UN General Assembly Session Ends after Hectic Week

UNITED NATIONS – Climate change, tensions with Iran and the crisis in Venezuela were some of the topics discussed during the 74th session of the United Nations General Assembly in New York this past week, although the proceedings were marked from the very start by the opening of impeachment proceedings against the host country’s president, Donald Trump.

The UN on Monday concluded a week of top-level meetings that brought a significant number of world leaders to New York over the past week to discuss and defend their particular views of the world scene.

Despite that, attention ended up focusing to a great degree on the impeachment proceedings launched by the US House of Representatives against Trump over a telephone call he had with his Ukrainian counterpart, Volodymyr Zelensky.

On the day that the General Assembly got under way – Sept. 24 – House Speaker Nancy Pelosi, the head of the majority Democratic caucus in the lower chamber of Congress, announced her intention to begin impeachment proceedings against Trump after it became known that he had asked Zelensky for a “favor” – namely, to investigate his main political rival for the 2020 election, former Democratic Vice President Joe Biden.

Trump speaks at UN, preoccupied by impeachment

With Trump in New York to speak before the UN, the scandal over the Ukrainian phone call immediately overshadowed many of the big issues being discussed at the conclave and seemed to continually weigh on the US leader.

In a listless speech before the General Assembly, the New York real estate mogul reiterated his nationalist thesis without offering much that was new and without achieving the impact that his speeches to the international body had had in earlier years.

Trump’s standard attacks on “globalism,” Iran and Venezuela took up a good part of his speech, as well as at other associated events in which he took part, but the shadow of impeachment clearly had him on the back foot and seemed to keep him publicly on the defensive.

His most combative responses came, of course, on Twitter, where he denounced what he called the “witch hunt” against him and accused the Democrats of ruining the day on which he gave his UN address.

Trump ended his trip to New York with a huge press conference in which he denied pressuring Zelensky to investigate Biden and his son Hunter, who was working in Ukraine, and promising “transparency.”

No photo op with Iran, farther apart than ever

The US president had come to the annual UN assembly hoping to get a historic and headline-grabbing photo op with Iranian President Hassan Rouhani similar to the one he had achieved in the past with North Korean leader Kim Jong-un.

However, the drone attacks earlier in the month on Saudi oil refineries, for which Washington and its allies blame Iran, had completely squelched any possibility of that, thus seemingly making Trump’s desire to manufacture something positive – or at least some smiles and handshakes – with the Iranians a forlorn hope.

In the end, Rouhani and Trump in New York were apparently farther apart than ever, with the US president calling on the world to increase pressure on Tehran and Rouhani rejecting any talks with Washington as long as the US maintains its onerous sanctions on the Iranian regime.

Angry words on climate change

The problem of climate change was, with a few notable exceptions, the issue that most unified world leaders at the UN gathering, and they promised to take new measures to combat it, although very little in the way of concrete action was proposed.

The Climate Summit with which the UN opened the past week was more a type of alarm to accelerate the decision-making vis-a-vis what many view as an existential threat to the planet and, of course, to humankind.

Personifying the anger and frustration of much of the world – including uncounted millions of young people – at the general or relative lack of action by governments around the world on climate change was 16-year-old Swedish environmental activist Greta Thunberg, who dressed down the assembled heads of state and government in a speech to the world body that, probably, will be the most-remembered moment from this year’s General Assembly.

IMF Regional Economic Outlook

October 2019

OUTLOOK FOR LATIN AMERICA AND THE CARIBBEAN: STUNTED BY UNCERTAINTY

CAPITAL FLOWS TO LATIN AMERICA IN THE AFTERMATH OF THE COMMODITIES SUPER-CYCLE

SOVEREIGN SPREADS AND FISCAL CONSOLIDATIONS

LABOR MARKET DYNAMICS AND INFORMALITY OVER THE BUSINESS CYCLE IN LAC

SPILLOVERS TO LATIN AMERICA FROM GROWTH SLOWDOWNS IN CHINA AND THE UNITED STATES

Growth in Latin America and the Caribbean (LAC) has slowed from 1.0 percent in 2018 to 0.2 percent in 2019, but a tentative pick-up to 1.8 percent is expected in 2020.
External factors remain a headwind to economic prospects in the region, led by sluggish global growth, subdued commodity prices, and volatile capital flows, although easier global financial conditions provide some respite.
Policy uncertainty in some large LAC countries continues to be a drag on growth, while Venezuela’s economic and humanitarian crisis continues to drive large migration flows to other countries in the region.
Against this backdrop, the LAC economies will need to rely on domestic sources of growth to accelerate the recovery, which hinges on a pickup in private consumption and investment anchored on a rebound in business and consumer confidence.
Risks to the outlook remain skewed to the downside, including further falls in global growth and commodity prices, spikes in risk premiums, heightened domestic policy uncertainty, contagion from the financial turmoil in Argentina, and natural disasters.
Given the challenging global environment and still negative output gaps in the region, policies will need to strike a balance between supporting growth and rebuilding policy space.
Fiscal consolidation to lower public debt remains a priority in several countries.
Monetary policy can continue to support growth given the stable inflation outlook and well-anchored expectations.
Corporate vulnerabilities require enhanced surveillance. Structural reforms, aimed at greater openness to trade and investment, bolstering competitiveness, and addressing stringent labor market regulations, remain an imperative.
Capital Flows to Latin America in the Aftermath of the Commodities Super-Cycle. Countries in Latin America and the Caribbean (LAC) rely on volatile capital inflows to finance investment, which poses important challenges. After the end of the commodity super cycle in 2014, capital flows to the region have declined and their composition has become riskier, with a larger prominence of portfolio flows.
Moreover, the sensitivity of capital inflows to global financial conditions and growth differentials has increased in recent years, increasing the likelihood of a sudden stop in capital flows if growth in the region continues to falter and global financial conditions tighten.
The analysis in this chapter shows that countries with floating exchange rate regimes tend to experience shorter and less costly sudden stops in capital flows, while a tightening of monetary policy following a sudden stop episode is also associated with a reduction in the duration of sudden stops and the ensuing deceleration in growth.
Tighter capital controls, however, do not have statistically significant effects on the duration of sudden stops.

Sovereign Spreads and Fiscal Consolidations

Lower commodity prices, mediocre growth, and a prolonged period of low global interest rates have contributed to rising public debt in many countries in Latin America and the Caribbean (LAC).
Against this backdrop, and amid a more challenging external environment, financial markets’ perception of credit risk in LAC has deteriorated somewhat. This has led policymakers in many of these economies to announce fiscal consolidation measures aimed at reducing public debt and improving confidence in the sovereign, as measured by sovereign bond spreads.
Nevertheless, empirical evidence quantifying the effects of fiscal policy on sovereign spreads has been elusive. Using a new database on fiscal policy news, this chapter investigates the effects of fiscal consolidation announcements on sovereign spreads in LAC during 2000–18.
Our results show that sovereign spreads decline significantly following news that fiscal consolidation measures have been approved by Congress, particularly in periods of high sovereign spreads or in countries under an IMF program.
In addition, fiscal adjustment packages are more effective—leading to smaller output losses and larger reductions in the public debt-to-GDP ratio—when sovereign spreads significantly decline following the announcement.
These results constitute direct evidence that if confronted with a situation of fiscal stress, credible consolidation efforts get rewarded. These confidence effects are crucial in mitigating the drag on economic activity in the aftermath of fiscal consolidation.

Labor Market Dynamics and Informality over the Business Cycle in LAC

Labor markets in Latin America and the Caribbean (LAC) are characterized by high levels of informality, low female participation rates, and relatively rigid employment protection legislation. Our results show that informality plays an important role in the dynamics of labor markets in the region.
Informality is countercyclical, and the formal/informal adjustment margin reduces the importance of the employment/unemployment margin, that is, informality dampens the usual Okun’s coefficient relating unemployment to cyclical changes in GDP.
However, evidence suggests that informality makes the adjustment to shocks slower, with negative impact on growth.
We find that higher redundancy costs, cumbersome dismissal regulations and high minimum wages are associated with increased informality. Also, changes in aggregate participation rates are positively related to changes in GDP, but we find some evidence that the female participation rate is countercyclical in recessions in LAC.

Spillovers to Latin America from Growth Slowdowns in China and the United States

Economic activity in China and the United States is projected to slow down going forward due to cyclical forces, population aging, and sluggish productivity growth. Moreover, their heightened trade and technology tensions could lead to a faster slowdown in the near term. These developments will likely have spillovers to other countries, including to Latin America. This chapter seeks to quantify these spillovers using empirical and model-based techniques.

The results show larger spillovers for countries that are more exposed to China or the United States through trade, commodity prices, and financial flows. For example, a temporary fall of 1 percentage point in China’s growth would reduce growth in Chile and Peru—the two countries most exposed to China—by 0.2–0.3 percentage points.

A similar US shock would lower growth in Costa Rica and Mexico by 0.5 percentage points. These spillovers could be significantly larger if the slowdowns in China and the United States also lead to tighter financial conditions in emerging market economies, including in Latin America.

WASHINGTON, United States (CMC) – The International Monetary Fund (IMF) reports growth in Latin America and the Caribbean (LAC) is slowing down and that the region is expected to record a 0.2 per cent growth this year.

The Washington-based financial institution said that the low growth comes amid continued trade tensions,
lower global growth,
subdued commodity prices, and
in some large regional economies, high policy uncertainty.

In its latest Regional Economic Outlook for the Western Hemisphere, the IMF says in order to boost the economic recovery and create more jobs; the region will need to rely on domestic drivers of growth, like consumption and investment.

In reviewing economic performances of Caribbean states, the IMF projected Guyana will record economic growth of 4.4 per cent this year, up from 4.1 per cent last year.

Suriname will record marginal growth of 2.2 per cent, up from 2 per cent in 2018.

The IMF predicted that Belize will record negative growth, moving to 2.7 per cent from three per cent last year.

Antigua and Barbuda will see economic growth decline from seven per cent last year to four per cent this year.

The Bahamas, hit by a Category 5 hurricane in September will record a decline in economic growth from 1.6 per cent last year to 0.9 per cent in 2019.

Barbados, with a negative 0.6 per cent growth in 2018, will register a minus 0.1 per cent growth this year.

Dominica will be among Caribbean countries recording a high economic growth this year of 9.4 per cent, up from 0.5 per cent last year.

Grenada’s economic growth will drop from 4.2 per cent last year to 3.1 per cent in 2019.

Jamaica, which recently concluded an agreement with the IMF, will record a decline in economic growth from 1.6 per cent last year to 1.1 per cent this year.

Economic growth in St Kitts-Nevis is estimated at 3.5 per cent this year, down from 4.6 per cent the previous year.

St Lucia will show an improvement in its economic growth, rising from 0.9 per cent last year to 1.6 per cent.

St Vincent and the Grenadines will record a slight increase in growth, moving from two per cent to 2.3 per cent this year.

Trinidad and Tobago will record no economic growth this year, down from the 0.3 per cent the previous year.

Haiti, where opposition parties are staging demonstrations to remove President Jovenel Moise, will record growth of 0.1 per cent, down from 1.5 per cent.

Belize: 2019 Article IV Mission

October 7, 2019

[ A Concluding Statement describes the preliminary findings of IMF staff at the end of an official staff visit (or ‘mission’), in most cases to a member country. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.

The authorities have consented to the publication of this statement. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF Executive Board for discussion and decision. ]

An International Monetary Fund team led by Daniel Leigh visited Belize from September 23-October 4 to conduct the discussions for the 2019 Article IV consultation. The team met with the Rt. Honorable Mr. Dean Barrow, Prime Minister; Amb. Joy Grant, Governor of the Central Bank of Belize; Mr. Joseph Waight, Financial Secretary; and other senior government officials, representatives of the opposition, private sector, and public sector unions.

A Continuing but Slower Recovery

Economic recovery continues, but the pace is slowing. Real GDP grew by 3.2 percent in 2018 and by an estimated 4 percent (y/y) in 2019Q1.
The unemployment rate reached a historic low of 7.6 percent in April 2019, with inflation near zero. Tourist arrivals grew by double digits in 2018, reflecting marketing initiatives, more flights from major cities, and strong trading-partner growth. However, recent data indicate a slowdown in economic activity, with a minor contraction in 2019Q2, reflecting a severe drought.
Growth for 2019 as a whole is projected at 1½ percent.
The current account deficit widened to 7.9 percent of GDP in 2018 from 7.7 percent in 2017, despite higher tourism earnings, reflecting increased imports of construction materials, including for large foreign-financed projects.
The government implemented significant fiscal consolidation over the past two years, but the pace of adjustment has slowed. The primary fiscal surplus reached 2.1 percent of GDP in FY2018/19––a 4 percent of GDP rise from two years ago.
The approved FY2019/20 budget targeted a primary fiscal surplus of just above 2 percent of GDP, but recent data indicate more spending on wages and public investment and weaker revenue than expected, putting the budget’s target at risk.
The authorities increased pension contribution rates in July 2019 to shore up the sustainability of the social security scheme.

A Range of Risks to the Outlook

The medium-term outlook remains challenging. Real GDP growth is projected at just below 2 percent over the medium term, in line with recent trends.
The current account deficit is projected to remain large, reflecting structural weaknesses, with international reserves projected at about 3 months of imports of goods and services over the medium term.
A primary fiscal surplus that is larger than targeted in the FY2019/20 budget is needed to reduce public debt from its end-2018 level (94 percent of GDP) to prudent levels over the long term and build buffers against shocks.
Downside risks remain substantial. External risks include weaker U.S. growth, which would impact tourism; higher oil prices; and natural disasters to which Belize remains highly vulnerable.
Elevated rates of crime pose risks to growth and competitiveness.
Reputational risks from potential financial misuse of the international financial services sector’s entities, and governance concerns, could weaken investor confidence and renew pressures on correspondent banking relationships (CBRs).
Belize’s inclusion on the European Union list of non-cooperative tax jurisdictions, and uncertainty regarding standard setters’ expectations, could disrupt investment and trade flows.
The government continues to contest legacy claims which could lead to large public and external financing needs.
On the upside, an intensification of structural reforms could further raise investment, income, and employment.

Strengthening the Foundation for Durable and Inclusive Growth

Reinforcing Belize’s economic growth hinges on improving the business environment.
Reform priorities include facilitating access to credit by establishing a credit bureau and collateral registry;
streamlining regulations for starting a business;
expanding technical and vocational training programs;
fighting corruption by implementing and enforcing the asset declaration regime through the Integrity Commission and strengthening the rules on conflict of interest; and
ensuring public safety, including through community programs that steer youth toward formal employment and away from crime.
Easing supply-side constraints is especially important for sustaining growth of tourism and diversification into new products.
To support the authorities’ poverty alleviation strategy, enhancing social programs merits consideration.
Belize’s last poverty assessment is almost 10 years old and an update is needed for improving the targeting and effectiveness of social policies.
Campaigns to increase awareness of Belize’s flagship targeted social protection programs, such as Building Opportunities for Our Social Transformation (BOOST), Food Pantry, and the Conditional Cash Transfer (CCT) Program, and amplifying support for them, are warranted.
Belize’s recently launched National Financial Inclusion Strategy is a step toward making growth inclusive by increasing the share of the population with access to financial services.

Building Resilience to Natural Disasters and Climate Change

Intensifying efforts to build resilience to natural disasters would reduce economic volatility and raise long-term growth. Belize should continue making substantial investments into climate-resilient infrastructure, guided by the National Climate Resilience Investment Plan.
Costing and prioritizing projects and designing financing strategies with development partners is a priority.
Stronger implementation of building codes and land use regulations would further reduce Belize’s vulnerability to weather shocks.
Belize needs more self-insurance through a natural disaster fund; ex-ante contingent lines of credit; and optimized participation in regional insurance options.
To provide development partners with a comprehensive guide to Belize’s resilience-building needs and plans, and to facilitate donor coordination, the authorities could benefit from preparing a Disaster Resilience Strategy based on a multi-year macro-fiscal framework, with input from stakeholders.

Balanced and Sustained Medium-term Fiscal Consolidation

Reducing public debt to prudent levels requires additional fiscal consolidation alongside structural reforms that raise growth. Reducing public debt to below 60 percent of GDP in 10 years and
building buffers to address weather-related and other shocks requires gradually raising the primary surplus to about 4 percent of GDP.
Revenue measures could include further broadening the tax base by phasing out tax exemptions; streamlining tax incentives; and
reinforcing tax administration, which the recent merger of the General Sales Tax (GST) and Income Tax departments should support.
On the spending side, making space for priority investments requires restraining current spending, including by implementing a 2-5 replacement ratio to gradually reduce the number of public sector employees;
limiting salary increments to the rate of inflation; and making the public-sector pension plan contributory.

A rules-based fiscal framework based on a debt anchor could, if underpinned by public consensus, support the fiscal adjustment. Belize could benefit, as a number of Caribbean countries have, from a fiscal responsibility law with rules to guide the debt reduction effort. A public-private forum to monitor the conduct of fiscal policy could strengthen public awareness and consensus regarding fiscal policy goals. A multi-year budget framework would further enhance planning, transparency, and continuity of fiscal policy.

Tax Reform to Enhance Fairness, Efficiency, and Revenues

Reforms to Belize’s tax system are needed to make it more equitable, less distortionary, and to mobilize additional revenue. The (turnover-based) business tax is inefficient, discouraging investment, and inequitable, and a more efficient Corporate Income Tax should be introduced over the medium term. Belize’s special tax regimes constitute a parallel tax system with much lower tax rates and potential for significant domestic revenue losses. To address risks to domestic revenues, conditions offered in special regimes should be tightened, which is feasible while maintaining an attractive system. Taxation should also be tightened for the importation of goods through digital platforms and the purchase of digital services in Belize.

Keeping the Financial System Safe

The financial system should remain under tight supervision. An asset quality review would help assess banks’ capital buffers. The CBB recently implemented a cybersecurity framework, an important step toward strengthening cybersecurity supervision. The CBB took resolute action in 2019 to deal with a troubled international bank and the bank resolution legal framework should be fortified to clearly designate the CBB as the sole resolution authority and enable irreversible actions. The CBB should further strengthen capacity and resources to conduct anti-money laundering and combating the financing of terrorism supervision of banks and take effective enforcement actions.

Intensifying supervision and enforcement in the international financial services sector is needed to bolster investor confidence and prevent a loss of CBRs. An in-depth assessment of the risks and costs associated with the international financial services sector, including regarding virtual assets is needed to inform policy making. Policy priorities include:

(i) increasing the resources and capacity of the International Financial Services Commission (IFSC) to properly license, regulate and supervise international financial service providers, and imposing dissuasive and proportionate penalties when breaches are identified;
(ii) legal reforms informed by the risk assessment to implement international standards on virtual assets;
(iii) identifying and sanctioning IFSC licensees providing virtual asset-related services without authorization; and
(iv) ensuring that beneficial ownership information of legal persons and arrangements established by agents is accurate, up-to-date, and available without impediment.

[ The IMF Executive Board is expected to discuss Belize’s Article IV consultation in November 2019. The mission expresses its sincere thanks to the authorities and other Belizean stakeholders for their warm hospitality, cooperation and candor. ]

[1] The first release of real GDP data for 2019Q1 published on June 26 indicated growth of 5.2 percent (y/y).

[2] Public debt includes central government debt as well as external financial and non-financial public sector debt.

IMF Communications Department

MEDIA RELATIONS PRESS OFFICER: RANDA ELNAGAR

PHONE: +1 202 623-7100

EMAIL: MEDIA@IMF.ORG

Interview with Alejandro Werner on the Latest Economic Developments in Latin America

October 28, 2019

Growth in Latin America and the Caribbean is slowing down. The region is expected to grow by 0.2 percent this year, amid continued trade tensions, lower global growth, subdued commodity prices—and in some large regional economies—high policy uncertainty, according to the IMF’s latest Regional Economic Outlook for the Western Hemisphere.

CARICHAM

eng-oct-28-whd1-reo
CARICHAM – NETWORK OF CHAMBERS OF COMMERCE LAUNCHED
NEWSAPRIL 3, 2019

Executive Directors of sixteen (16) Chambers of Commerce across the Caribbean region gathered in Barbados on April 1 and 2, 2019, for the Official Launch and First Official Meeting of the Network of Chambers of Commerce

(CARICHAM). During the two-day meeting, history was created with the official signing of a Memorandum of Understanding (MOU) establishing the Network. by Antigua and Barbuda, Barbados, Belize, Cuba, Dominica, Grenada, Guyana, Haiti, Jamaica, Martinique, St Kitts and Nevis, St Vincent and the Grenadines, Saint Lucia, Trinidad and Tobago and Suriname.

The Minister in the Ministry of Foreign Trade, Ministry of Foreign Affairs and Foreign Trade, delivered the opening address on the importance of trade policy in the region and the ways in which the Network of Chambers of Commerce could contribute to shaping trade policy agendas.

The formal Meeting of the Network of Chamber was supported by the United Nations International Strategy for Disaster Risk Reduction (UNISDR), the European Union (EU), the Caribbean Disaster Emergency Management (CDEMA) and the Barbados Government. Presentations were delivered by Chambers and regional and international stakeholders from the UNISDR, CDEMA, the Caribbean Community (CARICOM) Secretariat, Caribbean Export Development Agency (CEDA), the United Kingdom’s Department for International Development (DFID), the Inter-American Development Bank (IADB) and the International Chamber of Commerce (ICC).

The Executive Directors elected . Lizra Fabien, Executive Director of the Dominica Association of Industry and Commerce as CARICHAM’s first Chairperson and Trevor Fearon, CEO of the Jamaica Chamber of Commerce as the Vice Chair of CARICHAM.

CARICHAM is a platform designed to represent the Chambers and their Members at the regional and international levels in order to foster constructive partnerships. The four main pillars of engagement are:

• Advocacy and Membership Value Creation;
• Disaster Risk Reduction (DRR);
• Knowledge Sharing, and Best Practices;
• Transportation, Trade Facilitation and Promotion.

The Sixteen (16) Chambers of Commerce Represented under CARICHAM are:

• Antigua and Barbuda Chamber of Commerce;
• Barbados Chamber of Commerce and Industry;
• Belize Chamber of Commerce and Industry;
• Cámara de Comercio de la República de Cuba;
• Dominica Association of Industry and Commerce;
• Grenada Chamber of Industry and Commerce;
• Georgetown Chamber of Commerce and Industry;
• Chambre de Commerce et d’Industrie d’Haϊti;
• Jamaica Chamber of Commerce;
• Chambre de Commerce et d’ Industrie de la Martinique;
• St Kitts and Nevis Chamber of Industry and Commerce;
• St Vincent and the Grenadines Chamber of Industry and Commerce;
• Saint Lucia Chamber of Commerce, Industry and Agriculture;
• KKF Chamber of Commerce and Industry (Suriname);
• Energy Chamber of Trinidad and Tobago;
• Trinidad and Tobago Chamber of Industry and Commerce.

Hopefully this will promote cooperation to achieve successful regional development of the international petroleum company expanding offshore Guyana.

Further reading- Caribbean Region Quarterly Bulletin: Volume 8, Issue 3: September 2019 (Link)

EVENTS

Global Offshore Brazil Summit 2020.
3-4 March, 2020.Grand Hyatt Rio,

Latin America Oil & Gas Summit_ December 5th to 6th
2019 Punta Del Este, Maldonado, Uruguay.

ISABELANA 2

UN General Assembly Session Ends after Hectic Week

IMF Regional Economic Outlook

OUTLOOK FOR LATIN AMERICA AND THE CARIBBEAN: STUNTED BY UNCERTAINTY

CAPITAL FLOWS TO LATIN AMERICA IN THE AFTERMATH OF THE COMMODITIES SUPER-CYCLE

SOVEREIGN SPREADS AND FISCAL CONSOLIDATIONS

LABOR MARKET DYNAMICS AND INFORMALITY OVER THE BUSINESS CYCLE IN LAC

SPILLOVERS TO LATIN AMERICA FROM GROWTH SLOWDOWNS IN CHINA AND THE UNITED STATES

Belize: 2019 Article IV Mission

Interview with Alejandro Werner on the Latest Economic Developments in Latin America

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CARICHAM

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