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ECFH Closing Price as at December 6, 2018: $4.67

Market News

December 7, 2018

CARICOM’s Competition Watchdog Has Close Eye on Scotiabank Transactions

PARAMARIBO, Suriname, Thursday December 6, 2018 – The Caribbean Community (CARICOM) Competition Commission says it’s closely monitoring the proposed controversial sale of Sociabank’s banking assets in nine Caribbean countries, as well as the financial institution’s plan to sell out its life insurance business in two other regional countries.

In a statement yesterday, the Suriname-based Commission, which was established to promote and protect competition within CARICOM, said it had noted the concerns of bank customers and governments across the region regarding the proposed acquisition of Scotiabank by Trinidadian banking conglomerate Republic Financial Holdings Ltd. (RFHL).

Scotiabank announced on November 28 that it intends to sell banking assets in Anguilla, Antigua and Barbuda, Dominica, Grenada, Guyana, St Kitts and Nevis, St Lucia, St Maarten, and St Vincent and the Grenadines to RFHL for US$123 million. It also said its Scotia Life Insurance business in Jamaica and Trinidad and Tobago would go to a new company, following a deal by Toronto-based firm Alignvest to acquire Sagicor Financial Corporation.

Chairman of the CARICOM Competition Commission Justice Christopher Blackman.

“The Commission advises that it shall continue to monitor these developments in the banking and insurance sectors. Any impact to the community market by the proposed acquisitions will be assessed in accordance with the RTC [Revised Treaty of Chaguaramas],” commission chairman Justice Christopher Blackman said in the statement, adding that the deals also underscored the need for strong national and regional competition rules and frameworks.

“Despite the need for these regulatory tools, the Commission stands ready to support the Member States of the CSME [CARICOM Single Market and Economy] and financial sector regulators in analyzing the competition effects of the proposed acquisitions in their respective national or sub-regional jurisdictions.

“As always, the Commission remains committed to a process that is fair and transparent in the determination of any regulatory matter where the interests of both business and consumers must be considered,” Justice Blackman added.

Both of Scotiabank’s banking and insurance transactions are subject to regulatory approval, but it is the proposed bank sale that has raised alarm in some of the countries that will be affected by that move.

The Antigua and Barbuda government says it has advised the Eastern Caribbean Central Bank (ECCB) – which has regulatory responsibility for banks operating in Antigua and Barbuda’s domestic financial space – that it will not be issuing a vesting order to facilitate the bank’s divestment of its Antigua holdings to FHL.

Guyana, meantime, said the proposed sales agreement raises a number of issues for the banking sector and the public which the Finance Ministry, the Bank of Guyana and the Government will need to carefully consider, given that Republic Bank currently holds 35.4 per cent of the banking system’s assets and 36.8 per cent of deposits and the acquisition would increase that to 51 per cent of both assets and deposits.

However, Scotiabank has defended its decision, insisting that the Caribbean is very important to its overall operations, and that even after the transactions in the nine countries it will still be servicing 90 per cent of the region.

Article published December 06, 2018 on caribbean360.com

Barbados is back!

Barbados yesterday deposited the Inter-American Development Bank’s (IDB) $200 million “cheque” significantly boosting the island’s struggling international reserves in stark contrast to the position a year ago.

News of this has come from Government’s Economic Advisor Dr Kevin Greenidge, who signalled: “Barbados is back”.

“The IDB just signed $200 million and today (on Wednesday) it went into Central Bank,” Greenidge said, as he addressed the Society of Trust and Estate Practitioners (STEP) Christmas Cheer event under the theme Trusting BERT: Understanding Barbados’ Roadmap to Recovery at the Champers restaurant.

“The good news is that with the inflows of the IDB money our reserves have now reached $1 billion. So we are back. Of course some of it is borrowed money but it allows you the space to feel comfortable. So when investors look they can say ‘look, Barbados is back’. That is the word in the international community,” boasted Greenidge.

At the end of December last year the reserves reached an all-time low of about $410 million or approximately 6.6 weeks of import cover. The international benchmark is 12 weeks.

However, after reaching a staff level agreement with the International Monetary Fund (IMF) in early September for the Barbados Economic Recovery and Transformation (BERT) programme, and approval of an extended fund facility of about US$290 million in October, the island received pledges from other international lending agencies.

In late October the Caribbean Development Bank (CDB) approved its pledged $150 million policy-based loan to support the implementation of the BERT programme and in mid-November the IDB signed a loan agreement for $200 million to support the BERT plan.

At the end of September this year the reserves stood at $577.1 million or 7.4 weeks of import cover. Barbados then benefited from the IMF’s first disbursement of about $98 million, the IDB’s $200 million, and $150 million from the CDB pushing the country’s reserves over the billion-dollar mark.

Greenidge, who pointed out that Barbados would also be getting two more tranches of $150 million over the next three years from the CDB, recalled that the country’s reserves had reached a dangerous position at the end of 2017 making it one of the worse performing economies in the region at that time.

“We had one of the lowest reserves cover in the region at the end of 2017. Just one-and-a-half months of reserves cover . . . Two tins of sardines and a pack of biscuits and we hurt up. This was no way to live . . . even Haiti and Jamaica beating us. These are countries that have done reforms. So we have to build back our reserves,” said Greenidge.

“So what was the problem? No growth, unsustainable debt position, unsustainable fiscal position and you are literally out of money to feed yourself. So any programme put together must address these issues and here comes BERT,” he said.

Article published December 06, 2018 on barbadostoday.bb

Nevis premier presents $269.95 million tax-free budget

CHARLESTOWN, Nevis (NIA) — Mark Brantley, premier of Nevis and minister of finance, presented the Nevis Island Administration’s (NIA) $269.95 million tax-free budget, when he delivered the 2019 Budget Address in more than two hours at a sitting of the Nevis Island Assembly on Wednesday.

With the theme “Harnessing the synergies of Innovation and Entrepreneurship while increasing Global Competitiveness to achieve our Socio-economic Goals,” Brantley said the budget represents an increase of 18.75 percent over the 2018 budget estimates.

“We have allocated the amount of $180.75 million to recurrent spending, an 11.5 percent increase in recurrent spending when compared to the fiscal year 2018.

“This increase is mainly as a result of the need to make a provision in our recurrent budget for Principal Repayment on Treasury Bills held on behalf of the British American Insurance Company. The full amount of these Treasury Bills, amounting to $11.24 million, is due and payable by December 31, 2019,” he said.

Brantley added that provisions for the enhancement of the healthcare system on Nevis are also responsible for the increase.

With regard to revenue collection, the minister of finance noted that the administration is projecting to collect $137.78 million in recurrent revenue, which is on par with the projected revenue collections for the 2018 fiscal period. He added the administration would aggressively enforce the collection of existing taxes due.

An additional amount of $30 million is expected from revenue generated from passport processing fees under the citizen by investment programme for St Kitts and Nevis.

The combined total recurrent revenue is projected at $167.78 million for the upcoming 2019 fiscal period as compared to $180.75 million in 2018. It represents a deficit on the recurrent budget of $12.97 million.

For capital expenditure, $89.20 million has been allocated, which represents a 37.85 percent increase over the allocation for the fiscal year 2018.

The key areas for major allocations are the Office of the Premier – $9.65 million, representing 3.56 percent of the total budget; Ministry of Finance – $92.89 million, representing 34.41 percent of the total budget; Ministry of Communication and Works – $51.44 million, representing 19.06 percent of the total budget; Ministry of Health and Gender Affairs – $37.27 million, representing 13.81 percent of the total budget; Ministry of Education, Library Services and Information Technology – $34.98 million, representing 12.96 percent of the total budget; Ministry of Social Development, Youth and Sports – $21.89 million, representing 8.11 percent of the total budget; Ministry of Agriculture, Lands, Housing, Co-operatives and Disaster Management – $10.57 million, representing 4.0 percent of the total budget.

Brantley explained that the increase is largely due to the allocation of funding to complete construction works on the Alexandra Hospital Expansion Project; the completion of works on the Brown Hill Road Rehabilitation Project along with provisions for rehabilitation works on the Island Main Road from Newcastle to Cotton Ground.

Funding for the capital budget will come from loan funding from the Caribbean Development Bank (CDB), disbursements from the Sugar Industry Diversification Fund (SIDF), the Hurricane Relief Fund, the Sustainable Growth Fund and other grant funding.

In addition, he stated that the administration would seek loan funding from other financial entities at concessionary rates not exceeding 3.5 percent per annum to complete the funding for the capital works.

The NIA has also embarked on what Brantley described as an innovative debt-swapping initiative in which it intends to substitute high cost debt for lower cost debt.

Article published December 06, 2018 on caribbeannewsnow.com

OPEC talks stall as Saudis refuse to exempt Iran from oil cut

VIENNA (Reuters) - OPEC talks on oil production cuts reached deadlock on Friday as the group’s leader Saudi Arabia refused to grant sanctions-hit Iran exemptions from planned reductions, OPEC sources said.

Saudi Energy Minister Khalid al-Falih, asked on Friday whether he was confident the day’s meetings would produce a deal, said: “No.”

The Organization of the Petroleum Exporting Countries was meeting in Vienna for a second day running, before discussions later in the day with non-member oil producers led by Russia.

On Thursday, OPEC tentatively agreed an output cut but could not decide concrete parameters as it was waiting for a commitment from Russia, sources from the group said.

On Friday, four OPEC and non-OPEC sources said Saudi Arabia’s arch-rival Iran, which came under fresh U.S. sanctions in November, was also holding up a final deal.

“Iran will insist on an exemption until sanctions are removed,” one of the OPEC sources said. Another source said Tehran wanted an OPEC communique to specify that Iran was exempt from cuts.

Saudi Arabia faces pressure from U.S. President Donald Trump to help the global economy by refraining from cutting supplies.

An OPEC output reduction also would provide support to Iran by increasing the price of oil.

Possibly further complicating any OPEC decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.

U.S. special representative for Iran Brian Hook met Falih in Vienna this week, in an unprecedented development ahead of an OPEC meeting. Saudi Arabia first denied the Hook-Falih discussion took place but later confirmed it.

“U.S. political pressure is clearly a dominant factor at this OPEC meeting, limiting the scope of Saudi actions to rebalance the market,” said Gary Ross, chief executive of Black Gold Investors and a veteran OPEC watcher.

RUSSIAN DILEMMA

The price of crude LCOc1 has fallen almost a third since October to around $60 a barrel as Saudi Arabia, Russia and the United Arab Emirates raised output to offset lower exports from Iran, OPEC’s third-largest producer. [O/R]

The price decline prompted OPEC and its allies to discuss output cuts, and Falih said on Thursday possible reductions by those involved ranged from 0.5-1.5 million bpd.

“The Iran exemption is the biggest hurdle ... If there is no agreement, the timeline for a deal will be pushed to the first quarter of 2019,” Energy Aspects said in a note.

A reduction of 1 million bpd would be acceptable and so far was the main scenario, Falih said, but he added that Russia needed to commit significant volumes.

Russian Energy Minister Alexander Novak met with President Vladimir Putin in St Petersburg on Thursday and returned to the Austrian capital on Friday morning.

OPEC delegates have said the group and its allies could cut by 1 million bpd if Russia contributed 150,000 bpd of that reduction. If Russia contributed around 250,000 bpd, the overall cut could exceed 1.3 million bpd.

A Russian Energy Ministry source said on Friday Moscow was ready to contribute a cut of around 200,000 bpd and that Iran, not Russia, now seemed the main hurdle for a deal.

Article published December 06, 2018 on reuters.com