• The Canadian fiscal deficit will narrow to 7.8% of GDP in FY2021/22 and 7.3% in FY2022/23, yet remain significantly wider than pre-2020 levels. In 2020, the pandemic and economic downturn caused public revenues to fall 10.4%, while Prime Minister Justin Trudeau’s government passed a series of countercyclical spending measures to ease the economic strain on households and businesses.
• Due to significant expansions in the Canada Emergency Response Benefit (CERB) and Canada Emergency Wage Subsidy (CEWS) programs, public expenditures increased 80.1% in FY2020/21 (April 2020 – March 2021), which widened the budget deficit to an estimated 13.5% of GDP. While Fitch is increasingly upbeat on the Canadian economy in 2021 and 2022 and expects public revenues will strengthen over the coming quarters, sustained stimulus will keep the deficit wide in the short-to-medium term. 
• Public spending will remain elevated, at 22.3% of GDP in FY2021/22, but will decrease from 27.1% of GDP in FY2020/21. Improving economic conditions will help reduce public expenditures on transfer payments and limit the amount of subsidies paid out to Canadians impacted by COVID-19, which drove the substantial increase in spending in FY2020/21. That being said, the government’s FY2021/22 budget, which passed in April, extended short-term unemployment schemes and subsidies on wages and rent. 
• Long-term public spending will remain structurally higher than pre-pandemic levels as the government expands and implements several progressive programs.

(Source: Fitch Solutions)

• Prime Minister, the Most Hon. Andrew Holness, says that the COVID-19 Subcommittee of Cabinet will meet over the weekend to review the coronavirus situation in the country. The meeting comes as the island sees an uptick in cases of the virus. Mr. Holness, who was addressing the House of Representatives on Wednesday (July 21), said that the meeting will, among other things, determine whether they may need to tighten some of the current COVID-19 measures prior to their expiration on August 10. 
• Holness further stated that the nation will be notified via press conference, “possibly Tuesday, if we do intend to make any new changes to the Orders”. 
• He noted that Jamaica recorded 122 new cases of COVID-19 on Tuesday, “our single highest day in terms of numbers in over eight weeks since May 2021”. He noted that there has also been an increase in the positivity rate. “Our average positivity rate for the last seven days was 8.8%. For week 29, the positivity rate, so far, is 9.9%. This puts us in the high-transmission range. You will recall that our target is to get our positivity rate down to 5.0% or below; we are almost doubling that now,” he pointed out. 
• The reimplementation of strict measures to contain the spread could stall the country’s economic recovery in the coming months, until the government is able to secure an adequate amount of vaccines to fast track inoculation.

(Source: JIS & NCBCM Research)

• The alpha variant of the coronavirus, which is estimated to be between 40% and 80% more transmissible than the original, has been confirmed to be present in The Bahamas, according to the Pan American Health Organization (PAHO). 
• During its weekly briefing, PAHO Regional Advisor for Viral and Emerging Diseases Dr Jairo Andres Mendez-Rico was asked whether the organization had confirmed additional variants in The Bahamas since the onset of the pandemic. Local health professionals have long speculated the presence of additional variants, but had not publicly confirmed based on samples sent to labs. 
• “So far, there is no evidence of delta variant circulation in The Bahamas; nevertheless, the genomic surveillance should be maintained to timely detect the possible introduction and spread of delta or any other variant.” According to Johns Hopkins data, the alpha variant was first detected in southern England last year, with patients of alpha facing a greater risk of hospitalization and death. 
• An Oxford study showed that after adapting to covariables, patients receiving primary care and infected with the alpha strain were more likely to die in 28 days than those infected by other strains of the virus. The alpha, beta, delta and gamma have been classified as variants of concern, which denotes evidence of an increase in transmissibility; more severe disease, including increased hospitalization or death; and reduced effectiveness of treatments or vaccines. 
• The nation has administered around 100,000 COVID-19 vaccines, with 39,366 fully vaccinated — around 9% of the population. The COVAX program, of which The Bahamas is a part, will see 3.7 million more vaccine doses sent to countries in the Americas region through the end of July, said PAHO Assistant Director Jarbas Barbosa.

 (Source: Eye Witness News)

• In 2020, real GDP contracted by an estimated 17.9%, and unemployment averaged 27.0%. This elevated unemployment is the main driver behind Barbados’ score of 65.0 out of 100 in the ‘social stability’ subcomponent of Fitch’s Short-Term Political Risk Index (STPRI), its lowest subcomponent score in the index. 
• Moving forward, Fitch Solutions forecasts that real GDP will rebound to 1.8% growth in 2021 and 4.0% in 2022 as the tourism sector re-opens, which the agency expects will lower unemployment to 14.0% in 2021 and 12.1% in 2022. An improving labour market will in turn reduce social stability risks. 
• That being said, Barbados’ economic recovery will limit risks to social stability in the quarters ahead, while the ruling, centre-left Barbados Labour Party (BLP)’s significant legislative majority will boost policymaking. As a result, Fitch Solutions assigned Barbados a score of 80.0 out of 100 in its Short-Term Political Risk Index, which is above the Caribbean average of 70.7. 
• Medium-term risks to Prime Minister Mia Mottley’s re-election prospects are the unpopular fiscal consolidation measures, which will likely be implemented in the quarters leading up to the May 2023 parliamentary elections.

 (Source: Fitch Solutions)

• The Biden administration on Thursday released $3 billion in COVID-19 rescue funds aimed at helping localities bolster their economies in the wake of the pandemic, calling on communities to seek funding for a range of revitalization projects. 
• The funding, authorized by the $1.9 trillion American Rescue Plan Act, is part of President Joe Biden's "Build Back Better" agenda to rebuild the nation after the novel coronavirus triggered widespread shutdowns and led to more than 600,000 U.S. deaths so far. 
• New funding will be available to communities nationwide through six programs ran through the Department of Commerce targeting jobs, for instance, in tourism, the agency said in a statement. 
• Commerce Secretary Gina Raimondo highlighted that the initiative could create as many as 300,000 jobs in the near term. Of the total funding, $1 billion will be allocated for up to 30 localities that apply for money for up to eight community projects such as building infrastructure or training workers.

(Source: Reuters)

• The International Monetary Fund on Thursday said it would revamp its concessional lending programs to better support low-income countries during the COVID-19 pandemic and recovery, and raised the prospect of limited sales of IMF gold to boost its lending capability. 
• The IMF said its executive board last week backed reforms that include raising the access limits for concessional financing for low-income countries by 45%; eliminating access limits for the poorest countries with eligible programs; and maintaining zero-percent interest rates on such loans. 
• To boost the lending capacity of its Poverty Reduction and Growth Trust, the IMF said it would seek an additional $18 billion in coming years from member countries, on top of some $24 billion already raised since the start of the crisis, plus $4 billion in subsidies to support zero-percent interest rates. 
• Richer member countries could channel their existing and new Special Drawing Rights emergency reserves to raise the funds, the IMF said, adding that the expected approval of a $650 billion increase in the IMF's SDR allocation this August could help facilitate the fund-raising process.

(Source: Reuters)

• A total of €30Mn (approximately US$35Mn) in concessional funding support is being provided to bolster the response of the Caribbean Development Bank’s (CDB’s) 19 borrowing member countries (BMCs), including Jamaica, to the coronavirus pandemic. The funds are intended to assist beneficiary countries in accessing and deploying COVID-19 vaccines and strengthening the capacity of their health services to deal with the pandemic. 
• The allocation, which is programmed for deployment by year end, has been repurposed from a €120Mn Climate Action Line of Credit II, jointly executed by the CDB and European Investment Bank (EIB) in 2017 to aid the BMCs in combatting climate change. The funds will be critical for BMCs in getting more affordable access to safe vaccines and related material, equipment and services for their populations. 
• The programme includes debt service support, policy-based lending, the purchasing of personal protective equipment for front-line workers, procurement of digital devices and other technology that support services to underpin online learning and assist with learning recovery. It will also include financing of a regional communication engagement strategy to increase vaccination, and the provision of working capital to micro, small and medium-sized enterprises (MSMEs).

(Source: JIS)

• Minister of Agriculture and Fisheries, Hon. Floyd Green, has welcomed the insurance product, GraceKennedy (GK) Weather Protect, which will provide coverage for farmers and fisher-folk impacted by adverse weather events. The policy is being provided through GK Insurance and will protect the businesses of farmers and fishermen against heavy rain, wind and drought. 
• Green, who was speaking at the virtual launch of the insurance scheme on Tuesday (July 20), said this new product “could not have come at a better time”, given the fact that the hurricane season has begun. He pointed out that the impact of severe weather conditions has been a major challenge for the agricultural sector, noting that between 2004 and 2017, the sector suffered $196Bn in losses from weather-related events. 
• In October last year, there was a significant period of sustained rains that caused more than $2.50Bn in damage to crops across Jamaica, and affected 14,000 farmers. “They (farmers) had to depend on the Government to find the resources to give them to start their agricultural enterprise again. While we were able to pull together over $600 million to get our farmers up and running, one of the realities is that a lot of the farmers had to wait for significant periods to get that support from the Government… [due to several factors],” he said. 
• This is where the GK Weather Protect product could better serve farmers and fishers by providing an accessible, affordable and flexible insurance product that offers a quick payout. Jamaica now has from the private sector “a truly affordable and accessible crop insurance scheme that will help to protect our farmers from the realities that they face because of our weather patterns”.

(Source: JIS)

• An improving COVID-19 situation in the Dominican Republic and economic tailwinds will bolster public support for President Luis Abinader and help facilitate his market-friendly policy agenda. 
• The DomRep government quickly secured enough COVID-19 vaccine doses to vaccinate its entire population, and the national campaign has vaccinated 49.5% of citizens as of July 19, making it the fastest vaccination effort in the Caribbean. The successful vaccination efforts have also allowed the country to facilitate visitors to the island without the requirement for a negative COVID-19 test, which has bolstered demand for its tourism product and allowed for a strong recovery in the sector so far this year. 
• Economic activity has also strengthened in 2021, averaging 13.4% monthly growth in the year through May. Real GDP growth is forecasted to be 6.0% in 2021 and 4.7% in 2022, which will help reverse the economic impact of the pandemic that caused real GDP to contract 6.7% in 2020. 
• However, political instability in neighbouring Haiti is likely to spur immigration to the Dominican Republic and may prompt the government to tighten entry requirements. 
• Fitch Solutions maintains the Dominican Republic’s score of 66.3 out of 100 in its Short-Term Political Risk Index (STPRI) as an improving economy and the recent developments in Haiti will offset in the country’s broader risk profile.  

(Source: Fitch Solutions & NCBCM Research)

• The United States has extended border restrictions on non-essential travel yet again. The U.S. and Mexico agreed to continue limiting non-essential travel “to prevent the spread of COVID-19” through August 21. The previous border restrictions were expected to end Thursday, July 22, 2021. 
• S. and Mexican officials determined that non-essential travel, such as tourism, between the United States and Mexico currently poses additional risk of transmission and spread of the virus. 
• Moreover, given the sustained human-to-human transmission of the virus, coupled with risks posed by new variants, returning to previous levels of travel between the two nations places the personnel staffing land ports of entry between the United States and Mexico, as well as the individuals traveling through these ports of entry, at increased risk of exposure to the virus associated with COVID-19. 
• This will continue to weigh on Mexico’s tourism sector outlook over the near term, given that the US is Mexico’s largest source market.

(Source: Reuters)