• The World Bank has approved a new project to assist the Dominican Republic in promoting key institutional reforms for climate resilience, reduced water, soil, and air pollution, as well as enhanced natural resource protection.
• The Sustainable Development Policy Loan (SDPL) project valued at US$400Mn will support the government’s efforts to strengthen institutional and financing capacity for environmental protection, with important positive effects on public health and the livelihoods of communities involved in tourism and fishing activities.
• “The Dominican Republic, loses the equivalent of 0.4% of its Gross Domestic Product annually due to extreme natural hazards associated with climate change. The World Bank’s support has been and continues to be crucial in achieving our goals of building climate resilience in agriculture, ensuring food security, improving landscape and natural resource management, and addressing the challenges posed by sargassum,” stated Pavel Isa Contreras, Minister of Economy, Planning, and Development.
• The SDPL project aims to enhance the government’s institutional and financial capacity for natural resource protection, climate change adaptation, and mitigation. It will also support marine conservation, reduce air and marine pollution, and strengthen river and water body protection.
• Additionally, the project will help regulate waste management from electrical and electronic equipment and address environmental challenges such as phasing out hydrofluorocarbon substances, thereby lowering greenhouse gas emissions. Furthermore, it will help tackle the sargassum seaweed issue and establish the regulatory framework for issuing green, social, and sustainable bonds.
• Overall, these climate adaptations and mitigation policies should further reduce economic and financial vulnerabilities, boosting inclusive and resilient growth. This, supported by the existing sound fiscal policies and fundamentals of the country should keep Dom Rep’s economic outlook relatively positive over the near to medium term. Real GDP is projected to grow around 4.6% and 4.3% in 2024 and 2025, respectively after growing by an estimated 4.7% in 2023.

(Sources: The World Bank Group & NCBCM Research)

• U.S. small-business confidence and hiring plans increased in May to their highest levels of the year. However, the looming U.S. presidential election also drove uncertainty to nearly a four-year high, a survey showed on Tuesday.
• The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose eight-tenths of a point to 90.5 last month, the second consecutive month it has risen after slumping in March to the lowest level since December 2012. Despite the gain, it was the 29th straight month the index was below the 50-year average of 98. The NFIB's Uncertainty Index rose nine points to 85, the highest reading since November 2020, the month the last U.S. presidential election occurred.
• 22% of owners reported that inflation was their single most important problem in operating their business, unchanged from April. The share of businesses planning price hikes increased two points to 28%. The net per cent of owners raising average selling prices was 25%, also unchanged from April. The Federal Reserve is keenly monitoring the pace of price increases as it tries to return inflation to its 2% target.
• There were some indications that small business owners may be beginning to pull back on raising wages. A net 37% of owners reported increasing compensation, down one point from 38% in April, while 18% planned to boost compensation over the next three months, down three points and the lowest reading since March 2021.
• Small businesses have increasingly felt the pressure amidst persistent inflation and high borrowing costs. The U.S. central bank on Wednesday is expected to leave its benchmark overnight interest rate unchanged in the current 5.25%-5.50% range, where it has been since last July. The Fed has raised its policy rate by 525 basis points since March 2022 to quash elevated inflation.

(Source: Reuters)

• Sagicor Select Funds Limited (SSFunds), announced on June 7, 2024, its intention to undertake a strategic reorganisation, subject to obtaining all requisite approvals.
• The reorganisation would result in the Funds being converted into two unit trusts registered with the Financial Services Commission (FSC) and governed by the Securities Collective Investment Scheme Regulations, 2013 (the CIS Regulations). This reorganisation was discussed and approved by the Board of Directors on May 8^th, 2024, and was considered to be in the best interest of the Fund’s shareholders.
• SSFunds was incorporated on January 19, 2019, and launched two funds: SELECTF and SELECTMD. Presently, both funds are listed on the main market of the Jamaica Stock Exchange (JSE).
• From the standpoint of the Board, the stocks have consistently traded at a relatively steep discount to their NAVs ranging from 17% to 35% and 40% to 45% for the SELECTF and the SELECTMD, respectively.
• The Directors and Management of SSFunds believe that the steep discount at which the shares trade on the JSE is primarily due to the illiquid market and weak demand for the shares. Therefore, a shareholder who wishes to sell his shares in a Fund has to reduce his asking price to attract buyers.
• If the Funds were unit trusts, investors would have the option to purchase or redeem units in the unit trusts at the NAV subject to possible fees and any other restrictions. The benefit to shareholders is that the units held in the new unit trusts would be priced concerning the NAV, reflecting the underlying “real value” to investors.
• The conversion process will be undertaken as a Court-approved scheme of arrangement. However, there is no guarantee that the conversion of the investment funds to unit trusts will occur as proposed. The change is subject to shareholders voting to pass the resolution to effect conversion and the company’s successful application to the FSC for registration of the new unit trusts.
• Sagicor Select Funds Limited operates two exchange-traded investment funds; namely the Sagicor Financial Select Fund (SELECTF) and the Sagicor Manufacturing and Distribution Select Fund (SELECTMD).

 (Source: JSE)

• Honey Bun Limited (HONBUN) has announced that it has acquired the Swirls brand effective June 1, 2024.
• With this acquisition, the Company plans to enhance its product portfolio, offering a wider variety of baked goods and meals to meet the growing consumer demand.
• HONBUN currently produces several variations of over a dozen products resulting in a range of over 40 products from four brands: Honey Bun, Shorty Bread, Pickney Crackaz and Buccaneer Jamaican Rum Cakes.
• This Swirls acquisition forms part of the company’s strategy to expand its offerings to grow its business and ultimately increase shareholders’ value.

(Source: JSE & NCBCM Research)

• The Trinidad and Tobago Chamber of Industry and Commerce says it remains optimistic about the outlook for the country's economy. The T&T Chamber commented as it issued a release commending Minister of Finance Colm Imbert for his presentation of the Finance (Supplementary Appropriation) (Financial Year 2024) Bill at the Parliament on Friday, June 7.
• The proposed increase in the national budget, with significant allocations to critical sectors such as healthcare, education, infrastructure, and social services, represents a positive step towards fostering sustainable economic growth.
• The allocation of funds to support SMEs (small and medium-sized enterprises) through the SME Development Fund and the focus on digital transformation and renewable energy projects are particularly welcomed by the business community. These initiatives align with the T&T Chamber's strategic direction, the T&T Chamber's release stated.
• Additionally, the emphasis on fiscal discipline and economic reforms to reduce the national debt demonstrates a commitment to long-term financial sustainability. However, the T&T Chamber expressed concerns about the expansion of the fiscal deficit, as articulated by the Minister of Finance.
• The Chamber noted that given the shortfall between the budgeted versus actual hydrocarbon prices, there is a need for fiscal and monetary incentives that will stimulate the growth of the non-energy sectors of the economy.
• The non-energy sector has become the main driver of economic growth, while the mature energy sector continues to struggle. Given this, IMF directors in their latest staff conclusion also emphasized the importance of continued efforts to mobilize revenue, particularly from the non-energy sector. This could be achieved by stepping up the efforts to operationalize the Revenue Authority and the gambling tax along with a comprehensive Value Added Tax (VAT) reform to eliminate extensive zero-ratings, exemptions, and selective tax incentives that could yield substantial revenues.
• Overall, T&T’s economic growth is projected to gain momentum in 2024 and grow by about 2.4% up from 2.1% in 2023, supported by the non-energy sectors and to a lesser extent the energy sector.
(Sources: Trinidad Express Newspapers & NCBCM Research)

• The Bahamas government has launched a new initiative aimed at assisting companies in becoming voluntarily compliant with the taxes and fees owed to various government agencies.
• Chairman of the Government's Maritime Revenue Enhancement Task Force, Commander Bertram Bowleg, said the weeklong initiative will serve as an educational exercise and offer assistance to business owners who are not compliant with agencies such as the Department of Inland Revenue, Bahamas Customs, the National Insurance Board (NIB) and the Port Department.
• '…we are bringing all the agencies together to ensure if you have a problem with NIB, Inland Revenue, Customs or Immigration you can see them and, before you leave the exercise, we can get your problem solved 80-90%.' Bowleg said that, after this initiative closes, his unit will begin door-to-door visits to ensure companies pay outstanding fees or expired Business Licenses or risk facing penalties, legal action or the threat of being shut down.
• This is a step in the right direction for the Bahamian government as there is a strong need to improve government revenues to allow for a faster reduction in debt-to-GDP. That said, there is scope to revise existing tax preferences and exemptions, to facilitate a more progressive and efficient tax system.
• Furthermore, beyond ensuring tax compliance from privately owned businesses, rationalizing the expenditures of state-owned enterprises (SOE) would alleviate current expenditure pressures. Efficiency gains in spending and improvements in the financial management of SOEs would support debt reduction and free up resources to invest in social outcomes and infrastructure.

(Sources: Trinidad Express Newspapers & NCBCM Research) 

• Updated economic projections from Federal Reserve officials this week are expected to show fewer interest rate cuts than policymakers anticipated three months ago, faster-than-expected inflation, and slower growth. This pinpoint economic outlook will carry the weight of the U.S. central bank's authority.

• With their forecasts stymied last year by faster economic growth and lower inflation than expected, and now by higher inflation and slowing growth, Fed officials of late have supplemented discussion of their outlook with the top alternate paths they think the economy may follow.

• Both a nod to what they don't know and a way to keep public expectations more fluid, it's a strategy Powell may well follow in his press conference after the end of a two-day policy meeting on Wednesday. This strategy could redirect focus from the new Summary of Economic Projections and its market-shaping plot of where officials think the policy interest rate is heading, with a focus on the median.

• Since the end of last year, precision has not been the Fed's ally as officials appeared to lock in three rate cuts for the year, only to be side-swiped by inflation that didn't decline as expected. As a result, they'll likely revise their outlook to just two quarter-percentage-point rate reductions for the year or perhaps just one, with doubts even around that.

• The U.S. Labor Department will publish new inflation data on Wednesday, just hours before the 2 p.m. EDT (1800 GMT) release of the Fed's updated projections and new policy statement. Powell's press conference will follow at 2:30 p.m. EDT. The central bank, which aggressively raised rates in 2022 and 2023 to combat a surge in inflation, is widely expected to keep its benchmark interest rate in the 5.25%-5.50% range that was set last July.
(Source: Reuters)

• European Central Bank interest rates are not on a linear downward path and policymakers could at times wait more than one meeting before cutting them again, ECB President Christine Lagarde said in a newspaper interview. The ECB cut rates from a record high last week but held off committing to more policy easing given stubbornly high wage growth and yet another increase in inflation projections.
• "We’ve made the appropriate decision, but it doesn’t mean interest rates are on a linear declining path," Lagarde told several major European newspapers in a joint interview. "There might be periods where we hold rates again."
• When asked if this meant the ECB could hold rates for longer than a single meeting, she said "it's a possibility". Markets now expect little more than one rate cut over the four meetings left this year and see between 3 and 4 reductions through the end of 2025, so in the next 12 policy meetings.
• While Lagarde did not explicitly say the ECB would hold interest rates at their current level in July, she argued that further cuts depended on a slew of wage and corporate profit indicators, which only become available closer to the bank's September meeting. "We will need more data, including on wages, on how unit profits are growing and absorbing part of the labour costs, and on productivity," she said.
• Still, Lagarde argued against explicit commentary given the uncertainty and likely bumps in the path of inflation. "Forward guidance has not been helpful," Lagarde said. "Time-dependent guidance is currently not helpful."

(Source: Reuters)

• Pan Jamaica Group Limited has announced the successful divestiture of Grupo Alaska S.A., a prominent ice and bottled water producer in the Dominican Republic, which is owned by Grupo Frontera, a joint venture equally held by Pan Jamaica and Norbrook Equity Partners Limited.
• Grupo Alaska S.A., with its manufacturing and distribution operations in Santo Domingo and Punta Cana, and a workforce exceeding 300 individuals, has been acquired by Diesco Industries Limited, an international entity with a regional emphasis on the bottled water sector.
• Currently, Panjam is actively in search of other opportunities as the company has proven the concept of using acquisition to secure other opportunities in strategic markets. The Group has also announced the acquisition of APA Processing BZ, S.L.U. ('APA'), a fresh juice processing facility in Barcelona, Spain, which will be managed by the Group's joint venture juice company, CoBeverage Lab S.A.
• The acquisition of APA is anticipated to enhance the high-pressure processing capabilities of the Group's Pan-European juice division, The Juicy Group, which operates facilities in Spain, Belgium, and the Netherlands.
• The Juicy Group provides a diverse selection of cold-pressed fresh juices and employs cutting-edge ultra-fresh and high-pressure processing technologies across all its operations.
• The acquisition is expected to add about 10% to the company’s juice output, ultimately boosting the company’s revenues.

 (Sources: JSE & NCBCM)

• Minister of Tourism, Hon. Edmund Bartlett, left Jamaica for Europe this week to participate in various high-level events aimed at enhancing Jamaica's standing in the worldwide tourism sector.
• Minister Bartlett is set to participate in two notable events: the Resilience and Innovation Summit, organized by the Global Travel and Tourism Resilience Council in Sarajevo, Bosnia and Herzegovina, and the 121st UN Tourism Executive Council Meeting, which will take place in Barcelona, Spain.
• Before his departure, the tourism minister emphasized that his attendance at the Resilience and Innovation Summit highlights Jamaica's dedication to developing a stronger and more resilient tourism sector.
• “The COVID-19 pandemic exposed the vulnerabilities of our industry globally,” said Minister Bartlett. “However, it also presented an opportunity to rebuild in a more resilient way. Innovation is key to this process, allowing us to develop new strategies, and cutting-edge technologies, and adapt to evolving market demands,” he added.
• Minister Bartlett will deliver the keynote address on how innovation cements resilience. “By fostering a culture of creativity and embracing new ideas, we can ensure that the tourism industry is prepared to navigate future shocks and thrive in the years to come,” he emphasised.

 (Source: JIS)