• Fitch downgraded its outlook on China’s credit rating on Tuesday, citing increasing risks to its finances as it faces economic challenges. Lowering its outlook from stable to negative does not automatically mean the rating agency will downgrade China’s creditworthiness, but it increases the chances.
• The revision “reflects increasing risks to China’s public finance outlook as the country contends with more uncertain economic prospects amid a transition away from property-reliant growth to what the government views as a more sustainable growth model,” it said in a statement. Fitch kept its rating on Chinese sovereign bonds at A+.
• China’s general government deficit is projected to rise to 7.1% of gross domestic product in 2024 from 5.8% last year. This year’s deficit is expected to be the highest since 2020, when pandemic-related controls began to weigh heavily on public coffers.
• China’s Finance Ministry has expressed “regret” over the revision. “We had a lot of in-depth communication with the Fitch Ratings team in the early stage, and the report partly reflected China’s views,” it said in a Wednesday statement. It added that the agency’s methodology “fails to effectively and prospectively reflect the positive role of fiscal policy in promoting economic growth.”
• “In the long run, maintaining a moderate deficit and making good use of precious debt funds will help expand domestic demand, support economic growth, and ultimately help maintain good sovereign credit,” it said.
• The fiscal budget deficit ratio for 2024 is set at 3%, according to the statement, which describes it as “overall moderate” and “conducive to stable economic growth.” The ministry has targeted 5% for economic growth for this year, which it says is “in line with realistic conditions.”
• “The long-term positive trend of China’s economy has not changed, nor has the Chinese government’s ability and determination to maintain good sovereign credit,” it said. In December, rival rating agency Moody’s downgraded its outlook on China’s credit rating from stable to negative, citing risks related to “structurally and persistently lower medium-term economic growth” and ongoing troubles in its property sector.

(Source: CNN)

• IMF Chief Georgieva expresses concern over the impact of higher U.S. interest rates on the global economy, noting that they make the U.S. more attractive for financial flows, potentially leaving other countries struggling.
• While acknowledging the prudence of the U.S. Federal Reserve's actions, Georgieva suggests that the U.S. government could explore additional measures to prevent overheating of the economy, although she doesn't provide specifics.
• Higher interest rates lead to a stronger dollar, weakening other countries' currencies, which could pose challenges to financial stability if sustained over a prolonged period. Recent consumer-level inflation data casts doubt on the Fed's forecast of rate cuts later in the year, with reports indicating stronger inflation than anticipated, prompting investors to reconsider their expectations for the timing of rate adjustments.
• Georgieva highlights the strengths of the U.S. economy, including its innovation, robust labour market supported by immigration, and recent government initiatives such as the Inflation Reduction Act and COVID aid. The IMF sees potential for the U.S. government to address inflation concerns and navigate towards a soft landing for the economy.

(Source: Reuters)

• MFS Capital Partners (MFS)has announced that it has completed the 100% acquisition of Microfinancing Solutions Limited. The transaction, which was first announced at the end of 2022, was finalised in time for the quarter ending March 31, 2024. Microfinancing Solutions is now the flagship operating entity in the company’s portfolio.
• Microfinancing Solutions is a Kingston-based money services company that began operations in 2010 as a microlender. Since then, it has expanded its operations into other areas of finance, including FX trading, remittances, bill payment services, and private credit. Furthermore, the company has taken equity positions in several other entities. 
• Through this strategic acquisition, MFS CAP strengthens its presence in the local finance market, expanding its financial products and services offerings. By leveraging the combined expertise and resources of both entities, MFS CAP aims to enhance its ability to meet the evolving needs of clients and drive sustainable growth and value for shareholders.
• Microfinancing Solutions will continue to operate under its current brand name from its current locations, with its existing management team led by Tamar Webley, who has been at the helm for the last 12 years since it began operations. 

(Source: JSE)

• Jamaica produced some 779,254 tonnes of domestic crops in 2023, which is the country’s second-highest recorded production figure. In making the disclosure, Minister of State in the Ministry of Agriculture, Fisheries and Mining, Hon. Franklin Witter, said that this was achieved despite unfavourable weather conditions.
• “Jamaica, like the rest of the world, experienced one of the hottest years ever recorded last year. Consequently, the drought, as well as the short period of intense rainfall that we experienced, did have some impact on our productivity here in Jamaica,” he said.
• Witter was addressing the Jamaica Agricultural Society (JAS) 41st Annual National Farmers’ Month church service held at the Kettering Baptist church in Duncans, Trelawny, on Sunday (April 7).
• “Our strategic vision is embedded in our New FACE of Food strategy, and this is an acronym for a strategic layout of food security, agro-business development, climate-change technologies, and export expansion,” he noted.

(Source: JIS)

• Guyana’s Permanent Representative to the United Nations, Carolyn Rodrigues-Birkett, has reiterated her country’s commitment to a peaceful solution to the border dispute with Venezuela, which is claiming the Essequibo region in the Caribbean Community (CARICOM) country.
• The UN Security Council met in private on Tuesday, April 9, to discuss the recent developments regarding the territorial dispute between the two countries at the request of Guyana’s President, Irfaan Ali, in an April 5 letter he had submitted to the Council. The meeting was held under the theme “Threats to international peace and security” with the Assistant Secretary-General for Europe, Central Asia and the Americas Miroslav Jenča providing a brief to the Council.
• This meeting comes in light of Venezuelan President Nicolas Maduro's promulgated Organic Law for the Defence of Essequiba on April 3, 2024. By this new law, Venezuela purports to exercise control over two-thirds of the sovereign territory of Guyana. This legislation appears to create a new state in Venezuela. The Head of State of Venezuela will have the power to elect a governor, and the National Assembly of Venezuela will have legislative functions in this territory. Additionally, all political maps of Venezuela will now include the ‘state of Guyana Essequiba’. 
• Rodrigues-Birkett, in her presentation to the Council, provided a thorough overview of the history of the border controversy and highlighted the actions taken by Venezuela in contravention of diplomatic agreements, including the Argyle Declaration, and international law, including the legally binding orders of the International Court of Justice.
• She emphasized Guyana’s commitment to peace, the rule of law and the resolution of the controversy through the International Court of Justice (ICJ). She called on the Council to impress on Venezuela the need to pursue a peaceful settlement of the controversy by the ICJ, as it is bound to do by the 1966 Geneva Agreement.
• Venezuela’s Ambassador to the United Nations, Samuel Moncada Acosta, who was present at the session, ruled out any occupation plan by the South American country. The UN Security Council, following the meeting at which both Haiti and Suriname addressed the delegates has so far issued no official statement.

(Sources: Loop Caribbean News & NCBCM Research)

• Mexican Pemex crude oil production is down some 20,000 barrels per day (Bpd) following a fire at an offshore platform on Saturday, April 6, that left several injured and at least one dead, a source at the state energy company said.
• While the reduction amounts to a 1% decrease, a prolonged outage would further dent already falling crude oil production that hit its lowest level in 45 years in February.
• According to anonymous sources, the Akal-B platform in the Gulf of Mexico was still out of service on Tuesday as workers sought to restore operations.
• The company has not provided updates on the fire since Sunday, when it reported that it was carrying out an inspection and evaluating the causes of the fire "to reestablish operations at the processing centre."
• Pemex puts its current production of oil and condensate at 1.8 million bpd, of which 1.5 million is crude oil, the lowest level in 45 years.
• In recent years, the oil company has recorded several fatal accidents at its offshore facilities, which some experts attribute to a lack of investment in key maintenance. Pemex has repeatedly denied this.

 (Source: Reuters)

• The third time is not the charm. March’s higher-than-expected inflation number, announced on Wednesday, follows hot prints in January and February and kills off the prospects the Federal Reserve will lower borrowing costs in June. The central bank has hinted at three small rate cuts this year; however, economic data and political tensions may force it into fewer, but bigger, reductions.
• Fed Chair Jerome Powell had said the previous two pieces of inflation data might have been “bumps in the road”, but the current figures suggest bigger issues are afoot. The Consumer Price Index rose at an annual rate of 3.5% in March, faster than the 3.2% recorded in February, due to higher gasoline, rent and food costs. Although the Fed targets a different inflation yardstick that has been undershooting CPI, the pace of price growth is well above its 2% goal.
• The Fed indicated it may make three cuts this year, of 25 basis points each, to bring rates from the current 5.25% to 5.5% range to around 4.5% to 4.75%. However, if Powell doesn’t start cutting in June, his window will get narrower.
• Notably, while Powell may choose not the wade in the hot political waters, fewer bigger cuts are risky. Two 50-basis point reductions would bring rates below the level forecast by the Fed last month, increasing the chances of a pickup in inflation. Keeping rates higher through 2024 could curb economic growth and even cause a recession. Still, if economic data and political realities block the road to lower rates, Powell may be tempted to take a shortcut and enact fewer bigger cuts.
• The Fed meets at the end of July, but derivatives prices suggest traders believe the September meeting is more likely to kickstart easier monetary policy, according to LSEG.

(Source: Reuters)

• The European Central Bank is all but certain to keep borrowing costs at a record high on Thursday but is likely to signal that a rate cut could come as soon as June, given a sharp slowdown in inflation and continued economic weakness.
• The ECB has kept interest rates steady since September but has already signalled that cuts are coming into view, with policymakers awaiting a few more comforting wage indicators before pulling the trigger.
• The only complication could be if the U.S. Federal Reserve delayed its own policy easing, although even that might slow but not stop the ECB given a widening performance gap in the world's biggest economy and the 20-country Eurozone.
• The Eurozone is now in its sixth straight quarter of economic stagnation and the labour market is starting to soften. Meanwhile, the U.S. economy continues to grow above trend, its labour market remains tight and inflation rose more than expected last month, raising the risk of price growth getting stuck.
• Policymakers have pointed to a June cut in the 4% deposit rate so often that investors consider it an effective pre-commitment and any walking back would risk damaging the ECB's credibility.
• However, ECB President Christine Lagarde is likely to avoid any talk of what happens beyond June, especially as there is little consensus yet on how far and fast interest rates need to fall. Markets have priced in 80 basis points of cuts this year, or between three and four moves, but these expectations have moved in a wide range.

(Source: Reuters)

• In its recent statement, the Bank of Jamaica (BOJ) defends its actions taken in December 2021 to suspend the cambio and remittance operating licence of then Alliance Financial Services Limited (AFSL), an Alliance Investment Management Limited (AIML) - affiliated company. This notice comes following the Court’s ruling to dismiss the Bank’s charges against AIML.
• In addition to the suspension, the BOJ’s actions included the revocation of the authorisation granted to AFSL to operate in the Bank of Jamaica Fintech Regulatory Sandbox as a payment service provider, effective 3 December 2021.
• As stated at the time, the Bank says regulatory actions became necessary after the Financial Investigations Division (FID) charged AFSL’s principals and two AFSL-affiliated companies at the time (AIML and Alliance Finance Limited (AFL)) with several offenses under the Bank of Jamaica Act and the Banking Services Act.
• Bank of Jamaica maintains that its actions were necessary as the allegations at the time threatened the good order in the foreign exchange market and payment systems as well as the reputation and good standing of the Jamaican financial system internationally.
• It further noted that Alliance’s divestment of business was a strategy and activity pursued by the principals of Alliance as their own business decision and that the Bank of Jamaica had no part in that decision or transaction.

(Source: BOJ)

• Eppley has announced the appointment of Raymond Donaldson as the Chief Executive Officer, effective May 3, 2024.
• Jeffrey Brown will also join Eppley on May 3, 2024, as Chief Investment Officer and will work closely with Denise Gallimore, Vice President of Real Estate, and Samantha Summerbell, Assistant Vice President of Credit, to grow and expand Eppley’s investment efforts.
• Justin Nam has resigned as Eppley’s General Manager to pursue other interests after nearly a decade at the company. His resignation is effective May 31, 2024, and he will coordinate with Raymond and Jeffrey to facilitate a smooth transition.
• Raymond Donaldson has a 20-year career in banking and finance in Jamaica, the Bahamas, and the wider Caribbean. Most recently, Mr. Donaldson was Vice President of Corporate and Commercial Banking at National Commercial Bank. Prior to that, Mr. Donaldson served as Director of Corporate and Investment Banking in the Bahamas and Turks and Caicos at CIBC FirstCaribbean.
• Jeffrey Brown has held executive roles in banking in Jamaica and Barbados, mostly recently as Head of Loan Structuring and Syndications at National Commercial Bank and previously at CIBC FirstCaribbean, Scotiabank, and PricewaterhouseCoopers (PwC).

(Source: JSE)