• The Inter-American Development Bank (IDB) and the International Monetary Fund (IMF) said they have agreed to enhance their collaboration to better support the efforts of members in Latin America and the Caribbean (LAC) to foster sustainable and inclusive growth and address the structural challenges of climate change.
• The agencies said that by operating within the scope of each institution's mandate, the IDB and IMF staff will increase their cooperation in two main areas - general coordination and climate finance.
• The two Washington-based financial institutions said that as part of their enhanced general coordination, the IDB and the IMF staff will deepen their cooperation on four topics, namely: surveillance of macro-economic policies; IMF arrangements, in particular, the Resilience and Sustainability Fund (RSF); IDB lending operations, including investment and policy-based loans; and capacity development.  
• The climate finance collaboration will focus on identifying policies to support member countries' climate objectives in the context of the RSF, capacity development to support the implementation of the RSF and building programmatic approaches to mobilise climate finance.
• By strengthening their collaboration in these areas, the IDB and the IMF are seeking to enhance their support for designing economic policies and policy reform programmes in common member countries, as well as mobilise climate finance more effectively. This includes working with country platforms to attract additional funding for climate action.
• In this context, climate finance roundtables recently convened in Barbados, Jamaica, and Costa Rica, brought together authorities, development partners, and private investors. These initiatives helped to explore solutions to the countries' climate finance needs and provided faster and broader access to financing and capacity development.

(Source: Trinidad Express Newspapers)

• Panama's government expects to start deportation flights for migrants who crossed the country's dangerous Darien jungle in two to three months, the country's chief of migration, Roger Mojica, said. The flights will be paid by the United States under a recent agreement that the two countries closed earlier this month.
• "We are establishing the needs, equipment, and requirements that Panama has to face in order to start the program, and we are in conversations with the United States," Mojica said during a conference call. "We estimate we should be able to start the process in two to three months."
• Panama's new president, Jose Raul Mulino, has vowed to curb unlawful immigration and has started to work closely with the U.S. to control passage through the jungle that links Central America to Colombia.
• Panama's Darien Gap, a jungle that bridges Central America with the South American continent, saw a record half a million migrants cross last year seeking security and better economic opportunities abroad. Panamanian authorities estimate that some 213,702 thousand people have crossed the Darien so far this year, many of them children.
• The topic of migration has gained traction ahead of elections in the U.S., a key destination for many migrants, with Republican candidate and former President Donald Trump vowing stronger borders and mass deportations.

 (Source: Reuters)

• The Bank of Canada (BoC) is widely expected to cut its key overnight rate on Wednesday for a second time in as many months after recent data showed a further easing of consumer price inflation, restrained spending, and a lackluster economic outlook.
• The BoC trimmed its policy interest rate by 25 basis points to 4.75% last month after keeping it at its highest in more than two decades for nearly a year. In making its first cut in four years, it became the first Group of Seven central banks to do so since the pandemic.
• Taylor Schleich, rates strategist at the National Bank of Canada, pronounced that “A rate cut is likely to be delivered”. He went on to add that he expects the central bank to reiterate its message that future cuts will be based on incoming data. At the time of the last cut, BoC Governor Tiff Macklem said any future rate reductions would be data-dependent. Financial markets are seeing almost a 93% chance of a rate cut this week, and a total of 75 basis points drop in borrowing costs this year.
• The BoC will announce its monetary policy decision on July 24 at 9:45 a.m. It will also release the quarterly Monetary Policy Report, which will include fresh forecasts regarding 2024 economic growth and inflation. Economists expect them to be lower than previous forecasts.
• "The economy is now operating with visible disinflationary economic slack ... with the Bank likely to again mention mortgage renewals as a drag ahead," Avery Shenfeld Managing Director and Chief Economist of CIBC Capital Markets, wrote in a note. Despite the persistent economic weakness, the BoC would likely refrain from making rate cuts deeper than 25 basis points.
• Canada's economic growth has been positive this year but barely encouraging. Rising unemployment has also highlighted economic constraints and underlying fears of recession. The bulk of the growth has been attributed to an immigration-led rise in population rather than any inherent strength of the economy. In its latest Monetary Policy Report in April, the bank estimated growth in 2024 would come in at 1.5% and 2.2% in 2025.

(Source: Reuters)

• Britain's new finance minister Rachel Reeves said she will consider giving inflation-busting pay increases for almost 2Mn government employees later this month to avoid crippling public sector strikes.
• Two pay review bodies who advise the government gave the recommendation of a 5.5% wage rise for 460,000 teachers and 1.4Mn staff in the state-run National Health Service, according to media reports.
• The estimated cost of pay rises of 5.5% for teachers and certain National Health Service staff could be about 3Bn pounds ($3.88Bn), according to the Institute for Fiscal Studies (IFS).
• If the government wants to approve the pay raises it would need to raise taxes, increase borrowing or cut government spending in other areas, the IFS said.
• Reeves said she would set out her plans for public sector pay deals and announce the date of the next budget before the end of this month.

(Source: Reuters)

• Efficiency in the public sector is being enhanced through the buildout of broadband infrastructure and the enhancement of the eGov Data Centre. Finance Minister, Dr. the Hon. Nigel Clarke, made the declaration as he addressed the recent Caribbean Public Sector Financial Management Conference in Kingston, where he gave an update on gains made under the Public Sector Transformation Programme.
• He noted that information and communications technology (ICT) is a critical pillar in the modernisation of the public sector. “Under the Public Sector Transformation Programme, we now have a dedicated broadband infrastructure that connects over 200 government offices in the greater Kingston Metropolitan area and over 500 more outside of Kingston, which includes schools and police stations and other government establishments,” Minister Clarke said.
• He mentioned that, as part of the ICT aspect of transformation, the Government managed to make a significant investment in the eGov Data Centre. In March, the Minister announced that upgrades were completed to the centre at a cost of $600Mn. “Under the Public Sector Transformation Programme, we are able to massively scale up the storage capacity of the existing data centre and to massively enlarge the cloud infrastructure available to it,” he indicated.
• With the upgrades in the capacity of the facility to deliver, there is now the possibility of consolidating existing data centres across the public service into the eGov Data Centre. These upgrades will provide economies of scale as the government seeks to ensure that the service from the data centre is at the best international standards as far as security and cyber threats are concerned and other service standards.

 (Source: JIS)

• Jamaican banks will no longer apply fees to dormant saving accounts, ending a practice that has been controversial for decades.
• Bank of Jamaica's Deputy Governor, Jide Lewis, has stated that banks have transitioned from manual methods to technological solutions for monitoring dormant accounts. This technology has received BOJ's verification. Moreover, banks have implemented a transaction-monitoring system that enables senior staff to spot and pinpoint employees attempting to access dormant accounts.
• In a session with the Economy and Production Committee of Parliament, Anthony Hylton conveyed his contentment with the latest advancements, noting that a senior banking official had previously advised him of the risks bank employees posed to dormant accounts.
• “My concern leading up to now has been that if members of staff were the ones accessing these accounts, then the responsibility must devolve on the banks to address this situation,” the opposition lawmaker said. However, Lewis said when a bank employee is involved in internal fraud, there are actions that the institution will take in addition to the intervention of the police. He said that banks are also required to report internal fraud to the BOJ.
• Reports indicate that 60% of dormant accounts range from one to seven years of age, with a median duration of 4.8 years. Furthermore, 94% of these accounts contain funds unclaimed for over 15 years. In Jamaica, if money remains unclaimed in a deposit-taking institution for 15 years or longer, it is transferred to the nation's revenue following a one-year publication period in the newspaper and on the Ministry of Finance's website.

 (Source: Caribbean National Weekly

• The Dominican Republic has surged to the forefront of global tourism, according to a recent report by Latinometrics. Despite its relatively small size, the Caribbean country has made significant strides in attracting visitors, outpacing even larger countries like Brazil and Argentina.
• With a population of nearly 11Mn and a surface area that could fit 175 times into Brazil’s, the Dominican Republic is one of the smallest countries in Latin America. However, it has managed to punch above its weight, boasting a diversified export economy worth $13Bn in 2023. Key exports include electrical equipment, medical instruments, and tobacco, while services account for 57% of GDP, with tourism being a significant contributor.
• As the “Tourism Bank” and a major financier of the tourism sector, Banco Popular Dominicano is committed to supporting local businesses and foreign investors seeking to capitalize on the sector’s growth potential. The bank highlights the importance of tourism as a key driver of the Dominican Republic’s economy.
• The country has emerged as a global leader in tourism post-pandemic, welcoming 7.1Mn visitors in 2022 and over 10Mn last year. Notably, it attracted 60% more tourists than Brazil, the region’s largest country by population and size. This makes the Dominican Republic one of the most visited countries in Latin America, second only to Mexico.
• The country’s tourism boom has also had a positive impact on investment, with two consecutive years of record foreign direct investment (FDI). Political stability has played a crucial role in attracting foreign capital in Latin America, and this has undoubtedly been a key factor in the Dominican Republic’s strong economic growth.

 (Source: Dominican Today)

• The Antigua and Barbuda government says it remains confident that the new regional airline, LIAT (Leeward Islands Air Transport Services ) 2020, will begin commercial operations early next month.
• However, the government says it is still awaiting a response from the Barbados-based Caribbean Development Bank (CDB) regarding its call for the bank and regional shareholder governments in the bankrupt airline to relinquish their interest in an escrow fund. This fund will be used to make the severance payments owed to the former employees. The shareholder governments of the former airline are Antigua and Barbuda, Barbados, Dominica, and St Vincent and the Grenadines.
• A statement issued after the weekly cabinet meeting noted that the ministers 'held a very brief discussion on LIAT (2020) and the possible start-up date for its re-commencement of commercial flights. 'Although a precise date has not yet been decided, the cabinet is confident LIAT will take to the skies in early August 2024,' the statement said.
• The commencement of LIAT operations would mean more direct flights to Antigua and Barbuda, boosting tourism numbers for 2024-onwards. This would result in greater growth across the tourism sector and related sectors, as well as greater economic growth for the dual island.
• Currently, Antigua and Barbuda is forecasted to grow by 5.8% in 2024, up from 4.2% in 2023, driven by a rebound in tourism (e.g. Antigua’s hosting of the UN’s Small Island Developing States Conference and co-hosting of the T20 Cricket World Cup) and construction activity; two of the major contributors to gross domestic product (GDP).

 (Sources: Trinidad Express Newspaper & NCBCM Research)

• China surprised markets by cutting major short and long-term interest rates on Monday, its first such broad move since August last year, signaling intent to boost growth in the world's second-largest economy just days after a Communist Party leadership meeting.
• The cuts to the central bank's key short-term policy rate, its market operations rates and benchmark bank lending rates came after China reported weaker-than-expected second-quarter economic data last week and its top leaders met for a plenum that occurs roughly every five years.
• The country is verging on deflation and faces a prolonged property crisis, surging debt and weak consumer and business sentiment. Trade tensions are also flaring, as global leaders grow increasingly wary of China's export dominance.
• "The cut today is an unexpected move, likely due to the sharp slowdown in growth momentum in the second quarter as well as the call for 'achieving this year's growth target' by the third plenum," said Larry Hu, chief China economist at Macquarie.
• Additionally, the People's Bank of China (PBOC) said on Monday it would cut the seven-day reverse repo rate to 1.7% from 1.8% and would also improve the mechanism of open market operations.
• Minutes later, China cut benchmark lending rates by the same margin at the monthly fixing. The one-year loan prime rate (LPR) was lowered to 3.35% from 3.45% previously, while the five-year LPR was reduced to 3.85% from 3.95%. That was the first cut to the rate since August 2023.
• Ju Wang, head of Greater China FX & rates strategy at BNP Paribas, said that growing expectations for the Federal Reserve to start cutting interest rates also gave the PBOC room to ease its policy, given the pressure the yuan has been under because of a wide yield gap with the dollar.

(Source: Reuters)

• A jump in British household savings since the COVID-19 pandemic appears here to stay and cannot be fully explained by higher interest rates or unemployment fears, according to the country's statistics agency.
• The Office for National Statistics (ONS) showed Britain's households saved 11.1% of their income in the first three months of this year, up from 5.8% in the final quarter of 2019. This was the highest rate since 2010, excluding the start of the pandemic when it spiked to 27.4%.
• Britain's persistent increase in the household savings rate contrasts with the United States and, to a lesser extent, the euro zone. The U.S. personal savings rate is just under 4%, around 3 percentage points lower than in 2019. The euro zone's savings rate of 14.7% is above Britain’s but has increased by less since 2019.
• The savings rate represents the percentage of household income after taxes and benefits that is not spent. Employers' pension contributions and changes in the value of retirement savings also count as income.
• Excess savings built up by British households since the pandemic are now in the range of 143Bn to 338Bn pounds ($185Bn to $437Bn), the ONS said. "UK households have been reluctant to spend these accumulated savings, unlike in the U.S. where it has been an important factor in supporting household consumption and economic growth," it further added.
• Retail volumes are still just below pre-pandemic levels, and a decision to spend past savings or a lower savings rate in the future would boost consumer demand and could fuel inflation. Of the increased saving rate since 2019, ONS analysis suggested more than 40% reflected higher interest rates and changed earnings expectations.
• Bank of England interest rates rose from 0.1% to 5.25% between December 2021 and August 2023, making it costlier to borrow and more rewarding to save. Financial markets expect the central bank to cut rates only slowly over the next 12 months.
• However, Under 10% of the increase in the savings rate was extra precautionary saving driven by fears of unemployment. But that left almost half the increase due to 'other factors' which the ONS said could include geopolitical worries or economic concerns not directly related to unemployment or interest rates.

 (Source: Reuters)