/raid1/www/Hosts/bankrupt/TCRLA_Public/240605.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Wednesday, June 5, 2024, Vol. 25, No. 113
Headlines
A R G E N T I N A
ARGENTINA: Milei Pitches at Silicon Valley After Setbacks at Home
B R A Z I L
BRAZIL: May Inflation Rises to 0.44%, Below Forecasts
COSAN SA: Reports a Narrower Net Loss of R$192 million
GOL LINHAS: Bankruptcy Exit to Involve $1.5B Capital Injection
GOL LINHAS: Seeks to Extend Plan Exclusivity to October 21
J A M A I C A
JAMAICA: BOJ Cuts Certificate of Deposit (CD) Minimum to $100,000
JAMAICA: Slow Productivity Continue to Stymie Economic Growth
P E R U
PERU: Economy Battles Inflation: A Closer Look at the First 5 Mos.
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A R G E N T I N A
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ARGENTINA: Milei Pitches at Silicon Valley After Setbacks at Home
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Buenos Aires Times reports that President Javier Milei will pitch
investing in Argentina to Apple Inc, Alphabet Inc and Meta
Platforms Inc in California, building on an unprecedented wave of
international recognition in a bid to fortify his political
strength at home.
The libertarian economist's meetings with Tim Cook, Sundar Pichai
and Mark Zuckerberg during a 36-hour window would be on a wish list
for almost any leader, according to Buenos Aires Times. But
they're particularly welcome for Milei, who badly needs foreign
investment to help turn around an economy battling annual inflation
near 300 percent and a worsening recession, the report notes. It's
also an A-list dance card none of his recent predecessors could
score, elevating his profile at home, the report discloses.
"Milei's personality and radical ideas are creating an unusual
investor interest in Argentina, in almost every sector," said
Marcelo García, director for the Americas at geopolitical risk
consultancy firm Horizon Engage, the report notes. "His challenge
now is to turn the photo-ops into concrete investments in the
country," he added.
Buenos Aires Times relays that optimism around the West Coast trip
contrasts with Milei's domestic setbacks. He fired his Cabinet
chief less than six months into the job, he hasn't yet lifted
currency controls and he missed a self-imposed deadline last week
to win approval for his signature piece of legislation, the report
notes. The bill contains a range of pro-business, deregulation
measures to attract investment from the likes of Silicon Valley and
would also serve as a template for Milei to work with an
adversarial Congress if it passes, the report relays.
The president has nonetheless maintained high approval ratings in
Argentina, despite his harsh austerity measures and confrontational
attitude toward Congress, which he decries as a "rat's nest," the
report discloses. So far he's delivering on his chief promise to
rein in runaway prices, with monthly inflation forecast to come
around five percent in May from a peak of 26 percent in December
when he took office, the report notes.
Beyond Buenos Aires, Milei is getting a lot of attention abroad,
the report says. Time magazine put him on the cover and he's
received ample praise from billionaires like Elon Musk for rapidly
cutting spending, the report relays. So far this year he's also
made appearances at the World Economic Forum in Davos, Switzerland,
the Conservative Political Action Conference outside Washington and
the Milken Institute in Los Angeles, the report notes.
The San Francisco jaunt is also Milei's first opportunity to prove
whether he can recruit the world's top companies to expand
operations or, in the case of Apple, break ground on a store in
Argentina, the report discloses. So far, his trips abroad have
focused on fortifying relationships with political allies aligned
with his free-market, anti-establishment approach, such as Donald
Trump in the US or Santiago Abascal of the far-right Vox Party in
Spain. He's generally left investor meetings to his economic team,
despite his own corporate background as an economist, the report
says.
It's not immediately clear what Milei is offering Cook, Zuckerberg
and Pichai, among others, the report relays. For Musk, the
Argentine leader published a decree to allow Starlink to sell its
satellite Internet in the country, the report relays. More
broadly, the nation's protectionist policies have made iPhones and
other high-end products cost nearly double what they do in the US,
while its labour laws, currency controls and capital restrictions
have discouraged some major multinationals from having a larger
presence, the report notes.
"Beyond Milei rubbing shoulders with the people who are leading the
most important change of the century, which is very important for
Argentina, he's giving a very clear signal of where things are
going," said Alberto Ades, a director at investment advisory firm
NWI Management, the report discloses.
The president not only recognises where the world is headed, Ades
added, but he's also trying to "embrace that path with enthusiasm,"
the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Javier Milei is the current
president of Argentina after winning the November 19, 2023 general
election. He succeeded Alberto Angel Fernandez in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal year
2019, according to the World Bank. Historically, however, its
economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
The IMF's executive board completed on August 23, 2023, the fifth
and six reviews of Argentina's 30-month Extended Fund Facility
(EFF), and approved a US$7.5-billion disbursement to Argentina as
part of the larger program, which refinances payments Argentina
owes the institution from a previous bailout that failed to
stabilize the economy in 2018. Argentina would receive another IMF
disbursement in November of about US$2.75 billion pending another
staff-level agreement and board approval.
S&P Global Ratings, on March 15, 2024, raised its local currency
sovereign credit ratings on Argentina to 'CCC/C' from 'SD/SD' and
its national scale rating to 'raB+' from 'SD'. S&P also raised its
long-term foreign currency sovereign credit rating to 'CCC' from
'CCC-' and affirmed its 'C' short-term foreign currency rating. The
outlook on the long-term ratings is stable. In addition, S&P
revised its transfer and convertibility assessment to 'CCC' from
'CCC-'.
S&P said the stable outlook on the long-term ratings balances the
risks posed by pronounced economic imbalances and policy
uncertainties with the favorable change in near-term debt service
obligations. S&P also expect no further debt exchanges that it
would likely consider to be distressed.
Fitch Ratings upgraded on June 13, 2023, Argentina's Long-Term
Foreign Currency (FC) Issuer Default Rating (IDR) to 'CC' from
'C'and affirmed the Long-Term Local Currency (LC) IDR at 'CCC-'.
Fitch typically does not assign Outlooks to sovereigns with a
rating of 'CCC+' or below.
The upgrade of the FC IDR reflects that Fitch no longer deems a
default-like process to have begun, as the authorities have not
signaled a clear intention to follow through with an intra-public
debt swap announced in March. The new 'CC' rating signals a default
event of some sort appears probable in the coming years, regardless
of the outcome of upcoming elections. The affirmation of the LC IDR
at 'CCC-' follows the peso debt swap in June that Fitch did not
deem to be a "distressed debt exchange" (DDE).
Moody's Investors Service, in September 2022, affirmed Argentina's
Ca foreign-currency and local-currency long-term issuer and senior
unsecured ratings. The outlook remains stable. The decision to
affirm the Ca ratings balances Argentina's limited market access,
weak governance, and history of recurrent debt restructurings with
recent efforts to marshal fiscal and monetary measures to start
addressing underlying macroeconomic imbalances in the context of
the IMF program that was approved in 2022, according to Moody's.
DBRS, Inc. confirmed Argentina's Long-Term Foreign Currency Issuer
Rating at CCC and downgraded its Long-Term Local Currency Issuer
Rating to CCC from CCC (high) on March 3, 2023.
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B R A Z I L
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BRAZIL: May Inflation Rises to 0.44%, Below Forecasts
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Rio Times Online reports that in May, Brazil's National Consumer
Price Index (IPCA-15) increased by 0.44%, up from April's 0.21%.
Despite the rise, this figure missed market analysts' prediction of
0.47%, according to Rio Times Online.
Interestingly, this is the lowest May inflation rate since 2021,
which also saw a 0.44% increase, the report notes.
In comparison, last year's May rate was higher at 0.51%, the report
relays. This year, the IPCA-15 has climbed by 2.12%, the report
notes.
Over the past twelve months, it recorded a 3.7% increase, slightly
down from 3.77% in April, the report discloses.
The IBGE reported that eight out of nine groups of goods and
services saw positive results in May, the report says.
Notably, Health and Personal Care rose by 1.07%, contributing 0.14
percentage points, and Transportation grew by 0.77%, adding 0.16
points, the report notes.
Other variations ranged from a decrease of 0.44% in Household Items
to a 0.66% increase in Clothing, the report relays.
In Health and Personal Care, pharmaceutical products had the
biggest impact, rising 2.06%, the report notes.
This increase followed a price hike of up to 4.5% for medications,
effective from March 31, the report says.
Additionally, personal hygiene items accelerated from 0.29% in
April to 0.87% in May, mainly due to a 1.98% rise in perfume
prices, the report discloses.
May Inflation Rises to 0.44%, Below Forecasts
In the Transportation sector, gasoline prices went up by 1.9%, and
airline tickets soared by 6.04%, the report notes.
Ethanol rose by 4.70%, diesel by 0.37%, while vehicular gas prices
fell by 0.11%, the report relays.
In the Food and Beverages group, at-home food costs rose by 0.22%
in May, the report relays.
Contributing to this were price hikes in onions (up 16.05%), ground
coffee (up 2.78%), and long-life milk (up 1.94%), the report
discloses.
However, carioca beans dropped by 5.36%, fruit prices fell by
1.89%, rice by 1.25%, and meat by 0.72%, the report notes.
Background
On the other hand, Brazil's Producer Price Index (IPP) experienced
a notable rise of 0.74% in April, the report relays.
This marked the third consecutive month of gains, signaling subtle
yet significant shifts in the country's industrial landscape, the
report says.
Despite a previous year's overall decline of 3.08%, April's
increase of wholesale inflation contributed to a modest annual
growth of 0.99%, the report discloses.
Brazil's Producer Price Index (IPP) tracks price changes received
by domestic producers, reflecting wholesale inflation, the report
says.
Sector performances varied. The paper and cellulose industry led
with a surge of 3.99%, while pharmaceuticals also rose by 2.10%,
the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Luiz Inacio Lula da Silva won the 2022 Brazilian
general election. He was sworn in on January 1, 2023, as the 39th
president of Brazil, succeeding Jair Bolsonaro.
S&P Global Ratings raised on Dec. 19, 2023, its long-term global
scale ratings on Brazil to 'BB' from 'BB-'. The outlook on the
long-term ratings is stable. S&P affirmed Brazil's global scale
short-term ratings at 'B' and its national scale long-term rating
at 'brAAA'. S&P also raised the transfer and convertibility
assessment on the country to 'BBB-' from 'BB+'. S&P said, "The
stable outlook reflects our expectation that Brazil will maintain
A strong external position, thanks to strong commodity output and
limited external financing needs. We also believe Brazil's
institutional framework can sustain stable and pragmatic
policymaking based on extensive checks and balances across the
executive, legislative, and judicial branches of government. We
expect a very gradual fiscal correction but anticipate fiscal
deficits will remain large."
Fitch Ratings affirmed on Dec. 15, 2023, Brazil's Long-Term
Foreign-Currency Issuer Default Rating (IDR) at 'BB' with a Stable
Outlook. Fitch said Brazil's ratings are supported by its large and
diverse economy, high per-capita income, and deep domestic markets
and a large cash cushion that support the sovereign's financing
flexibility and its high local-currency debt share. Strong external
finances support resilience to shocks, underpinned by a flexible
exchange rate, robust international reserves and a sovereign net
external creditor position. The ratings are constrained by weak
economic growth potential, relatively low governance scores, high
and rising government debt/GDP, and budgetary rigidities. A new
fiscal framework introduced this year aims to anchor a gradual
consolidation process and address these fiscal weaknesses, but its
effectiveness is increasingly unclear.
Moody's credit rating for Brazil was last set at Ba2 in 2018 with
stable outlook. Moody's affirmed the Ba2 issuer ratings and
senior unsecured bond ratings in April 2022.
DBRS Inc., on August 15, 2023, upgraded Brazil's Long-Term
Foreign and Local Currency - Issuer Ratings to BB from BB (low).
At the same time, DBRS Morningstar confirmed Brazil's
Short-term Foreign and Local Currency - Issuer Ratings at R-4.
The trend on all ratings is Stable (March 2018).
COSAN SA: Reports a Narrower Net Loss of R$192 million
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Rio Times Online reports that Cosan S.A. disclosed its Q1 2024
financial results, reporting a narrower net loss of R$192 million
compared to R$904 million in Q1 2023, and a slight decrease in
corporate gross debt to R$25.3 billion.
The company's performance reflects strategic initiatives such as
liability management, growth investments in key projects across its
portfolio, and portfolio management, including the divestiture of
distributed generation projects by Raizen, according to Rio Times
Online.
As reported in the Troubled Company Reporter-Latin America on Aug.
21, 2023, S&P Global Ratings revised its outlook on Cosan to
positive from stable and affirmed its 'BB-' global scale ratings.
S&P also affirmed the 'BB-' issue-level rating on the debt issued
by Cosan's financial arms and kept the '3' (65%) recovery rating
unchanged.
GOL LINHAS: Bankruptcy Exit to Involve $1.5B Capital Injection
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globalinsolvency.com, citing Reuters, reports that Brazilian
airline Gol expects its exit of chapter 11 bankruptcy proceedings
to involve a $1.5 billion capital injection through the issuance of
new shares and refinancing of $2 billion in debt, it said in a
securities filing.
Gol, one of Brazil's largest carriers, filed for bankruptcy
protection in the United States earlier this year after struggling
with heavy debt and delayed deliveries from planemaker Boeing,
according to globalinsolvency.com.
The estimates for it to emerge from the restructuring process are
part of a broader five-year strategic plan unveiled by the firm,
which includes increasing its fleet and boosting operating margins,
the report notes.
Sao Paulo-traded shares of Gol dropped as much as 3.5% after the
plan was announced, as the company cautioned that it is "highly
likely" that its shares will hit "minimal value upon emergence"
from bankruptcy, the report relays. Gol said that it would hold a
competitive process starting in June to evaluate proposals to
finance its bankruptcy exit, adding the process should last at
least until the end of the third quarter, the report adds.
About Gol Linhas
GOL Linhas Aereas Inteligentes S.A. provides scheduled and
non-scheduled air transportation services for passengers and cargo;
and maintenance services for aircraft and components in Brazil and
internationally. The company offers Smiles, a frequent-flyer
program to approximately 20.5 million members, allowing clients to
accumulate and redeem miles. It operates a fleet of 146 Boeing 737
aircraft with 674 daily flights. The company was founded in 2000
and is headquartered in Sao Paulo, Brazil.
GOL Linhas Aereas Inteligentes S.A. and its affiliates and its
subsidiaries voluntarily filed for Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 24-10118) on Jan. 25, 2024.
GOL Linhas estimated $1 billion to $10 billion in assets as of the
bankruptcy filing.
The Debtors tapped Milbank Llp as counsel, Seabury Securities Llc
as restructuring advisor, financial advisor and investment banker,
Alixpartners, LLP, as financial advisor, and HUGHES Hubbard & Reed
LLP as aviation related counsel. Kroll Restructuring
Administration LLC is the claims agent.
GOL LINHAS: Seeks to Extend Plan Exclusivity to October 21
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GOL Linhas Aereas Inteligentes S.A., and its affiliates asked the
U.S. Bankruptcy Court for the Southern District of New York to
extend their exclusivity periods to file a plan of reorganization
and obtain acceptance thereof to October 21 and December 20, 2024,
respectively.
The Debtors state that the Chapter 11 Cases involve thirteen
Debtors, which maintain active, international airline and cargo
operations with customers and creditors around the world. With
approximately 14,000 employees and approximately $3.7 billion in
annual revenue in 2023, the Debtors play a key role in the South
American aviation market. The Debtors have in excess of $4.2
billion of outstanding funded indebtedness and lease obligations,
and their Schedules and Statements contain tens of thousands of
creditors and thousands of contracts.
The Debtors explain that the sheer size of the Debtors' cases alone
warrants the requested extension of its Exclusive Periods. In cases
of this size and complexity, 120 days is inadequate to formulate a
chapter 11 plan, especially where, as here, the Debtors did not
have the ability to "prenegotiate" a chapter 11 plan with their key
stakeholders before filing for chapter 11. Accordingly, the Debtors
submit that the requested 150-day extension of the Exclusive
Periods is warranted and appropriate.
The Debtors claim that although they have made substantial
progress, the administration of these Chapter 11 Cases and the
negotiation, formulation, filing, and prosecution of a chapter 11
plan will require substantial additional time and effort, which can
only begin in earnest once the Debtors have finalized their
business plan.
The Debtors assert that this is their first request for an
extension of the Exclusive Periods, and it comes only four months
after the Petition Date. Although the Debtors continue to work
diligently towards a timely emergence from chapter 11, they require
additional time to evaluate additional operational restructuring
opportunities, finalize their long-term business plan, access the
capital markets, consider plan structures, and negotiate with key
stakeholders before they are able to propose a value-maximizing
plan of reorganization.
The Debtors further assert that they are not seeking an extension
of the Exclusive Periods to pressure creditors to submit to their
demands, nor will granting the requested extension unfairly
prejudice creditors. Rather, the Debtors submit that the requested
extensions will benefit all parties in interest by affording them
an organized and efficient process to negotiate a consensual
chapter 11 plan, consistent with how these Chapter 11 Cases have
progressed thus far.
The Debtors' Counsel:
Evan R. Fleck, Esq.
Andrew C. Harmeyer, Esq.
Bryan V. Uelk, Esq.
MILBANK LLP
55 Hudson Yards
New York, NY 10001
Telephone: (212) 530-5000
Facsimile: (212) 530-5219
Email: efleck@milbank.com
aharmeyer@milbank.com
buelk@milbank.com
- and -
Gregory A. Bray, Esq.
MILBANK LLP
2029 Century Park East, 33rd Floor
Los Angeles, CA 90067
Telephone: (424) 386-4000
Facsimile: (213) 629-5063
Email: gbray@milbank.com
- and -
Andrew M. Leblanc, Esq.
Erin E. Dexter, Esq.
MILBANK LLP
1850 K St. NW, Suite 1100
Washington, DC 20006
Telephone: (202) 835-7500
Facsimile: (202) 263-7586
Email: aleblanc@milbank.com
edexter@milbank.com
About Gol GOLL4.SA
GOL Linhas Aereas Inteligentes S.A. provides scheduled and
non-scheduled air transportation services for passengers and cargo;
and maintenance services for aircraft and components in Brazil and
internationally. The company offers Smiles, a frequent-flyer
program to approximately 20.5 million members, allowing clients to
accumulate and redeem miles. It operates a fleet of 146 Boeing 737
aircraft with 674 daily flights. The company was founded in 2000
and is headquartered in Sao Paulo, Brazil.
GOL Linhas Aereas Inteligentes S.A. and its affiliates and its
subsidiaries voluntarily filed for Chapter 11 protection (Bankr.
S.D.N.Y. Lead Case No. 24-10118) on Jan. 25, 2024.
GOL Linhas estimated $1 billion to $10 billion in assets as of the
bankruptcy filing.
The Debtors tapped Milbank Llp as counsel, Seabury Securities Llc
as restructuring advisor, financial advisor and investment banker,
Alixpartners, LLP, as financial advisor, and HUGHES Hubbard & Reed
LLP as aviation related counsel. Kroll Restructuring
Administration LLC is the claims agent.
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J A M A I C A
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JAMAICA: BOJ Cuts Certificate of Deposit (CD) Minimum to $100,000
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David Rose at Jamaica Observer reports that the Bank of Jamaica
(BOJ) has cut the minimum bid size for its 30-day certificate of
deposit (CD) offerings by a 10th, from $1 million to $100,000, a
move which has opened up greater access for the general public to
higher-yielding financial instruments.
The change took effect at the May 22 auction, whereby any applicant
only needed $100,000 to access the 30-day financial instrument
which has a quoted 7.50 per cent annualized interest rate,
according to Jamaica Observer. That auction, which had $34.50
billion in CDs on offer, was oversubscribed to the tune of $41.72
billion with an average yield of 10.19 per cent and average bid
prices of $99.75. This CD is set to mature on June 21, the report
notes.
The BOJ highlighted that this move not only aligns its auctions
with best practice, but also improves financial inclusion for
investors with smaller sums of money, the report discloses.
Participants in the BOJ's CD auctions also benefit from holding the
securities in their name in their account at the JamClear(R)
Central Securities Depository (CSD), the depository for all BOJ and
Government of Jamaica (GOJ) instruments, the report notes. This is
opposed to it being held in custody by a securities dealer, the
report says.
"Based on market surveillance, recent issuances of securities by
financial institutions within the domestic market have set the
minimum bid size at One Hundred Thousand Jamaica Dollars
(JMD100,000.00). Accordingly, the adjustment to the minimum bid
size aligns the Bank's auctions with the industry norm. Notably,
the minimum bid sizes for Government of Jamaica (GOJ) instruments
are lower than the JMD100,000.00; Treasury Bills are JMD5,000.00
while Benchmark Investment Notes are JMD1,000.00," the BOJ said in
an emailed response to the Jamaica Observer.
Nicole Adamson, VM Wealth Management Limited manager – research,
business planning and investor relations, also highlighted that the
reduction in the minimum has lowered the barrier for entry for the
average Jamaican to access another finacnial instrument, the report
relays.
"Furthermore, the CDs are still very attractive in the current
economic environment which should serve as a further impetus to
investors to take positions in them. With greater accessibility we
should see greater demand from more local investors, which may,
however, drive down the yield. It also gives a greater platform for
diversification in an asset class that has been doing well while
the equities market has been underperforming. This move by the BOJ
should see a greater demand for CDs and more possibilities for
diversification for investors," Adamson added, the report notes.
The BOJ's CD auction takes place every Wednesday with a wide range
of high net worth and institutional investors 'parking' their
excess funds into the BOJ financial instrument, the report relays.
Any investor can access a BOJ CD by contacting a designated primary
dealer such as Barita Investments Limited, Jamaica Money Market
Brokers Limited (JMMB Investments), JN Fund Managers Limited,
Mayberry Investments Limited, NCB Capital Markets Limited, Sagicor
Investments Jamaica Limited, or Scotia Investments Jamaica Limited,
the report notes. The dealer would place the bid on their behalf
and would follow the instructions of the investor to either 'roll'
the CD along with the interest into the next auction or to disburse
it back to the investor's settlement account, the report relays.
Although the BOJ has reduced the minimum bid size for CDs, some
primary dealers can maintain the minimum they will facilitate at $1
million, the report discloses. However, this is still a major win
for Jamaicans with smaller bank accounts who can now seek better
fixed returns on their money, the report says.
"While we may see increases in the total number of investors,
whether this increased number amounts to a larger absolute dollar
value in the instrument and auction remains to be seen. Ultimately,
whether it achieves the desired effect will be determined in part
by the opportunity cost to the Jamaican who would have been
participating in other instruments before the change in entry
point," stated Ryan Strachan, vice-president of investor relations
at GK Capital Management Limited, the report relays.
While commercial banks offer certificate of deposit offerings, they
are way below the BOJ's CD rate as shown in the table, the report
notes. The BOJ even published a table in January 2023 which showed
the weighted average interest rates on different deposit accounts,
the report says. Citbank N A had the best time/fixed-term weighted
average deposit rate of 8.01 per cent, while the Bank of Nova
Scotia Jamaica Limited (BNSJ) was the lowest at 0.42 per cent, the
report discloses. JMMB Bank (Jamaica) Limited had the best
weighted average savings rate on offer for savings accounts at 1.46
per cent, while JN Bank Limited had the lowest at 0.08 per cent,
the report relays. National Commercial Bank Jamaica Limited's
weighted average time/fixed-deposit rate was 4.34 per cent and its
weighted average savings rate was 0.62 per cent, the report adds.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
In October 2023, Moody's upgraded the Government of Jamaica's
long-term issuer and senior unsecured ratings to B1 from B2, and
senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has
been changed to positive from stable. The upgrade of Jamaica's
rating to B1 reflects the government's sustained commitment to
fiscal consolidation and debt reduction. The positive outlook
reflects Moody's assessment that a continuation of the favorable
fiscal trajectory will further increase Jamaica's credit
resilience.
S&P Global Ratings raised on September 13, 2023, its long-term
foreign and local currency sovereign credit ratings on Jamaica to
'BB-' from 'B+', and affirmed its short-term foreign and local
currency sovereign credit ratings at 'B'. The stable outlook
reflects S&P's expectation that the government will remain
committed to prudent fiscal policies and reducing debt, as well as
supportive economic policies including a flexible exchange rate
regime and effective monetary policy.
In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
JAMAICA: Slow Productivity Continue to Stymie Economic Growth
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Kellaray Miles at Jamaica Observer reports that expanding by two
per cent in the last fiscal year, substantial growth in the local
economy continues to be impacted by slower levels of productivity
and economic diversification, senior technocrats from Planning
Institute of Jamaica (PIOJ) have said.
Responding to questions from the Jamaica Observer during a
quarterly press briefing held, director of modeling and research at
the PIOJ Hugh Morris said the country can grow past certain levels
if it is able to successfully address certain issues, according to
Jamaica Observer.
"For us to grow above the one to two per cent we have to address
productivity gaps in the country. The HEART[/NSTA] Trust is now
offering free trainings up to Level IV, so this is expected to
improve the capacity of our labour force — which we expect to
further drive growth. Also, in diversifying our economy we have
seen where approximately 21 new products have been [added] over the
last two years, and as those products/ sectors and industries grow
we expect the economy to also grow further," he said, the report
notes.
"A country will only grow faster if it is able to produce more
goods and services — and ones [goods and services] that are also
more complex. We have been doing this, however it has not yet
reached the scale to further drive that level of growth," he
further said, the report relays.
As it relates to the industries that are expected to drive growth
going forward, he cited manufacturing now strengthened by increased
investments, retooling, automation and technology, as well as
logistics among those most poised to make meaningful contributions,
the report discloses.
"As we move forward we're looking as well on those in the knowledge
economy, especially now as we up the value chain from call centres
to data analytics. We also see some potential in our creative
industries. It can be seen where we have been building but it
continues to take some time before we can start to see that push to
higher and more sustained levels of growth," Morris said, Jamaica
Observer notes.
"Investment in human capital to ensure that persons can attain the
necessary skills needed to function in some of the newer industries
is also vital in achieving this growth," added Rochelle Whyte,
senior technical advisor to the director general of PIOJ, the
report relays.
Jamaica Observer says that PIOJ, in its latest report on the
preliminary estimates of GDP performance during the last fiscal
year, said that a 2.1 per cent increase in both the goods-producing
and services industries, coupled with increased demand among other
factors, were responsible for the 2 per cent yearly out-turn.
This, following commendable output from the mining industry, up
60.9 per cent; hotels and restaurants, up 7.6 per cent; and
electricity & water supply, up 6.2 per cent, the report notes.
For the January-March quarter, or last quarter of the 2023/24
fiscal year, the economy also continued to register positive
growth, increasing 1.9 per cent during that period, the report
relays.
"This represents 12 consecutive quarters of growth. The performance
largely reflected the impact of increased external demand which was
facilitated by continued growth in the economies of Jamaica's main
trading partner, higher levels of consumer confidence, increased
agricultural output, and the continued expansion in capacity
utilisation at alumina refineries which resulted in higher
productions," said James Stewart, senior director in charge of
economic planning and research at the PIOJ, the report discloses.
The PIOJ, in banking on the continuation of a positive growth
momentum in all industries, has in its outlook targeted growth
within the range of 1.5-2.5 per cent for the current April-June
quarter and 1-3 per cent for the full fiscal year (FY 2024/25), the
report says.
"All industries are forecasted to record growth as greater focus is
placed on entrenching macroeconomic stability to facilitate higher
levels of economic activities in this new growth phase, which
refers to the fact that the country has fully recovered from the
shock of COVID-19 and is achieving output levels above the
pre-COVID highs in 2019, the report recalls.
"Growth is expected to be led by hotels and restaurants, other
services, transport, storage and communication, agriculture and the
manufacturing industries," Mr. James said, the report notes.
The PIOJ director, in also providing update on the integration of
its new Inclusive Growth Index Framework (IGIF) tool, launched
earlier this year in a bid to map growth differently, said it is
now being tested with plans to have full implementation in short
order, the report relays.
"We have not started to use the tool as we are still in the process
of reviewing and fine-tuning data collection etc. We intend to give
further update by the end of this year as to the findings from the
tool," Stewart told the Business Observer.
Developed over a six-year period, the IGIF, which seeks to capture
a deeper understanding of the economy as it zooms in on more areas
often overlooked by the traditional GDP measurement which has been
used for decades, is built around seven welfare pillars and more
than 40 outcomes which seek to provide a bird's-eye- , data-driven
view of the economy, the report adds.
About Jamaica
Jamaica is an island country situated in the Caribbean Sea.
Jamaica is an upper-middle income country with an economy heavily
dependent on tourism. Other major sectors of the Jamaican economy
include agriculture, mining, manufacturing, petroleum refining,
financial and insurance services.
In October 2023, Moody's upgraded the Government of Jamaica's
long-term issuer and senior unsecured ratings to B1 from B2, and
senior unsecured shelf rating to (P)B1 from (P)B2. The outlook has
been changed to positive from stable. The upgrade of Jamaica's
rating to B1 reflects the government's sustained commitment to
fiscal consolidation and debt reduction. The positive outlook
reflects Moody's assessment that a continuation of the favorable
fiscal trajectory will further increase Jamaica's credit
resilience.
S&P Global Ratings raised on September 13, 2023, its long-term
foreign and local currency sovereign credit ratings on Jamaica to
'BB-' from 'B+', and affirmed its short-term foreign and local
currency sovereign credit ratings at 'B'. The stable outlook
reflects S&P's expectation that the government will remain
committed to prudent fiscal policies and reducing debt, as well as
supportive economic policies including a flexible exchange rate
regime and effective monetary policy.
In March 2022, Fitch Ratings affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
=======
P E R U
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PERU: Economy Battles Inflation: A Closer Look at the First 5 Mos.
------------------------------------------------------------------
Juan Martinez at Rio Times Online reports that in the first five
months of 2023, Peru saw a modest 1.23% rise in the national
Consumer Price Index (CPI).
This figure, reported by the National Institute of Statistics and
Informatics (INEI), signifies subtle but key changes in the
country's economic landscape, according to Rio Times Online.
In Metropolitan Lima, the heart of Peru's economy, the CPI dipped
by 0.09% in May, the report notes. Consequently, the five-month
cumulative rate reached 1.45%, the report relays.
Annually, the data shows a national inflation rate of 1.66% and a
slightly higher 2% for Lima, indicating diverse economic impacts
across regions, the report discloses.
The 0.13% decrease in May's CPI mainly resulted from a sharp 0.96%
drop in food and non-alcoholic beverage prices, the report says.
Notably, prices for vegetables, legumes, and tubers fell by 2.9%,
while fish and seafood prices were down by 1.6%, the report notes.
Despite this, the transportation sector saw a 0.24% price rise due
to higher costs in vehicle purchases, transport fares, bus tickets,
and fuel, the report says.
Price hikes were also noted in several other areas:
-- Restaurants and Hotels rose by 0.23%,
-- Goods and Direct Services by 0.21%,
-- Health by 0.18%,
-- Education by 0.14%,
-- Recreation and Culture by 0.10%, and
-- Alcoholic Beverages and Tobacco by 0.09%.
These figures illustrate a complex economic landscape where some
sectors stabilize or decrease while others rise, showcasing the
intricate nature of inflation, the report relays.
Grasping these trends is essential as they influence everything
from daily expenses to broader economic policies, the report
notes.
For residents, understanding which sectors are becoming more
expensive aids in budgeting, the report says.
For policymakers, these trends are crucial for formulating
effective economic strategies, the report discloses.
Inflation rates indicate a nation's economic health and living
standards, essential for economic planning and public awareness,
the report adds.
*********
S U B S C R I P T I O N I N F O R M A T I O N
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Chapman, Editors.
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