• Individuals could soon be able to move their accounts easily from one bank to another. The Bank of Jamaica (BOJ) is actively developing strategies to make deposit portability a reality locally.
• Deposit portability will give the banked and unbanked the flexibility to shop around at the various banks to find the services that best suit their needs.
• In addition to other features, the dream is that all standing instructions, inclusive of direct debits of credit cards, will remain intact without the complicated account opening procedures or know-your-customer (KYC) hassles.
• Speaking with JIS News, Deputy BOJ Governor, Research and Economic Programming Division and Financial Stability, Robert Stennett, explained that the Central Bank is aware that the initiative is a game changer for banking in Jamaica. He noted that the Central Bank is currently working on strategies that will allow customers to close existing accounts and move their business to another bank easily.
• Stennett however noted that it will be a long-term effort as it will take a lot of time to develop the right strategies and make the necessary amendments to the law.

(Source: JIS News)

• Mexico's central bank on Wednesday signalled it would hold the country's benchmark interest rate at its current all-time high for an extended period of time to bring inflation down to the bank's target range.
• "To achieve orderly and sustained convergence of headline inflation to the 3% target, the bank's governing board considers that it will be necessary to maintain the benchmark rate at its current level for a prolonged period," the Bank of Mexico said in its quarterly economic report.
• The central bank's governing board unanimously held the benchmark interest rate steady at 11.25% on May 18, breaking a nearly two-year rate-hike cycle.

(Source: Reuters)

• With elections a year away, Fitch expects policy continuity will remain stable throughout the remainder of 2023 in the Dominican Republic.
• The approaching election season, coupled with elevated costs of living, are likely to pressure President Luis Abinader to maintain subsidy spending and work towards raising the minimum wage.
• Abinader has also kept in place popular policies, including the fuel subsidy as well as the strict policy of deporting any undocumented Haitian in the Dominican Republic. While there has been some pushback to the latter on humanitarian grounds, the policy remains popular, especially as Dominicans fear the influx of Haitians will put strains on public services.
• Of note, President Abinader has focused on capital projects for improving and modernising the country’s ecotourism, renewable energy sector, as well as transportation infrastructure. His Modern Revolution Party (PRM) will continue to enjoy a majority coalition in Congress, supporting policy continuity. 
• Given these factors, Fitch has maintained the Short-Term Political Risk Index (STPRI) score at 75.2 out of 100. While inflationary pressures continue to subside, the upcoming election cycle and cost of living crisis will pose some risks to social stability in the short term.
• Last week, Central Bank Governor, Valdez Albizu, delivered a speech to the local banking association hinting that inflation could converge to the target range as soon as this month. In April it had come out at 5.15% (down from 9.6% a year before), while the target band is set at 4% +/- 100bp.

(Source: Fitch Solutions)

• The S&P 500 rose Tuesday after the Biden administration and Republican lawmakers reached a tentative deal on raising the U.S. debt ceiling.
• President Joe Biden and House Majority Leader Kevin McCarthy reached an agreement to raise the debt ceiling and avoid a default over the weekend, with Congress set to vote on the legislation as early as Wednesday. Lawmakers have not signaled that they intended to return to Capitol Hill early to work on the deal. Both Republican and Democratic support is needed for the bill agreement to pass.
• “Although the upcoming votes in Congress still pose a small risk, the main risk had been that political pressures would prevent a deal from coming together,” wrote Goldman Sachs economists in a note. “Now that a deal has been reached, it seems very likely to pass both chambers of Congress in the coming week.”
• The agreement comes just days before the so-called “X date” on June 5, which is the earliest date the Treasury Department has signalled the U.S. could default on debt obligations. The initial compromise was first announced on Saturday evening.

(Source: CNBC)

• Steep competition in the housing market and low supply are heating up home prices again. Nationally, home prices in March were 0.7% higher than in March 2022, the S&P CoreLogic Case-Shiller Indices said Tuesday.
• “The modest increases in home prices we saw a month ago accelerated in March 2023,” said Craig J. Lazzara, managing director at S&P DJI in a release. “Two months of increasing prices do not define a recovery, but March’s results suggest that the decline in home prices that began in June 2022 may have come to an end.”
• Home prices are rising again month to month, however. After seasonal adjustment, prices increased nationally by 0.4% in March compared with February. The 10-city composite gained 0.6% and the 20-city composite rose 0.5%.
• Lazzara also noted that the price acceleration nationally was also apparent at a more granular level. Before seasonal adjustment, prices rose in all 20 cities in March (versus 12 in February), and in all 20, price gains accelerated between February and March.

(Source: CNBC)

• Lighting and energy company, FosRich has established an American subsidiary to explore business opportunities in the United States. FosRich USA, Inc. was registered in Delaware but will be operating out of New York.
• FosRich intends to tap into the minority-owned business market in the USA, where the federal government has set aside US$1 trillion to purchase products and services supplied by the minority-owned business segment. The company plans to take advantage of an infrastructure buildout of bridges and roads, that will be taking place across the US. The company also plans to leverage its relationship with infrastructural giants, Siemens and Philips, to supply directly to these projects, whether they be housing projects, roads or airport expansion.
• The company’s initial target market for its PVC pipes and fittings is the tri-state area of New York, New Jersey, and Connecticut, where these areas have a lot of Jamaicans and a lot of developers that have established strong relationships with Jamaicans. The company is also set up to take advantage of, not only opportunities in the US but also go after similar projects financed by the United Nations in developing countries. The UN procures about US$30.4 billion worth of products and services each year, including pipes like the one's FosRich produces, which provides an opportunity for the company to continue diversifying and increasing earnings.
• With the new establishment of the subsidiary in the United States, Fosrich has access to a larger market. This could be a key driver of growth in the medium term and expectations from management is that the subsidiary could drive between 20 and 30% of the business.
• The notice comes just days ahead of FosRich also indicating that its planned rights issue will be for those on record as owning its shares on June 2. Given that FosRich already raised $369.6 million out of the maximum $500 million allowed for companies listed on the Junior Market of the Jamaica Stock Exchange, the maximum the company can raise is $130.4 million. That said, the difference will go towards paying fees and other costs associated with raising the capital.

(Source: RJR News & Observer)

• An outstanding 2023 summer tourist season is being anticipated for Jamaica as the country prepares to welcome a surge of visitors that would further consolidate the island’s status as a premier vacation destination.
• Acting Deputy Director of Tourism with responsibility for the USA, Canada and Latin America, Philip Rose, told journalists that after wrapping up its best winter tourist season, during the 2022/23 period, Jamaica is forecast for what promises to be its best summer yet.
• He was addressing journalists during the launch of Frontier Airlines’ service between Dallas-Fort Worth International Airport in Dallas, Texas, USA, and Sangster International Airport in Montego Bay on May 22.
• Rose advised that online activities already show increased interest and more air seats secured for travellers looking to come to Jamaica. “We are seeing the online behaviour from the consumers that they want more and more to come to Jamaica. As such, we are very confident that we are going to have a fantastic summer, and beyond,” he further pointed out.
• The new Frontier Airlines flight arriving on May 22, had 92 passengers and a six-member crew. It marked the ninth new flight that Frontier has introduced to Montego Bay, since commencing operations during the COVID-19 pandemic.
• Jamaica continues to benefit significantly from the vibrancy in the tourism industry. Tourism accounts for about 34% of the economic output in Jamaica and 31% of employment in Jamaica and is expected to be a key driver for economic growth this year.

(Source: JIS News)

• The International Monetary Fund (IMF) has advised the Government of Grenada not to continue a tax amnesty programme implemented on 1 January and scheduled to conclude on 31 December 2023.
• “We emphasised several times to the Government that this one should be the last one; it should be very deeply rooted in people’s minds and those who are owing tax to the Government that this should be the last one,” said Huidan Lin, IMF Mission Chief for Grenada, in the just concluded Article IV consultation of the IMF’s Articles of Agreement.
• Both parties (IMF and Govt. of Grenada) asserted that although amnesties are sometimes good, it is not the ultimate solution to the problems that are faced in taxation and thereby cannot offer a permanent remedy.
• The tax amnesty was announced in the presentation of the 2023 budget statement by then Finance Minister Dickon Mitchell. He explained that over EC$777Mn in outstanding taxes are owed, along with late fees, and penalties, and the amnesty is aimed at settling money owing to the Government.
• The IMF has indicated that the Government does not only have to say that there will be no more amnesty, but it also has to step up on enforcement of the Tax Administration law. The efficiency of the tax system can be improved through an update to its tax incentive framework and increased risk-based internal auditing of the customs administration.

(Sources: IMF & Now Grenada)

• Fitch forecasts a fall in Trinidad and Tobago (T&T)’s 2023 and 2024 current account surpluses to 11.2% of GDP and 10.8% respectively, from its 2022 estimate of 18.3%.
• While this marks a fairly sizable fall in the size of the surplus compared to its 2022 estimate, Fitch notes that its forecasts are largely consistent with the 10-year (2012-2021) average historical surplus of 7.8%. 
• This will be the result of a narrower surplus in the goods trade, as global energy prices fall from a multi-year high recorded in 2022. Energy products typically account for four-fifths of T&T’s goods exports, making the trade balance highly susceptible to changes in global energy prices.
• The services trade deficit, meanwhile, will decline as tourist arrivals continue to approach pre-pandemic levels.
• International tourist arrivals have yet to reach the pre-pandemic (2017-19) average of 32,186 monthly visitors, having averaged only 18,874 in 2022 according to the UN World Tourism Organization (UNWTO). This indicates that tourist arrivals still have room to continue growing in 2023 and 2024, though Fitch notes that the pace of such recovery will face headwinds stemming from slow growth in tourist-origin markets like the US. 
• Despite the lower current account surplus, Fitch asserts that risks to T&T’s external position are small given its position as a net creditor to the rest of the world and adequate foreign reserves.

(Source: Fitch Solutions)

• A handful of hard-right Republican lawmakers said on Monday they would oppose a deal to raise the United States' $31.4 trillion debt ceiling, in a sign that the bipartisan agreement could face a rocky path through Congress before the U.S. runs out of money next week.
• Florida Governor Ron DeSantis, a candidate for the Republican 2024 presidential nomination, said the deal does not do enough to change the fiscal trajectory. "After this deal, our country will still be careening toward bankruptcy," he said on Fox News. Still, backers predicted it would clear Congress before the United States runs out of money to pay its bills, which the Treasury Department says will happen on June 5.
• The 99-page bill would suspend the debt limit through Jan. 1, 2025, allowing lawmakers to set aside the politically risky issue until after the November 2024 presidential election. It would also cap some government spending over the next two years. While some panel members have come out in disagreement with the bill, top congressional Republican Kevin McCarthy states that it will draw on the support of most Republicans who control the House of Representatives.
• Representative Raul Grijalva, a progressive Democrat, spoke out in reference to an element of the bill that would speed up the permitting process for some energy projects. The bill would also claw back unused COVID-19 funds, and stiffen work requirements for food aid programmes for poor Americans. It would shift some funding away from the tax-collecting Internal Revenue Service, though White House officials say that should not undercut enforcement in the near term.
• Republicans have argued that steep spending cuts are necessary to curb the growth of the national debt, which at $31.4 trillion is roughly equal to the annual output of the economy. Interest payments on that debt are projected to eat up a growing share of the budget in the decades to come as an ageing population pushes up health and retirement costs, according to government forecasts.

(Source: Reuters)