday.
• Sovereigns' credit ratings overall have also weakened globally in the past decade. The report's findings are a stark warning as the world exits a punishing round of sovereign debt defaults - even as wealthy creditor nations said earlier this year that the risk of a debt crisis that has weighed on the world was beginning to recede.
• "These factors quickly create liquidity challenges as access to financing dries up and capital flight accelerates," the report said. "In many cases, this constitutes the tipping point where liquidity and solvency constraints become problematic for a government."
• The COVID-19 pandemic in 2020 strained state finances, and there were seven instances of countries defaulting on their foreign currency debt - Belize, Zambia, Ecuador, Argentina, Lebanon and Suriname twice. A spike in food and fuel prices after Russia's February 2022 invasion of Ukraine piled on more pressure, and eight more countries defaulted in 2022 and 2023, including both Ukraine and Russia.
• The combined number of defaults since 2020 amounts to more than a third of the 45 sovereign foreign currency defaults since 2000. S&P Global Ratings analysed defaults over the past two decades and found that developing countries are now relying more heavily on government borrowing to ensure foreign capital inflows. But when that reliance was paired with unpredictable policies, a lack of central bank independence and shallow local capital markets, trouble repaying often followed.
• Higher government debt and fiscal imbalances prompted capital flight, which in turn intensified balance-of-payment pressures, depleted foreign exchange reserves and eventually cut off their ability to borrow - essentially a doom spiral that led to default. It also warned that debt restructurings are taking significantly longer now than in the 1980s - with big consequences.

(Source: Reuters)

• Driven by a reduction in cost of sales, Express Catering Limited (ECL) reported a net profit of US$1.01Mn for its first quarter ended August 31, 2024, a 19.7% increase relative to the US$843.11K recorded in the prior period.
• During the period, revenue grew by 1.2% to US$6.48Mn despite a 7.9% (or 56,916) decline in passenger traffic at Sangster International Airport. The passage of Hurricane Beryl, resulted in the slowdown in passenger traffic during the quarter. The company expects a recovery, with increased travel towards the end of 2024.
• Additionally, ECL implemented price increases across most offerings in August 2024, contributing to better margins and improving its Cost of Sales (COS) ratio by 2.82 percentage points to 29.96%. ECL expects an additional 1.5% improvement in the COS ratio in the following quarter as the full impact is realised. Overall, COS decreased by 7.51% (or $157.53K) to US$1.94M, resulting in a 5.5% gross profit improvement to US$4.54Mn.
• Administrative expenses for the quarter declined by 13.2% to US$1.85Mn but was partially offset by an 11.4% increase in salaries and wages due to the 15.4% increase in the national minimum wage on June 1^st, 2024. However, savings in occupancy costs helped mitigate some of the cost pressures from salaries.
• During the quarter, ECL resumed its dividend payments, and moving forward, the company expects continued growth fuelled by the anticipated rise in visitor arrivals with the addition of over 1000 new hotel rooms in 2024.
• ECL’s stock price has decreased by 15.0% since the start of the calendar year. The stock closed Thursday’s trading session at $3.40 and currently trades at a P/E of 21.4x, which is above the Junior Market Average of 17.7x

(Sources: JSE and NCBCM Research)

• Jamaica has made significant strides in positioning its spice industry, particularly ginger, turmeric and pimento, on the global stage. Through the five-year United States Department of Agriculture (USDA) Food for Progress Jamaica Spices Project, which began in 2022, key milestones have already been achieved, laying the groundwork for the future of the country’s spice sector.
• Speaking at a Jamaica Information Service (JIS) Think Tank, on October 9, Chief of Party, USDA Food for Progress Jamaica Spices Project, Dr. Ronald Blake, said that six foundational studies along with research with key partners were conducted during the first year of the Project, providing critical empirical data.
• “For the first time, we have empirical evidence that shows that a particular Jamaican product is the best in the world,” said Dr. Blake, noting that a test was conducted on the Jamaican ginger by Rutgers’ Food Innovation Center, one of the world’s leading research institutions.
• Dr. Blake further noted that the foundational studies conducted identified gaps in the spices sector and outlined necessary interventions that would be required to strengthen its international presence.
• The USDA Food for Progress Jamaica Spices Project has, so far, put 157 acres of new production (ginger, turmeric, and pimento) on the ground, using clean planting material. The project has also fostered crucial linkages among producers, processors, and exporters, laying the foundation for expanded production and processing capabilities.
• “… We have also worked with some of our major agro processors in Jamaica and we have provided them with grants to upgrade their mechanisation to pull and push back on production,” said Dr. Blake.
• He informed that by doing this, agro processors will be able to transform primary production into secondary and tertiary products for both local and export markets. As the project continues, he indicated that it is now at a place where “we are ready to scale up production, scale up processing and accept new investors”.
• Ginger and turmeric, once considered simple culinary staples, are now recognised as essential inputs in the pharmaceutical industry, particularly in treatments for respiratory illnesses. “… you will never be able to look at a list of superfoods, and ginger and turmeric will not be on it… it therefore means that Jamaica has the capacity to reset its economic viability through ginger and turmeric,” Dr. Blake said.

(Source: JIS)

• Trinidadian Finance Minister, Colm Imbert, and Bernardo Requena, the director representative for CAF-Development Bank of Latin America and the Caribbean in Trinidad and Tobago, signed a US$35Mn investment loan.
• The loan is aimed at enhancing the services of the Export-Import Bank of Trinidad and Tobago (EXIMBANK) to better serve a broader range of clients, particularly Small and Medium Enterprises (SMEs), a release from the Finance Ministry stated.
• The facility is expected to benefit more than 100 SMEs in Trinidad and Tobago, providing a significant boost in financing to help grow their operations and expand into new markets, according to the Ministry of Finance.
• 'The credit facility will secure US$35Mn in additional funding to expand EXIMBANK's financial services and support to SMEs and emerging sectors and position them to better compete in local, regional and international markets. This initiative is tied to EXIMBANK's 2022-2026 Strategic Plan and focuses on increasing access to credit and innovative financial solutions for SMEs across focused sectors, including the creative industries, ICT and renewable energy,' it stated.
• 'The financing will help businesses invest in plant upgrades, digital transformation and technology deployment, as well as product quality improvements to position them for export growth and long-term sustainability,' the Finance Ministry stated.
• Speaking at the signing ceremony, Imbert said this enhanced financing option will empower businesses to innovate, compete globally and contribute to economic growth. 'This collaboration with CAF will allow the EXIMBANK to expand its support to SMEs, equipping them with the financial tools needed to grow their operations and contribute to the national economy.
• Furthermore, 'this partnership is aligned with CAF's mission to build resilient, innovative and sustainable economies across Latin America and the Caribbean through agile and flexible financing options,' Requena said.

(Source: Trinidad Express Newspaper)

• The Panama Canal’s 2024-25 cruise season officially commenced on Tuesday, October 8, 2024, and is expected to witness over 225 ship transits throughout the season. This should help to support the steady growth of Panama’s economy through tourism activities and its spillover effects.
• According to a press release, this repositioning voyage marks the beginning of over 225 expected transits through the Panama Canal during the season. Albano G. Aguilar, a specialist in market analysis and forecasting at the Office of Corporate Affairs, said that “an increase in transits is expected this fiscal year due to the continued demand for vacation experiences, which still shows no signs of slowing down.”
• “Crossing from one ocean to the other through a fast and safe route like the Panama Canal is also a great attraction for the cruise industry because of the wonder that our operation represents,” said Panama Canal Administrator Ricaurte Vásquez Morales.
• This season, major cruise lines like Norwegian, Carnival, and Royal Caribbean continue to offer full and partial Panama Canal transits, while smaller ships such as Le Bellot and National Geographic Quest are also expected. Fourteen cruise ships, including the World Explorer, Sapphire Princess and Queen Anne, will transit the canal for the first time.
• This fiscal year, 54 Neopanamax passenger ships are expected to transit the Panama Canal, including nine of the largest ever, such as the Norwegian Bliss, Joy and Encore. Inaugural transits of other Neopanamax ships, including the Sapphire Princess, Crown Princess, Queen Anne, Grand Princess and Nieuw Statendam, are also anticipated.
• During the 2022-23 season, the canal recorded 210 Panamax and 41 Neopanamax cruise transits. For the 2023-24 season (through July), 201 transits have been logged, including 42 Neopanamax vessels. The Panama Canal cruise season runs annually from October to May.

(Source: Cruise Industry News)

• The pace of price increases over the past year was higher than forecast in September, while jobless claims posted an unexpected jump following Hurricane Helene and the Boeing strike, the Labour Department reported Thursday.
• The consumer price index, a broad gauge measuring the costs of goods and services across the U.S. economy, increased a seasonally adjusted 0.2% for the month, putting the annual inflation rate at 2.4%. Both readings were 0.1 percentage points above the Dow Jones consensus.
• The annual inflation rate was 0.1 percentage points lower than August and is the lowest since February 2021. Excluding food and energy, core prices increased 0.3% in the month, putting the annual rate at 3.3%. Both core readings were also 0.1 percentage points above forecast.
• Much of the inflation increase — more than three-quarters of the move higher — came from a 0.4% jump in food prices and a 0.2% gain in shelter costs, the Bureau of Labor Statistics said in the release that offset a 1.9% fall in energy prices.
• A separate report Thursday showed weekly jobless claims hitting a 14-month high, indicating potential softness in the labor market despite the big jump in nonfarm payrolls in September. However, most of the surge could be tied to the hurricane and strike. Goolsbee said the data is largely in line with Fed expectations and shouldn’t be viewed in isolation as having an outsized influence on policy.
• The jobless claims figures follow the damage from Hurricane Helene, which struck Sept. 26 and impacted a large swath of the Southeast. Florida and North Carolina, two of the hardest-hit states, posted a combined increase of 12,376, according to unadjusted data. A strike by 33,000 Boeing workers also could be hitting the numbers. Michigan had the largest gain in claims, up 9,490 on the week.

(Source: Reuters)