• China is negotiating a compromise plan with other major creditors that could help break a logjam in debt-relief talks for struggling developing nations, the Wall Street Journal reported on Tuesday.
• The Wall Street Journal said the new plan if agreed upon, could see China drop its demand for multilateral lenders such as the World Bank and International Monetary Fund to join it in taking losses in any debt-restructuring deals that have stood as an obstacle to reaching workouts for countries like Zambia and Ghana.
• Specifically, the new plan could help break an impasse that has held up an agreement between China and other government creditors to restructure the debts of Zambia. It will serve as a model for multibillion-dollar debt-relief deals for other developing countries in financial distress.
• Negotiations could then move on to the details of Zambia’s debt restructuring, such as extending repayment deadlines and lowering interest rates. China continues to oppose taking losses on the face value of its loans, people close to Beijing’s decision-making told the paper.

(Source: Reuters)

• In demonstratively supporting its strategic growth agenda, Future Energy Source Company Limited (FESCO) introduces its cooking gas brand FESGAS and advises that it has acquired the assets related to the liquefied petroleum gas (LPG) business of Wilson Beck LPG Limited (WB). The transaction was completed on Wednesday, April 5, 2023. This asset purchase supports the advancement of FESCO’s goal of entering the cooking gas market under the FESGAS brand.
• FESCO’s Managing Director, Jeremy Barnes commenting on the acquisition highlighted that the assets acquired are appealing for many reasons, including the plant’s capacity and throughput.
• WB began distributing cooking gas in April 2020 from its business location in Bernard Lodge, St. Catherine and at the same location began its LPG filling plant operation in May 2021.
• According to WB’s Managing Director, Gregory Beck, the move will see FESCO inheriting a state-of-the-art LPG filling plant at Bernard Lodge, St. Catherine as well as a loyal group of gas dealers from the distribution network in south-eastern Jamaica. The plant will give FESCO the ability to immediately start supplying consumers and take advantage of the groundwork that has been completed over the last couple of years.
• FESCO will launch its LPG business within the first quarter of its next fiscal year (June 2023). This acquisition will bolster revenue growth as it allows the company to expand its value-added products and improve operational efficiency, which ultimately increases shareholders’ value. 

(Source: JSE)                

• The Central Bank is reporting that Jamaica’s inflation rate is decreasing. Data from the Statistical Institute of Jamaica (STATIN) show that the rate, which peaked at 11.8% in April 2022, fell to 7.8 % in February 2023.
• Speaking during a Jamaica Information Service ‘Think Tank’ on Wednesday (April 5), Bank of Jamaica (BOJ) Senior Deputy Governor, Dr. Wayne Robinson, said this has resulted from the BOJ’s monetary policy actions, as well as lower imported commodity prices.
• Robinson indicated that “we actually responded very swiftly, early and decisively to the increase that we’ve been seeing which was actually spurred by rising inflation globally”. He further added that “as a result of our policy actions, along with the fact that we have been seeing a lowering of the prices of some international commodities over the past 10 months, we have been seeing a general reduction in the rate of inflation.” Despite the decrease, the BOJ has indicated that 7.8% is still too high, and the utilisation of its monetary policy is crucial in controlling inflation.
• The policy relates to the broad set of actions or tools that the Bank has at its disposal to manage inflation. These have included raising the policy interest rate that the BOJ pays on the current account balances of deposit-taking institutions (DTIs), including commercial banks, building societies and merchant banks; reducing the volume of Jamaican dollar liquidity in the banking system; and stronger intervention to sell US dollars in the foreign exchange market, which, along with the other two actions, have kept the Jamaican dollar stable, thereby limiting the inflationary effect of imported price increases.
• Deputy BOJ Governor, Research and Economic Programming Division and Financial Stability, Robert Stennett, explained how the Central Bank’s monetary policy works. “They can be broken into three broad-based categories; one is interest rates. The Central Bank has the ability to influence interest rates. The second tool is really the ability to control money supply within the financial system, and finally, there is communication, where we keep the stakeholders abreast of our actions,” he outlined.
• The BOJ has reaffirmed its commitment to taking the necessary monetary policy actions to restore inflation to the Government of Jamaica-established target range of 4 to 6%. Inflation is projected to return to this range during the final three months of 2023, between October and December. 

(Source: JIS News)

• After keeping its repo rate fixed at 3.50% at its meeting on March 31 2023, Fitch expects that the Central Bank of Trinidad & Tobago (CBTT) will leave the policy rate unchanged for the remainder of 2023.
• Prior to October 2022, the government of Trinidad & Tobago (T&T) had worked to lower the burden of high inflation with subsidies. The CBTT has not pursued a rate hiking cycle during the COVID recovery like some of its Caribbean neighbours and despite climbing inflation, which has worsened after the removal of government subsidies, the CBTT still held its policy rate at 3.50%.
• While the Central Bank of Trinidad & Tobago has taken account of the significant rise in inflation and the interest rate differential, it has indicated that it will keep rates lower in order to support borrowing and the continued post-pandemic economic recovery.
• The CBTT also cited concerns about spillovers from the US banking sector crisis and damaging effects on the island’s growth and therefore did not want to add additional pressure to the banking system.
• Given these factors, Fitch forecasts that headline CPI will average 8.0% in 2023, and end the year at 4.8% y-o-y as demand softens. However, risks to their forecast are towards higher interest rates if energy prices do not come down, but remain elevated through 2023.

(Source: Fitch Solutions)

• Brazil's government expects monetary policy next year not to be as restrictive as in 2023, an economy ministry official said on Monday, April 10, stressing that a new fiscal framework proposed by the administration would help bring interest rates down.
• Brazil's finance ministry unveiled a proposal for new fiscal rules to balance limits on spending growth with the government's vow to boost social programmes and public investment, lifting local markets after months of uncertainty.
• The new rules would allow public spending to grow between 0.6% and 2.5% per year above inflation. Spending growth would also be limited to 70% of revenue growth in the prior 12 months. The full text of the proposal is expected to be released sometime this week.
• Economic Policy Secretary Guilherme Mello noted that central bank chief Roberto Campos Neto had praised the proposed framework, despite him saying the new fiscal rules would not mechanically affect interest rates. "From the moment the monetary authority recognizes the quality of the fiscal framework, the prospect of monetary easing emerges," Mello said in an interview with Globo News.
• Currently, Brazil’s Central Bank, The Banco Central do Brasil (BCB) has been closely watching core inflation, which at 7.9% has been consistently higher than headline inflation (5.6%) (which has cooled largely due to a drop in fuel prices).
• Given where core pressures sit, economists expect that BCB will be cautious about lowering interest rates despite political pressure to cut borrowing costs, and therefore share the same sentiments that the effect of the new fiscal framework in creating a less restrictive monetary policy is still yet to be seen.

(Sources: Reuters & Fitch Solutions)

• Oil prices rose on Tuesday, April 11 on expectations that inventories in the U.S., the world's biggest crude consumer, are expected to fall and on signs that demand in emerging markets remains healthy. Crude futures likely received a boost from gains in Asian equity markets as regional central banks are expected to keep their interest rates steady.
• In March, strong fuel demand in India, the world's third-biggest oil consumer, also supported prices. Last month, fuel consumption jumped by 5% from a year earlier to a record 4.83 million barrels per day. The country continues to be the main destination for Russian Urals crude amid the resorting of global oil trade flows in the wake of the invasion of Ukraine.
• Oil futures have climbed more than 5% since the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia surprised the market last week with a new round of production cuts starting in May. On the U.S. supply front, industry data on U.S. crude stockpiles are due on Tuesday. Five analysts polled by Reuters estimated on average that crude inventories fell by about 1.3 million barrels in the week to April 7.
• Oil prices fell on Monday after rising for three straight weeks, after U.S. jobs data pointed to a tight labour market, heightening expectations of another Federal Reserve rate hike that could curb oil demand.
• Rate hike expectations boosted the U.S. dollar index on Monday and Tuesday, which weighed on oil prices as dollar strength makes oil more expensive for other currency holders. Further, a U.S. inflation report to be released on Wednesday could help investors gauge the near-term trajectory for interest rates.

(Source: Reuters)

• Core inflation in the Eurozone is likely to stay high for the rest of 2023, ECB policymaker Pablo Hernandez de Cos said on Monday, leaving the door open for further interest rate hikes.
• Data showed that inflation in the Eurozone dropped by the most on record in March, but growth in core prices accelerated. "Core inflation is expected to remain elevated for the rest of the year. That may delay convergence towards the 2% target in the medium term and that will therefore need close monitoring," De Cos, who also chairs Spain's central bank, told a financial event in Washington, D.C.
• Last year, the Eurozone’s core inflation averaged 3.9%, but it reached 5.7% in March, an all-time high. In mid-March, the ECB cut its inflation projections but figures still point to price growth above its 2% target for years to come.
• De Cos said that if the ECB's baseline scenario were to be confirmed "we still have ground to cover to make sure that inflation pressures are stamped out." The inflation path in the March staff projections was based on a risk-free forward curve that continued to point to expectations of further interest rate increases.
• On Monday, April 10, De Cos said that these projections were subject to uncertainty, which "means we are neither committed to a rise in rates further nor are we finished with hiking rates." The ECB has raised rates by a combined 350 basis points since July but did not provide specific guidance for its May 4 meeting, arguing that turbulence in the financial sector required extra caution. Although recent financial sector tensions have been contained so far, De Cos added that if they persisted or intensified, "a scenario could materialize of significantly tighter credit and financial conditions and worsening confidence, with downward effects on economic activity and prices."

(Source: Reuters)

• JMMB Group Limited (JMMBGL), the parent company of JMMB Group of companies, carried out a restructuring exercise involving some of its Jamaican member companies effective March 31, 2023. This move comes following JMMB’s receipt of a no-objection response from the Bank of Jamaica to the group’s proposed restructuring.
• JMMB indicated that the exercise is part of a wider restructuring exercise being undertaken by the group and was done to ensure its compliance with the Banking Services Act, 2014 (BSA) which requires financial groups to separate financial services companies in the Group from the non-financial companies.
• As a result, JMMB Financial Holdings Ltd was incorporated as a new, direct wholly owned subsidiary of JMMB Group Ltd for the purpose of holding, directly and indirectly, the shares of all of the financial services companies within the group. The remaining non-financial Jamaican companies (JMMB Real Estate Holdings Limited and Capital and Credit Securities Limited) are now held under the direct ownership of JMMB Group instead of JMMB Limited.
• The statement noted that the restructuring will not impact the group’s operations and services and that JMMBGL will remain listed on the Jamaica Stock Exchange and the Trinidad and Tobago Stock Exchange.
• JMMB is the latest financial institution to restructure its organisation to create a financial holding company in order to separate its non-financial subsidiaries. Victoria Mutual Building Society (VMBS) and Cornerstone United Holdings Jamaica (CUHJL) also recently announced similar reorganisation exercises.

(Source: JSE)

• In April, the administrators of the digital payment wallet – Lynk – will be launching a new line to its suite of business client services, known as LynkBiz. The facility is a web-based platform that will allow micro, small and medium-sized businesses to accept digital payments seamlessly. These include transactions involving Jamaica’s Central Bank Digital Currency (CBDC) – JAM-DEX – for which Lynk is the first provider.

• During his 2023/24 Budget Debate presentation, Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, announced that the Government will be offering $500 million in incentives for businesses signing up to accept JAM-DEX payments, as of April 1, under the Small and Micro Merchant Incentive Programme.

• Chief Product Officer for Lynk, John Matthew Sinclair said for the first 10,000 merchants, the Government has made provisions for businesses to receive a $25,000 grant in digital currency.

• He pointed out that the provision to small businesses is a different and safer channel to offer goods and services and receive digital payments instantly. “We have over 205,000 users on the platform, to date; so merchants will have access to all those users. You can sell on social media and you can sell in person by simply scanning a QR code,” Mr. Sinclair said.

• Lynk app users can easily cash in through NCB ABMs or any local bank using a debit or credit card. Once the money is cashed into a Lynk user’s primary wallet, it can be used at merchant locations and easily changed to JAM-DEX in the app and spent at merchants with JAM-DEX QR codes, so users can earn cash back.

(Source: JIS News)

• Mexico's annual inflation slowed in March by more than expected to 6.85%, the lowest rate in nearly one and a half years, although core price pressures remained elevated, data from national statistics agency INEGI showed on Wednesday, April 5.
• The March reading was the lowest since October 2021 (6.24%), and came in below the consensus forecast of 6.90%, as determined by a Reuters poll. In February, inflation stood at 7.62%.
• However, the measure of core inflation, which strips out some volatile items, slowed less than anticipated to 8.09% from 8.29% the previous month. Analysts had forecast a reading of 8.07%. "Core inflation was impacted by the high readings in services, driven by the seasonal increase in airfares, tourism packages, and food services," Goldman Sachs economist Alberto Ramos wrote in a research note.
• Notably, Banxico has raised rates by 725 basis points since its rate-hiking cycle started in June 2021 to combat inflation. Month-on-month, Mexico's headline consumer price index rose by 0.27%, less than the 0.31% forecast in the Reuters poll.
• The latest data come as leaders of Latin American countries, including Mexico, Chile, Argentina, Brazil, and Colombia, are due to meet virtually to discuss trade measures aimed at combating rising inflation in the region.
• The measures to be proposed include "getting rid of tariffs, eliminating red tape for imports, exports, to ensure sufficient supply and fighting shortages," Mexican President Andres Manuel Lopez Obrador said last month.

(Source: Reuters)