Barbados raising BDS$150M

June 19, 2013 by

The Government of Barbados has announced the issue of two bonds, one a debenture and the other Treasury notes to raise BDS$150 million in total, starting on the 24th June.

The debenture which will open on Monday, June 24, 2013 and will be issued at par with a fixed interest rate of 6 7/8% per annum payable on June 30 and December 31 of each year and is targeted to raise BDS$100 million.

The Treasury Notes targets BDS$50 million and will be issued at par with a fixed interest rate of 4 1/8% payable on June 30 and December 31 of each year. The Treasury Notes will be repayable at par on June 30, 2015.

The interest due on both instruments to Pensioners 60 years and over residing in Barbados will not be subject to withholding tax. Non-residents seeking tax exemption must satisfy the Commissioner of Inland Revenue of their status before exemption is granted. However, for all persons resident in the island, the interest from these Debentures will be taxed separately from other income at a rate not exceeding 12½%. These Debentures will be repayable at par on June 30, 2024. The issue will remain opened until the Central Bank advises that it has been fully subscribed.

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Inflation up in May

June 19, 2013 by

Inflation for May as measured by the All Jamaica ‘All Divisions’ Consumer Price Index increased by 0.5 percent, a 0.1 percentage point increase over the 0.4 percent increase recorded for April 2013, this according to a release from the Statistical Institute of Jamaica (Statin).

The CPI movement was influenced by a 0.8 percent increase in prices for ‘Food and Non-Alcoholic Beverages’, the heaviest weighted division in the computation of the Index. The main contributor to the division’s inflation was an increase of 1.3 percent in the index for ‘Vegetables and Starchy Foods’. ‘Transport’, the second heaviest weighted division, recorded a decline, moving down by 0.2 percent. This was primarily because of lower prices for ‘Fuels and Lubricants for Personal Transport Equipment’, particularly petrol, Statin said. The third heaviest weighted division of the CPI, ‘Housing, Water, Electricity, Gas and Other Fuels’, recorded an increase of 0.7 percent. The upward movement in the index for May 2013 resulted in a calendar year-to-date movement of 3.7 percent.

The other divisions that recorded increases were ‘Alcoholic Beverages and Tobacco’ 0.7 percent, ‘Clothing and Footwear’ 0.3 percent, ‘Furnishings Household Equipment and Routine Household Maintenance’ 0.6 percent, ‘Health’ 0.3 percent, ‘Recreation and Culture’ 0.7 percent, ‘Restaurants and Accommodation Services’ 0.3 percent, and ‘Miscellaneous Goods and Services’ 0.4 percent. No movement was recorded for ‘Education and ‘Communication’.

All three regions covered by the survey recorded increases for the period; Greater Kingston Metropolitan Area (GKMA) 0.6 percent, Other Urban Centres (OUC) 0.8 percent and Rural Areas 0.4 percent.

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BOJ offers yet another instrument

June 17, 2013 by

Fast on the heels of an issue of two local certificates of deposit that close on Tuesday, 18 June 2013, Jamaica’s central bank, the Bank of Jamaica, announces the offer of another special money market instrument commencing Thursday, 20 June 2013. The instrument, a 365-day US-Dollar Indexed Note due 2014 and is extended to all primary dealers and commercial banks.

The term sheet will be circulated via electronic mail to these institutions on Wednesday, 19 June 2013. A check with the BOJ did not disclose the terms of the issue other than what has been released but IC Insider gathers that the use of this instrument is to provide an alternative instrument for investment purposes without affecting the demand for foreign exchange. IC Insider can report that at least one big bank is rationing US dollars to $2,000 per day per person.

The central bank says in a release that it will continue to offer its regular 30-day Certificate of Deposit at the current interest rate of 5.75 per cent per annum. In addition, the current offers of variable rate Certificate of Deposits will remain open until Tuesday, 18 June 2013, as originally advised and will continue to monitor conditions in the financial markets and adjust its market operations to maintain stability.

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More tertiary education cost to be borne by students

June 13, 2013 by

The Minister of Education, The Honourable Reverend Ronald Thwaites, in a speech yesterday, indicated that Jamaica has been grossly under spending on early childhood education.

He indicated that for this financial year, the Ministry of Education has allocated 14.6% or just over $11 billion of the education’s Ministry recurrent budget to early childhood and special education. The Minister says that, “It is an investment we cannot put off due to the importance of the early years to the child’s educational development”. He says “It will mean other areas will have to ensure that the majority of that dollar is spent on delivering an effective education product”, Minister Thwaites stressed.

Reverend Thwaites indicated that the move will require sacrifices, “admittedly difficult, from parents and teachers”. It will mean that the cost of tertiary education will be more and more borne by the recipients of it rather than by the State.”

Source: MoneyMasters Ltd press release

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Mixed views from Eastern Carib States

June 13, 2013 by

Business expectations in the Eastern Caribbean states are mixed. That should not be too surprising as the region is in recession with negative inflation for the first three months of the year. In a business survey carried out by the EC Central Bank, 37.4 per cent of the businesses surveyed indicated that they anticipate that general economic conditions would improve in the first half of 2013, while 23.6 per cent expect economic conditions to deteriorate. Of the total, 39.0 per cent expect conditions to remain the same. This resulted in an overall net percentage indicator (NPI) of 13.74 for the region, reflecting the overall positive business sentiment for the first half of 2013. Respondents also expressed optimism when they were asked about the economic climate within their sector.

Survey respondents in five of the ECCU member countries are optimistic about their prospects for the first half of 2013 with positive NPIs being recorded for Grenada (60.0), Montserrat (48.0), Antigua and Barbuda (47.62), St Kitts and Nevis (20.0), and St Vincent and the Grenadines (12.50); while businesses in Saint Lucia (-66.67), Dominica (-36.0), and Anguilla (-18.75), were generally pessimistic about their prospects. 

ECCUlogo150x150Mixed sentiments | While general economic conditions are expected to improve, the sentiments expressed for the key indicators within sectors are mixed. In general, during the January to June 2013 period, businesses expect their sales performance to improve but their profits to deteriorate further relative to the first half of 2012. With respect to overall exports, businesses in six member countries expect an improvement in performance. St Vincent and the Grenadines, Anguilla, Grenada, Montserrat, St Kitts and Nevis and Saint Lucia are optimistic about their exporting prospects during the outlook period while businesses in Dominica expect exports to deteriorate. In Antigua and Barbuda businesses expect their exporting prospects to remain unchanged for the review period. Respondents indicated that they expect the cost of doing business in the ECCU to continue on an upward trajectory. With respect to construction activity performance, sentiments in Anguilla, Grenada, Montserrat and Saint Lucia are optimistic about the outlook period while businesses in Antigua and Barbuda and Dominica expect activity to remain unchanged for the review period. Businesses in St Vincent and the Grenadines expect construction activity to decline.

TRENDS IN BUSINESS SENTIMENTS & CREDIT | An analysis of business sentiments from January 2007 to June 2013 indicates that general business sentiments declined during the period 2007 to 2009, but have fluctuated thereafter. Positive sentiments were expressed for the January to June 2013 outlook period — the first time since January to June 2007.

The trend in sentiments expressed by respondents during the period from January to June 2007 to January to June 2013 reflects one of overall tightening in the terms and conditions for lending over the period with improvements seen in some periods. Sentiments were the lowest during the period July to December with an NPI -82.1 and although still negative, subsequently improved for three consecutive periods. Although the sentiments expressed are still one of overall tightening, an improvement has been seen for the last three survey periods i.e. January to June 2012 to January to June 2013.

The data was adopted from the ECCB.

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BOJ issues 2 new CDs

June 12, 2013 by

Jamaica’s Central bank has just announced the issue of two Special Variable Rate Certificates of Deposit targeted at Primary dealers to augment its liquidity management operations.  The issues which are variable rate instruments are being offered from today Wednesday, 12 June 2013 and will be opened until to Tuesday, 18 June 2013. The instruments are:

  1. A 183-day Certificate of Deposit, for a limited nominal amount of $3.0 billion. The instrument re-prices quarterly at 0.15 percentage point above the three month GOJ Treasury Bill rate existing at the start of each repricing period. The initial coupon for the first three months is 6.77 per cent per annum. This offer is extended to all Primary Dealers and commercial banks, from 12 June 2013 to 18 June 2013.
  2. A 365-day Certificate of Deposit, for an unlimited amount. The instrument re-prices quarterly at 0.23 percentage point above the three month GOJ Treasury Bill rate existing at the start of each re-pricing period. The initial coupon for the first three months is 6.85 per cent per annum. This offer is extended to all Primary Dealers and commercial banks, from 12 June 2013 to 18 June 2013.

This is the second such issue in weeks as the most recent one closed last week Friday and seemed to have delivered a fair amount of foreign currency to the central bank.

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Employment rate stabilised in 2012

June 12, 2013 by

Data from the Statistical Institute of Jamaica (STATIN) showed that the employment remained fairly stable in 2012 compared with 2011. The labour survey done by the government body that collects economic and social data (STATIN) between December 16 to 22 last year showed that there were 1,093,200 persons employed in December last year and 181,600 unemployed, which represented an increase of 4,400 (2.5%) over the 177,200 in December 2011 with the unemployment rate of 14.2 percent a slight increase over the level of 14.1 percent in December 2011.

In December 2012, the unemployment rate was, 10.3 per cent for males and 18.9 per cent for females. In September 2012, 172,900 persons were unemployed. The December data showed that of those employed 619,300 were males and 473,900 females. This showed no significant change compared with 1,083,400 (0.9%) in December 2011. In September 2012, employment was 1,088,200.

Total labour force was 1,274,800 persons in December 2012, comprising 690,300 males and 584,500 females, an increase of 14,200 (1.1%) from 1,260,600 in December 2011. In the previous quarter, September 2012, there were 1,261,100 persons in the labour force.

EmploymentChairVacancy150x150Employment in ‘Hotels and Restaurants Services’ increased by 8,500 (11.9%) from 71,100 in December 2011 to 79,600 in December 2012. During the same period, employment in ‘Manufacturing’ declined by 9,200 (11.2%).

Employment for ‘Professionals, Senior Officials and Technicians’ increased by 21,900 persons (9.8%) between December 2011 (223,800) and December 2012 (245,700). While, employment of ‘Craft and Related Trades Workers’ fell by 10,000 (7.1%).

The unemployment rate among youths (14-24 years) was 37.0 per cent in December 2012. This represented an increase of 3.3 percentage points when compared with 33.7 per cent in December 2011. In September 2012, the rate was 35.3 per cent.

The number of persons outside the labour force decreased by 11,600 (1.5%) between December 2011 (748,800) and December 2012 (737,200).

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Exports surge but trade deficit widens

June 6, 2013 by

The trade deficit for the first two months of this year widened despite exports growing faster than imports. The deficit was US$827 million compared to US$755 million in the similar 2012 period. Imports rose 12.5 per cent or US$127 million to US$1.148 billion from the same period in 2012. The bulk of the increase was occasioned by US$98 million rise in chemicals.

Exports | Grew faster than imports at an increase of 21.2 percent which generated US$321 million inflows, an increase of US$56 million. Mining and quarrying accounted for major part of the increase. But manufactured goods, which fell by US$23 million, prevented a steeper increase in export earnings. The decline may well be a timing difference relating to shipment of  sugar which is mostly exported in the early part of the year. Statin, who released the report, did not say which items resulted in the decline in manufactured goods. Investigations done by IC Insider confirms that in 2012 the sugar industry exported 40,000 tonnes of sugar between January and February at a value of US$37.5 million and this year only 19,130 was shipped in the same period with a value of US$16.6 million, a difference of US$21 million.

KingstonWharves150x150Imports | While imports rose, not all major categories rose as some items fell. Imports of Chemicals rose by US$178 million to US$276 million, due to higher imports of ‘Organic Chemicals’, ‘Plastic in Non Primary forms’, and ‘Medicinal and Pharmaceutical products’. “Food” increased by US$26 million to US$174 million up by 17.3 per cent. “Machinery and Transport Equipment” increased by US$5.7 million or 3.9 per cent to US$153 million this period.  “Mineral Fuels, etcetera” fell by US$89 million or 21.1 per cent and was valued at US$333 million. “Manufactured Goods” also declined by US$3.5 million or 3.5 per cent, and was valued at US$95 million down from US$99 million recorded in the comparable 2012 period.

Traditional Exports | This segment earned US$139 million during 2013 period, a decrease of 3.4 per cent, or US$5 million, due to the decline in earnings from “Manufactured Goods” which fell by 48.6 per cent from US$48 million to US$25 million. There was an increase in “Agriculture” earning US$3.4 million, 73.2 per cent above the US$2 million recorded in 2012. “Coffee” was the commodity which contributed to the overall increase in this category. “Mining and Quarrying” rose by 17.9 per cent, or US$17 million to US$111 million. Alumina earned US$90.3 million, moving up from US$74 million in the comparable 2012 period. “Bauxite” earnings grew by US$1 million or 4.4 per cent to US$21 million.

Non-traditional | Exports of non-traditional commodities earned US$170 million due largely to increases in the groups “Food’, and “Other Non Traditional Exports”.

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CARICOM balance narrows sharply

June 6, 2013 by

The trade balance with the CARICOM region narrowed sharply during the first two months of 2013 as Jamaica imported US$41 million less goods form countries in the region compared with the previous year. Not only did imports enjoy a major decline, exports held up well and was virtually the same as the year before period with a mere marginal decrease of US$0.7 million or 6.5 percent.

The country imported US$98 million worth of goods from CARICOM, a decrease of 29.5 per cent. Expenditure on “Mineral Fuels, etcetera” fell by US$50 million or 51 percent to US$48 million. “Food” grew by US$6.9 million to US$30 million.  “Beverages & Tobacco” were valued at US6 million, roughly the same as in 2012 period, the Statin report on the trade data indicated.

Total exports to the region fell by to US$10 million during the 2013 review period. Exports of domestically produced goods accounted for US$8.8 million, down from US$9.2 million in the comparable 2012 period. Re-exports fell to US$1.5 million. The major groups of domestic exports were “Food”, valued at US$5.2 million, and “Beverages & Tobacco” worth US$1.7 million. These two sub-categories increased by 9.0 per cent and 27.4 per cent respectively.

The trade deficit with CARICOM during February 2013 fell by US$40.3 million to US$ 87.6 million. This was due to decrease importation of “Mineral Fuels, etcetera” during the current review period.

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GOJ: Deficit cut

June 3, 2013 by

The GOJ fiscal deficit for April was cut below projection, as revenues were marginally better while expenses, mainly interest cost, were lower than forecast. The deficit that was projected at $3.46 billion ended up $2 billion better, coming in at $1.43 billion.

Revenue growth | Tax on interest delivered $806 million more than planned, but the early payment of dividends in March by some companies resulted in tax on dividends under performing by $219 million. Special consumption tax brought in $735 million more and motor vehicle licenses accounted for $162 million of the increase and tax on telephone performed better than planned by $122 million.

Rollbackthetax150x150Inflows below | There were areas that underperformed. GCT on local sales was 10 percent less reducing revenues by $666 million, surprisingly education tax was less by $144 million and betting & gaming tax brought in $188 million less than planned. Although travel tax was up 152  percent to $1.27 billion, an increase of $765 million tax on international trade was down $425 million as custom duty brought in $284 million less and Special Consumption tax on imports by $898 million. Tax on international trade may have been down as importers would most likely have brought in goods ahead of the new tax measures.

The government would have been pleased with the revenue performance which was slightly more than projected but which would have been even more had some taxpayers not taken advantage of the long time frame between increased taxes and the implementation of them to minimise their tax liability.

Spending down | Government paid $993 million less on interest or  13 percent less than originally planned and also spent less on wages $228 million and $384 million less on capital expenditure and they repaid $1.7 billion net on loans during the month.

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