/raid1/www/Hosts/bankrupt/TCRLA_Public/230302.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
Thursday, March 2, 2023, Vol. 24, No. 45
Headlines
A R G E N T I N A
AES ARGENTINA: S&P Affirms 'CCC+' ICR, Outlook Negative
ARGENTINA: Seeks Fresh IMF Approval
ENEL SPA: Enel Argentina Sells Stake in 2 Thermal Plants
B E R M U D A
BERMUDA: Insurers Urged to Transform to Face Challenges
B R A Z I L
BRAZIL: Central Bank Opposes Revising Inflation Targets
D O M I N I C A N R E P U B L I C
DOMINICAN REPUBLIC: Foreign Direct Investment Totaled US$3.8BB
DOMINICAN REPUBLIC: Wages Must Still Not be Indexed, M. Diaz Says
J A M A I C A
[*] JAMAICA: Economy Recovering Faster
P A N A M A
ENA NORTE: S&P Lowers Debt Rating to 'BB-', On Watch Negative
- - - - -
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A R G E N T I N A
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AES ARGENTINA: S&P Affirms 'CCC+' ICR, Outlook Negative
-------------------------------------------------------
S&P Global Ratings, on Feb. 24, 2023, affirmed its 'CCC+' issuer
credit ratings on AES Argentina Generacion (AAG).
The outlook remains negative, reflecting that the company's credit
quality could worsen in the next six to 12 months if there's no
progress on its debt refinancing, which would further pressure its
capital structure and liquidity position.
S&P said, "In our view, AAG's cash flow generation plus existing
cash balances won't be sufficient to face the $300 million upcoming
debt maturity at the beginning of 2024. Although the company is
currently working on different alternatives for refinancing, in our
view there's high uncertainty about Argentine companies' ability,
in general, to access the capital markets for a dollar-denominated
transaction. Specifically, on Sept. 15, 2020, Argentina's central
bank tightened regulations on accessing foreign exchange (FX) to
protect the country's international reserves. It recently extended
the regulation until Dec. 31, 2023.
"AAG's cash balances as of Sept. 30, 2022, totaled $67 million. We
expect EBITDA generation of about $80 million-$90 million in 2023,
as well as annual cash inflows of $55 million related to the
FONINVEMEM, a national fund for expansions in the power sector. For
this year, we expect that the company will execute payments
corresponding to financials obligations of about $30 million, and
will make annual maintenance investments of at least $15 million
this year. Therefore, we expect a deficit of about $90 million for
2024."
S&P's ratings on AAG also incorporate its exposure to Argentina's
(foreign currency: CCC+/Negative/C) economic and regulatory
volatility. AAG obtained the following ad hoc rate increases for
base generation:
-- Through resolution 238/2022: 30% in February 2022 and 10% in
June 2022; and
-- Through resolution 826/2022: 20% for September 2022, 10% for
December 2022, and already established tariff increases of 25% in
February 2023 and 28% in August 2023.
However, S&P continues to see these increases as discretionary,
absent any permanent adjustment formula or framework. As a result,
it doesn't incorporate any tariff increases for the following years
besides the ones mentioned.
In addition, the ratings on AAG reflect that it operates in
Argentina, which exposes the company to worsening business
conditions and exchange rates, high interest rates, poor access to
the international capital markets, and restrictions on accessing
and/or transferring funds abroad.
ESG credit indicators: E-3, S-4, G-3
S&P said, "Environmental factors are a moderately negative
consideration in our credit rating analysis of AAG because its
generation mix includes 53% thermal, 40% hydro, and a small amount
of wind generation. Social factors are a negative consideration
given the regulatory intervention, which is a key issue for the
rating. In particular, we view electricity affordability concerns
as the root cause of the regulator's decision to switch the
dollar-denominated rates to those in pesos and delay the pass
through of inflation-related costs to consumers." Governance
factors are also a moderately negative consideration and relate
primarily to country risk factors rather than to entity-specific
concerns.
ARGENTINA: Seeks Fresh IMF Approval
-----------------------------------
Buenos Aires Times reports that Argentina's Deputy Economy Minister
Gabriel Rubinstein and the portfolio's chief adviser Leonardo
Madcur flew to the United States on a mission to close the latest
staff review of the country's US$44.5-billion debt deal with the
International Monetary Fund (IMF).
Approval of the fourth quarterly review of Argentina's Extended
Fund Facility (EFF) deal is of high importance for President
Alberto Fernandez's government, which needs to strengthen Central
Bank reserves at a time of low foreign currency inflows and a
punishing drought that has dramatically slashed projections for the
agricultural harvest, according to Buenos Aires Times.
If IMF staff sign off on the deal, followed by the multilateral
lender's board, Argentina will receive a new disbursement of US$5.4
billion in fresh funds that will boost the state's coffers, the
report notes.
Technicians from Argentina's government and the International
Monetary Fund have been poring over the country's books from the
fourth quarter of 2022, the report relays. The country closed out
last year with a primary deficit (excluding debt servicing)
equivalent to 2.4 percent of Gross Domestic Product (GDP), an
improvement of one tenth of a percentage point on the agreed target
of 2.5 percent, the report notes.
For 2023, Argentina's primary deficit target needs to drop to 1.9
percent. Economy Ministry staff would like to discuss this during
the upcoming talks in Washington, given the likely impact of the
drought on the agricultural harvest and subsequently for foreign
exchange earnings, the report says.
Production of soy, the country's leading export product, is set to
fall to its lowest volume in 14 years, the Rosario Stock Exchange
reported earlier this month, the report notes.
As well as this, officials will also highlight the ongoing conflict
between Russia and Ukraine, with no end seemingly in sight, and the
impact of that on energy prices and transport and logistics costs
worldwide, the report relays.
Rubinstein and Madcur took part in talks back in early February,
both online and in-person, the report discloses. The head of the
IMF delegation, Luis Cubeddu, participated remotely, the report
relays.
In the lead-up to those sessions, Economy Minister Sergio Massa
accused the IMF of reneging on a commitment to fully review and
consider the domestic impact of the war in Ukraine, the report
discloses.
"Argentina fulfilled its program, but the IMF is not fulfilling its
commitment to Argentina to review how they are going to compensate
the countries that paid the cost of the war with their economy. It
is a problem to be solved," said Massa, the report relays.
Speaking at the recent G20 Summit in Indonesia, the minister said
that the war carried "a very high cost for the countries of the
southern hemisphere," claiming that Argentina is US$5 billion
worse-off as a result and that "there is no global arena where this
issue is being discussed," the report discloses.
Fuel imports amounted to US$5.8 billion in 2022, compared to the
US$2 billion projected before the start of the war, resulting in a
net increase of US$3.8 billion, according to the government, the
report relays.
In addition to those costs, increases in the price of major
commodities means that more foreign exchange was needed to import
fuels, including those used for energy supply during 2022, the
report notes.
Massa's portfolio says that when the conflict broke out last
February 24, Argentina was forced to renegotiate its contract with
Bolivia for the importing of natural gas, with prices rising more
than 100 percent as a result. Electricity purchases from Brazil
also rose, the report relays.
Meanwhile, fertiliser prices have risen by an average of 93
percent, according to the government, the report says. Nearly 70
percent of such products are imported by local agricultural
producers, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of South
America. Its capital is Buenos Aires. Alberto Angel Fernandez is
the current president of Argentina after winning the October 2019
general election. He succeeded Mauricio Macri 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.
Last March 25, 2022, Argentina finalized agreement with the IMF for
a new USD44 billion Extended Funding Facility (EFF) intended to
fund USD40 billion in looming repayments of the defunct Stand-By
Arrangement (SBA), with an extra USD4 billion in up-front net
financing. This has averted the risk of a default to the IMF
and is facilitating a parallel rescheduling of Paris Club debt.
S&P Global Ratings, in mid-January 2023, affirmed its 'CCC+/C'
foreign currency and 'CCC-/C' local currency sovereign credit
ratings on Argentina. The outlook on the long-term ratings remains
negative. S&P's 'CCC+' transfer and convertibility assessment is
unchanged. The negative outlook on the long-term ratings reflects
risks surrounding pronounced economic imbalances and policy
uncertainties before and after the 2023 national elections. Global
capital markets are closed to Argentina. Moreover, disagreement
within the government coalition and infighting among the opposition
constrains the sovereign's ability to implement timely changes in
economic policy.
Fitch Ratings, on the other hand, downgraded in October 2022
Argentina's Long-Term Foreign-Currency (FC) and Local-Currency (LC)
Issuer Default Ratings (IDRs) to 'CCC-' from 'CCC'. The downgrade
reflects deep macroeconomic imbalances and a highly constrained
external liquidity position, which Fitch expects to increasingly
undermine repayment capacity as foreign-currency debt service ramps
up in the coming years.
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 confirmed Argentina's Long-Term Foreign Currency Issuer Rating
at CCC and Long-Term Local Currency Issuer Rating at CCC (high) on
July 21, 2022.
ENEL SPA: Enel Argentina Sells Stake in 2 Thermal Plants
--------------------------------------------------------
Buenos Aires Times reports that Enel Americas, a unit of Italy's
largest utility Enel SpA, sold its stake in two thermal generation
plants in Argentina to power generator and distributor Central
Puerto, according to company documents.
Enel Argentina, owned by Santiago-based Enel Americas, sold nearly
76 percent of its stake in thermal power generator Enel Generación
Costanera to a unit of Central Puerto for US$48 million, according
to a statement, according to Buenos Aires Times. The same Central
Puerto unit, Proener, said it had reached an agreement to pay US$54
million to Enel Américas and Enel Argentina for stakes in
Inversora Dock Sud and Central Dock Sud, the report notes.
The move is the latest step in Enel's broader plans to sell assets
around the world to reduce its debt burden after a wave of
acquisitions to boost renewable energy production, the report
relays. The company said in November it was looking to sell its
assets in Argentina, Peru and Romania, the report notes.
"These are operations that are in line with our decarbonisation
strategy, with the goal of reaching zero emissions by 2040,"
Maurizio Bezzeccheri, chief executive of Enel Americas, said in a
statement, the report notes.
Enel's CEO added last year that he expects the sale of its assets
in Peru to be completed by 2023, the report relays.
Enel Américas operates in Argentina through the Edesur brand. In
addition to the assets sold, it also operates the Enel Generación
El Chocón hydroelectric plant and distributes power, the report
discloses.
The sale of the Dock Sud assets is subject to certain conditions
and is expected to close in the first quarter, according to a
statement, the report adds.
About Enel Spa
Headquartered in Rome, Italy, Enel SpA operates as a multinational
power company and an integrated player in the global power, gas,
and renewables markets. As reported in the Troubled Company
Reporter-Latin America, Egan-Jones Ratings Company, on December 15,
2022, maintained its 'BB' foreign currency and local currency
senior unsecured ratings on debt issued by Enel SpA.
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B E R M U D A
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BERMUDA: Insurers Urged to Transform to Face Challenges
-------------------------------------------------------
David Fox at Royal Gazette reports that the value of absent
insurance is so high, insurance companies are leaving a trillion
dollars worth of business on the table that could be worth tens of
billions of new profit, an industry report has determined.
EY Global Insurance Outlooks are annual reports that reflect a
perspective based on the thinking of EY's entire insurance team,
according to Royal Gazette.
A message from the EY Insurance leadership team, led by Isabelle
Santenac, states: "Barely recovered from the powerful effects of a
global pandemic, the insurance industry now finds itself confronted
with greater macroeconomic uncertainty and geopolitical volatility
than it has seen in decades," the report notes.
And they see a growing worldwide protection gap incorporating
climate and cyber protection, as well as retirement savings and
life and health insurance, the report relays.
The Insurance Protection Gap measures the difference between
optimal insurance coverage and actual coverage in any country, the
report relays. It describes uninsured losses for a country, the
difference between the total economic losses and that which is
insured, the report discloses.
The report said that in the wake of the pandemic, social unrest and
more natural disasters, consumers and companies have never been
more aware of their need for insurance protection, Royal Gazette
relays.
And the protection gap represents an opportunity to reap as much as
$1 trillion more in premium, and to gain billions in profits, the
report notes.
The EY team cited a 2021 quote that placed the global insurance
protection gap at $1.4 trillion, the report discloses. And it
quoted Swiss Re estimates that the potential increase in annual
industry profits, should the industry narrow the protection gap,
was $60 billion to $80 billion, Royal Gazette says.
The report pointed out the recession is making the gap worse and
enabling some of man's most troubling issues, Royal Gazette notes.
It states: "Closing the gap will require insurers to think and act
differently – new products and services delivered in new ways,
with new underwriting models and via new distribution channels,
Royal Gazette relays.
"In other words, insurers that continue to focus exclusively on the
risks they've always written profitably, will not only miss out on
the huge potential upside, but also contribute to the expanding
gap, the report notes.
"For insurers to seize the opportunity, they must address long
standing barriers on both sides of the business:
* Demand: affordability, awareness, appeal, trust
* Supply: transaction costs, adverse selection, insurability
limits
"Further, insurers must assess individual opportunities relative to
several large key risk pools, representing two of the three pillars
of ESG: environmental catastrophes and climate risk; and, social
risks, including healthcare and mortality, the report relays.
"Along with cyber-risk, these are all issues too large and complex
for the insurance industry to address on its own. Though
public-private partnerships will be necessary where insurability is
too expensive or impossible, insurers should develop solutions
proactively, the report relays.
"Taking action now, can help insurers prepare for the unlikely
event that government authorities will ask them to take on more
responsibility for covering cyber or climate risks in the future,"
the report says.
The report urges insurers facing huge challenges ahead, to seek
opportunities to improve the customer experience, develop more
sophisticated pricing models and increase operational resilience in
order to return to growth sooner, rather than later, Royal Gazette
adds.
===========
B R A Z I L
===========
BRAZIL: Central Bank Opposes Revising Inflation Targets
-------------------------------------------------------
Richard Mann at Rio Times Online reports that the president of the
Central Bank of Brazil, Roberto Campos Neto, ratified his
opposition to revising the inflation targets for 2023 and allowing
a decrease in the basic interest rate of the Brazilian economy.
Campos Neto responded in this way to the intention of President
Luiz Inácio Lula da Silva's government, which seeks to revise the
2023 inflation target and reduce the benchmark interest rate, which
now stands at 13.75 percent per annum, according to Rio Times
Online.
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.
As recently reported in the Troubled Company Reporter-Latin
America, Fitch Ratings, in December 2022, affirmed Brazil's
Long-Term Foreign Currency Issuer Default Rating (IDR) at 'BB-'
with a Stable Outlook. The ratings are constrained by high
government indebtedness, a rigid fiscal structure, weak economic
growth potential, and a record of governability challenges that
have hampered efforts to address these fiscal and economic issues
and clouded policy predictability. The Stable Outlook reflects
Fitch's expectation that growth will slow in the coming year and
that recent fiscal improvement will erode under a new government,
but within a margin consistent with the current rating, and from a
better starting point than previously expected. Uncertainty is
elevated regarding the plans of the incoming government and the
extent to which these could ease or aggravate fiscal and economic
challenges. However, Fitch does not expect policies that
jeopardize broad economic stability.
Standard & Poor's affirmed its 'BB-/B' long- and short-term
foreign and local currency sovereign credit ratings on Brazil, and
the outlook remains stable (June 2022). The stable outlook
reflects S&P's base-case assumption that Brazil will maintain its
fiscal anchors over the next two years despite an increasing
interest burden, preventing significant fiscal slippage and
limiting the rise in its already high debt burden.
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's credit rating for Brazil is BB (low) with stable outlook
(March 2018).
===================================
D O M I N I C A N R E P U B L I C
===================================
DOMINICAN REPUBLIC: Foreign Direct Investment Totaled US$3.8BB
--------------------------------------------------------------
Dominican Today reports that foreign direct investment (FDI) flows
in the Dominican Republic would have reached the historical amount
of US$3.8 billion during 2022, thus exceeding the levels of 2021 by
22.57%, of 2019 by 25.85%, and its highest amount registered in
2017, (US 3.5 billion, 6.5%).
In fact, already in September of that year, according to data
available on the portal of the Export and Investment Center of the
Dominican Republic (ProDominicana), they had exceeded the amount of
2021, reaching US$3.1 billion, an additional US$779.1 million (32.3
%) compared to that period a year earlier, according to Dominican
Today. The flow presented that year, as indicated, was driven
mainly by investments in the tourism (US$759.2 million), energy
(US$687.3), and Commerce and Industry (US$524.1 million) sectors,
the report notes.
In this sense, the CARD Region Balance of Payments reports, as of
the third quarter of 2022, from the Central American Monetary
Council (CMCA), highlights that the communication sector had an
outstanding pace in the country, adding US$168.1 million in foreign
investments, the report relays. This is a sector that for several
years presented negative indicators, the report discloses. During
2022, the United States remained the country with the largest
issuer of investment to the Dominican Republic, surpassing other
countries by more than 1,000%, the report relays. It added US$1
billion in the first nine months, while Mexico registered US$290.1
million, followed by Canada with US$265 million, and Spain with
US$247.6 million, the report notes. British Virgin Islands
complete the five nations with the highest amount injected with
US$235.8 million, the report says.
At the regional level, net Direct Investment (ID) flows
(acquisition of financial assets minus net incurred liabilities)
from Central America and the Dominican Republic (CARD) totaled
US$7.8 billion (2.9% of regional GDP), the report notes. The
amount is higher than the ID captured during the same period of
2021 (US$6.9 billion, 3.0% of GDP), the report discloses.
Meanwhile, foreign direct investment by directional direction
received accounted for US$8.1 billion (including intraregional
investments), an amount 6.1% higher than that registered in the
same period of 2021 (US$7.6 billion), the report notes. Likewise,
it is basically due to the increase in ID captured by the Dominican
Republic, Honduras, and Nicaragua, the report adds.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican To related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'.The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative.S&P also
affirmed its 'BB-' long-term foreign and local currency sovereign
credit ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said.A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
DOMINICAN REPUBLIC: Wages Must Still Not be Indexed, M. Diaz Says
-----------------------------------------------------------------
Dominican Today reports that the former general director of
Internal Taxes (2016-2020), Magin Diaz, agreed to workers' wages
not being indexed yet in the Dominican Republic. He acknowledged
that it is a decision of economic policies and believes that since
2017, wages are not indexed, according to Dominican Today.
"It is a way of capturing tax base. That is the reality, and the
government has continued with that policy that has come for years
as a way of not losing tax income. My opinion is that it should
continue to be made until a great reform is discussed which will be
in one or two years," Díaz said, the report notes.
At least since 2017 in the country, salaries are not indexed
annually as established by the Tax Code of the Dominican Republic,
the report relays. For 2023, the General Directorate of Internal
Taxes (DGII) left the readjustment to the taxable minimum entry of
natural persons without effect. This means that there are workers
who pay the Income Tax (ISR) and should not, the report says.
About Dominican Republic
The Dominican Republic is a Caribbean nation that shares the island
of Hispaniola with Haiti to the west. Capital city Santo Domingo
has Spanish landmarks like the Gothic Catedral Primada de America
dating back 5 centuries in its Zona Colonial district. Luis Rodolfo
Abinader Corona is the current president of the nation.
TCRLA reported in April 2019 that the Dominican To related that
Juan Del Rosario of the UASD Economic Faculty cited a current
economic slowdown for the Dominican Republic and cautioned that if
the trend continues, growth would reach only 4% by 2023. Mr. Del
Rosario said that if that happens, "we'll face difficulties in
meeting international commitments."
An ongoing concern in the Dominican Republic is the inability of
participants in the electricity sector to establish financial
viability for the system.
Fitch Ratings, in December 2021, revised the Outlook on Dominican
Republic's Long-Term Foreign-Currency Issuer Default Rating (IDR)
to Stable from Negative and affirmed the IDRs at 'BB-'.The
revision of the Outlook to Stable reflects the narrowing of
Dominican Republic's government deficit and financing needs since
Fitch's last review resulting in the stabilization of the
government debt/GDP ratio, as well as the investment-driven
economic momentum, reflected in the faster-than-expected economic
recovery in 2021 that Fitch expects to carry into above-potential
GDP growth during 2022 and 2023.
Standard & Poor's, also in December 2021, revised its outlook on
the Dominican Republic to stable from negative.S&P also
affirmed its 'BB-' long-term foreign and local currency sovereign
credit ratings and its 'B' short-term sovereign credit ratings. The
stable outlook reflects S&P's expectation of continued favorable
GDP growth and policy continuity over the next 12 to 18 months that
will likely stabilize the government's debt burden, despite lack of
progress with broader tax reforms, S&P said.A rapid economic
recovery from the downturn because of the pandemic should mitigate
external and fiscal risks.
Moody's affirmed the Dominican Republic's long-term issuer and
senior unsecured ratings at Ba3 and maintained the stable outlook
in March 2021.
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J A M A I C A
=============
[*] JAMAICA: Economy Recovering Faster
--------------------------------------
Kellaray Miles at Jamaica Observer reports that buoyed by the
continuation of strong tourist arrivals, the reopening of the
Jamalco alumina plant, and overall positive out-turns across most
industries, the local economy in Jamaica is recovering faster than
previously projected.
Director of the Planning Institute of Jamaica (PIOJ) Dr. Wayne
Henry, presenting the preliminary estimates on gross domestic
product performance (GDP) for the October-December, or last quarter
of 2022, during a quarterly briefing, said that by all indications
it is likely the country will return to pre-COVID levels this
fiscal year (FY) - ahead of the upcoming 2023/24 fiscal year as
previously anticipated, according to Jamaica Observer.
"The Jamaican economy continues to recover during the review
quarter, with some industries already surpassing COVID-19 levels of
output. The latest projections indicate that the economy is likely
to fully recover to pre-COVID-19 output in fiscal year 2022/23 -
earlier than the previously projected fiscal year 2023/24," he
stated while noting that the recovery of the employed labour force
is, however, expected to be confirmed in FY 2023/24, the report
notes.
"For FY 2023/24 the economy is projected to grow within the range
of 1-3 per cent, largely reflecting a faster-than-expected pace of
recovery in the previous fiscal year, leading to an
earlier-than-anticipated normalisation of output, and a return to
the long-term trend of growth," Henry stated, pointing to some
seven quarters of consecutive growth, the report discloses.
For the October to December review quarter the economy expanded by
3.4 per cent, owing to strong growth across both the
goods-producing and services industry, the report notes. The
goods-producing industry, which was led by positive out-turns from
the mining and quarry industries up almost 116 per cent following
previous quarters of contractions, was also supported by growth in
the agriculture and manufacturing sectors up 5 and 3.7 per cent,
respectively, despite fallouts in construction which declined by
4.7 per cent, the report relays.
The Jamalco plant, which resumed operations in July 2022 following
a fire in August 2021 that negatively affected production, though
not back at full capacity is said to be gradually picking up pace
and has already started to make significant contributions to real
value added, the report says.
"We expect, as time goes on, that it will eventually reach about
70-80 per cent, which is normal operating capacity. It will
unlikely operate at 100 per cent but our expectation is that it
will continue to ramp up production as the year goes by," commented
James Stewart, senior director of the PIOJ's Economic Planning and
Research division, the report discloses.
The services industry, driven by continued growth across its hotels
and restaurants subsector, also accelerated the pace of recovery,
adding some 23.4 per cent increase in out-turns and accounting for
the largest growth in the division as a result of increased
stopover and cruise passenger arrivals, the report relays.
"Visitor expenditure was estimated to have increased by 46.3 per
cent to US$543.7 million for the months of October and November
2022," preliminary data revealed, the report notes.
The sector similarly, for the full calendar year of 2022 at which
time the economy was said to have registered growth of 5.1 per
cent, also accounted for the bulk of growth accompanied by higher
real value added across most of the other industries, the report
discloses.
"Growth during 2022 was led by hotels and restaurants, up 48.9 per
cent; other services, up 11.1 per cent; agriculture forestry and
fishing, up 9 per cent; and transport, storage and communication,
up 6 per cent," Henry said, the report says.
Henry, in sharing a short-term outlook for the economy, said that
while the prospects for growth generally remain positive, some
downside risks — including tightened monetary conditions
globally, persistence of supply shocks, and extreme weather events
— could impact outcomes, the report notes.
For the current (January to March 2023) quarter the projection is
for the economy to grow within the range of 3.0 per cent to 5.0 per
cent, the report relays.
"Growth will be led by the strong performances from the hotels and
restaurants, and mining and quarrying industries. For January 2023,
preliminary airport arrivals grew by 63.8 per cent and alumina
production increased by 125.7 per cent," Henry further noted, the
report relays.
In light of the accelerated recovery the director general, however,
concluded that as more industries recover the expectation is that
the pace of economic growth during the upcoming financial year will
slow, similar to that of the global economy, the report discloses.
"With this in mind, the GOJ's economic team has refocused its
efforts on building economic resilience by removing inhibitors to
growth, and developing policy initiatives geared at addressing
these constraints to support the continued expansion of economic
activity during the medium term," he said, citing the continued
focus on climate and environment resilience-building, deeper
examination of the labor market to identify skill gaps, and further
diversification of the economy to increase economic resilience,
among the strategies being engaged, the report adds.
As reported in the Troubled Company Reporter-Latin America in March
2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
===========
P A N A M A
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ENA NORTE: S&P Lowers Debt Rating to 'BB-', On Watch Negative
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S&P Global Ratings, on Feb. 27, 2023, lowered its issue-level
rating on the Panamanian toll road operator, ENA Norte Trust's (ENA
Norte or the project) debt to 'BB-' from 'BB+' and placed the
rating on CreditWatch with negative implications.
The CreditWatch negative listing reflects a 50% chance of a further
downgrade of one or more notches in the next three months if we
were to expect weaker traffic growth in 2023 that could reduce the
payment of principal, and consequently, increase the risk of
refinancing compared with our current base-case scenario, S&P
says.
In 2022, the project's traffic volume increased about 6% and debt
prepayments totaled $31.5 million, considerably below S&P's
previous projections of 20%-23% and $37 million - $39 million,
respectively. This was mainly due to the increasing competition
from free alternative roads (such as the Domingo Diaz Avenue) and
other transportation models (such as the Panama Metro's Lines 1 and
2), which has had a deeper-than-expected impact on ENA Norte's
traffic volume.
S&P said, "Our updated base-case scenario for ENA Norte assumes
traffic in 2023 to grow about 7%, compared with our last projection
of 8%-10%. This would push the full recovery to pre-pandemic levels
to 2026, three years later than in our previous base-case scenario.
Therefore, we now forecast the project would repay the total
outstanding debt at legal maturity in April 2028, three quarters
later than in our previous base-case forecast. In addition, our
updated base-case scenario assumes that ENA Norte will have to use
more than $1 million of its DSRA to repay debt on time.
"Moreover, the project's exposure to marginal changes in traffic
volumes has significantly increased the debt's refinancing risk.
Therefore, under hypothetically stressed levels of traffic, O&M
expenses, and capex, ENA Norte would be unable to fully repay its
debt at legal maturity, even using the full amount of its DSRA. The
updated downside shortfall in April 2028 would be about $71
million, versus the previous estimate of $7 million, and as of the
date of this report, the project's DSRA totals about $7.2 million.
Therefore, to reflect our updated projections and ENA Norte's lower
resiliency under a downside scenario, we lowered our debt rating to
'BB-' from 'BB+'."
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2023. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
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