News Americas, NEW YORK, NY, Thurs. Nov. 9, 2023: The Jamaican government has achieved a significant financial milestone by issuing its first-ever Jamaican Dollar (J$) linked international bond, totaling J$46.6 billion or US$300 million. The bond, issued on November 3, was oversubscribed 1.4 times and consists of Senior Unsecured Notes due in 2030, registered with the United States-based Securities Exchange Commission, (SEC).

This groundbreaking operation marks the Government of Jamaica’s inaugural J$-linked transaction in international capital markets and aligns with the GOJ’s objective to open local currency debt issues to international investors. The move aims to reduce the GOJ’s exposure to USD-denominated debt, as both interest and principal payments are linked to the value of the Jamaican dollar.

However, it’s essential to note that while the bond is denominated in J$, debt service payments to bondholders will be in US$, determined by the average of the prevailing J$ exchange rate over the ten business days before each payment date. This arrangement means that international investors in this bond assume Jamaican Dollar exchange rate risk.

The bond issuance represents the second phase of a liability management operation, with the proceeds from this Jamaican dollar-linked bond being used to repurchase outstanding US$-denominated bonds.

Moody’s, the international credit rating agency, published an Issuer’s Comment, stating that the use of the J$ linked Bond issuance proceeds to buy back outstanding USD-denominated bonds will reduce “the government’s exposure to foreign-exchange risk, which is a credit positive.” Over time, this reduction in exchange-rate risk is expected to address one of the sovereign’s key credit challenges.

In the initial phase of the transaction, Jamaica invited offers to tender for cash, targeting its 7.625 per cent Notes due 2025, 9.250 per cent Notes due 2025, and 6.750 per cent Notes due 2028. This offering achieved several significant milestones, marking the first J$-linked transaction by the Jamaican government and demonstrating the success of local currency deals in international markets.

International investor participation in the J$ link bond reached 93.5 percent, with 6.5 percent coming from domestic investors. This represents the highest participation rate by international investors in a local currency issue in 2023 globally. The bond is also noted for having the lowest coupon and yield for a local currency-linked global bond transaction in 2023 to date, marking Jamaica’s first return to the international capital markets since 2019.

Dr. Nigel Clarke, Jamaica’s Finance and Public Service Minister, led a Jamaican delegation on an investor road show in London and New York related to the bond issuance. He emphasized the transaction’s significance in opening new possibilities and frontiers for Jamaica, highlighting the country’s improved macroeconomic fundamentals and monetary policy transparency.

Dr. Clarke stated that tapping international investors for local currency-linked debt enhances Jamaica’s funding sources, broadens financial diversity, and paves the way for more international issues in the future. The government’s ability to alter the currency mix of the national debt is expected to strengthen the country’s resilience and financial stability.

This landmark development represents a substantial policy dividend resulting from Jamaica’s economic progress and commitment to monetary policy transparency, central bank independence, and low, stable, and predictable inflation as a monetary policy objective.

Jamaica’s inaugural J$-linked international bond marks a significant step towards financial independence and economic growth, offering new opportunities and strengthening the country’s position in the international financial market.

News Americas, WASHINGTON, D.C., Mon. Oct. 30, 2023: The Caribbean and Latin America is poised to achieve a 2.3 percent growth rate in both 2023 and 2024, even as notable challenges to economic prosperity persist.

That’s the word from the Atlas Network Initiatives in Latin America, based in the United States, and the Centro de Estudios de la Realidad Económica y Social (CERES) in Uruguay. The two organization recently jointly unveiled their latest report, titled the “Latin America Macro Vista Regional Report.”

This comprehensive report delves into the economic prospects for Latin America and the Caribbean (LAC) for the current year and the next. Here are the main takeaways:

In many aspects, LAC economies continue to trail behind their global counterparts, with the global economy forecasted to expand by three percent this year, including a robust four percent growth for emerging economies. The international context exhibits signs of intricate resilience, despite enduring issues such as high inflation and interest rates, among other unfavorable factors. For context, global economies, on average, saw growth rates of 3.8 percent over the past decade, surpassing the current economic predictions for the years to come.

The increasingly complex global landscape calls for policy adaptations by governments in Latin America and the Caribbean to address the issues of sluggish growth and development. Fortunately, history has revealed that during times of crisis and widespread uncertainty, opportunities for transformation and rejuvenation often emerge. The LAC region holds substantial potential to extend its influence in global trade by venturing into new markets beyond its traditional partners. Encouraging prospects are presented by countries like India, Japan, Saudi Arabia, and others, provided the region can tap into essential export opportunities while facilitating advantageous imports and investments, fostering a mutually beneficial relationship. Given the abundance of natural resources and agricultural products, LAC economies stand uniquely positioned to reap the rewards of increased global trade.

Furthermore, the report underscores the growing prevalence of pro-market ideologies across the LAC region. Despite Argentina grappling with over-indebtedness, persistent macroeconomic imbalances, and distortionary taxation within a relatively closed economy in recent years, there is room for optimism. The outcomes of Argentina’s August presidential primaries indicate a positive shift. During the presidential election cycle in Argentina, policy proposals inspired by the Austrian School of Economics have gained prominence in public discourse, favoring economic liberalism, particularly at a time when it is needed most.

Dr. Roberto Salinas-León, Executive Director of Atlas Network’s Initiatives in Latin America, emphasized, “In Latin America and the Caribbean, the path forward, in light of today’s adversity and uncertainty, is to embrace reforms promoting free-market principles and to build upon the successes of economic liberalization. While the projection suggests economic growth for LAC in 2023 and 2024, the region has not yet fully realized its potential. This underscores the importance of policymakers in the region championing open markets, with a particular focus on global trade. Global trade should be a central policy concern this year and beyond, and we encourage all LAC governments to leverage their vast export potential.”

By Lilia Burunciuc And Marla Dukharan

News Americas, WASHINGTON, D.C.,Thurs. Oct. 18, 2023: In the Caribbean, understanding poverty and exactly who is affected and how, in order to inform corrective policy measures, is inhibited by the absence of data. Many Caribbean countries simply do not collect the data to measure and monitor poverty and inequality.

A World Bank study carried out in 2015 showed that nine Caribbean countries were data deprived, meaning they had one or less poverty estimates available within a ten-year period. The recommended frequency is 3-5 years (see chart showing the latest poverty data available by country).

This situation has not changed much since 2015. In 6 out of 18 countries in the Caribbean, national poverty estimates are available only for the 2000s. With the exception of Jamaica, which has a long history of monitoring poverty on an annual basis, and the Dominican Republic, the most recent poverty estimates are between 5 and 7 years old. In several countries, socio-economic information such as unemployment rates and demographic characteristics, is also not collected regularly. 

Unless we have up-to-date poverty data, we are unable to measure progress toward poverty reduction and may in fact be heading toward higher levels of poverty and inequality. Without the data, we are also unable to develop effective policies and interventions that address poverty, and social welfare spending could end up missing the mark completely. 

Caribbean people suffered severe socio-economic repercussions of the COVID-19 pandemic and their households were hit by yet another shock when living costs increased sharply in 2022. Evidence from phone- and online-based surveys conducted by development partners in recent years suggests that these shocks hit the poor and vulnerable the most, leading to rising inequality which is very visible now and a direct cause of poverty as the two reinforce each other in a vicious cycle.

The CARICOM Food Security & Livelihoods Impact Survey showed that, when faced with rising food prices in 2022, low-income households in the Caribbean were much more likely to reduce essential expenditure in health and education or sell productive assets to meet food needs than those better-off. Such coping behaviors reinforce inequality. On the other hand, higher levels of inequality can perpetuate poverty if power is concentrated in the hands of a few and limits access to opportunities or basic needs for those who need it the most. We need the data, and we need deliberate policy action to break this cycle so many are stuck in. 

More frequent household data can also be used to improve our resilience to climate change and natural hazards, for instance, by combining household data with climate and hazard data for vulnerability assessments that can inform targeted policies.

In the context of higher debt levels, the absence of recent poverty data means poverty may be less of a policy priority, but when poverty policies are implemented without sound data and evidence, they are less likely to be successful, resulting in wasted resources. The Caribbean simply can’t afford to continue along this path – Caribbean people deserve better.

The Capacity Gap 

Statistical capacity in the Caribbean is lower than in other world regions globally, as measured by the Statistical Performance Indicator. Many Caribbean countries struggle with weak statistical capacity and low data usage, which reinforce each other.  

Limited capacity means that the quality of the data can be poor and outdated. In addition, countries sometimes opt not to disclose poverty data based on political sensitivities, which hampers policymaking to improve the lives of the most vulnerable.

What Can Be Done? 

Some Caribbean countries have made efforts to address aspects of the data gap. For example, initiatives like the World Bank funded OECS Data for Decision Making Project, the Caribbean Development Bank’s Enhanced Country Poverty Assessment Project or Statistics Canada’s Project for the Regional Advancement of Statistics in the Caribbean have been implemented with the support of development partners. However, if we are to end poverty by 2030, the following needs to be considered: 

1. Commit to regular and comprehensive data collection on poverty and key socio-economic indicators. This includes conducting household surveys, censuses, and surveys to gather information on income, living conditions, employment, education, and healthcare access.  Governments must budget appropriately to conduct these surveys, and the development community can support these efforts by providing additional funding, capacity building and analytical support. 

2.  Invest in the capacity of national statistical offices and policy analysis units. This includes adequate staffing of statistical offices and providing training and resources to staff responsible for data collection, analysis, and reporting.  

3. Promote data transparency and accessibility. This includes making key indicators of surveys and poverty estimates available online and through public events, strengthening the legal framework for microdata dissemination and investing in microdata repositories for safe storage and dissemination.  

Poverty projections conducted for the Caribbean by the World Bank and insights from phone and online surveys conducted during the pandemic suggest that the Caribbean may not be making material progress with poverty reduction.

Although poverty is expected to be on a declining path since its spike in 2020, in most countries it is believed to still be above pre-pandemic levels. There is much work to do to help the poor and vulnerable recover from the pandemic and ensure that there will be no long-term impacts on the welfare of future generations who suffered from severe disruptions in education and health services during the pandemic. It is now imperative that leaders, in collaboration with international organizations and civil society, seize this opportunity to collect and transform data into meaningful action, leaving no one behind. 

At an individual level, we all need to advocate for governments to conduct and share assessments of poverty and the corresponding outcomes. By advocating for greater openness and transparency, we can contribute to the reduction of poverty and improved Caribbean lives and livelihoods.

EDITOR’S NOTE: Lilia Burunciuc is the World Bank Director for Caribbean countries. Ms. Burunciuc, a Moldovan national, is responsible for maintaining the partnership with the countries to address their development challenges.  Marla Dukharan is a Caribbean economist and a point of reference for monitoring regional developments and country-level economic performance, and is known for leading discussions and publishing reports on the Caribbean implications of global geopolitical developments. She is a highly sought-after speaker for key industry, multilateral, and academic conferences on a regional and international scale, and she regularly advises investors and private sector Boards of Directors in the Caribbean. The article was written to mark The International Day for the Eradication of Poverty – celebrated each year on October 17 throughout the world.