• Fitch Solutions forecast Guyana’s fiscal deficit will widen from 2.2% of GDP in 2022 to 3.0% in 2023 given the government’s planned 41.4% increase in headline expenditure over the year.
• While this suggests a slight deterioration in the market’s fiscal trajectory, Fitch notes that the projected deficit remains comfortably below both the 5-year and 10-year historical average deficits of 5.0% and 4.3%, respectively.
• The successful offshore oil field explorations and developments in Guyana in recent years have prompted the government to increase headline expenditure by double-digit growth rates since 2019, and 2023 will be no exception to this trend.
• Nonetheless, Oil revenues will record large gains in the medium term as production continues to rise amid stabilising prices, suggesting that Guyana will hit its first surplus in Fitch’s records by 2024.
• Overall, Fitch sees limited risks to Guyana’s medium-term fiscal trajectory due to persistent surpluses and a low debt-to-GDP ratio (24.6% in 2022 and averaging 25.6% between 2023 and 2027).

(Source: Fitch Solutions)

• As the dust settles from a string of government seizures of failed midsized banks, the forces that sparked the regional banking crisis in March are still at play.
• Rising interest rates will deepen losses on securities held by banks and motivate savers to pull cash from accounts, squeezing the main way these companies make money. Losses on commercial real estate and other loans have just begun to register for banks, further shrinking their bottom lines. Regulators will turn their sights on midsized institutions after the collapse of Silicon Valley Bank exposed supervisory lapses. 
• What is coming will likely be the most significant shift in the American banking landscape since the 2008 financial crisis. Many of the country’s 4,672 lenders will be forced into the arms of stronger banks over the next few years, either by market forces or regulators, according to a dozen executives, advisors and investment bankers who spoke with CNBC.
• After 10 straight rate hikes and with banks making headline news again this year, depositors have moved funds in search of higher yields or greater perceived safety. Now the too-big to-fail-banks, with their implicit government backstop, are seen as the safest places to park money. Big bank stocks have outperformed regionals. JPMorgan shares are up 7.6% this year, while the KBW Regional Banking Index is down more than 20%.
• Compounding the industry’s dilemma is the expectation that regulators will tighten oversight of banks, particularly those in the $100 billion to $250 billion asset range, which is where First Republic and SVB slotted.
• “Higher fixed costs require greater scale, whether you’re in steel manufacturing or banking,” he said. “The incentives for banks to get bigger have just gone up materially.” Half of the country’s banks will likely be swallowed by competitors in the next decade, said Chris Wolfe, a Fitch banking analyst. In the meantime, banks are already seeking to unload assets and businesses to boost capital, according to another veteran financials banker and former Goldman Sachs partner. 

(Source: CNBC)

• The European Union signed a free trade agreement with New Zealand on Monday that the two sides expect will increase bilateral trade by up to 30% within a decade. New Zealand will gain up to 1.8 billion New Zealand dollars ($1.1 billion; €1 billion) in exports to the 27-country bloc every year, a government statement said.
• The deal brokered over five years will cut NZ$248 million ($153 million; €140 million) a year in duties, a European Commission statement said. “New Zealand is a key partner for us in the Indo-Pacific region and this free trade agreement will bring us even closer together. With today’s signature, we have taken an important step in making the agreement a reality,” European Commission President Ursula von der Leyen said.
• Duties will be removed on 91% of New Zealand’s goods exported to the EU from the start of the agreement, rising to 97% after seven years. The deal has yet to be ratified by the two sides' parliaments and a start date set.

(Source: Yahoo Finance)

• The House of Representatives, on Tuesday (June 27), approved the Bauxite and Alumina Encouragement (Relevant Concession Period) Order, 2023. The Order will facilitate further extension of the duty concession on fuel for the bauxite sector, for the next five years.
• The Bauxite and Alumina Industries (Encouragement) Act was previously amended to grant the duty concession for the period July 1, 2018, to June 30, 2023. Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, informed that while the bauxite industry continues to make a tremendous impact on the economy, the sector continues to rely on the concession to remain afloat. Due to this, a policy decision was taken to extend the concession for an additional five years.
• The Act allowed for this concession period to be amended simply by issuing an Order, subject to affirmative resolution after review of the needs of the industry, thus eliminating the need to embark upon elaborate legislative changes, going forward.  Dr Clarke noted that withdrawal of the benefit would have grave economic implications for Jamaica, inclusive of a potential closure of the industry.
• However, he gave the assurance that the relevant engagements are ongoing to encourage the bauxite and alumina sector to reduce their dependence on the type of fuel being utilized, based on the Government’s move to utilize cleaner energy resources in all sectors.

 (Source: JIS)

• Electrical, lighting and PVC company Fosrich Limited is seeking to raise J$139.32Mn by way of a provisional allotment under a non-renounceable Rights Issue of 55,729,647 New Ordinary Shares.
• Existing ordinary stockholders as of the record date (June 2, 2023) may participate. The offer, which allows existing shareholders to acquire new shares to be issued by the company, will open on July 11 and close on August 18, 2023.
• Each existing ordinary stockholder on the record date will be provisionally allotted: One new ordinary share for every 90 existing ordinary stock unit(s) held on the record date (and so in proportion for any other number of existing ordinary stock units then held).
• The new shares will be sold for $2.50, which is 11.1% higher than its market price ($2.25) at the close of day on Wednesday July 5, 2023.
• The Company intends to use the proceeds to complete the second phase of the new 30,000 square foot Fulfilment Centre located at 76 Molynes Road as well as to pay the expenses associated with the Rights Issue, which it estimates will not exceed J$9 million inclusive of General Consumption Tax.

(Source: JSE)

• The head of the Ministry of Economy and Finance (MEF), Héctor Alexander, highlighted Saturday, July 1, that in the region, Panama leads economic growth, while maintaining lower inflation.
• "We have low inflation and, above all, what has been done in terms of public finances allows us to continue with investment grade (and pro-business) economic policies, being one of the few countries in the region that have it and one with the lowest level of risk, which benefits not only the government and its transactions but also to the operations that are carried out in Panama”, Alexander highlighted upon arriving for the installation of the National Assembly.
• “The Panamanian economy has been growing very well, 15.8% in 2021 10.8% in 2022, and it is estimated that at the end of the year, growth will be 5%.”, Alexander detailed to the media on the outskirts of the chamber.
• He added that Panama's economic growth continues to lead the region, and along with that, it can be said that the country also leads one of the lowest inflation rates, not only in Latin America but in the world, recording 2.6% in 2021, an estimated 2.1% for 2022 and a forecasted 0.5% for 2023.

(Source: Newsroom Panama)

• Costa Rica has unlocked a total of around $519Mn for its economic reform programme and a climate and sustainability programme, the International Monetary Fund (IMF) said.
• Around $274Mn went to the economic reform programme, which is one instalment in the more than $1Bn Costa Rica has received from the IMF under the arrangement, the fund said. Another $245Mn goes to the resilience and sustainability arrangement.
• The Central American country met its fiscal targets by large margins, further strengthening debt sustainability, Kenji Okamura, acting chair of the IMF board, said in a statement.
• Additionally, proposed tax reforms, including recently submitted legislation, will make the system more progressive, equitable, efficient, and environmentally friendly. The steady improvement in public debt management is also welcomed.
• "While there is scope for further monetary easing in 2023, policies should remain attentive to risks to the inflation outlook," he added.
• The IMF pegged Costa Rica's real gross domestic product (GDP) growth for this year at 3.0% and 3.2% in 2024.

(Sources: IMF & Reuters)

• June data indicated a sustained upturn in UK service sector output, but the rate of expansion eased to its weakest for three months amid a much softer rise in new orders. In contrast, staffing levels expanded at the fastest pace since last September as improving candidate availability helped to boost recruitment.
• Service providers recorded another sharp increase in their average cost burdens. Rising salary payments offset falling energy and transportation bills. However, the latest overall rise in business expenses was the weakest for just over two years. Prices charged by service companies meanwhile increased at the second-slowest pace since August 2021.
• At 53.7 in June, down from 55.2 in May, the headline seasonally adjusted S&P Global / CIPS UK Services PMI® Business Activity Index signalled a slowdown in service sector output growth to its weakest since March. The latest index reading marked five months of continuous business expansion across the service economy.
• Survey respondents typically noted resilient business and consumer spending, despite pressure on budgets from elevated inflationary pressures. However, there were several reports citing weak demand from clients in the real estate and construction sectors, largely due to rising interest rates.
• Employment numbers increased for the sixth consecutive month in June. The rate of job creation accelerated to its fastest since September 2022. Service providers widely noted that vacancies had become easier to fill. Additional staff recruitment helped to boost business capacity and in turn, resulted in an overall reduction in backlogs of work for the first time since January.

(Source: S&P Global)

• The Chinese service sector showed signs of softening growth in June, according to the latest PMI data. Business activity and new orders both expanded at notably slower rates than seen in May, as some firms reported softer-than-expected market demand. Cost pressures meanwhile remained relatively subdued, with input cost inflation remaining below the series trend, while output charges rose only slightly.
• Despite the softer increase in activity, firms added to their staffing levels at the quickest rate for three months. Recruitment in the sector was supported by a more positive outlook for the year ahead, with overall business confidence picking up for the first time in five months in June.
• At 53.9 in June, the seasonally adjusted headline Caixin China General Services Business Activity Index slipped from 57.1 in May to signal a weaker upturn in service sector activity. Though solid, the rate of growth was the softest seen since the current period of expansion began in January.
• The slower rise in business activity was often linked to softer than anticipated demand conditions. Although total new business continued to expand at the end of the second quarter, the rate of growth moderated to a six-month low and was modest overall. The new export business meanwhile expanded solidly, despite the rate of increase edging down to the softest since January. There were several reports that the sector continued to benefit from a revival in tourism and travel since the easing of pandemic restrictions.

(Source: S&P Global)

• Elite Diagnostic Limited recorded a net profit of $6.09Mn for the quarter that ended March 31, 2023. This represents a 78.4% yoy decrease in profitability. Furthermore, for the nine months ended March 2023, net profit tumbled to $4.56Mn from $34.89Mn in 2022. Despite the higher revenues, profit declined because of increased expenses over the period under review. 
• Revenue for the quarter was up by 25.6% yoy to $202.21Mn. This was driven by revenue-generating machines being back in service, allowing them to increase work hours to clear the backlogs. Similarly, revenue for the nine months increased by 25.9% yoy to $565.76Mn
• Direct costs for the quarter and the nine months ending March 2023 were up 54.7% to $66.7Mn and 24.9% to $175.19Mn, respectively. This was due to the additional maintenance repair cost that was incurred for some machines that were out of operation since Q2.
• Administrative expenses were up 29.4% yoy to $77.92Mn for the quarter, while for the nine months, it was up 35.6%, owing to higher operating expenses from the extended shifts to clear backlogs.
• Additionally, depreciation was up 87.4% to $40.18Mn and 53.3% to $116.76Mn for the quarter and the nine months respectively.
• Elite’s stock price has decreased by 30.2% since the start of the calendar year. The stock closed Wednesday’s trading session at $2.20 and currently trades at a P/E of 44.0x which is above the Junior Market Health Sector Average of 15.7x.
• Going forward the company highlighted that it will implement a different strategy to ensure that the machines are brought back into service more quickly to minimize the reduction in projected daily revenues. Additionally, the installation of solar equipment at its Liguanea branch and subsequently at its Drax Hall branch is being coordinated to reduce its operating expenses in coming quarters.

(Source: JSE)