• The Government of St. Kitts and Nevis has successfully implemented its new salary increase for government employees and a Contributory Pension Plan, effective January 01, 2024. Civil servants and pensioners will benefit from an 8% salary increase commencing on January 12, 2024.
• The Contributory Pension Plan, also commencing on January 12, 2024, with a 3% pension contribution, is specifically designed for all Government Auxiliary Employees (GAE) and those employed by the government since May 18, 2012. This plan aims to provide a secure and sustainable pension system, contributing to the financial stability of government employees post-retirement.
• To ensure a smooth transition and comprehensive understanding of these new benefits, particularly the Contributory Pension Plan, a series of information sessions will commence on January 15, 2024.
• Prime Minister, the Honourable Dr. Terrance Drew, expressed his satisfaction with the implementation of these changes, reiterating the Government of St. Kitts and Nevis’s dedication to improving employee working conditions and benefits. He emphasized that the new salary structure and pension plan represent a long-term commitment to support government employees throughout their careers and into retirement.

(Source: St. Kitts and Nevis Observer)

• The International Monetary Fund (IMF) published its full report following the fourth review under the Extended Fund Facility (EFF) arrangement for Suriname. The document comes just under a month after the IMF Board approval that allowed for the disbursement of around $53Mn (accumulated $263Mn) and greenlit the program extension until March 2025. The review from the IMF was positive, highlighting the authorities’ commitment to fiscal discipline while undertaking an ambitious reform agenda.
• Program performance is reported to be strong following the fourth review, with all quantitative performance criteria (QPCs) and continuous performance criteria met. Authorities, however, missed the September floor on social assistance spending. Progress on meeting the structural benchmarks under the EFF continues, albeit with various delays.
• On the fiscal front, the IMF anticipates authorities to achieve a 1.6% of GDP primary surplus this year, despite weaker mining revenue. For 2024, it revised the primary balance target to 2.7% of GDP from 3.5% to support the recovery and also “attract and retain qualified civil servants”. The IMF anticipates a return to a 3.5% primary surplus in 2025, the final year of the program and an election year.
• Still, the report noted, “further fiscal consolidation beyond the program period may be needed to build buffers for the recapitalization of the CBvS (Central Bank) and commercial banks”. The IMF estimates the recapitalization needs at 10% of GDP, with 5% of GDP to the CBvS through annual injections and a one-time 5% of GDP recap for the commercial banks. This is now expected to take place sometime in 2024.
• Policy implementation challenges are the foremost risk, particularly if social discontent were to worsen. Other key downside risks to the near-term outlook include rising risks to the financial sector and weak capacity that could impact the implementation of the government’s reform program.
• The revised Debt Sustainability Analysis (DSA) shows a lower estimated debt balance for end-2023 at 87% of GDP compared to 107% following the third review. Half of this difference reflects the delay of the recap assumptions to 2024. Despite the lower figure, the downward debt trajectory is slightly more modest than earlier forecasts, with debt expected to reach 60% of GDP by 2032, assuming real GDP at 3% and primary surpluses of 3.5% of GDP over the period.

 (Sources: International Monetary Fund & Oppenheimer & Co. Inc.)

• US Bond Manager, Pacific Investment Management Company LLC (PIMCO), emphasizes that it is premature to declare victory over inflation despite market expectations of a soft landing for the U.S. economy. The bond manager suggests that recession risks persist, warranting a vigilant approach.
• PIMCO predicts that bonds will outperform stocks in 2024, especially in the event of a recession. Despite a recent bond-market rally driven by expectations of Fed rate cuts, the company adopts a neutral stance on duration, highlighting that it currently doesn’t view duration extension as a compelling tactical trade.
• Looking ahead, PIMCO expresses concerns about long-term bonds facing potential challenges due to worries about widening U.S. fiscal deficits and increased government bond issuance. The company anticipates that anxiety regarding elevated supply, seen in late summer, could lead to further weakness in the long-end curve. PIMCO favours government bond maturities of five to 10 years and is "underweight" in the 30-year area.

(Source: Reuters)

• Canada's trade surplus decreased to CAD 1.57Bn in November from the previous month, falling below analysts' expectations of CAD 2Bn. October's surplus was revised upward to CAD 3.2Bn.
• Exports experienced a 0.6% decline, marking the first decrease in five months. The drop was attributed to lower exports of precious metals like gold, silver, and platinum group metals, as well as aircraft and transportation equipment. Bergman said the decline in precious metals was likely due to a decrease in bank demand in Europe due to unrest in the Middle East.
• Imports, on the other hand, were up 1.9%, driven by energy products and industrial machinery, with increased imports of nuclear fuel and other energy products. Under the energy segment, imports of nuclear fuel and other energy products increased the most, mainly on higher imports of uranium from Kazakhstan. Imports of refined petroleum energy products also increased due to higher imports of motor gasoline and aviation fuel from the United States, coinciding with outages reported in Canadian refineries in autumn.
• Despite flat economic growth in October, the Bank of Canada noted easing labour market pressures. The central bank expects a slowdown in 2024 but considers it a sign that its monetary policy is effective. The next rate announcement is on Jan. 24, with expectations to maintain the key policy rate at 5%.
• Factors influencing the trade balance include a potential return to deficit due to normalizing auto imports after U.S. strike impacts. Further, global high interest rates may limit demand for Canadian exports.

(Source: Reuters)

• Government support for agriculture will be strengthened this year to boost productivity and enhance the sector’s contribution to gross domestic product (GDP). Agriculture currently contributes about 8.3% of GDP, and the aim is to get to the 9.0% mark, said Agriculture, Fisheries and Mining Minister, Hon. Floyd Green.
• “I believe that this will be an exceptional year for agriculture and for our farmers. This financial year, we provided about $1Bn in production incentive and $800 million to our farm road programme. We will be advocating for more, especially for farm roads. We want to bring that farm road programme to over $1Bn this year and to continue our production incentive programme”, he said.
• He noted that works on irrigation systems in Parnassus in Clarendon and Amity Hall in St. Catherine are targeted for completion this year, which will assist in increasing the sector’s output.
• Minister Green also noted that 2023 was a challenging year for the agricultural sector, citing the prolonged droughts with excessively high temperatures, followed by severe flooding in some sections of the island, all of which led to a decline in production.
• He expressed optimism for the outlook of the sector, noting that the crafting of critical agricultural programmes and projects will assist in creating a more resilient industry that is better able to manage the vagaries of climate change.

(Source: JIS)

• Small and medium-sized enterprises (SMEs) can now be listed on the stock exchange with ease thanks to the cooperative agreement signed between the T&T Chamber of Industry and Commerce (TTCIC) and the T&T Stock Exchange (TTSE).
• The agreement ensures that SMEs are aware of opportunities that come with being listed on the stock exchange. Both the TTCIC and the TTSE also agreed to engage in initiatives to benefit the business community, such as webinars, seminars, and face-to-face meetings.
• TTSE's manager of marketing operations, Jase Torry, delved deeper into the benefits and sought to clear up concerns SME owners may have. Expanding on how SMEs will gain access to capital once listed, Torry said, 'Listing on the stock exchange provides an opportunity to raise capital by issuing shares to investors, so, equity financing. This will help with expansion and the growth of business and invest in new technology.'
• Another benefit he said, would be the tax incentive for listing on the stock exchange as an SME. Once listed as an SME, there is a zero percent corporation tax, and a tax break can be implemented.
• 'It's a fantastic initiative; we, as the Government of T&T and the Ministry of Finance, would do all that we can to support entrepreneurs and SMEs in T&T. Our non-energy sector now outstrips our energy sector and I believe it's due to the many initiatives implemented by this Government. We want to see more entrepreneurs and we want to see more employment in T&T; and we want to grow our economy, as we believe that builds a better T&T,' Ministry of Finance, Brian Manning said.

(Source: Trinidad Express Newspaper)

• Disruption to global shipping as cargo carriers avoid the Red Sea could fuel further price hikes and goods scarcities in Antigua and Barbuda within weeks.
• That was the stark warning from local port bosses, just days after a deeply unpopular hike in the sales tax (ABST) came into effect, forcing shoppers to dig even deeper when visiting supermarkets, restaurants, and entertainment spots alike.
• Attacks on ships in the Red Sea have seen freight firms bypass the vital waterway that connects major markets, instead taking the long route around South Africa’s Cape of Good Hope. Notably, on Friday, the world’s biggest shipping company Maersk, announced it was suspending all Red Sea routes for the “foreseeable future”.
• Port Authority boss, Darwin Telemaque, said the situation was a “major source of concern” for all. “Shipping prices have already started rising,” he told Observer. “The duration for which cargo would arrive from Asia to North America, South America, and the Caribbean has been extended for several lines who have decided to avoid the Suez Canal.
• Telemaque said the problems are being compounded by droughts in the Panama Canal – which serves as a crucial link between the Atlantic and Pacific oceans – reducing the number of ships that pass through there each day from around 36 to 18.

(Sources: Antigua Observer)

• The U.S. economy ended last year with the labour scars from the COVID-19 pandemic effectively healed and a quandary for Federal Reserve policymakers so far waiting in vain for wage and job growth to cool to a sustainable level. The addition of 216,000 jobs to U.S. payrolls in December and wage growth of 4.1% both beat expectations, quelling traders’ expectations that the Fed will start cutting rates at its March meeting.
• "Workers still have the upper hand in the current environment, with strong wage growth and plenty of job opportunities," wrote Nationwide Senior Economist Ben Ayers. Wage growth remaining above 4% adds to concern that inflation in labour-intensive services industries may be hard to quell and represents "another blow to the odds that the Fed will cut rates early this spring."
• The language in the policy statement issued after the Dec. 12-13 session was changed to allow the possibility that no further rate increases will be needed. However, new projections showed most policymakers expect rate cuts of three-quarters of a percentage point will be appropriate by the end of the year.
• Minutes of that meeting reflected an increased sense among officials that they may be approaching a point where the risks to jobs and economic growth posed by the current level of interest rates are more serious than those posed by inflation and have fallen faster than expected of late and which by some measures is near the Fed's 2% target already.
• Despite the headline strength in employment, certain indicators suggest a potential slowdown. Recent revisions to job estimates, a decline in monthly payroll growth on a three-month average, and normalization of other labour market aspects indicate emerging challenges.
• Federal Reserve officials are beginning to question the continued need for tight monetary policy, with some recognizing potential tradeoffs between sustaining a healthy job market and addressing inflation concerns.

(Source: Reuters)

• Bleak forecasts from the UK's budget office suggest limited room for tax cuts or increased spending for the next government. However, a slight economic improvement beyond expectations could provide the winning party with significant fiscal flexibility, enabling tax cuts or funding for key plans.
• The current public debt is nearly 100% of economic output, and addressing it becomes challenging with a stagnant economy and increasing demands for public services. Productivity growth is a crucial factor; if it reaches pre-2008 levels, fiscal headroom could rise substantially, but a slowdown could lead to missing debt reduction targets by over 40 billion pounds.
• The Bank of England's interest rate policies significantly impact the government's debt interest costs, and recent expectations of rate drops could save the Treasury billions annually.
• The uncertainty of fiscal rules poses a challenge, as both major parties express the intention to reduce debt. Still, the specifics and potential changes in rules remain uncertain, affecting the government's fiscal decisions.

(Source: Reuters)

• Ciboney Group Limited (CBNY) announced that its shareholders have agreed to rename the company at its most recent annual general meeting in December. The resolution was passed for the company to be called Innovative Energy Group (IEC).
• IEC Energy Company Limited is a St. Lucia-based holding company/special purpose vehicle (SPV) incorporated to acquire the majority interest in CBNY. It was owned by Wiltshire Consulting and Advisory Group Limited and was transferred to Innovative Energy Company Limited.
• IEC purchased 393,732,417 shares or 72.1122% of the share capital on June 29, 2023, from the following former majority shareholders - FINSAC Limited (200,185 shares), Trumpton Limited (223,406,286), Jamaica Mutual Life Assurance Society (641,810 shares), Eagle Merchant Bank of Jamaica Limited (32,029,376 shares), and Crown Eagle Life Insurance Company Limited (137,454,760 shares).
• Of note, shareholders also agreed to increase the number of shares from 546Mn ordinary shares of no par value to No Maximum number of ordinary shares of no par value to facilitate the proposed subdivision of the existing ordinary shares in the capital of the Company.
• Ciboney Group was formerly a major investor in the Ciboney Hotels and Villas in Ocho Rios, St. Ann. However, the financial meltdown in the 1990s saw Ciboney's properties being sold off by the Financial Sector Adjustment Company (FINSAC), which was the majority shareholder in the distressed financial companies.

 (Source: JSE)