BRADES, Montserrat (GIU) — Montserrat on Tuesday signed a new agreement to receive 10th European Development Funds (EDF), which have been earmarked to support the government’s development goals.

Premier Reuben Meade signed on behalf of the government, after which Ambassador Valeriano Diaz, head of delegation of the European Union to Barbados and the Eastern Caribbean, added his signature.

A total of 15.66 million Euros or EC$55.9 million will be disbursed to the island for the period 2011-2014.

Meade said a portion of the funds will be used on the development of the new port project at Little Bay. He added the agreement stipulates that the contract to begin the works must be signed off by June 2013 or Montserrat will lose the amount allotted for that project. The government leader said Halcrow has already been awarded the port design contract and it is the intention to have the next phase agreed upon to meet the June 2013 deadline.

“The port development project is a major one for Montserrat and cannot be funded by one single funding agency,” Meade told the press on Tuesday. Utilising the grant support from the EU and the Department for International Development “will limit the amount of funds we need to borrow to complete the project.”

The premier said the just opened ferry terminal in Antigua, which was done with EU support alongside the government of Antigua and Barbuda, still needs to have the onshore facilities completed and it is hoped they will be ready for the 50th Festival celebrations this Christmas.

Dias said he was impressed with the rapid development after the volcanic devastation adding his pleasure that the EU is able to contribute to Montserrat’s reconstruction effort.

Over the last decade, the EU has contributed grant funding of approximately Euro 24.2 million or EC$84.4 million to Montserrat. These funds have been used to establish the Montserrat Community College, the construction of 60 homes under the Montserrat Resettlement Programme, and support for the island’s tourism programme, among others.

According to an official statement from the ambassador, “The funds under the 10th EDF are 100 percent grant financing and are transferred directly to the budget of Montserrat upon demonstration of progress and results achieved in implementation of the SDP and the Sustainability Roadmap.

“The specific performance benchmarks that the EU and the government have agreed to achieve … include:

• The construction of additional units of affordable housing for Montserratians

• The establishment of a labour market survey and realignment of the labour market with the education curriculum

• The definition of an energy regulation framework for proper development of the geothermal energy sector

• A reduction of government tax arrears

• The provision of property tax services on the government’s website

• The merging of the port and airport authorities for improved service delivery and efficiencies.

“Technical assistance funds to the tune of Euro 170,000 or EC$670,201 have been ring fenced to help with Montserrat’s achievement of the performance benchmarks.”

Dependent on the fulfilment of actions to be undertaken by the government in 2012, an initial sum of Euro 5.13 million or EC$18.3 million will be disbursed. The remaining disbursements will be subject to the eligibility criteria and scheduled to be released in equal sums of EC$18.3 million in the fourth quarters of 2013 and 2014.

By Nerissa Golden
Caribbean News Now

BRIDGETOWN, Barbados (BGIS) — There is a heightened air of expectation that the current relations that exist between the 15-member Caribbean Community (CARICOM) grouping of states and Mexico will be further strengthened by the end of their upcoming summit in Barbados.

“This will redound to the benefit of individual countries like the host country Barbados, as well as to the region in general,” according to an official of the Ministry of Foreign Affairs.

The May 20-21 meeting will bring together heads of state and government in face-to-face dialogue over a number of agenda items that are crucial to their development.

The first such forum was held in Mexico in February 2010. Ahead of next week’s meeting, the foreign affairs official has pointed to a level of increased cooperation between CARICOM countries and Mexico, and in particular to steadily improving relations between Barbados and Mexico.

She said: “Only recently, Mexico’s Ambassador to Barbados, Mario Eugenio Arriola Woog, during talks here with the Minister of Foreign Affairs and Foreign Trade, Senator Maxine McClean, explained that the summit would provide both sides with an opportunity to expand and build on their relations.”

At that meeting, McClean had noted that the pending conference was critical for determining areas of further collaboration, particularly in business and trade, safety and health, and various greening initiatives; and she made the observation that Mexico also recognised the need to be more present in CARICOM.

For her part, McClean pointed out that, as Mexico continued to play an active role in hemispheric integration, Barbados and CARICOM saw the need to foster closer ties with its Latin American counterpart.

In the bilateral context, Mexico, like Barbados, has a strong interest in strengthening approaches to climate change and the green economy.

By Peter Greene
Caribbean News Now

US car giant General Motors (GM) has said it will stop advertising on Facebook, days ahead of the social networking site’s share flotation.

GM does not believe paid-for advertising on Facebook influences many people’s choice of car.

Analysts said it raised questions about Facebook’s ability to lift profits.

Despite this, Facebook’s first issue of shares is proving so popular that on Tuesday it increased the price range for the stock.

It raised the price range from $28-$35 a share to $34-$38, potentially putting the firm’s total value above $100bn (£62.2bn).

The Reuters news agency also reported that demand was so high that the company would release up to 25% more shares, allowing it to raise about $16bn.

Trading in the shares is expected to begin on Friday.

The eight-year-old social network has 900 million users worldwide and made a profit of $1bn last year.

Risk

GM, the third-largest advertiser in the US, is the highest-profile company to pronounce on the worth of advertising on social networking sites compared with conventional media.

While it is dropping paid-for advertising, it will continue with its own Facebook page.

“In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers,” GM said in a statement.

However, rival Ford will continue its social media strategy. A spokesman said: “You just can’t buy your way into Facebook. You need to have a credible presence and be doing innovative things.”

Brian Wieser, internet and media analyst at Pivotal Research Group, said GM’s move intensified questions about site’s business plan.

“This does highlight what we are arguing is the riskiness of the overall Facebook business model,” he said.

BBC News

MANAGUA, Nicaragua — A staff team from the International Monetary Fund (IMF) visited Managua during May 2–11 to hold discussions on the 2012 Article IV consultation with Nicaragua.

The mission met with the Nicaraguan vice president, the Economic Cabinet, the superintendent of banks, the attorney general, the comptroller general, the minister of energy, the Economic Commission of the National Assembly, other government representatives, the business community, labor unions, civil society organizations, and international donors.

At the end of the visit Marcello Estevão, the IMF mission chief for Nicaragua, made the following statement:

“The Nicaraguan economy has recovered strongly from the global financial crisis of 2008-09. Helped by high export prices, large concessional and foreign direct investment flows, and broadly appropriate macroeconomic policies, the economy has averaged growth rates in excess of 4.5 percent during 2010-11. Inflation rates have remained relatively contained; fiscal accounts have improved on the back of the 2009 tax reform and stronger economic activity; and the international reserve position of the Central Bank has strengthened. In addition, the financial sector remained stable and credit to the private sector resumed growth.

“The outlook for 2012 is generally positive. Economic growth is projected to be somewhat lower than in 2011 on the back of weaker global activity, and inflation to be in a range of about 8 to 9 percent due to energy price pressures. Risks to this outlook include lower global activity, an adverse terms-of-trade shock, and sudden changes in concessional assistance or foreign direct investment. Maintaining prudent macroeconomic policies will be essential to an appropriate, swift response to these risks. In this context, keeping public spending pressures at bay, including by targeting subsidies and moderating wage increases, while preserving the room for social and infrastructure spending, is a priority. IMF Staff welcomes the commitment of the fiscal and monetary authorities to preserve the sustainability of public finances and to keep adequate international reserve buffers, in the context of the well-functioning crawling-peg exchange rate regime”.

“Higher economic growth is essential to reduce poverty rates significantly over the medium-term. In this regard, measures to further strengthen institutions, reduce labor market informality, and enhance the effectiveness of public spending while reducing budget rigidities will be key. Boosting growth and reducing the high dependence on oil imports require strengthening the electricity sector, including with predictable rules that attract new investments. In addition, reforming the pension system is necessary for inter-generational fairness and long-term fiscal sustainability, and a more equitable tax system would also generate resources for needed infrastructure investment and social spending.”

Caribbean News Now

The head of JPMorgan Chase, the biggest US bank, has been backed by shareholders days after it revealed a $2bn (£1.2bn) trading blunder.

At its annual shareholder meeting in Tampa, Florida, 91% of those who voted backed Jamie Dimon’s $23m pay packet for the last year.

And a vote to strip Mr Dimon of his dual titles of chief executive and chairman won only 40%.

But most ballots were cast before the trading loss was announced.

Mr Dimon has called the shock loss a “terrible, egregious mistake” and told reporters after annual meeting: “The buck always stops with me.”

On Sunday, Mr Dimon said he was “dead wrong” to dismiss concerns about trading at the bank.

On Monday, the Wall Street firm said Ina Drew, who oversaw the London-based division responsible for the trading mistake, would leave after more than 30 years.

The losses were made at a small trading unit in London. Reports suggest that Achilles Macris, head of the unit, and Javier Martin-Artajo, a member of the desk, could also resign.

They also suggest the position of trader Bruno Michel Iksil, nicknamed the London Whale, will come under scrutiny.

The trading loss was revealed in a regulatory filing, and will dent the company’s profits, although it still expects to make about $4bn this quarter.

BBC News

WASHINGTON, USA — Latin America and the Caribbean faces a large and growing housing deficit, which can only be addressed if governments in the region foster greater private sector investment to increase the supply of adequate and affordable housing, according to a new study by the Inter-American Development Bank (IDB).

Currently, one in three families in Latin America and the Caribbean, or 59 million people, live in dwellings that are either unsuitable for habitation or are built with poor materials and lack basic infrastructure services. As many as 2 million out of the 3 million households that spring up annually in Latin American cities are forced to settle in informal housing, such as slums, because of insufficient supply of adequate and affordable dwellings, according to the new book, “Room for Development: Housing Markets in Latin America and the Caribbean.”

The book, the latest edition of the IDB’s flagship publication Development in the Americas, takes an in-depth look into the housing markets of more than 18 countries in Latin America and the Caribbean and analyzes the region’s regulations and policies. The study shows that Latin America and the Caribbean have a higher incidence of slums than other countries with similar income levels, a sign that the region’s housing markets are failing to meet demand for formal dwellings, particularly for the low-income population.

“Our region needs to address the root cause and not only the symptoms of the housing problem. It needs to promote a well-functioning housing market and provide adequate and affordable housing with legal property titles and access to basic services so that people do not need to resort to living in slums or other informal types of dwellings,” said César Bouillon, the coordinator of the IDB study. “A sustainable and long-term solution requires the mobilization of private resources to increase the housing supply. Governments simply cannot afford to do it alone.”

The study estimates that if the region aims to close the existing housing deficit using government housing and urban development programs alone it would need to boost investment in public housing programs by more than seven-fold to $310 billion annually, or 7.8 percent of regional gross domestic product.

Clearly, public resources are insufficient and private investment is crucial in order to close the region’s housing gaps, according to the study. In order to attract private sector investments and expand the stock of affordable housing and improve existing ones, governments must facilitate and implement incentives for mixed land development, improve regulations on land titling and mortgage financing, and explore options that go beyond home ownership to include renting and more efficient building techniques.

Housing Deficits by Country

The region suffers from both an insufficient number of houses and qualitative shortages, including dwellings with no legal titles, walls made from discarded materials such as cardboard, dirt floors and lack of access to potable water and sewage systems. Data from 18 countries show that over two-thirds of households in Nicaragua, Bolivia, Peru and Guatemala have sub-standard housing. In absolute numbers, Brazil and Mexico are the countries with the biggest housing deficits.

Despite advances in recent years, lack of access to basic infrastructure services continues to plague many households in the region, with 21 percent lacking electricity and sanitation. Twelve percent of households use poor construction materials, while as many as 6 percent have dirt floors and suffer from overcrowding, which can have a negative impact on health. Around 11 percent of households lack clear legal title to their dwellings.

What to do?

Currently, most of the population living in the region’s biggest cities simply cannot afford or get a mortgage to pay for the purchase of the cheapest type of dwelling that can be provided by the private sector. More than half of the households in Caracas, La Paz, Lima, Buenos Aires, São Paulo, Rio de Janeiro, Mexico City, Quito and Managua cannot afford anything beyond self-constructed housing.

Governments in the region need to boost investment in key infrastructure and improve regulation to increase the provision of affordable serviced land with proper tenure security for low-income households. The study also calls for the region to enact regulations that would allow greater private sector participation in the provision of mortgage financing for low-income households. That would require changing laws and improving public agencies to provide better protection of creditor rights, improved systems for evaluating borrower risk, and more comprehensive property registries.

The authors of the study also suggest that governments should adopt housing policies that offer households greater flexibility to meet their housing needs, going beyond simply providing low-income families with outright housing grants or subsidies to buy houses.

Another option in the menu of public policies to reduce the region’s housing gap is to foster the rental market for low-cost housing, paving the way for the creation of private enterprises specializing in rental units for the low-income population. That would help increase the supply of adequate and affordable dwellings and give this segment of the population greater flexibility to adapt to economic cycles since it will be easier for them to move to areas with better job prospects if they don’t own a house.

Supporting the improvement of existing housing through partnerships with non-governmental organizations and private companies could also be an important solution to lower the housing deficit in the region since most of the homes are self-constructed. Because construction costs account for almost two-thirds of the sales price of a dwelling, authors also suggest countries foster greater competition among developers and encourage the adoption of more efficient and cheaper construction techniques to lower the cost of building new houses.

“There is no single solution to solve the region’s housing gap. Policies must offer households more and better choices: to rent or own; to move or stay; to borrow or not; to buy or build,” said Bouillon. “A large menu of options would go a long way toward improving the lives of millions of people and enhancing the economic and social development of our region.”

Caribbean News Now