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BUSINESS GUARDIAN www.guardian.co.tt MAY 2014 • WEEK FIVE
So far this year Mexico s government has
resembled one of the country s many devo-
tees of St Jude, patron saint of lost causes.
It has doggedly stuck to a 3.9-per cent 2014
growth forecast, even though its main export
market, the United States, has been sluggish
and the twin pillars of its domestic economy,
buying and building, have fared even worse.
On May 21 the central bank revised its
growth prediction down to 2.3 per cent to
3.3 per cent, from 3.0 per cent to 4.0 per
cent previously. The government was expect-
ed finally to follow suit on May 23, when
first-quarter GDP figures were due to be
released. Even so, officials are convinced
that, within months, the benefits of its plans
to modernise the economy will start to show
up in the numbers.
Mexicans have good reason to be sceptical.
In President Enrique Pena Nieto s first year,
when he launched an impressive volley of
constitutional reforms, the economy grew
by a meager 1.1 per cent. His government
said that it would reinvigorate growth this
year with a slug of deficit spending. Sure
enough, public spending rose by 13.2 per
cent in the first quarter, compared with the
same period in 2013.
There has been a plunge in construction
activity, however, including grandiose infra-
structure projects supposedly kick-started
by public money. Even government officials
seem puzzled by how long it is taking for
the spending to register.
In the stores news is even worse. Antad,
the organisation that represents supermar-
kets and convenience stores, says that, in
the first four months of 2014, total sales
fell for the first time in 30 years. Manufac-
turing was brighter, and non-oil exports
rose by 5.2 per cent in the first three months,
mainly to the United States. Recovery north
of the border is not yet robust enough to
rely on, however.
Perversely, Pena s reforms appear to weigh
on growth in the short run, even if they
promise eventual benefits. Take taxes: A
fiscal reform has raised income tax, affecting
the well-off. Policy also has hurt the poor
disproportionately through an anti-obesity
levy on soft drinks and snacks.
"The government is spending more,"
economist Jonathan Heath says, "but it took
that money away from households."
Investment is another example. Many
firms have put expansion plans on hold until
they see how the secondary legislation
detailing the government s constitutional
changes turns out in Congress. This is par-
ticularly true in energy and telecommuni-
cations, the two most important industries
set to be overhauled.
They may not have long to wait, thanks
to two political breakthroughs. On May 16
lawmakers passed a reform aimed at increas-
ing federal oversight of state elections.
Though its own merits are debatable, the
bill s passage broke a long impasse in Con-
gress, enabling discussions on energy and
telecommunications to resume. Also, on
May 18 Gustavo Madero won re-election
as head of the opposition National Action
Party. He is a strong advocate of reform.
On the economy, Ernesto Revilla, the
Finance Ministry s chief economist, says
that green shoots are now emerging and
that even the most gloomy forecasters pre-
dict a pickup in the second half of the year.
Putting a brave face on things, he likens
Mexico s reform process to a house being
remodeled. At the outset there is excitement,
then there is anger and frustration because
it takes so long. That is the phase Mexico
is now in.
"But," Revilla says, "when it s over every-
one will be happier."
@2014 The Economist Newspaper Ltd.
Distributed by the New York Times Syn-
The Caribbean Association of Banks (CAB) is col-
laborating with United Kingdom-headquartered
Alexander Bain to pilot Streamlined , a new Inter-
net-based secure financial intermediation platform
to improve accessibility to loans for businesses region-
Through Alexander Bain, a pioneering management
consultancy with presence in the UK and the
Caribbean, users will access an electronic network
of banking associates across the Caribbean.
Streamlined will facilitate prospective borrowers
to electronically apply to a network of multiple com-
mercial banks across the Caribbean. Banks will receive
a copy of the professionally reviewed (typically con-
ducted by an Association of Chartered Certified
Accountants member) application forms and by
mutual agreement introduce the applicant to the
bank. Following lending, the Alexander Bain rela-
tionship then enables monitoring of the loan
covenants, increasing banks confidence to lend.
The key benefits of the Streamlined platform include
reducing application time and the associated load on
individual banks. Lenders will access a significantly
enhanced pool of potential borrowers and this initiative
is projected to transact more than US$16 million of
loans over the next three years, targeting small and
medium enterprises (SME) sector across the Caribbean
"Streamlined is the result of a perfectly timed
strategic partnership with Alexander Bain and Asso-
ciates. I personally think that such collaborative
approach is what is required across the Caribbean.
The landscape for the financial services sector globally
is changing rapidly and Caribbean bankers within
our membership aim to stay ahead of the curve," said
Carlton Barclay, chairman of the CAB.
Rhonda Best, managing director of Alexander Bain
added, "Streamlined is just the beginning, at Alexander
Bain we are determined to create opportunities to
improve access to debt and equity finance to enable
businesses with growth potential. We are pleased
that the Caribbean Association of Banks shared our
strategic vision and look forward to working together .
(Caribbean News Now)
Mexico's economy starts the year badly
Dozens of business owners and employees
in the travel agency sector protested outside
Venezuela s Tourism Ministry to demand the
government pay billions of dollars in ticket fees
owed to international airlines.
"We re very seriously asking the national
government to pay the more than US$4 billion
debt it has with the airlines," travel agent and
protest spokesman Pierre Marteau told EFE.
The Venezuelan government owes around
US$4 billion to airlines related to money from
ticket sales in 2013 and 2014, according to
Venezuela s airline association, known as ALAV.
The government s Cadivi foreign-exchange
agency collects Venezuelan bolivars from ticket
sales, and airlines are having difficulty converting
that money to dollars for repatriation due to
Airlines have been responding by restricting
ticket sales in the Venezuelan currency since
Marteau said the situation has put "more
than 250,000 jobs at risk" across the South
American country s entire tourism industry.
For its part, tourist operator Iñaki Alberdi
said the airlines move to reduce ticket sales in
bolivars has caused a massive reduction in
employment in the tourism sector, saying "30
percent is a conservative figure" for industry-
wide job losses.
"I m selling 67 per cent less than I sold last
year," the owner of the Cereus travel agency,
Paquita Peña, said.
"This past week I sold two flights to Europe
when normally I d sell eight or ten per day,"
Venezuela President Nicolas Maduro said
last week that some European airlines have
reprogrammed flights to attend increased
demand in Brazil related to this summer s soccer
"It s a big lie and he knows it because this
has been happening since last year and no one s
going to travel to the World Cup a year early,"
ALAV President Humberto Figuera said last
week that with each passing day, the airlines
are closer to a possible decision "to temporarily
suspend operations until this issue is resolved."
Alitalia and Air Canada have suspended serv-
ice, while other foreign air carriers have chosen
to reduce the frequency of flights to or from
Venezuela or try to fill seats exclusively with
sales in other countries.
Venezuela s government has held several
meetings this year with foreign airlines and
assured them that it will pay the money cor-
responding to 2014 ticket fees and review the
debt corresponding to 2013.
(Caribbean News Digital)
Venezuelan travel agencies demand govt pay money owed to airlines
in the Caribbean
The key benefits of the
application time and the
associated load on
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