• The House of Representatives has approved the withdrawal of $268.48Mn from the Capital Development Fund (CDF), to provide budgetary support to the Jamaica Bauxite Institute (JBI) for the 2022/23 financial year. Total budgetary support for the CDF is expected to cover approximately 73% ($268.48Mn) of the JBI’s operating expenditure of $367Mn.
• The Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, said the JBI was established by the Government in 1975 as a regulatory planning and development agency, to manage the sovereign aspects of the Government’s participation in the bauxite-alumina industry.
• The JBI is responsible for monitoring and studying the alumina industry and advising the Government on matters pertaining to the industry, locally and internationally. The organization is said to be primarily funded from levies on the bauxite industry through the CDF.
• The JBI’s primary operations are not revenue-generated activities. However, over the years the JBI has expanded its operations to include the provision of laboratory services on a commercial basis to generate some revenue.
• The Minister said the JBI has been granted budgetary support totaling $1.2Bn from the CDF during the five-year period 2017/18 to 2021/22. The balance in the CDF as at the end of the 2021/22 fiscal year was $3.8Bn, which is adequate to provide the support required for the JBI in 2022/23.

(Source: JIS News)

• Guyana’s economic growth rate has been revised up from 47.5% and 49.7% projected in the 2022 national budget and by the World Bank, respectively. The country is now expected to grow by 57.8%, according to Finance Minister Dr. Ashni Singh.
• The announcement comes even as the mid-year report is yet to be released but also with some 350,000 barrels of oil being produced per day in the offshore basin of the new oil-producing nation.
• Additionally, the country has a wealth of oil amounting to 11Bn barrels of proven reserves and still counting. As such, the country is well positioned to benefit from elevated oil prices. Guyana is now seen as the fastest growing economy with the third-largest reserves in Latin America and the Caribbean and the 17th in the world.
• Of note, the start-up of Phase 2 of the Liza Development with the arrival of the Liza unit storage and production facility in October 2021, has pushed daily output in South America’s newest oil-producing nation to above 300,000 barrels per day. This will support the country’s goal of producing one million barrels of oil per day by 2029.
• The country’s strong non-oil sector is also expected to grow by 7.7% this year, building on the 4.6% growth recorded last year.

(Source: Newsroom)

• On July 12, 2022, the International Monetary Fund, once more cut its growth forecast for the United States to 2.3% for 2022 from its estimate of 2.9% in late June. The report cites recent downward revisions to first-quarter U.S. GDP output and consumer spending in May as reasons for the change in projections.
• The IMF also cut its 2023 U.S. real GDP growth forecast to 1.0% from 1.7%, based on data revisions that showed "significantly less momentum" in private consumption and spending of savings built up over the pandemic.
• The IMF said that U.S. inflation pressures are broad-based, with declining price growth in durable goods largely offset by an acceleration of prices for shelter, healthcare, and other services, along with rising food and energy prices. "The policy priority must now be to expeditiously slow wage and price growth without precipitating a recession," the IMF said in the Article IV staff report.
• The Fund said Fed monetary policy tightening should help bring down inflation to 1.9% by the fourth quarter of 2023, compared with a forecast of 6.6% for the fourth quarter of 2022. It is also of the opinion that this will further slow U.S. growth and also allow the country to avoid a recession.

(Source: Reuters)

• U.S. consumer prices accelerated in June as gasoline and food costs remained elevated, resulting in the largest annual increase in inflation in 40-1/2 years and cementing the case for the Federal Reserve to hike interest rates by 75 basis points later this month.
• The consumer price index rose 9.1% from a year earlier in a broad-based advance, the largest gain since the end of 1981, Labour Department data showed on July 13. The widely followed inflation gauge increased 1.3% from a month earlier, the most since 2005, reflecting higher gasoline, shelter and food costs.
• Economists projected a 1.1% rise from May and an 8.8% year-over-year increase, based on the Bloomberg survey medians. This was the fourth-straight month that the headline annual figure topped estimates.
• The so-called core CPI, which strips out the more volatile food and energy components, advanced 0.7% from the prior month and 5.9% from a year ago, above forecasts. Treasury yields and the dollar jumped, while US stock futures fell following the report.
• The red-hot inflation figures reaffirm that price pressures are rampant and widespread throughout the economy and continue to sap purchasing power and confidence. That will keep Fed officials on an aggressive policy course to rein in demand by hiking interest rates by additional 75 basis points, and adds pressure to President Joe Biden and congressional Democrats whose support has slumped ahead of midterm elections.
• While many economists have suggested this data will be the peak in the current inflationary cycle, several factors such as housing stand to keep price pressures elevated for longer. Geopolitical risks including COVID lockdowns in China and Russia’s war in Ukraine also pose risks to supply chains and the inflation outlook.

(Source: Bloomberg)

• The Jamaica Mortgage Bank (JMB) is playing a major role in enabling the expansion of homeownership according to Prime Minister, the Most Hon. Andrew Holness. 
• He noted that the entity, which is earmarked for divestment, will be listed on the Jamaica Stock Exchange (JSE), so that “Jamaicans can own a piece of this asset”. With public ownership, the JMB will be able to finance more projects, which will “accelerate the housing development in the country”. 
• Delivering the keynote address at the official opening of the Genesis 28 housing development, financed by the JMB, at 28 Waterloo Road in St. Andrew on July 7, Mr. Holness said that the move will enable the bank to serve a much wider customer base. 
• The Government’s quest to deliver 70,000 affordable housing solutions in five years is still on track, and will be supported by the funds received from the JMB divestment.  
• Some of the solutions will also be financed by the National Housing Trust (NHT). NHT resources are specifically targeted at low- and affordable-income houses, which means that housing for middle income and higher would have to be financed by the private sector. 
• The JMB was established in 1971 with the objective of mobilizing resources for on-lending to private- and public-sector developers and financial institutions in support of the national settlement goal.

(Source: JIS News)

• The Government is being assured of keen interest in Jamaica by private and public sector investors in the Kingdom of Saudi Arabia (KSA).  
• Prime Minister, the Most Hon. Andrew Holness, received this assurance from the KSA’s Deputy Minister for Investors Outreach, His Excellency Badr Al Badr, during a business luncheon hosted for a 65-member delegation visiting Jamaica from the Middle Eastern state on Friday (July 8).  
• The Deputy Minister emphasized that investments are among the engines of growth in any economy that can result in asset creation, “which leads to enhanced production, employment and overall economic progress.” 
• The partnership would be beneficial as Saudi Arabia has leading companies operating successfully internationally in many areas that can work with the Jamaican government and entities to boost and diversify both economies in sectors like agriculture, traditional and renewable energy, mining, tourism, logistics, information technology, financial services, transportation, healthcare, construction, and engineering.    
• The investment dialogue is expected to continue, with the visit deemed as the start of an historic moment and an excellent opportunity that will enable both countries to build deeper investments, trade and business links.

(Source: JIS News)

• Brazilian central bank director Diogo Guillen ruled out that policymakers would give up interest rates as a policy instrument in the future, at a time when its aggressive cycle of monetary tightening is coming to an end. He stated that policymakers continue to have interest rates as a policy instrument, but will assess how to best use it in the future. 
• The statement followed a question about how the central bank would navigate an uncertain scenario without further monetary policy, following official communication that its strategy to combat inflation involves a higher terminal interest rate and keeping it at that level for longer. The central bank raised its benchmark Selic interest rate to 13.25% in June from a record low of 2% in March 2021, and has already penciled in another increase in August. 
• Without signaling precisely if this would be its final hike, policymakers also stressed the additional need to maintain rates "in significantly contractionary territory" for a longer period to bring 2023 inflation to around the 3.25% official target. Further, the strategy remains the same and the central bank has said it will "persevere" in this task until inflation expectations are "anchored." 
• Notably, while policymakers see 2023 inflation at 4%, private economists polled by a central bank's weekly survey forecast it at 5.13%. Guillen stated that the difference is due to the central bank's assumptions for oil, shocks in industrial goods, and a neutral interest rate.

(Source: Reuters & Nasdaq)

• The Inter-American Development Bank (IDB) has approved Guyana’s request to tap US$83.3Mn from the Norway fund to develop solar power projects to aid in the diversification of the country’s energy matrix. 
• The US$83.3Mn forms part of the revenues Guyana earned from Norway over the years for the preservation of its forests. According to the agreement Guyana has with the Kingdom of Norway, the money is to be overseen by the IDB to ensure they are invested in projects that propel the social and economic well-being of the Guyanese. As the custodian of those funds, Guyana was therefore obligated to get the IDB’s blessings for its plans to spend the said money. 
• The main objective of the Program is to support the diversification of Guyana’s energy matrix towards the use of climate-resilient renewable energy sources in the electricity generation matrix.

(Source: Kaieteur News)

• The euro slid to a 20-year low and came closer to parity against the dollar on July 11 on concerns that an energy crisis will tip the region into a recession, while the U.S. currency was boosted by expectations that the Federal Reserve will hike rates faster and further than peers. 
• The most proximate concern for markets is whether or not Nord Stream 1 (a major Russian gas pipeline) is going to come back online,” said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto, adding that “the markets will likely price in a recession” for the region if it doesn't. 
• The euro tumbled as low as $1.0051 against the U.S. dollar, the weakest since December 2002. The dollar index reached 108.19, the highest since October 2002. 
• “The Fed is going to raise rates more aggressively than most other developed market central banks and we don’t think other developed market central banks really have the bandwidth to keep up,” Rai said. The Fed is expected to lift rates by 75 basis points at its July 26-27 meeting. Fed funds futures traders are pricing for its benchmark rates to rise to 3.50% by March, from 1.58% now. 

(Source: Reuters)

• The quickly changing coronavirus has spawned yet another super contagious omicron mutant that’s worrying scientists as it gains ground in India and pops up in numerous other countries, including the United States. 
• Scientists say the variant – called BA.2.75 – may be able to spread rapidly and get around immunity from vaccines and previous infection. It’s unclear whether it could cause more serious disease than other omicron variants, including the globally prominent BA.5. 
• “The latest mutant has been spotted in several distant states in India, and appears to be spreading faster than other variants there,” said Lipi Thukral, a scientist at the Council of Scientific and Industrial Research Institute of Genomics and Integrative Biology in New Delhi. It’s also been detected in about 10 other countries, including Australia, Germany, the United Kingdom, and Canada. Two cases were recently identified on the West Coast of the U.S., and Helix identified a third U.S. case last week. 
• It may take several weeks to get a sense of whether the latest omicron mutant may affect the trajectory of the pandemic. Meanwhile, Dr. Gagandeep Kang, who studies viruses at India’s Christian Medical College in Vellore, said the growing concern over the variant underlines the need for more sustained efforts to track and trace viruses that combine genetic efforts with real-world information about who is getting sick and how badly. “It is important that surveillance isn’t a start-stop strategy,” she said.

(Source: AP News)