• Mount Gay Distilleries Ltd. has re-entered the sugar production industry with a major investment in a mill at its St Lucy location. At the same time, officials have announced the addition of a fifth ageing bond that will see the capacity going from roughly 50,000 barrels of rum to about 75,000.
• Managing Director, Raphaël Grisoni explained that while the focus of the sugar mill will be on the production of “high-value” molasses and less so on sugar, the investment, which forms part of a more than $40 million project over the past four years, was a signal of the company’s commitment to the rum industry and the island.
• The investment comes as Mount Gay joins forces with at least two other local rum producers in pursuing geographical expansion for Barbados rum. Grisoni noted that Mount Gay producing its own molasses was critical to that process while stressing that the investments will lead to added value.
• Minister of Tourism and International Transport Lisa Cummins, said with the island being marketed as the birthplace of rum this investment in the industry was a welcomed one.
• She also reiterated that Government was in the process of strengthening linkages between the “bread and butter” tourism industry and other sectors to ensure more locally-produced items are used in the tourism industry.

(Source: Barbados Today)

• The Sterling has suffered its sharpest monthly fall against the U.S. dollar since the aftermath of the Brexit referendum, as political uncertainty and a historic cost-of-living crisis weigh heavily on the British currency. The Sterling dropped 4.5% against the greenback last month and continued to slide on Thursday, September 1, 2022, last trading just below $1.16 by mid-morning in London. The pound also fell nearly 3% against the euro last month.
• The U.K. faces a rapidly deteriorating cost-of-living crisis as food and energy prices soar, with millions of households facing poverty this winter. The energy crisis arising from Russia’s war in Ukraine is now widely expected to push the eurozone and U.K. economies into recession, while some economists expect the U.S. to avoid the same fate given its relatively stronger economic position and energy independence.
• In a research note Wednesday, August 31, 2022, Capital Economics Chief U.K. Economist Paul Dales said this divergence would drive further weakness in both the euro and the pound against the U.S. dollar and expects sterling to “plunge to new depths” as political and economic uncertainty continue to hammer U.K. assets.

(Source: CNBC)

• Sri Lanka has reached a preliminary agreement with the International Monetary Fund (IMF) for a loan of about $2.9 billion, the global lender said on Thursday, as the country seeks a way out of its worst economic crisis in decades.
• The agreement, which Reuters first reported on Wednesday, August 31, 2022, is subject to approval by IMF management and its executive board and is contingent on Sri Lankan authorities following through with previously agreed measures.
• IMF conditions for the loan also include receiving financing assurances from Sri Lanka's official creditors and efforts by the country to reach an agreement with private creditors. Its programme, spread over four years, will aim to boost government revenue, encourage fiscal consolidation, introduce new pricing for fuel and electricity, hike social spending, bolster central bank autonomy and rebuild depleted foreign reserves. The country's reserves stood at $1.82 billion as of July, according to central bank data.
• "The programme aims to reach a primary surplus of 2.3% of GDP by 2024," it added. Once the IMF package is approved, Sri Lanka is also likely to receive further financial support from other multilateral creditors.

(Source: Reuters)

• GraceKennedy (GK) has confirmed that it has come to an agreement with the Bank of Nova Scotia to acquire 100% of Scotia Insurance Caribbean Limited (SICL), with the associated transaction being subject to regulatory approvals and other customary closing conditions.
• SICL will be the newest member of the GraceKennedy Financial Group, which comprises GK Life Insurance Eastern Caribbean Limited, GK General Insurance, Key Insurance, Canopy Insurance, Allied Insurance Brokers, GK Insurance Eastern Caribbean, GraceKennedy Remittance Services, GraceKennedy Money Services Group, GK Capital Management and First Global Bank.
• The announcement comes exactly one year after GK acquired another Bank of Nova Scotia subsidiary, Scotia Insurance Eastern Caribbean Limited (SIECL), in August 2021, which was subsequently rebranded under the name GK Life Insurance Eastern Caribbean Limited (GK Life).
• Like GK Life, SICL is a licensed life insurance company, which offers credit protection to customers on personal loans, residential mortgages, personal lines of credit, and personal and small business credit cards. SICL currently operates in Barbados, Belize, British Virgin Islands, Cayman Islands and Turks & Caicos Islands.
• GK Group CEO Don Wehby, commented on the development, “The acquisition of SICL is another step in the fulfilment of our strategy to grow GK’s insurance business in the Caribbean as we continue to expand the footprint of our Financial Group in the region. Along with last year’s acquisition of SIECL, the addition of SICL, and the five territories where it operates, will mean that we have expanded GK’s life insurance business to a total of 13 markets in less than two years.”
• This acquisition will enhance GraceKennedy’s geographical diversification, which bodes well for the company’s revenue growth and profitability over the coming quarters.

 (Source: JSE)

• Minister of Tourism, Hon. Edmund Bartlett, says the sector is recovering at a faster than anticipated pace. The Minister was addressing a town hall meeting hosted by the Tourism Enhancement Fund (TEF), at the Alterry Beach Club, at Priory Beach in St. Ann, on August 28.
• Thus far, in a recent mid-year review in Ocho Rios it was disclosed that to date, the country has had 1.7Mn visitors that spent just a little under US$3Bn. Based on the outturns for the year-to-date period, the sector is now trending 90% against 2019.
• “When you look at what we are doing you will see that in 2019, we earned US$3.6Bn for the entire year, and we have gone only eight months in this year and we are now at the edge of US$3Bn,” he pointed out.
• The Minister noted that 2022 predictions indicate that visitors will spend over US$4Bn and that would easily be a 15 to 20% increase from 2019.

(Source: JIS News)

• The St. Lucia government says it is anticipating investments in the tourism industry to surpass EC$320Mn as a result of negotiations with various investors during the first eight months of this year.
• According to Prime Minister Pierre, “Investors are showing high confidence and interest in St. Lucia’s economic prospects, evidenced by the level of tourism investments recorded for January to August 2022.” Pierre said during that period Cabinet approved 20 projects for tourism incentives “amounting to projected investments of EC$326.6Mn.”
• Tourism officials said that visitor expenditure post coronavirus (COVID-19) pandemic had exceeded EC$560Mn last year and hotels and other properties collectively made in excess of EC$303Mn.
• Further, the government indicated intentions to uphold corporate responsibility to treat workers fairly, compensate workers adequately so that every participant can enjoy the benefits of the tourism sector and in return, help to promote and defend the sector.

(Source: Caribbean News Weekly)

• Cleveland Federal Reserve President Loretta Mester said Wednesday, August 31, 2022, that she sees interest rates rising considerably higher before the central bank can ease off in its fight against inflation.
• Mester, a voting member this year of the rate-setting Federal Open Market Committee, said she sees benchmark rates rising above 4% in the coming months. That’s well above the current target range of 2.25%-2.5% for the federal funds rate, which sets what banks charge each other for overnight borrowing but is tied to many consumer debt instruments.
• Markets currently are pricing in only a 1-in-3 chance of the funds' rate climbing above 4% next year. The Fed this year has raised rates four times for a total of 2.25 percentage points. Markets are pricing in a third consecutive 0.75 percentage point increase at the September meeting and looking for rate cuts to start in the fall of 2023.
• Mester said she anticipates the rate increases to slow economic growth, which she sees as running “well below 2%” while the unemployment rate rises and financial markets remain volatile. She expects inflation to fall to a range of 5%-6% this year and then get closer to the Fed’s target in subsequent years.
• In one concession to those looking for lower rates, she said she does not think the Fed necessarily will have to keep raising rates until inflation hits the central bank’s 2% goal. But she said policymakers must remain vigilant.

(Source: CNBC)

• China's factory-gate inflation eased in July to a 17-month low, defying global cost pressures as slower domestic construction weighed on raw material demand, although consumer price increases hit a two-year high as pork supplies tightened.
• The producer price index (PPI) rose 4.2% year-on-year, the National Bureau of Statistics (NBS) said on Wednesday, August 31, 2022, versus an uptick of 6.1% in June and analysts' median forecast of 4.8%.
• China's producer price growth has slowed from a 26-year high in October last year, giving policymakers some leeway to stimulate the flagging economy even as central banks elsewhere scramble to hose down rampant inflation with aggressive interest rate hikes.
• The consumer price index (CPI) increased 2.7% from a year earlier, the fastest pace since July 2020, but below forecasts for a gain of 2.9%. The government has set an annual consumer inflation target of about 3%, while Premier Li Keqiang said last month China would be able to keep the 2022 price rise under 3.5%, in a bid to highlight the need to stabilise prices and employment.
• While China's relatively benign inflation has largely been due to weak domestic demand, a moderation in global price pressures, such as falling oil prices, also contributed to July's slowdown. “Factory gate inflation will remain on a downward trajectory throughout the rest of the year amid a further drop in commodity prices, easing supply bottlenecks and a higher base for comparison," Zichun Huang, China economist at Capital Economics, said in a research note.

(Source: Reuters)

• A total of 1,505 new housing solutions are slated for development in the Corporate Area over the next three years.
• This was announced by Prime Minister, the Most Hon. Andrew Holness, during a handover ceremony for units under phase 1A of the Majesty Gardens housing development in St. Andrew, on August 24.
• Other areas identified for developments are Fore Shore Estate with 230 units; Maxfield Park – 210; and Howard Avenue Apartments, 280 units. These are to be completed in 2023.
• The National Housing Trust (NHT) will partner in this ambitious drive to provide affordable solutions for all Jamaicans. Mr Holness emphasized that communities must be diverse and healthy, both in how people live in them and in the environment.
• However, given the increased cost of borrowing as a result of high-interest rates, it poses a risk of potential delays in some of the planned developments.

(Source: JIS News)

• The National Housing Trust (NHT) has decided to provide interest rate subsidies to middle- and low-income earners as well as persons with disabilities in keeping with the Government’s mandate to make homeownership possible for every Jamaican.
• Mr Holness said the change in its application of additional interest rate subsidies is a fairer and more effective approach, even as the Trust continues to provide greater assistance to those contributors who need it the most.
• “The subsidy is such that if you fall within a certain category, your interest rates are reduced. If you are disabled, and you are in the category of $30,000 to $40,000, you get a 1% reduction in your interest rate, but that category only pays 2%. If you are in the $42,000 and over, you get a 1% reduction, so you pay 3%,” the Prime Minister indicated.
• The NHT has been evaluating how it allocates subsidies. Under the previous approach, additional interest rate subsidies were applied to special groups. This resulted in persons who fell within those groups automatically attaining subsidies – whether or not they were needed to access or afford a loan.
• This change in interest rate subsidies is expected to make homeownership more affordable for low-income earners, especially in light of rising interest rates that have increased the cost of borrowing. This should help to sustain demand in the affordable housing segment of the real estate market.

(Source: JIS News)