Bermuda: Oxfam attacks banks’ offshore profits
International charity Oxfam has singled out Bermuda’s HSBC in a major report on the use of tax havens by the top 20 European banks, reports Royal Gazette. The Oxfam report said that 26 per cent of profits generated by the top 20 banks in the EU were made offshore — although these countries accounted for only 12 per cent of total turnover and seven per cent of staff. And it claimed Bermuda as the home of nearly $591 million in profits for the Euro top 20 in 2015, compared to $205 million in the Caymans, $21.7 million in the British Virgin Islands and $206 million in the Bahamas. But, later in the same report, it said that Bermuda had profits of $104 million — a massive $487 million difference. Of the $104 million, the report attributed nearly $86 million in profit to HSBC Bermuda. UK-based HSBC is the only European bank among the four with a physical presence on the island, while Oxfam records French multinational Société Générale as generating profits in Bermuda but with no physical presence. Economist Peter Everson pointed out that HSBC did not set up in Bermuda on its own — it bought the “flourishing” Bermuda-based former Bank of Bermuda and “that everybody in Bermuda recognises that”. He added: “We’re not in international banking — it’s insurance, reinsurance and captive insurance banking. “We don’t have room for international banking. That’s why we don’t have international banking here.” Bermuda appears again in the 52-page report — listed among “selected small tax havens and bank activity” for 2015. The report listed 2015 Bermuda figures for European-based banks as a turnover of nearly $309 million, profits of $104 million, a total of 618 staff and no taxes. It added that the average productivity of employees was nearly $174,000 each, with profitability of 34 per cent. But the report, while mentioning the island’s small population, apparently ignored the massive amount of insurance and reinsurance activity in Bermuda. And it highlighted Bermuda alongside other smaller countries in a table of “characteristics of selected small tax havens and bank activity” for 2015. The report listed Bermuda’s share of the profits of the European top 20 as $104.3 million of the total $1.67 million, alongside the Caymans, Monaco and Jersey, Guernsey and the Isle of Man, with the last three grouped together. The Oxfam report said: “One common feature of tax havens is that they provide a lower effective rate of taxation or even a zero corporate tax rate, making it possible for companies to avoid paying any taxes at all. “Despite the limitations of the information provided … for measuring the effective tax rate, it does reveal that these European banks have not paid a single euro of tax on $416 million of profits made in seven of these smaller countries.” The report said that the data highlighted “a number of tax havens that play a clear role in banks’ business”. And it added: “It underlines once more the role that these countries are playing in the haemorrhaging of global tax resources by competing against each other to offer ever more favourable tax regimes to global corporations. “While banks are taking advantage of this global race to the bottom, the losers are often the poor, who experience the consequences of the inadequate public spending as a result of the lower tax revenues for the government. “Only a fundamental paradigm shift on corporate tax and significant international and European tax reforms will help to put an end to this harmful global race to the bottom.” Article compliments IFC Review.
Caribbean: CARICOM seeks FATCA delay, but law may prove irrelevant
The Caribbean Community is looking at spending nearly quarter of a million dollars on a Washington-based consultant to lobby the Trump administration about the Foreign Accounts Tax Compliance Act, reports Cayman Compass. Cayman appears unlikely, however, to be affected by any lobbying – or even FATCA repeal – in the wake of last year’s enactment of Common Reporting Standards by the Paris-based Organisation for Economic Co-operation and Development. In mid-February, Trinidad and Tobago Prime Minister Keith Rowley announced moves by the 15-member CARICOM bloc to spend $240,000 countering a FATCA threat to correspondent banking in the region. As reported by the island state’s Daily Express on Feb. 18, Mr. Rowley said the organization would jointly contribute the sum, employing lobbyists to ensure Caribbean banks did not suffer censure or loss of correspondent banking access. “It is only for a short period as it is a specific assignment,” he said in an address. I think it’s US$40,000 for the period for which the lobbyist would be hired to carry out this specific exercise,” he said after returning from a two-day Guyana meeting of CARICOM heads of government. They had agreed, he said, “that cost should be incurred and the lobbyists should be hired and put to work to join the efforts made by CARICOM to ensure that we stave off any further de-risking or loss of correspondent banking access.” Calling it “a threat to our banking system,” the prime minister worried about a “collapse of the banking [system] in the region if in fact we are to find ourselves regarded as a high-risk area and lose correspondent banking facilities.” The move, however, appears to be less than a push for FATCA repeal as an effort to avoid penalties should Trinidad and other CARICOM members delay acceptance of the U.S. tax legislation. CARICOM needed to ensure its banking system was not denied access to corresponding banks and, therefore “not denied access to our trade,” he said. “We are at great risk,” Mr. Rowley said, urging countries “to ensure that we pass the necessary legislations, that we are compliant with the international standard that is demanded of us and that we ensure that we make every effort that we lobby in the relevant quarters that we are not treated adversely,” he said. In late November 2013, Cayman’s Tax Authority agreed to provide details to Washington’s Internal Revenue Service of all Cayman’s U.S.-resident and U.S.-affiliated account holders at 28,559 locally based “Foreign Financial Institutions.” The move, affecting nearly 6,000 local residents, has generated intense opposition, as some have called FATCA “unfair and outrageous,” demanding “the USA [come] into line with every other country in the world and stop taxing its citizens on citizenship, but [instead] on residence.” Director of Cayman’s Tax Information Authority Duncan Nicol was unavailable for comment, attending an OECD meeting in Europe, but it is unlikely his office will seek FATCA repeal. Experts have described 2010’s FATCA legislation as the first global tax-information legislation of its kind, forcing it to “come out with guns blazing in a sense,” one analyst said. FATCA has since been augmented, however, by 2013’s multilateral Mutual Administrative Assistance in Tax Matters, which Cayman joined in 2014, and is now among 108 signatories, and the same-year introduction by the OECD of global Common Reporting Standards, which Cayman signed only this year. The standards call on jurisdictions to gather information about account holders at local financial institutions, reporting it globally. “This new standard on automatic exchange of information will ramp up international tax cooperation, putting governments back on a more even footing as they seek to protect the integrity of their tax systems and fight tax evasion,” OECD Secretary-General Angel Gurría said at the time. In a footnote to the 100-jurisdiction listing, the OECD says the U.S. is “undertaking automatic information exchanges pursuant to FATCA from 2015” and “has entered into intergovernmental agreements with other jurisdictions to do so.” Those agreements, the footnote says, “acknowledge the need for the United States to achieve equivalent levels of reciprocal automatic information exchange with partner jurisdictions,” accompanied by “a political commitment to … advocate and support relevant legislation to achieve such equivalent levels of reciprocal automatic exchange.” Growing global regulation makes FATCA just one tax-reporting scheme among many. The Mutual Administrative Assistance convention alone “means certain information will go back to your home jurisdiction, and your tax man will give you a call if you haven’t reported it,” one legal expert said. And even if FATCA goes away, he said, “the Common Reporting Standards will kick in.” Article compliments IFC Review.
Cayman: FATCA repeal on agenda of US Republicans
Washington’s Foreign Accounts Tax Compliance Act, known as FATCA, will be assailed afresh as lawyers and lobbyists renew efforts to repeal the law as part of President Donald Trump’s tax reform, reports Cayman Compass. Washington-based Jim Jatras, a Republican and co-leader of the Campaign to Repeal FATCA, says “lots is happening,” and his group expects a Republican Congress to repeal the 2010 law by the end of this year. “The Republican leadership in both House and Senate, as well as the Trump administration, all know that their fortunes for 2018 depend on keeping a few do-or-die promises, such as repealing Obamacare, an infrastructure program and tax reform,” Mr. Jatras says. “They will find a way to do it. Our job is to make sure when that train leaves the station, FATCA repeal is on it.” Previous efforts to persuade the Obama administration were ineffective, he concedes, but says the November election of Mr. Trump and a Republican Congress have dramatically changed the landscape. “The legislative situation was very different from what it is today,” he told the Cayman Compass. “With both chambers of Congress and the White House controlled by the GOP, and strong language in the 2016 [Republican Party] platform favoring repeal, there’s a clear roadmap to repeal this year.” As early as January 2014, the Republican National Committee called for FATCA repeal. “There are questions about timing and what will be in the package, not whether there will be one,” Mr. Jatras said, calling it “a top priority” for “many interests.” Mr. Jatras was at the center of 2012 and 2013 lobbying efforts to repeal the law, which requires U.S. citizens and a broad range of U.S.-affiliated individuals and companies to declare their overseas income, paying taxes to the U.S. Internal Revenue Service. Up to 9 million people living overseas are estimated to be affected by FATCA, and as many as 6,000 in Cayman – more than 10 percent of the population – have obligations of some kind to the IRS. Mr. Jatras said, however, that looks set to change. In mid-February, Mr. Jatras and committee co-founder Nigel Green – head of U.S.-based financial adviser deVere Group – met members of Congress and “two influential assemblies of tax activist groups,” seeking to shape a tax package anticipated to be passed by the Congress this year.” He declined to name the groups, but said his committee had “been in touch with” both the House of Representatives’ powerful Ways and Means Committee and officials in the administration. “We are in contact with both. That’s all I can say for now,” he said. The organization’s repealfatca.com website says the five-member deVere delegation met Sen. Roger Wicker, Republican from Mississippi and co-sponsor of a previous repeal bill; Republican senator and 2016 presidential candidate Rand Paul of Kentucky, also sponsor of a previous repeal bill; Republican Rep. Mark Meadows of North Carolina, sponsor of a House repeal bill in the previous Congress; and Republican Rep. Thomas Massie of Kentucky, who joined Mr. Meadows in the repeal bill. According to repealfatca.com, the delegation also met with the Senate Budget Committee, described as “important for scoring FATCA repeal.” “The fight is now well and truly on to repeal this toxic, imperialistic and fatally flawed tax law,” Mr. Green said in a press release. “FATCA has wrecked [sic] havoc on the global financial system, turned 8 million Americans overseas into financial pariahs, violates other countries’ sovereignty, and is damaging for American jobs and therefore the American and global economies,” he said. He vowed immediately to submit a letter, signed by “numerous tax reform groups, spearheaded by the influential Americans for Tax Reform,” to “key Congressional leadership.” “FATCA repeal legislation,” he said, “will now definitely be introduced in the current Congress, in both the House and the Senate, in the next few weeks.” Mr. Jatras anticipates the tax-reform package would be introduced by July 4, although he conceded that efforts to repeal the Affordable Care Act are dominating congressional attention at the moment. “Repeal and replacement of Obamacare is, as they say, sucking all of the air out of the room right now. That doesn’t necessarily mean it will be prolonged. In any case, we need a little time to get FATCA repeal into a tax bill, so this is somewhat favorable to our campaign,” he said. Congress originally passed FATCA as part of a 2010 job stimulus package, Hiring Incentives to Restore Employment Act, created in the wake of the UBS banking scandal in 2009 that revealed U.S. citizens evading taxes by hiding deposits in Swiss accounts. The legislation required U.S.-affiliated persons and all foreign financial institutions to report U.S. depositors to the IRS under penalty of a 30 percent withholding “tax” on all transactions with the U.S. An online IRS database said Cayman registered 28,559 financial institutions under FATCA, nearly one-fifth of the global total. “We have confirmed that Sen. Rand Paul and Rep. Mark Meadows will soon reintroduce their repeal bills from earlier Congresses,” Mr. Jatras said. “We are conducting outreach to leadership and committees of jurisdiction on next steps. We are also looking at executive actions to nullify the IGAs. These initiatives are still in the early stages.” An IGA is an “intergovernmental agreement,” between the IRS and nearly 120 jurisdictions authorizing collection of tax information. On Nov. 29, 2013, Cayman became an early IGA signatory. The agreement can be unilaterally abrogated by either side with one year’s notice. “When the IGAs are nullified, or when FATCA is repealed,” Mr. Jatras said, “I think a lot of people are going to have some explaining to do,” including, he added, “why did they so meekly abrogate their domestic privacy laws … for many of their own citizens, not just Americans?” Article compliments IFC Review.
They’ve Only Just Begun, But Two Airlines Are Already Saying Adios to Cuba
It appears to be a case of too many cooks spoiling the broth – at least for two US airlines which are dropping its planned routes because they say with so many other airlines adding flights to the Spanish-speaking Caribbean nation, the routes are unprofitable. Silver Airways is dropping all nine of its planned routes by April 22, just six months after it started flying between Fort Lauderdale, Florida, and several Cuban cities. Low-cost carrier Frontier will follow suit on June 4, dropping its Miami-Havana route. After the US gave the nod to regular passenger flights to Cuba resuming about six months ago, for the first time in 50 years, US carriers rushed in to cash in on the expected boom in US travel to Cuba. But that has created a glut in airlift, and it’s not working out for some carriers. Silver spokeswoman Misty Pinson noted that the number of seats on planes between the US and Cuba tripled because the airlines added so many flights, many of them with big planes. “While the actual total number of passengers currently traveling to and from Cuba on all carriers combined is in line with what Silver originally projected, other airlines continue to serve this market with too many flights and oversized aircraft, which has led to an increase in capacity of approximately 300 percent between the US and Cuba,” she said. And spokesman for Denver-based Frontier, Jim Faulkner, said the airline was cancelling its flights because of heavy competition and higher-than-expected costs of providing service at the Havana airport. While larger airlines are still flying to Cuba, they have also cut back. American Airlines reduced daily flights to smaller cities in Cuba from 13 to 10 and switched to smaller planes on some flights, but kept its service to Havana intact; while JetBlue took out about 300 seats a day by using smaller planes. That is more a reflection of the glut in flights and not declining interest in travel to Cuba, according to statistics. About 285,000 tourists visited Cuba last year, up 76 percent from 2015, and the Cuban government says American visitors increased 125 percent in January. Article compliments Caribbean 360.com
British Airways Trying To Compete With Budget Carriers and It May Not Be All Good
Industry experts have warned that British Airways’ (BA) decision to reduce in-flight perks and slash legroom to compete with budget carriers could put its elite status at risk. Britain’s flag carrier, which serves the Caribbean, has been told that its new business model, which has brought it closer to traditionally cheaper brands like EasyJet and Ryanair, is damaging the company’s reputation. The airline recently struck a deal with retail giant Marks & Spencer to charge passengers for food for the first time, a move which angered loyal customers who are used to complimentary food and drink on all of its flights. BA is also planning to narrow the gap between seats from 30 inches to 29 on some of its aircraft, which is less than that of Ryanair and the same as EasyJet’s. The reduction is designed to make space for an extra two rows of seats to carry 12 more passengers. It means that carriers including Flybe, Norwegian and Wizz Air will now all have more legroom than BA but the industry standard legroom of 31 or 32 inches will still apply on BA’s long-haul planes. A BA spokesman said: “From next year, we’re making a small increase to the number of seats on our A320 and A321 fleet so we can keep fares low. Customers fly with us because we offer quality and value in all areas.” BA has been warned that squeezing bigger profits risked removing one of the last differences between the airline and its no-frills rivals, however. The global creative officer at the branding consultancy Landor, Peter Knapp, told The Times: “Along with the removal of free meals on short-haul flights there is little for the economy traveller to choose between when comparing BA to its value-focused competitors. “BA needs to be careful of how their brand image will fare following these announcements. The worst-case scenario is for their brand to devolve, losing their elite status as Britain’s flag carrier as it cuts the services that help it stand out in a highly competitive marketplace.” Max Kingsley-Jones, of aviation magazine Flight Global, said the latest decision was in response to growing competition on short-haul routes from budget operators. “BA is seeing declining fares and it has had to adapt,” he said. “We’ve already seen it with the decision to offer hand luggage-only fares.” He added that BA has a “hard core” of customers because of its connections at Heathrow and its loyalty programme. Article compliments Caribbean360.com.
CDB, IDB Sign Agreement To Strengthen Partnership
The Caribbean Development Bank (CDB) and the Inter-American Development Bank (IDB) have signed a memorandum of understanding (MOU) to strengthen their ongoing partnership in addressing the Caribbean’s development priorities. Through the MOU, signed at the IDB’s headquarters, both institutions renewed their commitment to collaborating on programmes and projects that contribute to sustainable economic development in the region. The agreement formalizes their cooperation in CDB borrowing member countries that are also members of the IDB, and countries in the Organization of Eastern Caribbean States (OECS). Through a unique charter provision, IDB resources are channeled to OECS countries that are not members of the Washington-based Bank, through CDB. “The MOU embodies the common vision for the sustainable development of the Caribbean that IDB and CDB share. I expect then, that the MOU will provide the framework for us to work collaboratively and creatively, over the next decade and a half, to facilitate the attainment of the development agenda; and accelerate the transformation of these countries,” said CDB President Dr. William Warren Smith. IDB President Luis Alberto Moreno said the two entities have had “a singularly close and forward-looking partnership” for four decades and they now have an opportunity to “strengthen those bonds and take on our shared challenges with renewed optimism”. CDB and IDB presently collaborate on a number of initiatives, including in the areas of renewable energy and private sector development for micro, small and medium-sized enterprises. Article compliments Caribbean360.com
Bermuda Is Most Expensive Country
Bermuda is ranked as the number one most expensive country in the world to live in, according to a report from the UK’s Independent, which cites an assessment from MoveHub, reports Bernews. A story in the Independent said “The world’s most expensive countries to live in were calculated by MoveHub, a company dedicated to helping people move abroad, in a new survey. “MoveHub based its assessment on a range of costs, such as the price of groceries, transport, bills, restaurants and how much renting somewhere to live is. These figures are then compiled into an index, using the notoriously expensive city of New York as a benchmark. “New York was given an index score of 100, and countries were then ranked based on this. So a country with a score higher than 100 is more expensive than New York, while below signals that it is cheaper. “As a reference point, the average score for the United Kingdom was 51.03, making it the 29th most expensive country in which to live. “Bermuda — 126.34: The Atlantic Ocean tax haven of Bermuda is officially the most expensive nation on earth, with the country’s capital Hamilton also the most expensive individual city on the planet.” Article compliments IFC Review.
OECS Firms To Showcase At Specialty Caribbean Expo
The Organization of Eastern Caribbean States (OECS) Commission, St Lucia’s Trade Export Promotion Agency (TEPA), and the Ministry of Commerce have collaborated to stage the largest trade show of its kind to be staged in the sub-region. The Specialty Caribbean Expo 2017, which will be held under the theme ‘A Unique Buying Experience’, is expected to improve intra-regional trade in goods and services, as well as the export of OECS goods and services to regional and international markets. Over 100 exhibitors have confirmed participation in the expo, which will feature export-ready goods and services. Specialty Caribbean Expo 2017 is being billed as the ultimate one-stop-shop, directly linking international buyers from worldwide corporations with Caribbean suppliers from a multitude of sectors including apparel and footwear, financial services, food and beverage, furniture, handicraft, health and wellness, tourism, printing and packaging services. Exporters from the OECS and Martinique will present and promote their products and services at this buyer-focused exhibition, while buyers from the United States, Canada, the United Kingdom, Cuba, CARICOM and the Eastern Caribbean are expected to participate in the 4-day trade show. The OECS Competitive Business Unit (CBU) has mobilized several producers and service providers from within its client portfolio to participate in the Expo. Business Development Officer, Sobers Esprit said the Expo is in line with the objectives of the OECS Regional Integration for Trade Project, being funded by the 10th EDF. The ICT sector, agro processing, film, music and fashion will feature prominently in the exposition, he added. The expo will be held March 9-12 at the Daren Sammy National Cricket Stadium in St Lucia. Article compliments Caribbean 360.com
T&T: FATCA Bill passed in Lower House
After five months of hard battle between the Government and Opposition, legislation to facilitate the Foreign Account Taxation Agreement (FATCA) between Trinidad & Tobago and the United States was passed in the House of Representatives at 7.48 last week, with unanimous support from both sides. “I finally beg to move, after many months – five months,” Finance Minister Colm Imbert said with a laugh of relief, as debate and final committee examinations of the legislation concluded. Legislation was passed with amendments in several areas with the nod of approval from all 39 Government and Opposition MPs present. At least three Opposition votes had been required for passage. The legislation enables local financial institutions to report to the US Internal Revenue Service (IRS) on accounts held by US clients. This will be done via T&T’s Board of Inland Revenue. The FATCA facility is part of US’ tax evasion law. The legislation came to fruition last night in the Lower House, almost at the eleventh hour of the deadline for approval which the US had recommended. The US had suggested passage this month – which ends next week with Carnival. Having crossed the first hurdle in the Lower House, the legislation must now be debated in the Upper House. This will be after Carnival, Attorney General Faris Al-Rawi said after last night’s debate. “It’s a foregone conclusion, we’ll get the Opposition’s support in the senate and therefore achieve the three fifth’s majority vote there,” the AG said. “However, we’re very open-minded regarding the views on the Independent bench, since only two Independent senators had been on the Joint Select Committee whose report the House accepted (yesterday).” Al-Rawi said the vast majority of amendments made to the bill were done by the Government “in the absence of the Opposition from debates during December last.” The main amendment done last night concerned agreement that banks would notify an account holder that their sensitive information had been passed to the BIR and the US IRS. The Opposition had suggested the account holder be notified 28 days before the information was sent to the BIR and IRS. But Imbert said the Treasury Solicitor and Law Association had said this would be contrary to the aim of the legislation. Prime Minister Dr Keith Rowley also said Government couldn’t have agreed to that, since it would undermine the legislation and create costs for the taxpayer in the event the account holder chose to challenge it legally during the 28-day period. “We’re not going to agree to that – it has consequences for the taxpayers,” the PM added. However, all sides eventually agreed the account information would be reported to the relevant authorities by September 30 of the year in question and the account holder would be notified – with one notice – four months later in the following January. “The Opposition presented significant amendments and in the end, Government gave us a version of what we sought – notification to the account holder. The Government did well to be flexible,” said UNC MP Dr Bhoe Tewarie of the collaboration at session’s end. PM: Trump called of his free will T&T is making world news today for the wrong reasons, and not because of its students or Olympic gold medals, Prime Minister Dr Keith Rowley says. Rowley said T&T therefore needed a lobbyist in the right places to speak for T&T and convey the correct picture and open doors to let people know who T&T is, before the country is harmed. “Therefore, when T&T hires any lobbyist, whether for $1m or half million, it is to protect T&T and ensure the correct information is transmitted,” he indicated. Rowley, however, denied any lobbyist was paid “$1m” to obtain the conversation with US President Donald Trump last Sunday. He said he was at home when someone said the US President had called. He added it didn’t cost T&T “a cent since the US President understands T&T is a country the US holds very dearly for good reasons – the US is our major trading partner and we’re a leader in Caricom.” Rowley also stressed T&T hadn’t paid for any lobbyist to go to the US to deal with banking de-risking issues. He said Caricom had agreed its Secretariat would fund a lobbyist regarding this, since some banks were taking action against some Caribbean states. He said Caricom had urged all states to be compliant so the region would be seen as this. He said he’d been invited to go to Chile since the Chilean President had indicated Chile would assist Caricom on that. Article compliments the Guardian Newspaper.
St Lucia Planning Further Tax Cuts
The International Monetary Fund (IMF) has warned Saint Lucia of the impact of recent tax reforms, which it says may impact tourist numbers and dent economic growth, reports Tax News. The IMF welcomed the new administration’s plans to lower the tax burden, enhance the efficiency of the tax system, and cut tax compliance costs. However, the IMF said that the decision to cut the value-added tax rate to 12.5 percent from 15 percent from February 1 makes the territory vulnerable to fiscal shocks, and the new airport tax may impact visitor numbers. In its annual report for the territory, the IMF said the territory should focus on lowering barriers to international trade and broadening the tax base. Article compliments IFC Review.
Link-Caribbean Awards US$125,000 To Five Caribbean Firms
Five Caribbean businesses are at a stage closer to securing private investment having each received US$25,000 through the LINK-Caribbean Investment Readiness Grant programme. The five firms are Carepoint and Caribbean Transit Solutions from Barbados; Bluedot Media and Innovative Menu Solutions Ltd from Jamaica and SystemIz Incorporated from Trinidad and Tobago. According to Chris McNair, Manager for Competitiveness and Innovation at Caribbean Export, the grants will be used to assist firms in making the necessary improvements to their businesses with the aim of attracting greater investment from private investors, such as Business Angels within the next six months. The firms were selected from a slate of 134 applicants from across the region, 7 of which were afforded the opportunity to pitch their businesses to a panel of judges in the hope of securing an investment readiness grant. LINK-Caribbean, a programme of the Caribbean Export Development Agency (Caribbean Export) supports the development of an early stage Investor eco-system within the region. Launched last September, it is funded by the World Bank and sponsored by Canada. “For many years Caribbean entrepreneurs were disadvantaged because of a lack of funding opportunities in comparison to our first world counterparts, with the LINK Caribbean grant we now have an opportunity to show the world that great, disruptive companies can be borne from here,” expressed Larren Peart of Bluedot Media. Barbadian recipient Shannon Clarke from Carepoint expressed his humility for his selection and spoke of looking forward to the guidance from Business Angels and importantly “their assistance to help push the adoption of ICT in the delivery of healthcare throughout the Caribbean”. Khalil Bryan of Caribbean Transport Solutions, also from Barbados, highlighted some of the key initiatives hosted by World Bank and Caribbean Export. “Starting from 2015, their team hosted entrepreneur sessions to sensitize us to key items that would prepare us to raise capital to providing support as we deploy capital from the IR grant. They have truly been a catalyst to improve the investment climate in the region – from building angel groups to disbursing grant funding to prepare us for investment. We appreciate the role that they have played and would encourage them to continue in this vein as entrepreneurship will truly be a catalyst to impact the economies of our region,“ he said. Aun Rahman, Financial Sector Specialist for the World Bank who also has responsibility for EPIC’s Access to Finance programme, stated that the Bank is encouraged with the initial response to LINK-Caribbean’s first grant cycle. “We are looking forward to building a stronger pipeline of more applicants who will be eligible to become beneficiaries under the programme in future grant cycles,” Rahman said. In addition to these grants, LINK-Caribbean provides other support activities to stimulate early stage investing in the region. It facilitates the development of deal-flow for early-stage investors through the Regional Angel Investor Network (RAIN). “We strongly encourage entrepreneurs and investors to join RAIN to uncover new investment opportunities throughout the Caribbean,” added McNair. Article compliments Caribbean360.com
Cuba Can Help Strengthen Region
The most fitting testament of solidarity between Cuba and the Caribbean would be their active collaboration to strengthen the region’s domestic, regional and global agendas. Minister of Foreign Affairs and Foreign Trade, Senator Maxine McClean, expressed this view while addressing a cocktail reception on Tuesday at the Grande Salle, to mark the 58th Anniversary of the Triumph of the Cuban Revolution. Senator McClean explained that while the official date of January 1 had passed, the global impact of the Cuban Revolution and its contribution to modern history for the country of Cuba and the region must be celebrated. “Today, Cuba stands poised to fully capitalise on its significant advances in healthcare, science and technology; its world-class cultural exponents and resilient people,” she stated. The Foreign Affairs Minister said that the people of Cuba could proudly celebrate its 58 years of revolution, “confident that the country’s reputation for global leadership and international solidarity will long be remembered and appreciated”. She added that Barbados joined with Cubans and the rest of the world in mourning the passing, last November 25, of the leader of the Cuban Revolution, Fidel Castro. “Any commemoration of the 58 years of celebration is also one that recognises the vision, the tenacity and the courage of Fidel Castro. His focus was not only on Cuba, but covered of course the entire developing world,” she remarked. Barbados and Cuba established diplomatic relations in 1972. Article compliments BGIS.
Airbnb and Caribbean Tourism Organization sign MOU
The Caribbean Tourism Organization (CTO) has made a bold move to include the fast-growing Airbnb platform into the regional tourism product. The agreement was signed at CTO’s headquarters in Barbados this morning by Chief Executive Officer and General Secretary Hugh Riley and Airbnb Public Policy Director for Central America and the Caribbean, Shawn Sullivan. Airbnb has been growing in popularity in the region, especially within the last year, recording more than 25,000 listings in the Caribbean as of February 2016. Said Sullivan, “This is an exciting partnership for Airbnb. We look forward to working with the CTO to develop policy recommendations for regional governments and other stakeholders on the sharing economy. The Caribbean is an important and growing market for Airbnb and we expect continued growth there.” Under the MOU, both sides have agreed to develop a set of policy principles and recommendations on the sharing economy for Caribbean governments. These include sharing data and studies with policymakers about the positive impact of sharing economy in the region, identify ways to make it more exclusive, as well as broaden the benefits of tourism to non-traditional actors. Riley said the agreement will allow the CTO to be in a position to properly advise its members on Airbnb. “The CTO is establishing a basis for mutual cooperation with Airbnb. It is important for us to examine all aspects of this important segment of the sharing economy. We believe that by clearly understanding Airbnb’s massive influence in capturing consumers’ interest in unique accommodations we will be in a position to properly advise our members and to allow the Caribbean to achieve the goals of year-round profitability, visitor satisfaction and sustainable tourism development.” The partnership agreement will give key stakeholders the opportunity to review Airbnb’s aggregate data including the value of the peer-to-peer review mechanism, at the same time Caribbean government officials and other stakeholders learn about the long-term benefits of the sharing economy and home-sharing in particular. It is estimated that a typical host earns approximately US$3,900 a year and there are currently 41,000 listings across the Caribbean. Article compliments LOOP News Barbados
LIAT cuts first two routes
The struggling regional airline LIAT has announced the first two routes that it will cut “as part of its efforts to achieve greater profitability and improve efficiency”. In a release issued today, the airline said it would stop servicing the United States Virgin Islands beginning March 1, when it ends flights to St Croix. Service to St Thomas will end on June 14, it said. In addition, LIAT said it would suspend its flight between Guadeloupe and Dominica, and would introduce instead a return service between Antigua and the French-speaking island. “The decisions made have been driven predominately by the need to enhance the operational stability of the airline and the quality of product for our customers,” Chief Commercial Officer Lloyd Carswell was quoted as saying. Following a meeting here of the shareholder governments last October, St Vincent and the Grenadines prime minister Dr Ralph Gonsalves had announced that the airline would stop serving countries that hurt its bottom line. Having recorded a net profit of EC$5 million (Bds$3.7 million) up to August 2016, a dramatic EC$14 million (Bds$10.5 million) reversal was expected in the final four months, leaving LIAT with an EC$9.2 million (Bds$6.8 million) loss for the year. Gonsalves, the chairman of the shareholder governments, had said at the time that the airline would be cutting some “non-performing and non-profitable” routes and that a “a critical review of the schedule has to be fine-tuned. Clearly LIAT needs to do fewer routes, but do what we are doing much better”. The airline today suggested that the review had been completed and it was ready to weed out the bad routes. “The suspension comes after the completion of a route review exercise designed to help the carrier establish a reliable schedule that will fly on commercially viable routes going forward to offer the region a more consistent service,” it said in the release. Article compliments Barbados Today.
CDB Calling Tech Entrepreneurs
A technology incubation programme that provides business support services for young entrepreneurs in Barbados, the Eastern Caribbean and Haiti is open for applications. The Caribbean Tech Entrepreneurship Programme (CTEP) is an initiative of the Caribbean Development Bank (CDB) and the World Bank Group in partnership with the Caribbean Climate Innovation Centre. It tailors support for participants according to the stage at which the entrepreneur or firm is currently operating. CTEP addresses two main problems faced by youth: the lack of appropriate job opportunities and the lack of a regional strategy to promote entrepreneurship and innovation. It follows the successful Youth Employment in Digital Animation Industries project in Jamaica. Entrepreneurs from Antigua and Barbuda, Barbados, Dominica, Grenada, Haiti, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines are eligible to apply. CTEP coordinator, Troy Weekes, said the CTEP was unique in the way it collaborates with the entrepreneurs that are selected. “CTEP is comprised of a set of activities that are aligned to three distinct entrepreneurial stages – the Idea Stage, the Validation Stage and the Revenue Stage. Also, it is based on direct consultations with entrepreneurs and it fosters collaboration between partners and stakeholders within the Caribbean entrepreneurship ecosystem,” he said. Lisa Harding, Operations Officer, CDB and Project Supervisor of the CDB/World Bank Caribbean Animation and Technology Capacity Building Programme, with which CTEP is aligned, added that CTEP can “contribute to the enhanced capacity of young entrepreneurs involved in the information and communications technology industry, foster opportunities for enhanced employability, improve income-earning opportunities and increase opportunities for entrepreneurship–all of which are important drivers for inclusive growth for CDB’s borrowing member countries”. The selection process for the 2017 edition of CTEP will take place during the period February 11–15, 2017. The successful entrepreneurs and start-ups for the specific tracks will be announced on February 20, 2017. The incubation programme will run from March 1–May 31, 2017. Article compliments Caribbean 360.com
IMF reduces its regional growth forecast
The International Monetary Fund (IMF) has revised downwards its economic growth projection for Latin America and the Caribbean. In its World Economic Outlook Update released today, the IMF said it was now projecting 1.2 per cent growth for the region for 2017, which is 0.4 per cent less than the 1.6 per cent it had estimated in October last year. This follows a contraction of 0.7 per cent which occurred in the region last year. However, the IMF is predicting that regional economies will growth by 2.1 per cent next year. “Growth in tourism-dependent economies will be supported by the expected higher growth in the United States while commodity exporters will benefit from somewhat higher, though still slow, commodity prices, notably of oil,” the IMF said. However, it warned that the region continued to face several risks, including the withdrawal of correspondent banking relationships and a high degree of policy uncertainty in the US. “Amid increasingly volatile external conditions, exchange rate flexibility has served the region well and should remain the first line of defence against shocks. Well-established monetary policy framework in the region are suited to limit the exchange rate pass-through to consumer prices,” it explained. “Strong risk management practices and policies facilitating corporate balance sheet repair are also critical to reduce vulnerabilities arising from tightening of global financial conditions and sharp currency movement,” it added. The IMF also warned that countries should “continue to use available space to calibrate fiscal adjustment, as commodity prices are expected to remain relatively low. “The needed pace of adjustment will depend on debt levels and market pressures. Beyond macroeconomic policy adjustment, structural reforms – such as decreasing informality and red tape, boosting infrastructure quality, and improving education and rule of law – are essential to support medium-term growth,” it said while projecting an improved outlook for the US and other advanced economies, including China. Article compliments Barbados Today.
New World Bank Chief Economist for Latin America and Caribbean
Carlos Végh, a Uruguayan national, is the new World Bank Chief Economist for Latin America and the Caribbean. Végh will oversee a team of economists charged with providing intellectual leadership, economic analysis, and advice on the development issues facing Latin America and the Caribbean (LAC) Region. “It is a great honor to take this position and build on the intellectual leadership of my predecessors,” said Végh. “Despite significant economic and social progress in recent years, the region is likely to face some challenging times in the near future. In the long run, LAC will need to consolidate past gains and strive for further improvements in a broad range of areas. I look forward to contributing to this process.” Végh, who will start in his new role on February 1st, is currently the Fred H. Sanderson Professor of International Economics at the Johns Hopkins School of Advanced International Studies (SAIS) and a Research Associate at the National Bureau of Economic Research (NBER). Previously he also served as Professor of Economics and Vice-Chair of Undergraduate Studies at UCLA, and before that as Chair of the Program in Comparative and Topical Studies at UCLA’s Latin American Center. He replaces Ecuadorean economist Augusto de la Torre, who served as Chief Economist for LAC since September 2008 and retired at the end of last year. Végh’s research on monetary and fiscal policy in emerging and developing countries has been highly influential and is regularly featured in the international financial press. He has contributed to several World Bank reports such as the Global Economic Prospects. He has also served as visiting scholar in Banco Central de Chile, Colombia’s Banco de la República and Banco de México. During the 1980s and 1990s Végh served in different research positions at the International Monetary Fund and the Inter-American Development Bank in Washington D.C. He is currently editor in chief of Economía, a publication of the Latin American and Caribbean Economic Association. He has also held other editorial positions in specialized publications such as the IMF Economic Review, the Journal of Development Economics and the Journal of International Economics, among others. He holds a doctorate degree on Economics from the University of Chicago and bachelor’s degree on economics from American University in Washington DC and Universidad de la República in Uruguay. Article compliments LOOP News Barbados.
UWI, Caribbean CaribVision launch UWI-TV
The University of the West Indies (UWI) in partnership with CaribVision, the regional cable service of the Caribbean Media Corporation, and the RJR Group have launched UWI-TV, a new multimedia public information and education service. UWI-TV went live on December 1, 2016 — initially for three hours per day — and offers a variety of programmes showcasing the scholarship and many public events and activities that take place daily at the university. This partnership with CaribVision will deliver UWI content to millions of viewers in 22 markets in the Caribbean, as well as the large Caribbean Diaspora communities in New York, Toronto, Montreal, London and Europe. UWI-TV’s cable service will be complemented by a robust web and social presence, allowing users to view programmes in real time or on demand. “We are now in a new phase of television. Technology has enabled us to view programming on a variety of platforms. It has compelled us to create programming more quickly and more efficiently,” said UWI Vice-Chancellor Professor Sir Hilary Beckles. “The UWI has decided to use the opportunity that these new technologies offer, to share ideas, to dig deeper, think broader, reach higher for our understanding of our region and our world, to forge ahead with a pantheon of ideas. For us, the medium is the message,” he added. The UWI-TV initiative demonstrates the outcome potential of partnerships between industry and academia which forms part of the Triple A Vision outlined in the University’s new strategic direction: Alignment between industry and academia for wealth creation and distribution; expansion of access to tertiary education and increased agility to global opportunities. Article compliments LOOP News Barbados.
Standard & Poor’s Plays Grinch To The Bahamas With Christmas Downgrade
The Bahamas has found itself on the “naughty list” of international credit ratings agency Standard & Poor’s (S&P), which delivered the unwanted gift of a major downgrade this month. The country’s creditworthiness is now deemed “junk” as the New York-based ratings firm lowered its sovereign credit rating from BBB-/A-3 to BB+/B. In a report raising the red flag about the spiralling fiscal deficit, high unemployment and low growth, S&P warned that the country was at risk for a further downgrade. According to the ratings agency, the Bahamian economy will only grow by 0.3 per cent this year, down from the 1.2 growth projected back in April. It cautioned that this “lower growth trend will challenge the government’s ability to meet its fiscal projections, likely resulting in rising debt”. “The erosion of the Bahamas’ creditworthiness reflects these growing vulnerabilities within a context of a weak external position with growing levels of external debt, double-digit unemployment, high non-performing loans in the banking system, and high household indebtedness,” it added. S&P also justified the downgrade against the backdrop of deteriorating government revenue, despite the introduction of the Value Added Tax (VAT). The report immediately drew a strong rebuke from the government, which charged that “S&P had turned a blind eye to initiatives currently underway to stimulate economic activity and boost revenue. “The Government . . . is of the view that S&P’s decision does not give appropriate weight to important developments on the ground, nor the Bahamas’ strong commitment to address its economic and fiscal challenges,” the statement said. Pointing to the much anticipated US$3.5 million Baha Mar project, the government added, that “The Bahamas’ short- to medium-term prospects for placing the economy on a stronger growth trajectory are more encouraging than they have been since the recent economic and financial crisis.” Financial analysts warn that the downgrade would likely result in Government paying more to service its debt, among other things. Opposition Leader Loretta Turner-Butler is also expected negative fallout. She said the report was evidence that the economic policies of the Perry Christie administration had failed. “This is not a good Christmas. We’ve obviously gone over that precipice that I’ve been talking about for some time,” she told the Tribune. Chief executive officer of the Bahamas Chamber of the Commerce and the Employers’ Confederation Edison Summer described the downgrade as a rude awakening for the country. “It has to be seen as a real wake up call. It’s not good news for anybody,“ he stressed. Article compliments Caribbean360.com
Banknotes Amid Currency Meltdown
Venezuela is to issue larger denomination banknotes as soaring triple-digit inflation and a currency in freefall reduces the worth of the country’s largest existing bill to around two US cents on the black market. Six new banknotes ranging from 500 to 20,000 Bolivars will begin circulating on December 15, according to the central bank. At present, the largest-denominated bill is 100 Bolivars which is worth just a few US cents. Given that a two-litre soft drink can cost 25 times that much, shoppers are said to need backpacks just to carry the cash for their purchases. The new bills will have a similar design to the notes currently in circulation but will have different colours. Venezuela’s currency lost 67 percent of its value on the black market last month, falling to 4,587 bolivars per US dollar – the steepest monthly plunge ever, according to data by Dollar Today, which tracks the black market rate by monitoring transactions with the currency at foreign exchange houses across the border in Colombia. Runaway inflation, believed to be the highest in the world, is expected to surpass four digits next year, according to the International Monetary Fund (IMF). Caracas hasn’t published price data since 2015. Making matters worse, cash has become virtually unavailable, with ATM withdrawals capped at an extremely low amount and, on Friday, the nation’s credit card payment system unexpectedly stopped functioning for several hours. President Nicolas Maduro blamed the malfunction on a “cyberattack”, and ordered the Sebin intelligence service to raid the offices of CrediCard which processes payment for Visa and MasterCard. He’s also accused “mafias” in neighbouring Colombia of trying to carry out an “economic coup” against his socialist-run economy. “The right wing wants to impose on Venezuela a parallel exchange rate from an account in Miami, and from that account take the dollar to a disastrously crazy level,” Maduro said in a televised address announcing the rollout of the new bills. The South American socialist country has maintained strict currency controls since 2003 and currently has two legal exchange rates of 10 and 663 Bolivars per dollar used for priority imports. On the black market, where people and businesses turn when they can’t obtain government approval to purchase dollars at the legal rates, the Bolivar has collapsed by a factor of five over the past year. The currency meltdown comes amid what should’ve been a rare bout of good economic news for Venezuela after OPEC last week bowed to months of pressure from Maduro and other oil-dependent nations and decided to cut production levels for the first time since 2008. Crude prices rallied the most in five years as a result. Article compliments Caribbean360.com
Caribbean SMEs to Benefit from Entrepreneurial Asset & Commercialisation Project
Small and medium-sized enterprises (SMEs) in the Caribbean region are to benefit from a technical cooperation project that will enable them to generate wealth from their intellectual entrepreneurial assets (IEA). Dubbed Regional Entrepreneurial Asset and Commercialization Hub (REACH), the project will provide capacity building, training and mentorship in technology commercialisation; creative industries intellectual asset management; and product branding value capturing. Jamaica’s Permanent Secretary in the Ministry of Industry, Commerce, Agriculture and Fisheries Reginald Budhan, speaking at the official launch of REACH at the Courtyard by Marriott Hotel in New Kingston, said the project will: provide an enabling environment to support the commercialisation and monetisation of the creative industries and intellectual assets in Jamaica and the wider region; bring needed support to entrepreneurs and innovators; and help to boost Intellectual Property (IP) investments in the region. Budhan said the initiative provides an opportunity for entrepreneurs to unite and take full advantage of the untapped intellectual property resources throughout the region. He noted that Jamaica, for example, has vast creative capacity that remains largely underutilised. He mentioned that in 2004, the International Intellectual Property Institute reported that from the US$1 billion generated from reggae, including retail sales, copyrighted music and retail merchandising, Jamaica only earned US $1.4 million. “This large gap indicates that there is strong potential for Caribbean countries to capture more of the total market value,” he said, adding that there is uge demand for monetising innovations through improved management of IEAs. Budhan noted that in 2010, the Bank of Jamaica reported that Jamaica earned US$23.8 million from cultural services, which is more than the earnings from services in finance, business, insurance and construction combined. The Bank noted that reggae icons like Sean Paul and Shaggy earned more annually than Jamaica’s banana industry. Budhan said in spite of these impressive results, Jamaica and the Caribbean remain significantly challenged in increasing the contribution of the cultural industries to sustainable development due to a myriad of reasons. These include the lack of strategic and focused management, limited financial resources, insufficient market intelligence and branding, poor linkages with the local tourism industry, and weak data collection. A business lab component of REACH is scheduled to begin in February 2017 and will equip delegates to run successful businesses and to transform their ideas into viable enterprises. Article compliments Caribbean360.com
IMF And Jamaica Agree On New Three-Year Programme
The International Monetary Fund (IMF) has approved a three-year Stand-By Arrangement for Jamaica geared towards raising living standards and boosting employment. The US$1.64 billion will replace the existing Extended Fund Facility (EFF), which was scheduled to expire in March 2017. The Fund said approximately $411.9 million will be made immediately available and the remainder will be provided in six tranches upon completion of semi-annual program reviews. According to the IMF, Jamaican authorities have indicated they do not intend to draw down on the new SBA, but will treat it as “insurance against unforeseen adverse external economic shocks.” In announcing the new deal, IMF Deputy Managing Director and Acting Chair, Tao Zhang commended the country for achieving key targets under the EFF. “Macroeconomic stability has been entrenched, evidenced by low inflation, the buildup of foreign currency reserves, and a decline in the current account deficit. Fiscal discipline and proactive debt management have helped place public debt on a downward trajectory,” he said. He however warned that lingering challenges including low growth, poverty, unemployment and crime. The Washington-based financial body noted growth had only reached 0.8 per cent over the three-year EFF, but improved to 1.4 percent for the first quarter of this year, supported by gains in agriculture, manufacturing, electricity generation and tourism. “Growth in FY2016/17 is expected to reach 1.7 percent in FY16/17. Business confidence is strong and Jamaica’s international bonds are trading close to the average rate of other emerging markets. Unemployment is still high at 13.7 percent in April 2016, which partly reflects an increase in labor force participation,” the IMF said. It noted that the objectives of the new programme included more support for job creation, improving public sector efficiency, strengthening the social safety net and reduce public debt to 60 per cent of GDP by 2025/2026 by maintaining primary surplus at seven percent of GDP for the duration of the new arrangement. Article compliments Caribbean 360.com
BVI launches new public-private initiative to support financial services industry
BVI Finance Limited, a new public/private initiative that will see the creation of a company to better support financial services promotion and business development in the British Virgin Islands, is set to launch in January 2017, reports Caribbeannewsnow.com The new entity, which will take over from the existing BVI Finance, is part of an ongoing government programme that aims to strengthen and reposition the financial services industry. BVI Finance Limited will operate in keeping with best practice and along similar lines as Jersey Finance, Cayman Finance, Bermuda Development Association and other agencies charged with the promotion of financial services. As a corporate entity under a fundamentally new structure, BVI Finance Limited will have greater autonomy and flexibility in fulfilling its role as the marketing and promotional arm of the financial services industry. Under a partnership agreement to be entered between the government and the private sector, the new organisation will be responsible for promoting financial services as an industry to customers, intermediaries and regulators abroad, as well as by developing new business opportunities to pursue through legislative, regulatory and product changes and innovation. A number of carefully considered objectives have also been designed through consultation for the new organisation, against which it aims to deliver. These include coordinating the efforts of all key private sector stakeholders within financial services, encouraging sustainable growth of financial services through excellence, innovation and balance, as well as promoting and encouraging capability building within the financial services industry. Commenting on BVI Finance Limited, Lorna Smith, interim executive director of BVI Finance, said, “I am delighted to report that preparations for BVI Finance Limited are progressing well and that come January 2017 the new entity will start delivering on its objectives. Having built a leading international finance centre over the last 30 years, BVI Finance Limited will play an important role in ensuring the sustainable future of our financial services industry.” She added, “Moreover, through the establishment of a public/private partnership, BVI Finance Limited will play an even more collaborative and effective role in the way financial services are promoted and marketed.” Brodrick Penn, permanent secretary in the premier’s office also commented, saying, “BVI Finance Limited represents another positive step that we’ve taken to improve representation for the private sector and should be seen as a sign that the BVI is determined to continue creating value and enabling growth by providing a world-class destination for international business and commerce. “I am grateful to members of the private sector for serving on the BVI Finance Ltd taskforce and for contributing their knowledge and experience to the design of a new entity that is fit for purpose and which has been approved by government.” Article compliments IFC Review.
Cayman Islands included on Italy’s ‘whitelist’
Cayman Finance, the private sector organisation that represents the Cayman Islands’ financial services industry, has welcomed the news that the British territory has been included on Italy’s “whitelist”, reports Caribbean News Now. CEO of Cayman Finance, Jude Scott, said inclusion on the whitelist will, among other things, allow Cayman Islands funds to invest in Italian securities such as bonds and securitization instruments and receive interest payments gross of withholding tax. Additionally, Cayman funds may benefit from full exemption from Italian tax on profits attributable to them where they own more than five per cent of an Italian real estate investment fund. While statistics show managers in the United States manage approximately 74 per cent of net assets from Cayman domiciled regulated funds, Europe remains an important player in the alternative investment industry. Scott said this decision was a positive step forward for Cayman’s financial services industry in Europe, particularly on the heels of the European Securities and Markets Authority’s (ESMA) recent deferral of its recommendation on the Cayman Islands’ application for the Alternative Investment Fund Managers Directive (AIFMD) passport. “We are optimistic that the pending legislation for the Cayman Islands AIFMD regime will be in place late 2016/early 2017,” Scott said. “Once the remaining legislation is enacted, we see no impediments hindering Cayman’s AIFMD passport application. The creation of this regime will offer wider opportunities for Cayman domiciled funds and managers in Europe.” The Cayman Islands continue to make positive strides as a reputable international financial centre as it co-operatively develops legislation for the AIFMD compliant regime to market into Europe beyond the national private placement regimes. Scott said Cayman’s financial services industry is encouraged by Italy’s recognition of the Cayman Islands for its good tax governance and inclusion of the jurisdiction on its whitelist. “The inclusion of the Cayman Islands on Italy’s whitelist echoes to the global financial services industry its recognition of our robust framework to combat corruption, money-laundering and tax evasion but as importantly, Cayman’s commitment to comply with international standards of transparency and exchange of information,” he said. “It is encouraging to be recognised by many European countries and more recently Italy, on tax information exchange. We look forward to building a stronger partnership with Italy and other EU countries in an effort to combat financial crimes,” he added. This development will enable Cayman funds, particularly credit and real estate funds, to provide much needed inward investment into Italy. The granting of the right to receive interest income gross of withholding tax is very positive for Cayman funds investing in Italian securities. Scott said Cayman’s funds industry could play an increasingly important role in providing liquidity and credit to Italian businesses, to help offset the challenges faced by Italian banks as a result of the recent global credit crises. “Cayman funds have played this role with other major economies,” he said. “As a premier global financial hub and allocator of global capital and financing, Cayman provides a cost effective, neutral platform to allow international investment to be made into economies that need that investment, while at the same time giving pension funds and other international institutional investors an opportunity to invest in a diversified portfolio of securities. “The Cayman Islands enables parties from around the world who are domiciled in countries that may have differing laws, regulations, tax structures and customs to benefit from doing business with each other using Cayman as an efficient and effective global financial hub. “This inward investment from Cayman will ultimately help stimulate economic activity, create much needed jobs and generate taxable revenue in Italy.” Scott said, if Cayman is granted the AIFMD passport, Italian resident investors and pension funds would be able to invest in Cayman domiciled structures including many of the world’s best alternative investment structures. “As Cayman funds continue to market into Europe, all stakeholders can take confidence that the Cayman Islands government, the Cayman Islands Monetary Authority and the financial services industry remain committed to building a vibrant alternative investment funds industry that safeguards its investors but facilitates growth and good business,” he said. The Cayman Islands signed a Tax Information Exchange Agreement with Italy on 3 December 2012, which came into force on 13 August 2015. To date, the Cayman Islands has signed 36 tax information exchange agreements, two inter-governmental agreements, namely with the United States and the United Kingdom and more recently a multilateral competent authority agreement to implement the OECD Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard to improve international tax compliance and the exchange of information. Article compliments IFC Review.
Caribbean banks hope IMF can solve de-risking-risk
The Caribbean Association of Banks (CAB) has welcomed recent remarks by Christine Lagarde, Managing Director of the International Monetary Fund (IMF), over the problem of correspondent banks in the region de-risking and hopes that the organisation can help stop the current trend. As larger, mainly North American banks end their relationships with regional banks because of perceived regulatory risk and small profits, the banking sector across the Caribbean is getting increasingly concerned that the constant withdrawal of partner banks will destabilize all of its economies. The problem came to the forefront in Cayman last summer when a number of local money transfer firms lost their relationships with their US banks, making it very difficult for the thousands of overseas workers here to remit earnings back to their native countries or for Caymanians to help their friends and family overseas with cash transfers. But the de-risking is having a wider impact on Caribbean banking in general and Lagarde has described it as a “collective action problem that calls for a collective solution” as banks pull out of the region. The CAB said that it has been raising the alarm about the effects on the Caribbean region for two years and has requested intervention over the loss of correspondent banking relationships that could render the Caribbean region “unbankable and ultimately destabilize all sectors of the economies”. Among the many negative impacts anticipated from the disturbing trend of de-risking on small nation states is the risk of financial exclusion, a shrinking financial sector, thriving underhand economies, increased use of unregulated payment options and a barrier to attaining the Millennium Development Goal 10. “Correspondent Banking relationships are critical for the enabling of key economic and financial transactions such as remittances, foreign direct investments (FDIs) and international trade in goods and services, which constitute some of the key drivers for sustaining the Caribbean region’s growth and development,” the CAB said recently. As was demonstrated by the enormous level of concern last summer from Jamaicans in Cayman who regularly send money home, that country is extremely dependent on remittances. The CAB said average remittances to Jamaica from overseas work accounts for 15% of the entire GDP. Lagarde emphasized the problem in July when she said, “Correspondent banking is like the blood that delivers nutrients to different parts of the body. It is core to the business of over 3,700 banking groups in 200 countries.” While the CAB is hoping the IMF will come up with a solution, so far the private banking sector in North America in particular is still pulling out of the region, which the CAB said is putting the livelihoods of Caribbean people in serious danger. Article compliments CNS Business.
Concern over Brexit in vulnerable Commonwealth states
Key industries in some Commonwealth nations could take massive hits if appropriate steps aren’t taken following the UK’s departure from the EU, reports Caribbean News Now. The forecast over so-called Brexit comes from policy experts’ analysis in two new research papers published by the Commonwealth Secretariat. “Brexit is a journey into unknown trading arrangements, both for the UK dealing with the EU, and the UK’s trading relationship with a large number of developing countries. Many have benefited from EU trade preferences,” said Dr Mohammad Razzaque, head of the Secretariat’s international trade policy section. The analysis is part of the Secretariat’s peer reviewed ‘Trade Hot Topics’ series. The latest papers suggest that the uncertainties caused by Brexit may weaken the chances of world economic recovery. This in turn will have severe implications for many developing and so called least developed countries or LDCs. The EU provides special trade deals to support these vulnerable countries, using often complex mechanisms. Razzaque warns that if equivalent provisions are not provided while the UK leaves the EU, it could mean additional annual export duties of more than £600 million for these countries. “For 36 Commonwealth developing countries, this potential tax hike could be as high as one percent of their total exports to the UK,” he said. “For the likes of Bangladesh, Mauritius, Seychelles and Swaziland this could be more than ten per cent.” So what could this mean for some countries? “Let’s take Bangladesh as an example,” said Razzaque. “Unless similar EU trade preferences are maintained by the UK, Bangladesh will have to pay £220 million in tariffs to UK customs. That would put even more pressure on the four million, mainly women, workers facing already appalling conditions.” Strong historical ties mean at least 20 Commonwealth developing countries rely on the UK for ten percent or more in trade. The UK is often a niche market in certain sectors. Razzaque warns, “More than 80 percent of St Lucia’s exports, mainly bananas, to the EU is bound for the UK. Remember that the country’s banana industry has witnessed tremendous competitive pressure. Unless it secures the same level of market access provision as in the EU, post-Brexit trading could deal a further blow to the sector. Similarly, Fiji, a Pacific Island state, sources almost two-thirds of its European export from the UK alone. In 2014, 95% of Fiji’s exports to the UK was raw sugar.” The Commonwealth’s developing countries export a total of about £25 billion to the UK. A weak pound, following the Brexit referendum, will have resulted in a significant loss in export value for these countries. “It’s not just trade Brexit will affect,” Razzaque said. “The impact of a weaker pound will affect overseas aid from the UK. So imagine a 10 percent depreciation of sterling. $20 billion UK aid is only worth $18 billion. Think about how that extra $2 billion could have been spent. We’re talking about here, among other things, the UK’s helping 13.4 million people with emergency food assistance and supporting 11 million children with their education in the past five years.” But all is not lost. The Secretariat’s policy papers have used scenario analysis to produce four options which could help avoid the most vulnerable countries being put at risk. According to one of the papers, the UK’s commitment to promoting trade-led development has been globally influential. It has always recognised and championed the special needs and challenges facing such vulnerable country groups as the LDCs, sub-Saharan Africa and small states. “The UK is one of the few high-income countries which fulfils the UN target of providing 0.7 per cent of gross national income as overseas development assistance,” Razzaque pointed out. “It’s in this spirit that the UK’s newfound trade policy sovereignty should result in continuity and improvements over the currently existing trade preferences for vulnerable countries.” Article compliments IFC Review.
Bahamas Gets Rating Downgrade But Government Not Losing Sleep Over It
International credit rating agency Moody’s Investor Services has lowered the Bahamas government’s bond and issue rating, citing low medium-term growth prospects and an increase in the debt ratio as the key reasons for the downgrade. Although” disappointed” by the decision, the Perry Christie administration is not too worried, saying the country’s credit risk remains investment grade. It is also taking comfort in the stable outlook assessment given by Moody’s, contending that it “acknowledges that the economic developments underway stand to enhance the resilience of the Bahamian economy”. Moody’s this week lowered the Bahamas government’s sovereign credit rating one notch, from Baa2 to Baa3 and changed the outlook to stable. The rating actions concluded a review for downgrade that began on July 1. Why the downgrade? Moody’s gave two reasons for the action: Prospects of low medium-term growth which points to weaker economic strength relative to similarly-rated peers; and the persistent increase in the government’s debt ratio, which leaves the Bahamas with less fiscal space relative to rating peers. Explaining the former, Moody’s highlighted the expectation that the Bahamas’ economic performance over the next five years will likely remain subdued and constrained by structural rigidities. Moody’s forecasts the economy will recover in 2016-2020, with real GDP growth expected to average 1.3% during this period, the fourth weakest economic performance out of the current 22 Baa-rated sovereigns. “Structural constraints that limit potential growth include relatively high energy costs, a bureaucratic burden that hinders doing business and labour market rigidities. These constraints are reflected in, for example, the prevalent high rate of unemployment and non-performing loans in the banking system, and have also negatively affected the competitiveness of the tourism sector – a mainstay of the Bahamas’ economy – that accounts directly and indirectly for about 50% of GDP,” it said. “While authorities have implemented some measures to address these issues and have put forward a pro-growth reform agenda via the National Development Plan, progress has been slow so far.” Given those issues, Moody’s said it considered that the Bahamas’ economic strength will remain “low” – the lowest score among Baa-rated sovereigns which have an average score of “moderate”. On the debt issue, Moody’s noted that while government has reduced the fiscal deficit for three consecutive years, the government debt to GDP ratio continued to rise to an estimated 66.1% by the end of 2015/16, from 60.2% in 2013/14. The government’s medium-term plan forecasts continued deficit reduction and a balanced budget by 2018/19 on the back of strong revenue growth and a reduction of expenditures in real terms after 2016/17. According to the authorities this will lead to a reduction in the government’s debt/GDP ratio, closer to 60% of GDP. However, Moody’s baseline, which incorporates a more gradual fiscal consolidation path, forecasts that the debt/GDP ratio will peak in 2016/17 at about 67% and then stabilize around 65%. Government responds In a statement issued on the heels of the downgrade, the Bahamas government said its perspective on the economy remains positive and promised it would continue pursuing the necessary policy reform measures and initiatives to secure durable growth, broadened employment opportunities, and greater fiscal sustainability with debt reduction. “To this end, the Government is moving swiftly to advance the many real sector initiatives underway that are poised to deliver, over the near-term horizon, further concrete, measurable contributions in these key economic policy areas,” it said, pointing to the mega Baha Mar project which will resume next month. The administration insisted that fiscal sustainability and debt reduction remain high on its policy agenda. “The government’s opinion is that The Bahamas’ economic fundamentals still support a strong creditworthiness assessment and, based on its proactive approach to addressing existing policy concerns, is confident that this rating outcome is temporary and an improvement will be secured in the short-term,” it said. Moody’s has indicated the rating could go back up with a strengthening of budgetary processes, including expenditure controls and improvements in revenue collections that lead to a rapid deficit reduction. It said an improvement in ratings could also materialize if implementation of structural reforms fostered higher potential growth and contributed to a significant improvement in the Bahamas’ debt metrics. On the other hand, it said if government’s commitment to fiscal discipline diminishes, delaying the stabilization of debt metrics, or if there is a slower than anticipated economic growth – particularly if it lowered government revenue growth, a key component of the deficit reduction strategy – the rating could be further downgraded. Article compliments Caribbean360.com
Public-Private Partnership Helpdesk Now Available For Region
The Caribbean Development Bank (CDB) has launched a Public-Private Partnership (PPP) Helpdesk, which will provide technical assistance to regional governments seeking to develop PPP projects in their countries. The Helpdesk will assist governments to better manage PPP programmes and projects, especially in the early stages of development. It will provide support to governments through the provision of specialist consultants, to undertake pre-feasibility studies and PPP screening. “Many potential PPP projects in the Caribbean never get past the concept stage, as it takes a lot of work, technical capacity and money, to move a project from concept, through to feasibility study, then implementation. What we hope to do through this Helpdesk, which is a free resource to our Member Governments, is to assist in ensuring that projects that can have real potential are supported,” said Brian Samuel, PPP Coordinator at CDB. So far, Anguilla and Grenada have utilized the services provided through the Helpdesk, which was officially launched in May 2016. The Helpdesk provides technical advice across all infrastructure sectors, including transportation, water and sanitation and renewable energy. The initiative is part of a US$1.2 million Regional PPP Support Facility, launched in March 2015, to build the capacity of government agencies to develop and implement PPP projects. CDB is the primary implementing agency of the Facility, with additional funding and technical support provided by the Inter-American Development Bank/Multilateral Investment Fund, and the World Bank/Public-Private Infrastructure Advisory Facility. Other initiatives which are part of the Regional PPP Support Facility, include a series of three PPP boot camps held between September 2015 and February 2016. A Caribbean web-based PPP Toolkit is being launched in October 2016. Article compliments Caribbean360.com