• Britain experienced a bigger-than-expected budget deficit in December, swelled by debt interest costs and a one-off purchase of military homes, according to official data that underlined the fiscal pressure faced by finance minister Rachel Reeves.
• Public sector net borrowing was 17.8Bn pounds ($22Bn) in December, more than 10.0Bn pounds higher than a year earlier, the Office for National Statistics said on Wednesday. Economists polled by Reuters had a median forecast of 14.1Bn pounds for headline public sector net borrowing.
• Since the Oct. 30 budget that raised borrowing and increased tax on employers to help restore public services and investment, economic and financial data has largely turned against Reeves, adding to the likelihood that she will need to do more to meet the government's self-imposed fiscal rules. Reeves, speaking with Bloomberg on the sidelines of the World Economic Forum's annual meeting in Davos, Switzerland, said Britain's public finances were now in order but she would continue to take decisions to meet the fiscal rules.
• Earlier this month, a sharp sell-off in British government bonds, driven to a large degree by shifts in U.S. interest rate expectations, forced Reeves to say she would act to meet the government's fiscal rules.
• These include balancing day-to-day spending with revenues by the end of the decade and for public sector net financial liabilities to decline as a proportion of gross domestic product. However, market borrowing costs have fallen in the last week and as at Tuesday, British gilts were the third best-performing bonds among the Group of Seven countries this year.

(Source: Reuters)

• On January 21, 2025, Caribbean Information and Credit Rating Services Limited (CariCRIS) reaffirmed the Issuer/Corporate Credit Ratings assigned to National Commercial Bank Jamaica Limited (NCBJ or the Bank) at CariA and CariA+ (Foreign and Local Currency Rating) on the regional rating scale, and jmAA+ (Local Currency Rating) on the Jamaica national scale.
• The regional ratings indicate that the level of creditworthiness of NCBJ, relative to other peers in the Caribbean, is ‘good’. However, the national scale rating indicates that the level of creditworthiness of NCBJ relative to other peers in Jamaica, is ‘high’.
• CariCRIS also maintained a stable outlook on the ratings for NCBJ. The stable outlook reflects the high probability of a turnaround in profitability over the next 12-15 months due to the three consecutive declines in interest rates in Jamaica in the 2nd half of 2024, with further rate cuts anticipated.
• This is likely to result in a reduction in the cost of funds, thus positively impacting net interest income, as well as the booking of trading gains. Profitability is, however, expected to be tempered by an increase in expenses as NCBJ continues to implement strategic projects.
• That said, the Bank and its subsidiaries are expected to remain well-capitalised with good asset quality and NCBJ is expected to comfortably meet its financial obligations over the next 12 to 15 months.

(Source: CariCRIS)

• Local private equity firm, MFS Capital Partners (MFS CAP), has announced that its subsidiary, Micro-Financing Solutions (MFS) Limited, has rebranded and will now operate as Monolith Financial Services (MFS) Limited.
• The name change is said to align with the company’s evolution and its current strategic focus on providing a diverse suite of financial solutions to meet the needs of a broad client base.
• The rebranding reflects the company’s broader mission of fostering economic growth and inclusivity through a variety of financial solutions, while to its parent company, MFS Capital Partners, Monolith is set to be that stable foundation around which, the company will build out its portfolio of subsidiaries. 
• Having begun operations in 2010, Monolith Financial Services has transitioned from its initial offerings of micro-loans to a comprehensive range of financial services, comprising FX trading, remittances, bill payment services, and private credit from its three locations across Kingston.
• While the company no longer offers microloans as a part of its suite of products, the rebrand signifies the company’s continued commitment to financial inclusion by offering innovative and accessible financial solutions tailored to varying needs.

(Source: JSE)

• Panamanian authorities began an audit of the China-linked company that controls two ports adjacent to the Panama Canal, as President Donald Trump repeats threats to take over the waterway.
• The comptroller’s office sent a team of auditors on Monday (Jan 20) to the local offices of the Panama Ports Company, a subsidiary of Hong Kong billionaire Li Ka-shing’s CK Hutchison Holdings, to launch their investigation, the comptroller’s office said on X.
• Comptroller General Anel Bolo Flores said last week the probe would seek to verify compliance with the terms of a 25-year concession granted to the company and promised a “severe and strong” financial audit. Panama initially granted the concession in 1998, and the Panama Maritime Authority authorised its renewal in 2021.
• The scrutiny comes as Trump accuses Panama of allowing China to meddle in the canal. In his inaugural address on Monday, Trump reiterated his claim that China is operating the waterway and said that his administration would take it back.
• Panama’s government has repeatedly denied that there is any Chinese presence in the canal, and Trump has not yet produced any evidence to contradict this. Panama’s President Jose Raul Mulino on Monday reiterated in a post on X that the canal will remain under Panamanian control.

(Sources: Bloomberg & Business Times)

• Mexico's headline and core inflation rates will likely land below 4% in January, deputy central bank governor Jonathan Heath told newspaper Excelsior in a story published on Monday, adding that the bank does not need to exaggerate a restrictive posture.
• The central banker's forecast comes as some brace for upward pressure on prices, as the incoming U.S. president, Donald Trump, has threatened blanket tariffs on its southern neighbour's exports to the United States in addition to mass deportations. Both have the potential to drive inflation.
• Heath, one of four members of the central bank's policy-setting board, also told the newspaper that he aims to lower the Latin American economy's inflation rate to the bank's 3% target. In December, Mexico's headline inflation rate eased to 4.21%, according to official data, which also saw the core rate tick up to 3.65%.
• At the time, Heath hailed the evolution of prices as "good news," as inflation slowed to its lowest rate since October 2023.

(Source: Reuters)

• British pay growth stayed stubbornly strong in the three months to November but there were more signs of a softening jobs market, according to data on Tuesday that reinforced the current outlook for Bank of England interest rates.
• Growth in private-sector pay excluding bonuses - a measure watched closely by the BoE as a gauge of domestic inflation pressure - rose to 6.0% in the three months to November from 5.5% in the three months to October.
• It was the strongest reading since February 2024 and suggested that the central bank's fourth-quarter forecast of 5.1% will be overshot by a wide margin. Sterling and market expectations for a Bank of England interest rate cut on Feb. 6 were largely unmoved by the data.
• Economists and investors expect the BoE to cut its main interest rate by 0.25 percentage points to 4.5% on Feb. 6, and economists polled by Reuters expect three further cuts this year. Meanwhile, markets expect one or two more after February. While pay growth pointed to persistent inflationary pressure, other measures of labour market health pointed in the opposite direction.
• However, the survey used for calculating the unemployment rate is being overhauled after response rates fell too low to be a reliable gauge of the jobs market. Separate data provided by employers to the tax authorities showed the number of employees dropped by 47,000 in December. This is the sharpest fall since November 2020, following a 32,000 drop a month earlier.

Source: (Reuters)

• As Donald Trump begins his second term as U.S. president, currency speculators are giving the dollar their strongest backing since before he was first given keys to the White House.
• The question now, is whether this signals more USD strength ahead or marks the peak of the current cycle for the "mighty dollar", as Trump referred to the greenback late last year. The bullish dollar trade has had a remarkable run since late September when investors began betting on a stronger U.S. economy, 'higher for longer' U.S. interest rates, and a Trump victory.
• In the three and a half months since then, Commodity Futures Trading Commission funds have flipped a leveraged net short¹ dollar position against major and key emerging market currencies worth around $15Bn to a leveraged net long position worth over $35Bn. That's the biggest 'long' since January 2016.
• At the same time, the dollar index, a measure of the dollar's value against its G10 peers, rose 10% to its highest level in more than two years, posting multi-year peaks against sterling and the Canadian dollar as well as record highs against emerging market currencies like the Brazilian real and Indian rupee.
• As the 'Trump 2.0' era begins, the dollar index is some 20% higher than its average over the past quarter of a century and at levels rarely seen since the 1980s. As Societe Generale's Kit Juckes notes, the dollar might be "mighty" but may also be "getting a little bit ahead of itself."
• Analysts at Morgan Stanley agree, announcing on Friday that they were turning bearish on the dollar and recommend selling it against the euro, sterling, and yen. They argue that most of the economic fundamentals and dynamics that have strengthened the dollar recently – and there have been many - are fully priced into the dollar's exchange rate or even over-priced in some cases.

________________________________

¹A long position is essentially a bet that an asset will rise in value, and a short position is a wager its price will fall.

(Source: Reuters)

• Data from the 2023 Economic and Social Survey of Jamaica (ESSJ) shows that micro, small, and medium-sized enterprises (MSMEs) have made steady gains in their numbers and sales compared to 2022. Sales from MSMEs rose by 1.2%, totalling $207.4Bn, driven by the performance of micro and medium-sized firms across various sectors, including Electricity and Water Supply, Mining and Quarrying, and Manufacturing.
• Details were provided by the Director General of the Planning Institute of Jamaica (PIOJ), Dr. Wayne Henry, at the opening of the Ministry of Industry, Investment and Commerce’s ‘MSME Business Roadshow’, on January 16^th.
• “Providing micro, small and medium-sized enterprises (MSMEs) with the opportunities to access services and facilitating access to financing to bolster their initiatives, represents a pivotal stride towards advancing economic development and mitigating poverty,” Dr. Henry said.
• The Director General noted that data from the Bank of Jamaica (BOJ) showed that Loans to Local Business Firms increased by 18.5% in 2023. Additionally, government initiatives, like the provision of funds to organisations for on-lending, tax incentives, and business development programmes, alongside private-sector initiatives, played crucial roles in fostering this growth.
• On average, business and consumer confidence improved, with the Index of Business Confidence averaging 139.8 points and the Index of Consumer Confidence rising to 163.0 points, indicating a positive economic outlook.
• Underscoring the critical role of the MSME sector in advancing the fundamental components of Jamaica’s economic structure, Dr Henry said that they play essential roles in promoting equity, preserving wealth, fostering economic growth, generating employment opportunities, facilitating sustained development, encouraging innovation, and expanding the private sector.

(Source: JIS)

• Jamaica’s Prime Minister, Dr the Most Honourable Andrew Holness, will set the tone at the Jamaica Stock Exchange’s (JSE’s) three-day conference from January 21 – 23, 2025 under the theme “Safeguarding the Capital Markets: People, Opportunities and Progress”. Prime Minister Holness will address the topic ‘Fueling Economic Development by Fostering a Pro-Business Environment’.
• The JSE conference will be an ‘in-person’ event with limited virtual access according to organisers in Kingston who expect hundreds of participants from Asia, Africa, Europe, North and South America, and several CARICOM countries.
• World-class leaders and industry experts from various sectors will gather at the annual event to share success secrets and help demystify complex topics in the presence of other leading entrepreneurs and noted professionals in their respective fields.
• The early-year conference is usually a fillip for participants to gain insights to help them succeed. It will feature addresses from other stakeholders including Finance Minister Mrs Fayval Williams with her address on ‘Empowering a Nation: Transforming Government Assets into Wealth for the People.’; Opposition Spokesman on Finance and Chairman of Parliament’s Public Accounts Committee (PAC) legislator Julian J. Robinson who will detail strategies on ‘Empowering People by Providing Opportunities for Progress’; and Mr Gregory Fisher, Managing Director and Head of EM Fixed Income Wealth Management at Jefferies on the topic, ‘The World Economy, Opportunities and Threats in 2025 and Beyond’.

(Source: JSE)

• Guyana's economy achieved its fifth consecutive year of double-digit growth in 2024, expanding 43.6% as oil output and exports showed solid increases, Guyana’s Finance minister said on Friday, January 17^th, but the expansion is expected to slow this year.
• The oil sector expanded 57.7%, while the non-oil sector grew 13.1% last year, the minister said.
• Oil output rose to an average of 616,000 barrels per day (bpd) from 391,000 bpd the previous year as a consortium led by U.S. major Exxon Mobil which controls all production in the country, continued expanding operations and completed a key upgrade at its offshore facilities. A fourth floating oil production facility expected this year will add 250,000 bpd of output capacity to the Exxon consortium's operations.
• The nation's oil revenue increased to $2.57Bn in 2024, including crude sales made by the government and $348Mn in royalties received from the Exxon group, compared with $1.62Bn in 2023, including $218.1Mn in royalties.
• However, economic growth is expected to slow in 2025, with a 10.6% expansion mainly fueled by the non-oil sector for the first time in years. Oil sector expansion is expected to slow from recent years to 9.5% growth, due to lower crude prices.
• Guyana forecasts an average of $71.9 per barrel for its crude this year, down from $78-80 last year, which would secure about $2.2Bn in revenue from oil exports.

(Source: Reuters)