• A strong public service is critical in enabling Jamaica to achieve the level of development for which it strives.
• Cabinet Secretary Audrey Sewell, in making the declaration at the recent awards ceremony for the top civil servants of the year held at the Terra Nova All-Suite Hotel in Kingston, said that a key characteristic of a developed country is the strength of its public sector.
• She highlighted that employees within the public sector are the architects of government policies that catalyse sustainable economic development.
• Sewell said that the Government remains committed to the transformation of the public sector and the vision articulated in the ‘Government at Your Service: Public Sector Modernisation Vision and Strategy: 2002-2012.
• This speaks to creating a public sector with a culture of performance that is client-focused and results-oriented and is constantly seeking ways to improve the delivery of public services.
• While there are still some ways to go, she noted that the public sector continues to demonstrate resilience and adaptability in navigating the challenges of modernisation, technological innovation, and public health crises.

(Source: JIS)

• The International Monetary Fund (IMF) is recommending that The Bahamas consider implementing a corporate income tax coupled with a personal income tax targeting high earners. In its Staff Concluding Statement of the 2023 Article IV Mission, the IMF also noted that there is an opportunity to meaningfully streamline current preferences, loopholes, and exemptions within the tax system.
• “Beyond reducing the fiscal deficit, a set of comprehensive tax reforms would be valuable in both raising revenues and improving progressivity. In particular, the implementation of the OECD global minimum corporate tax by trading partners provides an opportunity for The Bahamas to introduce a well-designed corporate income tax accompanied by a personal income tax on the highest earners. There is also scope to significantly rationalize existing preferences, loopholes, and exemptions in the tax system,” the IMF stated.
• The IMF noted that after peaking at 7.1% in July 2022, inflation has fallen steadily to 2.3% in July 2023, largely driven by the fall in global energy prices.
• Nonetheless, the Fund noted that a fall in tourism demand due to an economic slowdown in source markets could weigh negatively on the growth outlook. Furthermore, renewed pressures on global food and oil prices could burden lower-income households pressure on the balance of payments. Any associated fiscal measures to dampen the pass-through of global prices to the domestic economy would have to be well-targeted to mitigate further strain on the fiscal position. Finally, The Bahamas is highly exposed to risks emanating from climate change and natural disasters. In the event that risks are realised, domestic financing challenges could increase.
• According to the Fund, efficiency gains in spending programs and improvements in the financial management of state-owned enterprises will be needed to offset some of the budgetary pressures arising from an ageing population. To improve longer-run growth and strengthen social inclusion, there will be a need to reorient spending priorities toward education, healthcare-targeted social transfers, and infrastructure (particularly those that will increase resilience to the effects of climate change).
• The IMF also pointed out that enhancing debt management practices is crucial for mitigating the vulnerabilities stemming from The Bahamas’ high debt rollover requirements. It said that recent reforms aimed at fortifying both primary and secondary debt markets are expected to enhance the liquidity of government bonds, encouraging increased domestic holdings of longer-term securities.

 (Sources: IMF & Eyewitness News)

• The Panama Canal Authority (ACP), one of the world's main maritime trade routes, announced on Friday it is launching a special auction slot on Saturday at a base price was $55,000, as it battles a severe drought that has forced it to reduce daily ship crossings.
• "The purpose of this measure is to provide a greater opportunity of obtaining a slot for vessels in the Panamax Locks that have been waiting in the transit queue for an extended period," the canal's authority said in a statement.
• The Authority said it will add extra slots, allowing ships to pay big premiums to transit the waterway, which has become congested due to an ongoing drought.
• The special auctions allow vessels that have been waiting for a long time to pay a one-off fee — at times recently reaching several million dollars — in order to transit the canal. Only vessels that have been waiting for 10 days or more will be eligible to participate, according to an advisory.
• In a communiqué to the shipping lines, the ACP informed that the auction would be announced three days before the transit date and would be held two days before, as was the case last Saturday.
• Following the first bid, a chemical tanker was awarded the special slot last Monday for $1,100,100.
• The Canal Authority added that spaces (slots) that become available during the reserve period may be offered through extraordinary auctions, depending on several factors, including the water level of Gatun Lake. Full container vessels that have already obtained a reservation space before the auctions are called will also be considered. The charges derived from these auctions will be additional to the usual tolls paid for crossing.

 (Sources: Reuters & Port News)

• Federal Reserve officials express comfort with maintaining current interest rates for the rest of the year, aiming for a "soft landing" for the U.S. economy.
• Fed Governor Christopher Waller is confident in the current policy's ability to slow the economy and bring inflation back to 2%, considering potential rate cuts if inflation continues to decline over the next few months.
• Waller's remarks led to a market reaction, with bond yields falling and investors adjusting expectations, indicating a higher probability of rate cuts starting in May and potentially decreasing by more than a full percentage point in 2024.
• Differing views within the Fed are evident, with Fed Governor Michelle Bowman expressing doubts about the durability of progress on inflation and Chicago Fed President Austan Goolsbee suggesting a sharp decline in inflation. The final pre-meeting communication is expected from Fed Chair Jerome Powell.

 (Source: Reuters)

• U.S. consumer confidence rebounded in November, breaking a three-month decline, driven by plans for significant purchases like vehicles and houses despite concerns about higher prices and interest rates.
• While the improvement in confidence was notable, around two-thirds of surveyed consumers still perceive a recession as likely within the next year, contrasting with economists' predictions of slow growth instead.
• The Conference Board's consumer confidence index rose to 102.0 in November, surpassing expectations. Optimism was more pronounced among households aged 55 and older, with the present situation index slightly decreasing and the expectations index rising.
• Consumers express worries about rising prices, but their 12-month inflation expectations fell to 5.7%. The share of consumers anticipating higher interest rates was the smallest since April 2021, aligning with market expectations of a potential Fed rate cut in mid-2024.
• Financial markets responded positively, with stocks rising, the dollar falling, and U.S. Treasury prices increasing. Consumers showed increased intentions to make significant purchases, and online spending during Cyber Week exceeded expectations.
• The labour market remains resilient, supporting consumer spending, but concerns about job availability are emerging. Additionally, the survey indicates more consumers plan to buy a house, though affordability challenges may arise due to high mortgage rates and a shortage of available properties.

(Source: Reuters)

• Around 1,000 ships pass through the Panama Canal each month carrying a total of over 40Mn tons of goods—about 5% of global maritime trade volumes. However, water levels in this vital link between the Atlantic and Pacific oceans have fallen to critical lows because of the worst drought in the canal’s 143-year history.
• As a result, the Bank of Jamaica’s Monetary Policy Committee has expressed concern that worsening shipping delays in the Panama Canal may begin to affect the bank’s efforts to tame inflation.
• The issue was discussed during the September meeting of the central bank's monetary policy committee (MPC) and was itemised in the minutes as one of the developing "risks" that must be monitored as a drought, exacerbated by a severe El Nino weather system in Panama, continues to plague water levels at the Gatún Lake, which feeds the locks of the key global trade conduit.
• According to Panama Canal authorities, the drought requires them to reduce the number of daily transits from 29 to 25 ships per day starting this month, and in the proceeding weeks, they will reduce vessel transits even more until it declines to 18 ships a day in February. That represents between 40% to 50% of full capacity. Before the restrictions, up to 38 vessels traversed the canal daily.
• Therefore, economies like the Jamaica, which relies on the canal for trade, should prepare for more disruption and delay.
• Though the inflation outturn has fallen within the BOJ’s target range for the past two months, 5.9% and 5.1% for September and October, respectively, the delays could spark another round of inflationary shocks as the costs of moving goods increase.

(Source: IMF)

• First Rock, through its wholly owned subsidiary First Rock Latam One SRL, has signed a deal to acquire two parcels of land in Allajuela, San Jose for the construction of two new KFC restaurants.
• The restaurants will be leased to Intelectiva Costa Rica S.A., the operators of KFC Costa Rica, for a term of twenty years.
• Diversification across industries and jurisdictions is part of the company’s core strategies to bolster revenue and increase shareholders' value.

(Source: JSE)

• The economy of the Dominican Republic registered a growth of 3.6% last October, which is the highest monthly expansion, higher than the 3.1% of September and the 2.6% inter-annual increase in the third quarter, the Central Bank informed last Friday.
• In a press release, the issuing entity specified that the increase registered in October is mainly explained by the excellent performance of the activities of hotels, bars and restaurants (9.0%), financial services (6.4%), construction (4.7%), agricultural sector (4.1%), manufacturing of free zones (3.4%), commerce (2.8%) and local manufacturing (1.5%), among others.
• The agency highlighted the excellent performance of construction, with favourable variation rates for the fourth consecutive month. In accumulated terms, the Monthly Economic Activity Indicator (IMAE) registered an average variation of 1.9% in January-October 2023 concerning the same period of the previous year, mainly due to the 10.8% expansion of hotels, bars, and restaurants, the activity that contributed the most to the growth this year and that explains approximately 40% of the same.
• The excellent performance of hotels, bars, and restaurants was mainly due to the arrival of tourists, which in the first ten months of the year stood at 8.3Mn, a historical record, and is expected to exceed 10 million visitors by the end of 2023, with foreign exchange income to the country amounting to more than 10Bn dollars.
• Given the preliminary results corresponding to October, the issuing entity affirmed that the Dominican economy continues its recovery process to reach its potential growth rate in 2024. Notably, the Dominican Republic is expected to grow by 2.5% in 2023 and 2.7% in 2024.
• According to the Central Bank, the strength of the macroeconomic fundamentals and the resilience of the productive sectors allow to continue advancing in the economic reactivation in a context where inflation would remain within the target range of 4.0 % ± 1.0%.

(Sources: Dominican Today & Fitch Solutions)

• Bermuda has begun the process of joining the Caribbean Community (CARICOM). Premier David Burt obtained the go-ahead from the United Kingdom Under Secretary of State for the Americas and Caribbean, David Rutley, during a trip to London last week for the Joint Ministerial Council, according to Deputy Premier Walter Roban.
• Roban stated that Rutley expressed support for Bermuda making an application and encouraged Bermuda “to start the process and make an offer, to which we will respond,” He stated that Britain would be consulted at every stage prior to Bermuda’s application being filed.
• “We are now researching and exploring everything that is required to submit a complete application. Official discussions have begun with the United Kingdom to determine whether an entrustment is required or whether an amendment to the existing entrustment is sufficient,” Roban said.
• In response to “the elephant in the room,” immigration and the free movement of CARICOM nationals, Roban stated that full membership will not necessitate Bermuda opening its doors to let visitors from member countries come and go as they like, and given Bermuda’s modest size, he believes the Protocol on the Free Movement of Persons would not be accepted as a condition of membership.
• “At the moment, the CARICOM members who have opted out of free labour movement are Antigua and Barbuda, the Bahamas, Haiti, and Montserrat.” These countries have not signed or approved the Protocol on Free Movement of Persons, one of nine protocols that revise the Treaty of Chaguaramas to establish the CARICOM Single Market and Economy (CSME),” he stated.
• Bermuda is already benefiting from its status as an associate member through organisations such as the Caribbean Public Health Agency (CARPHA) and CARIFTA. However, “Being a full member of Caricom will allow Bermuda to have a voice and vote on matters of policy addressed by Caricom that impact the whole region, particularly the issue around correspondent banking and de-risking,” he said.

(Source: St Vincent Times)

• Some major banks expect global economic growth to ease further in 2024, squeezed by elevated interest rates, higher energy prices, and a slowdown in the world's two largest economies.
• The global economy is forecast to grow 2.9% this year, a Reuters poll showed, with next year's growth seen slowing to 2.6%. Most economists expect the global economy to avoid a recession but have flagged possibilities of "mild recessions" in Europe and the United Kingdom.
• A soft landing for the United States is still on the cards, although uncertainty around the Federal Reserve's monetary tightening path clouds the outlook. China's growth is seen weakening, exacerbated by companies seeking alternative, cost-efficient production destinations.

(Source: Reuters)