TRINIDAD & TOBAGO
• Finance Minister Karen Nunez-Tesheira admitted for the first time that Government was wrong in its estimation of the depth and duration of the current global financial crisis. Addressing the year’s first post-cabinet news briefing, she projected further revenue reduction beyond the $5.3 billion which Prime Minister Patrick Manning had mentioned in announcing a $4.5 billion cut to the 2009 Budget, as a means of weathering the crisis. She said the Government would proceed cautiously in making further adjustments because the impact on employment levels, economic growth and social stability.
A few days later, in an address to the senate, Prime Minister Patrick Manning announced that the government would issue bonds to raise the money needed to finance an additional $1.7 billion budget deficit resulting from the escalating impact of the global economic crisis. He said bonds would serve the dual purpose of mopping up excess liquidity as an anti-inflationary measure. One day later, Central Bank Governor, Ewart Williams praised the Government’s decision to issue bonds to cushion the revenue shortfall which could reach about $3 billion.
In its annual report on Trinidad and Tobago, Moody’s Investors Service said T&T’s Baa1 government bond ratings and stable outlook are supported by a vibrant and well-diversified energy sector, a relatively low and declining public debt burden, and a strong macroeconomic policy consensus. In Moody’s view the government’s commitment to undertake a fiscal contraction and avoid tapping into its stabilization fund underscores Trinidad and Tobago’s longstanding tradition of prudent policy management. Trinidad and Tobago’s long history of policy consensus is also a key factor underpinning its solid investment-grade ratings. The international rating agency believes the current downturn will be an important test for the economy’s resilience to shocks.
Scotiabank’s managing director, Richard Young, reported a decline in commercial and retail loans over the past few months, as high interest rates and steep inflation made customers reassess their need for consumer credit. In presenting the bank’s financial performance during a luncheon at Scotia’s Hospitality Suite at the Queen’s Park Oval in Port of Spain, Young said the bank’s loan volumes were about eight to ten per cent lower in the past few months compared to the same period last year. He cited higher car prices and increased interest rates as factors leading to a reduction cut the number of people applying for loans.
Emerging indications of the impact of the global recession on the region also came from a senior executive of one of the Caribbean’s largest conglomerates. Michael Carballo, Group Financial Director of CL Financial said in an interview in Newsday in early January that while Trinidad and Tobago was not in a recession the signs of a downturn were evident in reduced spending, restructured budgets and even in reduced feteing. Less than three weeks later, CL Financial withdrew as main sponsors of the Plymouth Jazz Festival which it had launched four years ago and which is scheduled to take place from April 24th to 26th. CL Communications CEO Anthony Maharaj, prime mover behind the project told the Trinidad Guardian “CL Financial feels the time is right and the level of interest so well established that the festival presents a plum opportunity for a new sponsor.” The budget for the 2007 Jazz festival exceeded $30 million.
Arcelor Mittal announced its decision to “temporarily” lay off 120 employees at its Point Lisas Industrial Estate plant, due to a global drop in demand for steel. In its public statement, the steel manufacturing giant said all key stakeholders including the Steel Workers Union of T&T (SWUTT) had been notified of the temporary lay-off of workers which was effective immediately. The company said the layoffs which began on January 10th is expected to last three months and that the affected workers would receive an “ex gratia amount equal to 40 percent of basic wage.” The Arcelor Mittal’s plant has been closed since October when the company brought up its maintenance schedule to make use of the initial downtime created by slow demand. Several other Point Lisas companies opted for early maintenance including PCS Nitrogen.
The National Gas Company of T&T (NGC) estimates that it has been affected by decreased sales “in the order of ten to 15 per cent,” according to Frank Look Kin, company president. The decrease is due to declining demand for NGC’s natural gas by its customers. These include methanol, ammonia, steel and other plants at the Point Lisas Industrial Estate.
At the Trinidad and Tobago Electricity Commission (T&TEC), CEO Ernest Boxill said he expects 2009 to be a difficult year due to a drop in revenue at a time when the commission is involved in a number of capital projects. Boxill disclosed that the cutback in production by a number of Point Lisas plants on the Industrial estate has resulted in decreased demand for electricity. He said this could impact on a lot of T&TEC’s infrastructural development projects, but did not say in what way.
BG T&T and its partners Petroleum Company of T&T (Petrotrin), ENI and Petro-Canada announced the safe delivery of the first gas from their Poinsettia Field development via their newly installed 20-inch pipeline connecting the Poinsettia field to the Hibiscus platform and on to Atlantic LNG. The Poinsettia field is operated by BG T&T and is located about 40 kilometres off Trinidad’s north coast in the North Coast Marine Area (NCMA).
Tourism Secretary of the Tobago House of Assembly, Neil Wilson, said the tourism picture in the sister isle is much better than many think and is out-performing other Caribbean destinations . Speaking to the Express, Wilson based his conclusion on the latest tourist arrival figures for selected Caribbean destinations. In October 2008, tourist arrivals in Tobago were down 4.3 per cent; in the US Virgin Islands it was down by 36.9 per cent; St. Marteen by 13.8 per cent; St. Lucia 3.1 per cent; Jamaica 1.9 per cent; the British Virgin Islands 2.6 per cent, Barbados 5 per cent and Antigua and Barbuda down by 10.4 per cent.
Hindu Credit Union’s (HCU) liquidator Dave Rampersad advised depositors that they may have to wait longer than anticipated to receive returns on their deposits since those first in line to be paid, preferential creditors and ex-employees, were yet to receive monies owed to them by the organization. Rampersad told Newsday that he was trying to collect funds from organisations owing money to the credit unions. Although 13 of the credit union’s vehicles were recently sold to the highest bidders he said the organization was still in the process of collecting payments.
JAMAICA
Prime Minister Bruce Golding put his country on economic alert right off the mark in his New Year’s Day address in which he tackled the economic challenges facing Jamaica while saying that his government was implementing policies to stimulate the economy and protect jobs. Declaring that his Government’s primary focus was on positioning the country for the earliest possible recovery, Golding outlined his strategies for protecting the economy. He signalled significant changes to come in Jamaica’s conduct of international finance and business adding that Jamaican organizations would have to respond to these changes. Jamaica entered the New Year in red ink with its budget deficit larger than the projected J$42 billion, despite having chopped J$13 billion in expenditure.
The World Bank approved a US$100-million loan to assist Jamaica in improving fiscal and debt sustainability. The loan will support a broad programme of measures to control overall public sector balances and debt, increase the efficiency of financial management and budget processes, reduce distortions, and enhance the efficiency and fairness of the tax system.
Fears that Jamaica could have been faced with a crisis in servicing its debt obligations were eased, with the signing of a US$329-million loan from the Inter-American Development Bank (IDB). Prime Minister Bruce Golding said the administration would be able to pay a €200-million bond due in February.
National Commercial Bank Jamaica Limited (NCB) gave its personal credit cards customers a payment holiday to give them a payment break during these challenging times. Customers who manage their credit cards responsibly can skip a monthly payment without incurring late payment fees.
Air Jamaica announced plans to cut its Jamaica-Barbados route by the end of February in a cost-cutting move that would eliminate 600 jobs from the struggling air carrier. Spared was its Barbados to New York route. Effective February 26, Air Jamaica will exit its Atlanta, Los Angeles, Miami and Grand Cayman and Grenada routes. Under its new schedule, Air Jamaica now has 218 weekly flights to 14 destinations between Jamaica and Toronto, New York, Chicago, Baltimore, Philadelphia, Orlando, Fort Lauderdale, Curacao, Nassau and Havana. The airline will also offer service between New York and Barbados and New York and Grenada. The government has said it favours privatization of the airline and are seeking to divest it by March 31 of this year.
Prime Minister Bruce Golding wrote a letter to his ministers urging them to exercise restraint in spending public funds during the current economic downturn. The letter called on them to provide leadership to the officers in their ministries in containing expenditure, downsizing or eliminating programmes and projects that, though desirable, were not immediately essential. He also encouraged his ministers to step forward with ideas for programmes and projects that could help their country weather the economic storm and get back on the road to recovery.
BARBADOS
The Central Bank of Barbados moved to encourage the country’s increasingly cautious consumers to spend in order to stimulate the economy by again reducing interest rates on deposits. Effective February 1st, the Bank dropped rates from four to three percent in response to “economic developments [that] indicate the need for further easing”. The move comes less than three months after another rate decrease.
CLICO Holdings Barbados Ltd announced plans for a new housing project at an estimated cost of B$60 million. Work is due to start within weeks on Crystal Haven, a condo type project in Clairmonte, St Michael, according to the Nation. The company is also building low-income houses in Todd’s, St George, with a price tag of $150,000 which should be completed in another four to six weeks.
Barbados awarded exploration licenses to one of the world’s largest oil companies to explore the possibility of drilling for oil offshore. The Government said it granted its first oil and gas offshore licence for two blocks - Carlisle Bay and Bimshire - to the oil, gas and mineral exploration company BHP Billiton, the world’s sixth largest oil firm which also has offices in Trinidad and Tobago. These two blocks are the first of over 20 which Barbados is seeking to explore and drill. If the bidding is successful, the island could earn millions since companies may pay over US$100 000 (BDS$200 000) per block for a production licence.
CUBA
While fellow Caribbean countries experienced declines in tourist arrivals for 2008, Cuba announced that it had broken its historical record, exceeding the figure of 2,319,000 visitors in one year. This, despite the impact of hurricanes which, according to Tourism Minister, Manuel Marrero, had caused a 34.5 per cent decrease in visitors, 10,000 of whom had returned to their respective countries with 109 international flights cancelled and 6,000 rooms closed.
Cuba and Argentina signed 11 bilateral agreements in Havana in the areas of trade promotion, technology transfer and humanitarian assistance. Another agreement also commits the countries to eliminating reciprocal visa requirements for diplomatic, official and service passports. Memoranda of understanding were also signed in the areas of prevention and mitigation of natural disasters, the peaceful use of nuclear energy, agriculture, fishing, forestry, food industry, biotechnology and rural development.
VENEZUELA
Venezuela’s US dollar reserves closed 2008 at a record of $42.2 billion after climbing $5.1 billion during the last two days of the year, according to data on the Central Bank of Venezuela’s website. The increase comes as Venezuela prepares to confront a drop in oil revenue this year by covering public expenditure with reserves and off-budget development funds. Venezuela’s 2009 budget calls for expenditure of $78 billion with revenues based on an average price for oil of $60 a barrel. The OPEC-member nation separately holds $39 billion in a National Development Fund, known as Fonden, to cover this year’s spending plans. Of the total, $9.6 billion is available for new projects. The Central Bank also has $828 million in an economic stabilization fund of which $7 billion of “excess” reserves will be transferred to Fonden in the first half of 2009.
Venezuela announced that it is reducing crude shipments to US refineries Chalmette and Sweeney to comply with its OPEC output cut of 189,000 barrels per day, to be borne in part by foreign oil companies.The cut nearly shuttered a joint venture with BP and slashed output from eight other projects that include foreign investment. Sweeney and Chalmette are joint ventures between state oil company, PDVSA and US oil companies Exxon Mobil and ConocoPhillips which are suing Venezuela for its 2007 takeover of Orinoco belt projects they once ran.
GUYANA
In Guyana, the Institute of Private Enterprise Development (IPED) reports no significant growth in the small business sector in 2008. “What we found was that some people went out of business and that those who are good at business simply stuck it out. Additionally, we have seen no significant increase in the number of new loans,” IPED Finance Controller Ramesh Persaud told Stabroek Business. Among factors with a negative impact on IPED’s loans portfolio, he said, were inclement weather and attendant flooding. ”More than 45 per cent of IPED’s portfolio is within the agricultural sector; more than 40 per cent is in the rice sector and 5 per cent in other crops.”
