• The government is currently formulating the first 2021/22 supplementary estimates through which it will seek to address critical needs emerging in Jamaica since the approval of this year’s $830.8Bn Budget.. Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, has said that these priorities include expenditure pressures brought on by the rise in the intensity of the COVID-19 pandemic. The first supplementary budget is anticipated to be tabled by the end of September 2021. 
• This first supplementary budget will address crucial financing requirements of the health sector, which are significant, as the government continues its efforts to reduce the health impact of the pandemic on the population. It will also address more targeted support for vulnerable populations, among many other areas of acute expenditure needs at this time. 
• The decision to formulate the supplementary budget comes against the background of robust revenue outturns recorded for the first four months of the fiscal year, ending July 31. Revenues exceeded budgeted inflows by $17.3Bn. This was among the factors spurring the primary balance surplus above the budgeted $26.4 billion target over the period. 
• The robust revenue performance reflects the much higher than anticipated GDP growth in the June quarter, which the Planning Institute of Jamaica estimated was 12.9% year over year, as the economy rebounded from its 2020 lows aided by the relaxation of containment measures and recovery in our major trading partners. 
• However, the Minister pointed out that while the government’s actual spend for the period was $7.3Bn lower than programmed, an underperformance of expenditure at a point in time does not reflect a reliable source of fiscal savings, as the expenditure may simply be delayed”. 
• If fiscal performance remains inline or above projections, the GOJ could realize a fiscal and primary surplus equivalent or better than the current 0.3% and 5.6% forecasts, respectively. However, tighter COVID-19 restrictions and their adverse impact on business operating hours, corporate profits and hence income tax payments, as well as greater COVID-19 related expenditures are major downside risks to this.

(Source: JIS News & NCBCM Research)

• Mexico has begun a process of refinancing state-owned Petroleos Mexicanos’s debt, after the nation received a transfer of about $12 billion from the International Monetary Fund. 
• President Andres Manuel Lopez Obrador said Monday that refinancing had begun, and restated that he wants to use newly issued IMF reserves to pay debt, but that he couldn’t provide further details. His spokesman Jesus Ramirez confirmed to Bloomberg News that Pemex’s debt is being refinanced. 
• The government is considering whether the $12 billion in IMF reserves could be fully or partially used to pay off Pemex’s debt, according to a person with knowledge of the matter who wasn’t authorized to speak publicly about the topic. 
• AMLO, as the president is known, has prioritized aid to Pemex, seeking to reduce the company’s borrowing costs and free up cash to invest in exploration and production following a decade and a half of output declines. The company currently has $115 billion in debt. 
• If these funds are used to repay a portion of Pemex’s debt it would help to improve the company’s solvency and liquidity position. This will in turn create more room for upstream investment in exploration and production activities to replenish reserves.

(Source: Yahoo Finance & NCBCM Research)

• Surging government revenues amid a swift economic recovery in the Dominican Republic will help narrow the fiscal deficit over the coming quarters, particularly as the government reins in expansionary measures. 
• Fitch Solutions has revised its fiscal deficit forecasts to 4.5% of GDP in 2021 and 4.0% in 2022, from 6.9% and 6.0% previously, due to its more constructive outlook for real GDP growth and revenues. 
• While President Luis Abinader’s government has delayed plans to propose fiscal consolidation measures, the country’s slimmer fiscal deficits will likely allow the government additional flexibility to avoid large-scale tax increases or spending hikes in a reform package.

(Source: Fitch Solutions)

• Britain must relax its new immigration rules to allow more foreign workers and ease labour shortages caused by the coronavirus pandemic and Brexit, a leading employers group, the Confederation of British Industry, said on Monday. 
• Since COVID restrictions began to ease earlier this year companies have complained about the lack of workers especially in hospitality, food processing and logistics, which has led to gaps on supermarket shelves and restaurant closures. 
• Britain's government has been reluctant to ease its immigration rules. Last month the business ministry rejected a call from retailers and logistics firms for an exemption for truck drivers, and said the industry should improve pay and conditions instead. 
• The British Government has called on employers to train more British people to fill vacancies however, this may take up to two years and as such cause disruptions in the Labour market in the short-term.

(Source: Reuters and NCBCM Research)

• Oil prices fell on Monday after Saudi Arabia's sharp cuts to crude contract prices for Asia revived concerns over the demand outlook. 
• Brent crude futures fell 39 cents to settle at $72.22 a barrel. U.S. West Texas Intermediate crude was last down 40 cents at $68.89 a barrel. 
• State oil group Saudi Aramco notified customers in a statement on Sunday that it will cut October official selling prices (OSPs) for all crude grades sold to Asia, its biggest buying region, by at least $1 a barrel. 
• The price cuts were larger than expected, based on a Reuters poll of Asian refiners. Global oil supplies are increasing as the Organization of the Petroleum Exporting Countries and its allies, a grouping known as OPEC+, are raising output by 400,000 barrels per day (bpd) each month between August and December. This is expected to put downward pressure on oil prices for the rest of 2021.

(Source: Reuters)

• Sygnus Credit Investment Ltd reported a 154.8% year over year increase in net profit to US$5.03Mn for its financial year ending June 30, 2021, on the back of an increase in net interest income and fair value gains from financial instruments.
• The results were driven by new investment origination activity across the Caribbean at attractive yields, continued proactive credit risk management and growth in its private credit investment portfolio to US$82.80 million. Sygnus’ capital raise of US$27.1 million via additional public offering (APO) of 249,887,900 ordinary shares earlier this year provided it with additional capital to expand its credit portfolio.
• Expenses rose by 9.6% largely owing to higher management and corporate services fees related to higher assets under management, first time performance fees and some one-off expenses. Core activities resulted in an efficiency ratio of 42.0% for FYE Jun 2021, vs 32.7% for FYE Jun 2020. First-time payment of a performance fee, accounted for 5.4 percentage points of the 42.0%.
• While the pandemic continues to evolve, management indicated that it remains committed to proactively managing the risk of its private credit portfolio. It also expects to maintain a strong balance sheet with a high asset coverage ratio and low leverage; as well as deepen current partnerships and build new relationships across the Caribbean to widen its regional footprint and grow the business well beyond the duration of the COVID-19 pandemic.
• SCI’s JMD stock price has risen by 1.3% since the start of the year and closed Tuesday’s trading session at a price of $16.45 per share. At this price, the stock trades at a P/E ratio of 10.5x earnings, which is below the Main Market financial sector average of 14.9x. On the other hand, USD share price is unchanged year to date with the P/E at 10.7x, which is above the USD sector average of 7.7x.

(Source: SCI Financials)

• In its July Economic Bulletin, the Central Bank of Trinidad and Tobago (CBTT) said: 'The short-term economic outlook for Trinidad and Tobago will be directly impacted by the virus' path and the domestic response’.
• 'If sustained, the gradual relaxation of restrictions on movement and business activity from August could see, by the end of 2021, a meaningful recovery of non-energy output lost during the first 2½ quarters of the year'.
• The price of the two commodities that drive T&T’s energy sector recovered for the first seven months of 2021, bolstered by favourable demand conditions on account of the re-opening of several economies alongside crude oil production cuts. West Texas Intermediate (WTI) crude oil price increased by 69.5%year-on-year over the first seven months of 2021 to an average of US$63.46 per barrel, while natural gas prices rose by 81.5% to an average of US$3.26 per million British Thermal Units (mmbtu).
• 'While some improvement is anticipated in export earnings as the country benefits from the ascent in international energy prices, continued efforts to shore up domestic energy output will be critical'.

(Source: Central Bank of Trinidad & Tobago)

• With the excitement brought on by the string of petroleum discoveries offshore Guyana, the country is already a coveted investment destination. President, Dr. Irfaan Ali plans to make the environment even more attractive to foreign direct investors.
• The government intends to add some 500 megawatts of new power, using the gas-to-energy and Amaila Falls hydropower projects, and several small-scale renewable energy projects, before the end of its term. The projects are intended to cut the cost of power by half and improve the reliability of the electricity supply to businesses and households.
• The government is continuously working to improve the ease of doing business, showing investors that local markets are ready for their entry. This would create thousands of jobs, in line with the government’s manifesto promise of opening avenues for persons to provide for their families.

(Source: The Tribune)

• Fitch Solutions expects the Canadian economy will continue to rebound from the COVID-19 pandemic and grow 5.9% in 2021 and 3.7% in 2022. In Q221, real GDP expanded 12.7% y-o-y on a seasonally adjusted basis but contracted 0.3% q-o-q, due to weak exports and a slowdown in residential investment.
• Additionally, a strengthened labour market and looser public health restrictions will underpin 5.3% private consumption growth in 2021 and 4.4% in 2022. In H121, private consumption increased 6.2% y-o-y, and elevated economic sentiment suggests that household spending will remain strong in the coming months. As businesses rehire more workers to fulfill higher demand, Fitch expects that unemployment will fall to 6.8% by end-2021, from 7.5% in July, raising household incomes.
• Furthermore, in the FY2021/22 budget, the government extended the Canada Workers Benefit and several other stimulus measures to support low-income and unemployed workers, offering additional tailwinds to private consumption. These measures, combined with Canada’s robust COVID-19 vaccine roll out, will sustain a rebound in commercial activity in the short-to-medium term.

(Source: Fitch Solutions)

• Wall Street's main indexes marched on, with the S&P 500 and Nasdaq hitting record highs on Wednesday, as fresh technology stock buying combined with hopes the Federal Reserve would keep the stimulus taps open after weaker-than-expected private payrolls data.
• Technology stocks, which tend to benefit from a low-rate environment, were up 0.5%. Apple Inc rose 1.2% to its second record high this week, and Microsoft Corp, Amazon.com Inc and Google-owner Alphabet Inc all advanced between 0.4% and 1.4%.
• Wall Street's main indexes have hit record highs recently, with the benchmark S&P 500 notching a solid 20.8% gain so far this year as investors shrugged off risks around a rise in new coronavirus infections and hoped for the Fed to remain dovish in its policy stance.

(Source: Reuters)