• British finance minister Kwasi Kwarteng, fresh from sowing turmoil in financial markets with a plan for big tax cuts, heads to Washington this week with International Monetary Fund criticisms of his new policy direction ringing in his ears.
• Kwarteng is due to attend the IMF's semi-annual meeting of global policymakers for the first time since being put in charge of Britain's economy by Prime Minister Liz Truss and tasked with delivering on her promises of ending policy-making "orthodoxy".
• On Sept. 23, Kwarteng made his first fiscal announcement including a controversial plan to scrap Britain's top income tax rate for the highest earners, part of a package of measures he said would speed up sluggish economic growth.
• But the IMF took the rare step of criticising the proposals, saying they could worsen inequality and work at cross-purposes with the Bank of England's drive to tame surging inflation which is the highest among the Group of Seven rich nations.
• In a nod to concerns about the impact of his plans on Britain's public finances, Kwarteng announced on Monday he was bringing forward the date for announcing his medium-term budget plans and independent forecasts on how much they would cost.
• BoE Governor Andrew Bailey is also due to attend the IMF meetings this week, from where he will watch how investors react to the central bank's newly expanded measures to calm financial markets after the turmoil sparked by Kwarteng last month.

(Source: Reuters)

• China's services activity in September contracted for the first time in four months, as COVID-19 restrictions dented already fragile demand and dimmed business confidence, a private-sector business survey showed on Saturday.
• The Caixin services purchasing managers' index (PMI) fell to 49.3 from 55.0 in August as COVID containment measures disrupted supply and demand and restricted national travel.
• An official survey published last week also showed services activity slowing, although its reading remained slightly above the 50-point mark that separates growth from contraction on a monthly basis. China's economy showed signs of improvement in August with faster-than-expected growth in factory output and retail sales but is being held back by protracted COVID curbs and a worsening property slump.
• The Caixin survey showed services companies are grappling with sluggish demand, shrinking production and rising costs, although foreign orders are recovering. The new business sub-index registered the first drop in four months in September, of which the new export business expanded for the first time since December 2021. Input prices have risen every month since June 2020, the sub-index showed, mainly driven by higher raw material and labour costs.
• That led services firms to reduce their payrolls at a sharper rate, with a sub-index for employment at 48.5, in contraction territory for the ninth straight month and down from 48.9 in August. With few signs COVID containment measures will ease in the near term, the market was much less optimistic.

(Source: Reuters)

• Minister of Tourism, Hon Edmund Bartlett has announced that Jamaica has earned US$5.7Bn since reopening its borders in June 2020. The data also shows that the island welcomed over 5Mn visitors over the same period. According to arrivals figures, the announcement follows the destination’s strong tourism recovery efforts that resulted in its best summer ever.
• Since reopening in June 2020, the island has welcomed approximately 5,173,000 visitors, including stopover arrivals and cruise passengers. Tourism is a key driver in the overall economic recovery for Jamaica, as such, the improvement in tourist arrivals augurs well for the economy, lives and livelihoods.
• Earnings from tourism are expected to return to pre-pandemic levels by end-2022 while arrivals should return to 2019 levels by end-2023 and this performance will be boosted by strong investments in the sector and the return of robust cruise demand.
• The island was one of the first destinations to reopen amidst the global coronavirus pandemic through its robust health and safety protocols and World Travel and Tourism Council-approved resilient corridors. These innovative approaches allowed for the safe reopening of borders and travel and tourism activities.

(Source: Caribbean News Now)

• Palace Amusement reported a net loss of $260.68Mn for its financial year ended June 30, 2022, despite seeing revenue growth of 513.6%. This loss was mainly attributed to higher direct and indirect expenses.
• Direct costs increased by 106.6% year-over-year, mainly due to increased business activity in tandem with the reopening of the economy which took place in the second half of the company’s financial year. Specific costs such as Film and Staff costs increased by 446.0% and 70.4%, respectively, resulting in an overall increase in direct costs. Additionally, the 54.3% increase in admin expenses also contributed to higher expenses.
• Going forward, the company should see stronger revenues in FY2023 given that the economy is now fully reopened. The company is expected to see higher revenue in the first half of the current financial year relative to the corresponding period last year which was marred by lockdown measures. Consequently, the company is anticipated to experience better Q1 2022/23 financial performance given its ability to contain cost.
• Palace’s stock price has decreased by 25.15% since the start of the calendar year. The stock closed Thursday's trading session at $800.00. 

(Sources: NCBCM Research and Company Financials)

• Over the past 17 months, there have been numerous defaults marking a collapse in Mexico’s shadow bank or non-bank financial sector.
• A year into the pandemic, Panton, who was then a debt strategist in New York for Stifel, Nicolaus & Co., had warned that the math underlying Crédito Real SAB de CV didn’t add up. Hedge funds and big banks had ignored him, instead backing the company, a rising star of Mexico’s shadow banking industry that borrowed cash from big-time foreign investors and cut smaller loans to low-income people and businesses.
• However, a revision was done in which the microlender admitted that its bad-loan book was 82% larger than it originally disclosed—just the type of issue Panton had cautioned about.
• The revision, combined with an accounting error revealed the same week by a smaller payroll lender called Alpha Holding SA de CV, (AlphaCredit), would eventually lead to the collapse of Mexico's alternative banking sector, a loss of nearly $5Bn for foreign bondholders, and a series of debt restructuring battles in the country's opaque courts, undermining investor confidence in Latin America's No. 2 economy.
• Following this, Unifin, Mexico’s largest shadow lender, defaulted in August 2022—just weeks after its chief executive officer snapped at investors during an earnings call about how healthy the company was.
• The future looks bleak for Mexico’s shadow lenders, according to Rafael Elias, a managing director for fixed income at BancTrust Investment Bank Ltd. The business depends on strong consumer spending, he says, which hasn’t recovered in Mexico since the pandemic.
• For now, investors in AlphaCredit, Crédito Real, and Unifin are hoping for restructuring deals that will pay some portion of the outstanding debt balances on bonds trading for pennies on the dollar. But the process is already proving arduous, with ever-shifting corporate leadership and cases proceeding through both US and Mexican courts.

(Source: Bloomberg)

• Revenue collection in Grenada surpassed projections for the period January to June 2022 while real GDP growth is projected to reach 3.3% by year-end.
• According to a mid-year review prepared by the Ministry of Finance, public finances improved in 2022 with revenue collections for the first 6 months exceeding the target and the comparable period of 2021 by $62.2Mn and $67.4Mn, respectively.
• The improvement in revenue came on the back of the administration’s decision to remove the cap on freight and petrol, as this allowed revenue collection agencies to earn more than what had been projected in the 2022 Estimates of Revenue and Expenditure.
• Notably, the recovery in the economy will continue to support revenues in the form of higher tax collection through wages due to higher employment, increased production, and consumption. Further, as the economy continues to recover, foreign direct investment should also improve bolstering economic output, as well as increasing foreign exchange inflow from pent-up tourism demand.
• Further, a primary surplus including grants of $58.2Mn is estimated for 2022, surpassing the budgeted deficit of $34.2Mn while a modest overall deficit of $1.6Mn is estimated at the end of this year compared to a budgeted deficit of $97.9Mn.

(Source: CARICOM TODAY)

• The Bank of England told lawmakers that several pension funds were hours from collapse when it decided to intervene in the U.K. long-dated bond market last week.
• The central bank’s Financial Policy Committee stepped in after a massive sell-off of U.K. government bonds — known as “gilts” — following the new government’s fiscal policy announcements on Sep. 23.
• The emergency measures included a two-week purchase program for long-dated bonds and the delay of the Bank’s planned gilt sales, part of its unwinding of pandemic-era stimulus.
• The plunge in bond values caused panic, particularly for Britain’s £1.5 trillion ($1.69 trillion) so-called liability-driven investment funds (LDIs). Long-dated gilts account for around two-thirds of LDI holdings.
• Many LDIs are owned by final salary pension schemes, workplace pension plans popular in the U.K. that provide a guaranteed annual income for life upon retirement, based on the worker’s final or average salary.

(Source: CNBC)

• Oil prices held near three-week highs on Thursday, Oct 6 after OPEC+ agreed to tighten global crude supply with a deal to cut production targets by 2 million barrel per day (bpd), the largest reduction since 2020.
• Brent crude futures gained 15 cents, or 0.2%, to $93.52 per barrel by 1340 GMT after settling 1.7% up in the previous session.
• S. West Texas Intermediate (WTI) crude futures rose 14 cents, or 0.2%, to $87.90 after closing 1.4% up on Wednesday, Oct 5.
• The agreement between the Organization of Petroleum Exporting Countries (OPEC) and allies including Russia, a group known collectively as OPEC+, comes ahead of a European Union embargo on Russian oil and will squeeze supplies in an already tight market, adding to inflation.

(Source: Reuters)

• For August 2022, output prices for producers in the Mining & Quarrying industry declined by 0.4%. Similarly, output prices for manufacturers declined by 0.6% for the second consecutive month.
• The decline in the Mining & Quarrying industry was mainly attributed to a 0.4% fall in the index for the major group ‘Bauxite Mining & Alumina Processing’. There was also a decline in the index for the other major group, ‘Other Mining & Quarrying’, which moved down by 0.1%. Meanwhile, the decline in the Manufacturing Industry was attributed to the 2.8% decline in the index for the major group ‘Refined Petroleum Products’.
• Overall, for the period August 2021 – August 2022, the index for the Mining & Quarrying industry increased by 3.2% primarily as a result of an upward movement of 3.0% in the index for the major group ‘Bauxite Mining & Alumina Processing’.  The point-to-point index for the Manufacturing industry moved up by 19.6%, due to increases in the index for the major groups; ‘Refined Petroleum Products’ (50.0%), ‘Food, Beverages & Tobacco’ (14.7%), and ‘Chemicals and Chemical Products’ (8.8%).

(Source: STATIN)

• The Government has decided not to complete the Bank of Bahamas’ rescue by injecting $167Mn in cash to replace a “promissory note” after efforts to recover the latter’s toxic commercial loans proved “trickier” than anticipated.
• The Bahamas International Securities Exchange (BISX) listed institution’s 2022 full-year financial statements, released last week, revealed that the Government has instead agreed to a three-year roll-over or extension to the maturity of the note that had been due for repayment at end-August 2022.
• Simon Wilson, the Ministry of Finance’s financial secretary, explained that it had proven “much more complex” than thought for the Bahamas Resolve to realise and sell the assets that were pledged as collateral to secure the Bank of the Bahamas’ previous delinquent commercial loans.
• The Bahamas Resolve is the special purpose vehicle (SPV), created in 2014, to which the Bank of Bahamas’ toxic commercial credit was transferred to prevent the latter’s collapse and thus facilitate its rescue. To fill the gap created by the transfer, two promissory notes were injected into the bank’s balance sheet, worth $100Mn and $167Mn, respectively, in 2014 and 2018.
• The latter was due for redemption or payout by the Government at end-August, which would have required the promissory note’s replacement with liquid cash provided by the Bahamian taxpayer - the final step in the bail-out. However, the Bank of Bahamas’ annual financial revealed: “The promissory note with a maturity date of August 31, 2022, was extended by three years to August 31, 2025, at 4% fixed interest rate with quarterly interest payments.”
• The maturity extension will give Bahamas Resolve, in particular, as well as the Government extra time and breathing room to realise more funds from selling off the loan collateral. Previous projections have suggested that Bahamas Resolve could realise up to $67Mn from these secured assets, which would substantially reduce the Government and taxpayer’s liability to the Bank of Bahamas down to around $100Mn.

(Source: The Tribune)