By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
A BISX-listed fund was yesterday exploring capital-raising options beyond the combined $16.5m needed to finance its next two New Providence property developments.
Michael Anderson, president of RF Bank Bank & Trust, the Bahamas Property Fund’s investment manager and administrator, told Tribune Business the latter plans to invest between $4m to $4.5m in upgrading Bay Street’s Beaumont House in addition to the acquisition price.
The $4.3m purchase of the mixed-use property, which is located immediately to the west of Bay Street’s Straw Market,
Eleuthera’s
• Short-term residential eyed for Beaumont House
• Property Fund to invest $16.5m in this, warehouse
• Targets equity raise in ‘25 to fund $100m ambitions
marks “the start” of the BISXlisted fund’s plans to play a role in downtown Nassau’s redevelopment as it explores whether to convert Beaumont House’s upper floors into short-term residential options. The vendor’s identity was not disclosed.
Besides this acquisition, which the Property Fund is aiming to
ten-day water crisis ‘like stepping back 20-30 years’
By NEIL HARTNELL
CENTRAL Eleuthera’s ten-day water crisis was yesterday compared to “stepping back in time 20-30 years” as some residents complained into last night that supply had yet to be fully restored.
Cyprian Gibson, the Water & Sewerage Corporation’s assistant general manager for New Providence, told Tribune Business that repairs to its contractor’s reverse osmosis plant at the former Naval Base had been completed at 1pm yesterday and pressure and full water supply were gradually being restored to the system.
“I can assure you that it’s back up and running, and that’s from 1pm today,” Mr Gibson said of the plant operated by Aqua Design Bahamas. Reverend Trajean Jadorette, the Water & Sewerage Corporation’s executive chairman, was on the ground in Eleuthera yesterday to watch the
necessary repairs being made.
The Water & Sewerage Corporation, in a statement, confirmed that repairs were complete and the plant fully operational although it acknowledged that it would take time to fully restore water supply distribution. “The latest update is that both desalination trains at the Naval Base desalination plant are now operational,” it said.
“Teams are continuing to monitor the repaired works closely to ensure the works meet the required performance specifications. As storage levels increase, residents should experience an improvement in their water supply this afternoon and into this evening.
“In tandem, the Water & Sewerage Corporation will continue the free tankering of water to locations at higher elevations and those at the extreme ends of our system who would have experienced periods of low pressure and/or no
Arbitration proceeds on $357m GBPA dispute
By FAY SIMMONS
THE Prime Minister
yesterday signalled that the Government’s $357m dispute with the Grand Bahama Port Authority (GBPA) continues to proceed towards arbitration. Philip Davis KC, while asserting that the process is “confidential”, told reporters that the “mechanism” to resolve disputes with Freeport’s quasi-governmental authority “has been engaged and it’s ongoing”.
close “within the next few weeks”, Mr Anderson told this newspaper it will also invest around $12m in Bahamas U-Store Ltd, a warehouse/storage facility to be constructed near the Carmichael Road/Gladstone Road junction.
While that project is still awaiting final planning approval, its
construction start is anticipated in the 2024 third quarter.
Confirming that Beaumont House and Bahamas U-Store will be funded from the proceeds of a preference share offering, the details for which are due to be worked out over the next month, Mr Anderson revealed that beyond these projects the Property Fund will need to raise equity capital in 2025 to finance ambitions of more than doubling its property portfolio to $100m by that year’s end.
Voicing optimism that “we get the Property Fund right”, the RF Bank & Trust chief admitted its
performance had “been disappointing for a long time” but said the resumption of regular dividend payments and an improved share price suggested the real estate investment trust (REIT) or mutual fund is beginning to build momentum once again. The Bahamas Property Fund’s just-released 2023 audited financials disclosed the Beaumont House purchase, revealing: “In April 2024, the group entered into a sales agreement to purchase a property called Beaumont House,
‘Spoonful of sugar’ drives 20% Fidelity cheque usage decline
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
A BISX-listed bank says cheque transactions decreased by more than 20 percent over the past 18 months as its “spoonful of sugar” strategy to encourage digital banking pays off.
Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business that digital banking transactions by its clients “have continued to increase exponentially” to around 26,000 per quarter alongside the drop-off in cheque usage as electronic trends “move in the direction we anticipated”.
Disclosing that “60 percent or more” of the commercial lender’s client base are conducting their daily banking transactions digitally or online, he said: “In the past year-and-ahalf, the number of checks
• BISX-listed bank: ‘60% or more’ of clients gone digital
• Says online transactions now hitting 26,000 per quarter
• Admits ‘teller fee’ criticism but move only cost recovery
we see drawn by our clients has decreased by in excess of 20 percent.
“We’ve seen it go from about 6,000 cheques a quarter to under 5,000. I think it’s 4,500. And we’ve seen the number of online transactions, meaning Automated Clearing House (ACH) transactions, have continued to exponentially increase. Those numbers are in the order of 26,000 per quarter.
“The digital trend is certainly moving in the direction we anticipated it to move.” Mr Bowe told this newspaper that, rather than “strong-arm” clients and force them to adopt digital and online banking, Fidelity Bank (Bahamas) has chosen what he described as a persuasive approach. He admitted, though, that the BISX-listed bank had been criticised for levying fees on customers who continue to conduct their banking business in-branch via tellers. Fidelity Bank (Bahamas) fee and commission earnings for the 2024 first quarter rose by $677,000, or 34.7 percent
year-over-year to $2.34m compared to $1.662m for the same period in 2023, partly due to this fee being levied from January 1.
“There is a bit of that,” Mr Bowe conceded. “We had the normal criticism by people in general but I have spoken in a number of fora and said that, with the teller fee, all we did was divide the number of tellers by the number of transactions.
“It was just a service that was subsdised. We said that if you continue using online banking or the ATM, those fees are non-existent or a lot lower. It was not without its criticism, but I give credit to
Opposition cites ‘troubling’ trends with unemployment
By NEIL HARTNELL and FAY SIMMONS Tribune Business Reporters
THE Bahamas must reach its “full potential growth” rate of greater than 3 percent annually, the Opposition urged yesterday, as it cited several “troubling” trends with the recent unemployment figures.
In June, the Davis administration sent a demand letter to the GBPA giving it 30 days to pay $357m allegedly owed to government for costs incurred over and above tax revenues generated from the city of Freeport during the period 2018-2022.
The claim is based on clause 1(5)(c)of the Hawksbill Creek Agreement, which requires the Port Authority to reimburse the Government within 30 days of the presentation of a detailed account of the costs
He said: “A lot of what’s happening now is confidential until they reach a stage where they could become non-confidential. As much I can say right now is, if you read the arrangements between the Government and the Port Authority, there’s a mechanism that’s set out there to resolve our disputes. That mechanism has been engaged and it’s going on. And I can say no more than that at this time.”
Prime Minister Philip Davis yesterday said he was “encouraged” by the reduction in discouraged workers during the 2023 fourth quarter while describing the 9.9 percent national unemployment rate for the period as “still low” when compared to historical figures.
“It is still low when you compare it with other periods going back, so we still say it’s very low.” said Mr Davis. He and his administration had previously hailed the 8.8 percent unemployment rate recorded for the 2023 first half, which was lauded as lower than the
pre-COVID rate of 9.5 percent.
However, Kwasi Thompson, the Opposition’s finance spokesperson, yesterday questioned why the Bahamas National Statistical Institute had released the two reports for the 2023 third and fourth quarters at the same time.
Describing the release as “conveniently timed”, he signalled the Opposition’s belief that at least one of the reports may have been delayed until
MICHAEL ANDERSON
KWASI THOMPSON
GOWON BOWE
Solomon’s Fresh Market launches online platform
SOLOMON’S Fresh
Market, the AML Foods subsidiary, yesterday said it has launched a new e-commerce grocery shopping platform in response to consumer demand.
It said in a statement that residents and visitors will now be able to order their shopping online via www. solomonsfreshmarkets.com from both the Harbour Bay and Old Fort Bay locations, with goods available for instore pick up or delivery.
“We are thrilled to introduce our new online grocery shopping service, making it easier and more convenient to shop at Solomon’s Fresh Market," said Gershwin Greene, director of e-commerce at AML Foods.
“You can expect the same superior service, variety and quality grocery products you’ve enjoyed in-store from the comfort of your home, office, boat, hotel or Airbnb. Family island residents can also take advantage of the new site and order their groceries online for delivery to the mail boat of their choice, free of charge”.
AML Foods added that all major debit and credit cards are accepted on the site, and MySolomon’s Smart Rewards members can seamlessly link their loyalty accounts to the
platform, allowing them to earn points with every online purchase.
To do so, customers can create an online account using the same e-mail address and phone number associated with their loyalty account in-store. AML Foods said the new e-commerce service includes customisable product substitution preferences; access to saved order history; the ability to track order progress; and an option to place orders up to seven days in advance.
“I would particularly encourage vacation rental owners and yacht charter managers to use the platform and inform their incoming guests, as the solution will give them the opportunity to have their groceries delivered and stocked before they arrive on island," said Mr Greene.
“Our valued local customers and busy professionals can also utilise this option to save time by letting us handle the grocery shopping for them. This new service is a major part of our commitment to modernising and improving the grocery shopping experience, and we invite all of our customers to experience the ease and efficiency of our new online grocery shopping platform.”
CIBC unveils new digital banking hub
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
CIBC Caribbean yesterday said customers can access all its digital services and products via the onestop shop provided by the new Ways to Bank hub.
The commercial lender, in a statement, said that with 94 percent of all client banking transactions being conducted online, the ‘Ways to Bank’ digital hub provides clients with access to information on various digital services through a centralised platform.
It added that this digital tool directs CIBC Caribbean clients to resources that facilitate all their daily banking transactions - from paying bills to instant payments. The Ways to Bank hub is said to be accessible on both mobile and desktop devices.
"We are excited about our new digital banking hub, which serves as a comprehensive online platform for all of our clients’ banking needs. The ‘Ways to Bank’ is another innovative solution in the bank’s digital
transformation journey, and reflects our commitment to providing convenient and efficient banking services to our clients in today’s digital age,” said Deepa Boucaud, executive director, CIBC personal and business banking.
“Our personal and business banking online, and mobile banking transactions, have increased by 27 percent since last year, and corporate banking online banking transactions have increased by 11 percent over the past year. By contrast, over-the-counter or in-branch transaction volumes have decreased by 23 percent year-on-year.
"It’s a given, therefore, that we would take the next step and find a way for all our clients to access all our digital banking resources in one convenient place, allowing them to do their banking on their terms at any time from anywhere.
We believe that our ‘Ways to Bank’ digital hub will help streamline our client’s online banking activities and enhance their overall banking experience with us.”
The Ways to Bank hub features information on digital banking services such as the mobile app, a card activation feature, bill payments and the first pay online fund transfer service.
Royal Caribbean names PI beach club’s harbour chief
ROYAL Caribbean International yesterday named Grand Bahama mariner, Captain Cameron Gibson, as harbourmaster for its $110m Royal Beach Club project on Paradise Island,
The cruise line, in a statement, confirmed that Captain Gibson will oversee the management of Nassau harbour operations for its 17-acre beach experience that is scheduled to open in 2025.
“We are extremely pleased to welcome Captain Gibson to our growing Bahamian team. He brings a wealth of experience with him - from navigating ships around the world to serving as an environmental officer on cruise ships - making him ideally suited for this new and critical position,” said Philip Simon, president and general manager
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located on Bay Street, Nassau, for a price of $4.3m. A 10 percent down payment of $430,000 was made under the sales agreement.”
Mr Anderson yesterday signalled the Beaumont House deal is just the first step in the Property Fund’s ambitions for downtown Nassau as he confirmed it is still seeking a suitable location for a parking garage that would help solve the area’s parking woes.
“The purchase of Beaumont House was really an opportunity to get into the downtown space,” he told Tribune Business, “where we see a longer-term opportunity as the downtown area redevelops, and we see an opportunity to redevelop that building.
“We’ve got retail downstairs and restaurants on the second floor. We’re looking at either office space or short-term residential rental space on the top two floors. It’s currently offices there, and we are looking at converting it into short-term residential.
“It’s more an opportunity to look at downtown, and the redevelopment that’s taking place, to see to what extent putting residential properties into downtown will be beneficial for the Property Fund. We’ve been looking for more shortterm residential for a while to expand and diversify the Property Fund’s assets,” Mr Anderson continued.
“We see where this opportunity itself could be the start of something for us in the downtown area. We see it as a start. We’re still
BAHAMIAN captain, Cameron Gibson, joins Royal Caribbean International as harbormaster to oversee the management of harbour operations for the cruise line’s Paradise Islandbased Royal Beach Club, which is set to open in 2025.
for Royal Beach Club and Royal Caribbean International Bahamas.
“Captain Gibson’s return home to The Bahamas is a testimony to his unwavering loyalty to his homeland, and this new appointment also echoes our commitment to hiring Bahamians at every level of the operation.”
Captain Gibson brings more than 15 years’ experience with him, including navigating some of the world’s largest and highest tonnage cargo and cruise ships through waters such as the South China Sea, West Africa and the Middle East. He earned a bachelor’s degree in maritime business and commerce from the State University of New York (SUNY) Maritime College in 2012, and has since gained experience on ships where he has
looking at doing a parking garage. I think it’s one of the parts of the strategy for the Property Fund.”
Mr Anderson said the Property Fund expects Beaumont House’s restaurant and retail tenants to remain during the transition to its ownership. He added that just those tenants alone will place the property in a “break even” position, but the acquisition is expected to be “accretive” to the BISX-listed fund’s cash flows and earnings.
“We have architects looking at different options for us in the office space and short-term residential,” the RF Bank & Trust principal said. “We’re waiting on them to come up with a final plan. We expect the [acquisition’s] closing imminently; all the agreements have been signed.
“We’ve done all our due diligence work and that kind of stuff. We think within the next few weeks it will close. We know that with just the retail space downstairs and restaurant space we can more or less break even with it. The opportunity is to optimise the top two floors.”
As for Bahamas U-Store Ltd, the Carmichael/Gladstone Road warehouse facility, Mr Anderson disclosed: “We’re still waiting for planning approval. We have all the designs finished, and are starting to clean up the property and get it ready. That should start in the next quarter.
“We have to wait for planning approval before we can do any significant work on it, but that is in process at the moment and we expect to have a 2024 third quarter
ELEUTHERA’S TEN-DAY WATER CRISIS ‘LIKE STEPPING BACK 20-30 YEARS’
water and, in parallel, our teams are also delivering one gallon and five gallon bottles of water to senior citizens and those without access to transportation to collect such supplies.”
However, there is little doubt that the ten-day water shortage and cut-off has undermined the quality of life for many residents in Central Eleuthera. One, who took to social media, said: “My 72 year-old mother hasn’t had running water for ten days so I don’t care about politics. I just need her water working. This is a utility that is necessary to survive. Not a want but a need.
“Again, I don’t care about politics. Someone needs to shed light on the concerns of the Eleutheran people. Too long we have suffered and we shut our mouths because of who’s in power. I cry shame. Expose them all. We need adequate service.”
Another added of the repairs announcement: “Sounds grand but no water at South Palmetto Point as of 5.30pm.” One person said: “So I am sick of hearing about the water coming on one side and, on the other, nothing is happening. Now I am hearing maybe tomorrow again. Lord help us. I am truly sick of this
foolishness.” Yet another chimed in: “8.26pm. Still no water in North Palmetto Point.”
Eleuthera residents have now been invited to a “joint constituency meeting” this Thursday, set to be attended by Cay Sweeting, minister of works and Family Island affairs, and Sylvanus Petty, the MPs for central and south Eleuthera and north Eleuthera, respectively.
Also present will be Leon Lundy, minister of state in the Prime Minister’s Office who has responsibility for the Water & Sewerage Corporation, and representatives from the Corporation itself as the Government seeks to plot the way forward following the water crisis.
Thomas Sands, the Eleuthera Chamber of Commerce’s president, told Tribune Business that while he could not place a “dollar and cents” value on any costs and economic losses caused by the loss of water supply it was impossible to grow the island’s economy without proper, reliable, affordable utility services.
“People are very annoyed,” he said, “and I understand some businesses have had to close their doors because they didn’t have water. Anyone operating a business with back-up systems it really costs them,
contributed to the development of marine monitoring processes and environmental management strategies. In 2018, Captain Gibson returned to The Bahamas, obtained certifications in various specialisations, and chaired disaster preparedness and response committees. He also earned the International Master Unlimited Licence awarded by the UK in 2021, representing the highest maritime qualification in the world.
Royal Beach Club, the first in Royal Caribbean’s collection, will take shape in the coming months ahead of its opening in 2025. It will feature Bahamian food, culture and staff, and a public-private partnership (PPP) in which Bahamians will own up to 49 percent of the equity.
start. The Property Fund is back in development mode, trying to find opportunities to both buy and develop as we try to diversify it outside of strictly office space.
“We’ll start to see what happens with this warehouse project and Beaumont House,” he continued. “We expect to put $4m to $4.5m into Beaumont House, and are looking to put about $12m into the warehouse. Both are development projects and cash drains initially because you don’t have tenants as you’re building out the property.
“We are raising capital to fund these. This will be done through preference shares initially. Our initial funding requirements will be met quite easily through a preference share offering which we’ve been looking at. My sense is we will do [place] that in the next three to four months.
“We’ve raised some of the money and started to fund it already. We haven’t finalised the preference share offering yet as to amount or terms, but expect to do that in the next month. The main funding requirement will be in 2025.”
Mr Anderson told Tribune Business that the Property Fund will likely need to raise additional equity capital from investors next year to finance ambitions to grow its real estate portfolio from $41.85m at year-end 2023 to around $100m by the end of 2025. That would more than double the value of its property assets within two years.
“We’re busy looking at other opportunities to acquire something,” he
the investment in the system, the redundancy for that to operate.
“Tourists in private homes are fed up. This is a case of turn away the business or do not give a very good impression when you have visitors. It’s very hard for people to live with it. It’s a combination of no water, power going off, telecommunications going down. It’s like stepping back 20-30 years.
“We have to find a solution. I think successive poor management and bad planning got us to this position but I don’t want to cast blame. We have to have a solution going forward. We have to resolve this. We cannot grow our economy and have taxpayers live in an environment where we don’t have such services. That day has passed.”
Conceding that he does not have all the answers himself, Mr Sands said any solution to Eleuthera’s utilities woes must account for the island’s current and future economic growth. And it needed to start from the premise that all residents, investors and visitors have expectations of being able to access reliable phone, light and water services that are not constantly being disrupted.
“Residents expect they’ll live in a location where the water stays on, the power stays on and the phones will be up,” Mr Sands said. “These inconsistencies cannot exist in an environment of being in
revealed. “I see us moving forward as we start to get back into it. If we’re going to pick up another $50m we have to find [property] assets. Depending on what happens, we think we can fund the two existing assets [Beaumont House and the warehouse] with our own debt; bank debt as well....
“But, next year, we expect to have to go out and raise equity. We do think there will be an opportunity to raise equity in the next year. It depends on what the acquisitions look like, what we can acquire, and if we carry out the plans to add $50m we can’t just use leverage.
“The cash flow requirements of those properties are such that we need equity. We are considering how to manage the capital structure of the Property Fund going forward.... We anticipate getting it back up to the $100m target between this year and next. We haven’t moved forward for a while,” Mr Anderson said.
“I hope we get the Property Fund right. It’s been a while. It’s been disappointing for a long time, but we’ve been paying a dividend now for 18 months to two years. The dividend yield is close to 5 percent, and people now are showing more interest in the shares.
“The share price has improved up to $8. My sense is that we’re starting to get to the right level of profitability and cash flow that’s creating interest among investors. We hope to see that continue to improve.”
The Bahamas and being a taxpayer... This cannot continue. It cannot. It cannot. We’ve had this discussion so many times, from one administration to another; it’s coming so get prepared.
“Let’s say from a local resident’s perspective that you want the service you pay for. It’s that simple. If you pay for water, you want to have water, and if you pay for power you want to have power that’s a reliable, consistent supply. We are somewhat accepting, because we live in the Family Islands, that we have to have a back-up water system, a back-up generator.”
Mr Sands said he had acquired Starlink’s satellite Internet service, adding:
“I have to have all these things to survive and operate my business. That’s not the benchmark we need. We need to have the service we pay for, and that’s available for me when I want it and comparable to other locations in the world where you pay similar fees.
“There’s an international benchmark, and people coming here and investing here are saying I want the same service level here that I pay for in other locations. The benchmark is not contrived; it’s real. It actually exists. That’s where we need to get to from where we are now; to that service level. There shouldn’t be second guessing of what the service standard is, otherwise we won’t meet our goals and objectives.”
PM: NO FEAR OF LAY-OFFS FROM NIB RATE INCREASE
By FAY SIMMONS
THE Prime Minister yesterday said he is not concerned that the imminent National Insurance Board (NIB) contribution rate increase will provoke layoffs and an unemployment rate increase.
Philip Davis KC dismissed "naysayers" who believe the total 1.5 percentage point rate increase, split evenly between employer and employee and due to take effect on July 1, will prompt businesses to terminate staff to compensate for increased labour costs.
He maintained NIB is an insurance that employees are taking out to ensure they will have a "safety net" in retirement and is not for the Government.
"Well, again, the naysayers. We all know that National Insurance, that is an insurance that persons are taking out for themselves; it’s not for the Government," Mr Davis said. "If you pay into National Insurance, you're assured of a safety net, when you're no longer
working in the twilight of your life. So it's an insurance you're paying. It's a premium you’re paying to ensure that you’ll have a life after work.”
Mr Davis said he was "not concerned" with criticism of the NIB rate increase, and pointed out that predictions the minimum wage increase would cause lay-offs "didn’t happen". He said the rate increase, which will see the employer portion rise from 5.9 percent to 6.65 percent, and the employee component from 3.9 percent to 4.65 percent for an
overall rate of 11.3 percent, is an attempt to save NIB for future employees.
He said: “I’m not concerned about that. Just like when we raised the minimum wage, you would have heard them say that's a bad idea because it's going to impact employers. They going to lay-off people to meet the extra. That didn't happen. So let's speak to what is happening and what is to resolve and respond to it.
“You are not to discourage people or think that this is something that's going to
Arbitration proceeds on $357m GBPA dispute
associated with providing services and infrastructure in Freeport in excess of the city’s tax revenues.
The original 1955 clause required the GBPA to provide rent-free office and living accommodation to government employees involved in the “the maintenance of law and order, the administration of justice, the general administration of Government, the collection of Customs Duties and other revenue and the administration of the Customs Department the administration of the Immigration Department, Post Offices” and other functions to be mutually agreed.
The GBPA was also required to “reimburse the Government annually” within 30 days of detailed accounts being presented by the latter, but only if “Customs Duties and emergency
taxes received by the Government in respect of goods entered or taken out of bond at the Port Area are less than the amount” spent by the Government.
The letter represented an unprecedented escalation in the Government’s pressure campaign against the GBPA, which Mr Davis has repeatedly accused of failing to live up its governance and development obligations under the Hawksbill Creek Agreement.
Tension has been brewing publicly between the GBPA and the government since Mr Davis said last year that the former is failing to maintain Freeport’s infrastructure and facilitate the city’s growth. Freeport’s quasi-governmental authority, however, has denied owing any funds to the Government maintaining that it “does not accept it owes $1 to the Government out of that $357m”.
The Hawksbill Creek Agreement clause at the centre of the dispute was last amended in 1960, when Freeport was five years-old, the city’s development very much in its infancy, and the only revenues earned by the Public Treasury at the time from the Port area were Customs duties.
While it indeed stipulates that the Government should not spend any more in the Port area than it earns in revenues, and that any excess costs over and above the latter should be reimbursed by the GBPA, that clause has not been amended to account for either the Freeport of today or multiple taxes that have been added since then.
Thus VAT, departure taxes and a host of other revenue streams have to be factored into the calculation of whether the Government is spending more than it is earning in Freeport.
‘Spoonful of sugar’ drives 20% Fidelity cheque usage decline
FROM PAGE B1
our ambassadors and branch people. They’ve not been taking a strong-arm to push people into digital banking; we’ve taken the spoonful of sugar to persuade them.
“It’s more convenient, more cost effective and simpler getting people into the digital space more. It’s [the teller fee] a cost recovery, and as people move away from using the teller services it’s not a big issue to us. It’s not to penalise in any way. It’s a matter of recovering cost and explaining an alternative way for them to use keep cost at a minimum.” Driven by increased fee and commission income from its merchant services and cards business, and a more than halving of loan loss provisions compared to the 2023 first quarter, Fidelity Bank (Bahamas) generated a 33.2 percent or $1.132m year-over-year net income increase to $4.54m for the three months to end-March. This compared to $3.408m for the same period last year.
Mr Bowe, noting that the improved profits were not generated by the expansion or returns from Fidelity Bank (Bahamas) core loan portfolio, said: “The general observation is that whilst we talk about economic recovery I think there’s still a tremendous amount of trickle down to still take effect.
“We didn’t see any contraction in the loan portfolio. We saw growth, albeit very modest, for the first quarter 2024 for the first
time in a while. It’s not one where we’ve seen any significant growth. Consumer loan growth for January to April was less than $20m [for the entire commercial banking sector]. That indicates it’s still a very slow recovery in terms of the trickle down effect.
“Persons are suffering from the effects of not having savings during COVID so their borrowing capacity is constrained and work earnings are putting them in a stable position as opposed to being able to expand.”
Mr Bowe said Fidelity Bank (Bahamas) is “not in any way retrenching” on its investments in government debt, and is “still holding firm on one-year or less in terms of tenor”. He added that these investments are enabling the bank to “deploy more of the cash coming in” into interestearning securities, although these income streams are “not at full potential” because they generate lower returns than loans and advances.
Noting that around $60m, or half, of Fidelity’s near-$125m investment securities have maturities of one year or less, Mr Bowe said the bank has also deployed some $15m-$20m into US dollar denominated investments with interest coupons of between 4.5 percent and 4.75 percent. This, he added, is set to generate around $1m in annual income earnings.
“We’ve been able to deploy more money into the local banks, the international banks, because they
impact persons adversely. What it is going to do is to ensure you pay up premiums. We are trying to save the fund so that when you reach the age of retirement, there's something there for you.”
The contribution rates for self-employed and voluntarily insured persons will jump from the present 8.8 percent and 5 percent, respectively, to 10.3 percent and 6.5 percent as part of a strategy to ensure The Bahamas’ national social security system survives for the long-term to meet its
benefit obligations to all citizens and legitimate persons who qualify for assistance.
However, the July increase will only take the all-in NIB contribution rate for working Bahamians to 11.3 percent - a level that financial studies, known as actuarial reports, state is still too low to ensure the scheme’s medium and longterm survival and prevent the $1.5bn reserve fund from being depleted in 2028 as predicted.
“An increase of the contribution rate by 2 per cent (over the existing 9.8
percent) every two years starting on July 1, 2022, and ending on July 1, 2036, could restore the short and medium-term financial sustainability of the scheme,” the last NIB actuarial report said.
“Starting in 2029, the required annual contribution rate to pay for all expenditures becomes the pay-as-you-go (PAYG) rate. As an illustration, the contribution rate will have to increase from 9.8 per cent to 16.9 per cent in 2029, and will reach 32.3 per cent in 2078.”
are looking to build their Bahamian dollar deposit base to replace wholesale funding,” the Fidelity Bank (Bahamas) chief added.
Mr Bowe told this newspaper that one of the keys to the commercial lender’s 2024 success is its drive to recover $90m in written-off loans. He added that $1.4m worth of such recoveries during the first quarter had helped slash loan loss provisions by 51 percent year-over-year, from $2.554m to $1.253m, as Fidelity invests in “pursuing” delinquent borrowers via bankruptcies and enforcing judgments.
“I think I had said to you in terms of our budget that we had slipped from $20m to $14m,” Mr Bowe said of the 2023 results. “We are confident of getting back to $18m, at least in this year, and it’s really going to hinge on the success of our loan recoveries.
“One of the biggest contributors to profits, if you look at the provision for loan losses, that’s actually the beneficiary of $1.4m in recoveries in the first quarter. When you look year-on-year, it’s not that we have a wonderful lending environment.
“We have $90m in written-off loans we are pursuing, and last quarter was successful. You have to spend money to make money, and we’re spending additional resources on litigation, putting people into consideration for bankruptcy and enforcing judgments from previous years in a more aggressive manner.”
GRAND BAHAMA PORT AUTHORITY (GBPA) HEADQUARTERS
PHILIP DAVIS KC
NATIONAL INSURANCE BOARD (NIB) HEADQUARTERS
Apple becomes first target of EU’s new digital competition rules aimed at big tech
By KELVIN CHAN AP Business Writer
EUROPEAN Union regulators on Monday leveled their first charges under the bloc's new digital competition rulebook, accusing Apple of preventing app makers from pointing users to cheaper options outside its App Store.
The European Commission said that according to the preliminary findings of its investigation, the restrictions that the iPhone maker imposes on developers using its mobile App Store had breached the 27-nation bloc's Digital Markets Act.
The rulebook, also known as the DMA, is a sweeping set of regulations aimed at preventing tech "gatekeepers" from cornering digital markets under threat of heavy financial penalties.
The commission opened an initial round of investigations after it took effect in March, including a separate ongoing probe into whether Apple is doing enough
to allow iPhone users to easily change web browsers, and other cases involving Google and Meta.
Apple has been facing pressure on both sides of the Atlantic to tear down some of the competitive barriers around its lucrative iPhone franchise.
The U.S. Justice Department filed a sweeping antitrust lawsuit against Apple this year, accusing it of illegally monopolizing the smartphone market and boxing out competitors, stifling innovation and keeping prices artificially high. By the time that case was filed, Apple had already started to comply with a U.S. court order enabling links to alternative payment systems within iPhone apps, but a judge has expressed frustration with the company's approach and has indicated may changes may be required.
App makers such as Spotify had complained for years about Apple's requirement that subscriptions only be
bought through iOS apps, allowing the company to take a commission of up to 30%. Those grievances culminated in European regulators slapping Apple with a $2 billion fine for unfairly favoring its music streaming service over Spotify and other rivals.
Under the DMA's provisions, app developers must be allowed to inform customers of cheaper purchasing options and direct them to those offers.
The commission, the bloc's executive arm, said App Store rules "prevent app developers from freely steering consumers to alternative channels for offers and content."
Apple now has a chance to respond to the findings. The commission must make a final decision on Apple's compliance by March 2025. The company could face fines worth up to 10% of its global revenue, which could amount to billions of euros, or daily penalties.
The regulatory tensions prompted Apple to recently raise the specter of excluding the European market from a package of new artificial intelligence features coming to iPhones because the company believes the new rules within the region are too onerous.
But the European commission is keeping the pressure on Apple, simultaneously opening a new investigation into contractual terms that it's offering app developers.
Regulators zeroed in on a "core technology fee" of 50 euro cents (54 cents) that Apple is now charging developers for each time their apps are downloaded and installed from outside Apple's App Store. The DMA's provisions open the way for alternative app
stores to give consumers more choice.
The commission said the the new terms are a "condition to access some of the new features enabled by the DMA." Rivals had criticized the fee, saying it would deter many existing free apps, which don't pay any fees, from jumping ship.
"We are concerned Apple's new business model makes it too hard for app developers to operate as alternative marketplaces & reach their end users on iOS," the European Commissioner for Competition, Margrethe Vestager, said on social media.
Apple Inc. said over the past several months, it "has made a number of changes to comply with the DMA in response to feedback from developers and the European Commission."
OPPOSITION CITES ‘TROUBLING’ TRENDS WITH UNEMPLOYMENT
after the recent 2024-2025 Budget debate because they painted an inconvenient narrative from the Government’s perspective of the unemployment rate having increased since May 2023’s 8.8 percent low.
“We are faced with a conveniently-timed release of unemployment statistics at the end of the Budget debate that shows the unemployment rate has jumped back up to 9.9 percent - as of the fourth quarter 2023 report released from the Bahamas National Statistical Institute – from the 8.8 percent level reported in May 2023,” Mr Thompson said in a statement.
“The Prime Minister in his Budget communication stated that the unemployment rate ‘is now the lowest it’s been since 2008 at 8.8 percent’. We now know this position was incorrect.”
Speaking subsequently to Tribune Business, Mr Thompson said: “I think it’s very curious that we have two reports that are being released at the same time.
“For us, we’d like to know when that first [2023 third quarter] report was completed because obviously the Government has to answer what took place between June 2023 and the end of the 2023 third quarter. In May, we had a release saying it was 8.8 percent, and in the third quarter that jumped to 10.4 percent. It’s very curious that you would release both at the same time. For us, we’d like to understand that a bit better.”
The Bahamas National Statistical Institute on Friday said the two quarterly reports should not be compared to previous Labour Force Surveys as these were conducted on a bi-annual, or every six months, basis and thus were taken less regularly. It added that the methodology has also changed.
However, Mr Thompson said The Bahamas’ total employed labour force in the 2023 fourth quarter was slightly less than the near215,000 recorded in May 2019 prior to both Hurricane Dorian and COVID - standing at 214,170 as
opposed to 214,890 more than five years ago.
And he added that New Providence’s employed labour force appeared to have declined quarter-onquarter, falling from 159,620 in the 2023 third quarter to 158,840 in the fourth.
“What is more troubling is that the total number of employed persons has still not reached the total number of employed persons in May 2029,” Mr Thompson said.
“And if you compare the 2023 third quarter with the 2023 fourth quarter, looking at New Providence, which is the largest number of employed persons, these numbers seem to be going in the wrong direction. The number of persons employed is greater in the third quarter than the fourth quarter. The Government needs to explain that and what they plan to do about it.”
The International Monetary Fund (IMF) has projected that Bahamian economic growth will revert to its historical average of below 2 percent next year, coming in at around 1.71.8 percent and further
declining to 1.5 percent in 2026.
“They seem to be resigned to low to no growth rates,” Mr Thompson said of the Government, “where we are stuck at less than a 2 percent growth rate predicted over the next two years. The Opposition believes we need more economic growth and can have more economic growth.
“There are a number of things the Government ought to be doing to increase economic growth which they are not doing. They need to present a full economic growth plan which allows us to reach our full potential, which is above 3 percent.”
Asked what the Government should be doing, Mr Thompson argued it needs to better support small business; improve the ease of doing business; implement the Bahamas Investment Authority’s (BIA) transformation into Bahamas Invest to better facilitate domestic and foreign investment; digital transformation; and implementing the newly-passed apprenticeship reforms and training initiatives.
The Bahamas National Statistical Institute (BNSI) on Friday said the number of discouraged workers,
which represents the category of individuals available for work but who have given up seeking employment as they are not hopeful about their job prospects, fell from 10,880 in the 2023 third quarter to 9,500 in the final three months of last year.
New Providence had 6,525 discouraged workers in the 2023 fourth quarter, while Grand Bahama had 1,095 and Abaco 645. Mr Davis yesterday said the reduction in discouraged workers demonstrates that Bahamians recognise the economy is “doing well” and are now more open to seeking employment.
He said: “What I’m encouraged about is that now Bahamians are recognising that the economy is growing, and the economy is doing well, they’re no longer discouraged in looking for work.
“When you look at the statistics, and the methodology engaged to determine unemployment, they are not taking into account persons who have stopped looking for work, the discouraged workers. What this tells me is that it has inspired a lot of persons who had stopped or given up hope of finding a job, and they’re now finding hope to find jobs,
"We are confident our plan complies with the law, and estimate more than 99% of developers would pay the same or less in fees to Apple under the new business terms we created," the company said in a statement. "All developers doing business in the EU on the App Store have the opportunity to utilize the capabilities that we have introduced, including the ability to direct app users to the web to complete purchases at a very competitive rate." The company said it will "continue to listen and engage" with the commission.
The EU had been carrying out a similar investigation since 2020 into whether Apple's in-app purchasing system and restrictions violated Brussels' antitrust rules.
hence that 1 percent tick and hopefully within the next two months or so we can see that number going down.”
Mr Davis said he is hopeful that the unemployment rate will continue to decrease over the coming years as the economy is still growing and there are a number of vacancies available. He added that it is a “challenge” for the Government to accommodate individuals who only want to be employed in the public sector and refuse to stay in positions found for them in the private sector.
“The economy’s growing, it’s doing well and there’s still a lot of vacancies out there for Bahamians to grasp the opportunity,” the Prime Minister said. “The challenge we’re having is that a lot of Bahamians want to work, but they want a government job.
“I can speak about having persons working and they got them the job and, four weeks later, they are leaving the job and they say Brave, you know….I wanted a government job, I didn’t want this job. The Government can only absorb so much of it. We’re trying to get as many people employed in the private sector as we can to help that segment of our society.”
Photo:Matthias Schrader/AP
RAILROADS MUST PROVIDE DETAILS OF HAZARDOUS CARGO IMMEDIATELY AFTER A DERAILMENT UNDER NEW RULE
By JOSH FUNK Associated Press
A NEW federal rule
finalized Monday aims to ensure first responders can find out what hazardous chemicals are on a train almost immediately after a derailment so they can respond appropriately.
Too often in past disasters like last year's fiery Norfolk Southern derailment in East Palestine, Ohio, firefighters risked their lives trying to extinguish a blaze without knowing the right way to respond. The local fire chief in charge of the response said it took him 45 minutes to learn exactly what was in the 11 burning tank cars on the train, but some firefighters from neighboring departments that came to help said they didn't know what they were dealing with until two hours after the Feb. 3, 2023, crash.
First responders need to know exactly which hazardous materials are on a train so they can look it up in the government's official guidebook and make sure they have the right protective gear and firefighting tools, said Tristan Brown,
deputy administrator of the Pipelines and Hazardous Materials Safety Administration agency that proposed the rule. Knowing what chemical is involved and how much of it is aboard also affects how big of an evacuation zone might be required to protect the public.
"There are so many different types of hazardous materials being transported across the country on any given day — one in 10 goods that move across the United States — and each one, poses unique risks and hazards, certainly to the folks who are running towards a fire," Brown said. "But certainly as well for anybody who may be living or working in that vicinity."
The rule was published just one day ahead of the National Transportation Safety Board's final hearing on the East Palestine derailment, where they will discuss exactly what caused that crash and recommend steps to prevent similar disasters.
Train crews have long carried lists of their cargo in the cabs of their locomotives, but in the middle
of the chaos after a derailment those engineers and conductors, who might have moved their locomotives miles down the track, can't always be found right away.
That's part of why the largest freight railroads developed an app called AskRail roughly a decade ago that enables firefighters to quickly look up the details of what each train carries. But not every firefighter had the app, and cell phones don't always have a signal strong enough to work in a disaster.
Regulators want the railroads to continue expanding access to that app, including to 911 centers, so information reaches first responders sooner. The railroads have been expanding access over the past year. The Association of American Railroads trade group estimates some 2.3 million first responders now have access to that information as a result of the effort to expand into dispatch centers.
The six biggest railroads also make train cargo information immediately available through the chemical industry's hazardous
materials hotlines in the U.S. and Canada known as the CHEMTREC and CANUTEC, emergency call centers.
Norfolk Southern said that in addition to AskRail it is working with a different program called RapidSOS that will allow the railroad to directly send information about its trains to first responders after a derailment — instead of forcing them to look up the details in AskRail. The railroad said its work fits well with the new rule.
But the new federal rule also applies to the hundreds of smaller railroads that aren't involved in AskRail. Even railroads that only
Yellen announces efforts to boost the housing supply as high prices create a crunch
By FATIMA HUSSEIN Associated Press
THE Biden administration announced new steps to increase access to affordable housing as still-high prices on groceries and other necessities and high interest rates have dramatically pushed up the cost of living in the post-pandemic years.
Treasury Secretary Janet Yellen promoted the new investments on Monday during a visit to Minneapolis. The investments include providing $100 million through a new fund to support affordable housing financing over the next three years, boosting the Federal Financing Bank's financing of affordable housing and other measures.
The increased attention to home prices comes as the housing crunch becomes a growing issue in this year's general election campaign.
"We face a very significant housing supply shortfall that has been building for a long time," Yellen said in a speech Monday afternoon. "This supply crunch has led to an affordability crunch."
Yellen said the Democratic administration is "pursuing a broad affordability agenda to address the price pressures that families have been feeling."
Both homebuyers and renters are facing increasing housing costs that skyrocketed after the pandemic.
According to the CaseShiller 20-City Composite Home Price Index, home prices increased by 46% between March 2020 and March 2024. A new Treasury analysis shows that over the past two decades, housing costs have been rising faster than incomes.
Meanwhile, sales of previously occupied U.S. homes fell in May for the third straight month as rising mortgage rates and record-high prices discouraged many prospective homebuyers during what's traditionally the housing market's busiest period of the year.
For low-income Americans, statistics from the National Low Income Housing Coalition show that nationally there is a shortage of more than 7 million affordable homes for the more than 10.8 million extremely low-income U.S. families. And there is no state or county in the country where a renter working full-time at minimum wage can afford a two-bedroom apartment, according to the group. It is becoming a crisis in some cities. For instance, on Martha's Vineyard in Massachusetts, the cost of housing has become
a public safety issue as it becomes difficult to attract and retain correctional officers and 911 dispatchers.
President Biden and presumptive GOP nominee Donald Trump have put forward a variety of proposals on how to make life more affordable for average Americans, from Trump proposing to make tips tax-free for workers and Biden pursuing a plan to cut student loan payments for borrowers. A representative from the Trump campaign did not respond to an Associated Press request for comment.
But increased housing costs have some economists predicting the crunch may not end until the Federal Reserve lowers its key interest rate, which remains at 5.3%.
Sal Guatieri, a senior economist at BMO Capital Markets Economic Research, wrote Friday that little change is expected in the housing market "until the Fed reduces policy rates."
Diane Yentel, president and CEO of the National Low Income Housing Coalition, said the White House has made efforts to prevent evictions and address the housing crisis, "but there is much more work still to be done."
Yentel said congressional action is needed to
"quickly enact transformative and badly needed housing investments. Only through a combination of administrative action and robust federal funding can the country truly resolve its affordable housing crisis."
In her speech, Yellen called on Congress to pass
have one or two employees now must have a plan to get the crucial details of their cargo to the local fire department quickly, even if its as simple as having the fire chief's cell phone number at the ready. Railroads also must test their plan at least once a year.
The derailment prompted a nationwide reckoning over railroad safety and prompted Congress to propose changes and regulators like Buttigieg to urge railroads to do more to prevent derailments.
The Federal Railroad Administration has issued various advisories about different aspects of railroad operations, but the reforms in Congress have stalled because Republicans wanted to wait for the final NTSB report and regulators have had only limited success making changes.
"In a hazmat incident, firefighters and first responders arriving on scene need to know what kind of hazardous materials are present so they can protect themselves and their communities," U.S. Transportation Secretary Pete Buttigieg said. It's not clear how this rule might have changed the outcome in East Palestine, but more information could have helped responding firefighters.
Biden's proposed budget, released in March.
The budget calls on Congress to provide a tax credit for first-time homebuyers and includes a plan to build more than 2 million homes. It would expand the Low-Income Housing Tax Credit.
The Biden administration has taken other steps to boost the housing supply, including launching a multiagency effort to encourage states and cities to convert
more empty office buildings into housing units, with billions of federal dollars available to help spur such transitions. In July 2023, the Department of Housing and Urban Development provided communities with $85 million to reduce barriers to affordable housing, such as zoning restrictions that in some places have become a hurdle to increasing the supply and density of affordable housing.
A VIEW of the scene Feb. 24, 2023, as cleanup continues at the site of a Norfolk Southern freight train derailment that happened on Feb. 3, in East Palestine, Ohio. The goal of a new federal rule finalized Monday, June 24, 2024 is ensuring first responders can find out what hazardous chemicals are on a train almost immediately after a derailment, so they can respond appropriately.
Photo:Matt Freed/AP
still-high
groceries
necessities have dramatically pushed up
cost of living in the post-pandemic years. Treasury Secretary Janet Yellen is traveling to Minneapolis on Monday, June 24, 2024, to promote the new investments. Photo:Rich Pedroncelli/AP
Most of Wall Street rises, but Nvidia tumbles again as AI mania cools
By STAN CHOE AP Business Writer
ANOTHER slide for Wall Street heavyweight Nvidia kept U.S. indexes mixed Monday, even as the majority of stocks rallied.
The S&P 500 slipped 0.3% to pull further from its record set last week. The drops for Nvidia and other winners of Wall Street's artificial-intelligence boom pulled the Nasdaq composite down 1.1%, while the Dow Jones Industrial Average rose 260 points, or 0.7%.
Stocks of oil-and-gas companies were among the market's strongest, as seven out of every 10 stocks in the S&P 500 rose. Exxon Mobil climbed 3%, and oilfield services provider SLB gained 4% as oil prices hung near their highest levels since April. Financial companies were also strong. JPMorgan Chase added 1.3%, and Wells Fargo climbed 1.6% ahead of results coming later in the week for tests by the Federal Reserve of how big banks would fare in a recession.
But declines for a handful of high-profile stocks offset all of those gains, and the spotlight shone brightest on Nvidia's 6.7% tumble. It was a third straight drop for the chip company, which had rocketed 1,000% higher since the autumn of 2022.
Nearly insatiable demand for Nvidia's chips to power artificial-intelligence applications have been a big reason for the U.S. stock market's run to records recently, even as the economy's growth slows under the weight of high interest rates. But the AI boom has been so frenzied that it's raised worries about a possible bubble in the stock market and too-high expectations among investors. Nvidia's stock has been receding since it briefly overtook Microsoft as Wall Street's most valuable last week, and it's down nearly 13% in just three days. Because Nvidia has become so massive in size,
the movements for its stock carry extra weight on the S&P 500 and other indexes. It was the heaviest weight by far on the S&P 500 Monday.
Other AI beneficiaries also gave up some of their fantastic gains. Super Micro Computer dropped 8.6% to shave its gain for the year so far back below 200%, down to 190.9%.
Such a rotation among stocks could actually be a healthy sign for the market, as long as it can stay close to its records. Market watchers have been worried to see just Nvidia and a handful of other companies responsible for much of the S&P 500's returns recently.
Puerto Rico power company suspends $65M worth of maintenance projects, sparking outcry amid outages
They would prefer a market where many stocks are participating in the gains.
RXO jumped 23% after it agreed to buy the Coyote Logistics freight brokerage business from UPS for nearly $1.03 billion. RXO said the deal will make it North America's third-largest provider of brokered transportation. UPS, which bought Coyote in 2015 for $1.8 billion, rose 1.5%.
Under Armour swung from an early loss to a gain of 2% after saying it agreed to pay $434 million to settle charges raised by shareholders related to its accounting and sales practices. The shoe and athletic wear company denied any
By CORAL MURPHY MARCOS Associated Press
THE private operator of Puerto Rico's power grid confirmed Monday the deferral of $65 million worth of maintenance and improvement projects in the U.S. territory, with
THE NEW York Stock Exchange is shown on June 11, 2024 in New York. European markets have opened with gains on Monday, June 24, 2024, and Asian benchmarks retreated after U.S. stocks coasted to the close of their latest winning week.
wrongdoing in the settlement, but it also agreed to separate the roles of chairman and CEO for at least three years. All told, the S&P 500 fell 16.75 points to 5,447.87. The Dow rose 260.88 to 38,411.21, and the Nasdaq composite dropped 192.54 to 17,496.82.
In the bond market, Treasury yields eased a bit. The yield on the 10-year Treasury fell to 4.23% from 4.26% late Friday.
It's been mostly falling since topping 4.70% in late April, which has relaxed the pressure on the stock market. Yields have sunk on hopes that inflation is slowing enough to convince the Federal Reserve to cut its main interest rate later this year.
The Fed has been keeping the federal funds rate at the highest level in more than 20 years, hoping to grind down on the economy just enough to get inflation under control.
Fed officials may be underappreciating just how much the U.S. economy is slowing, according to economists at UBS led by Abigail Watt. They see growth slowing to below a 2% annualized rate in the first half of 2024, down from
some repairs postponed for at least a year because of budget constraints, putting at risk the already troubled grid — and sparking a widespread outcry.
Some of the deferred projects include maintenance of more than 100,000 light posts, fire mitigation and repairs on underground circuits, among other improvements.
Luma Energy's head of regulatory affairs, Mario Hurtado, told The Associated Press on Monday that the suspended projects, which he aims to bring back next year, risk more outages across the island.
"The risk is always that there will be more failures in terms of public lighting," Hurtado said.
At a budget hearing on Friday, Hurtado said Luma Energy prioritized other tasks based on "professional judgment," which they consider calculated risks. The lack of fire mitigation puts the grid at risk as hotter temperatures seize Puerto Rico, increasing the chances of wildfires disrupting power lines.
"We make judgments based on what we have available and what our goals are," Hurtado said Friday. "Although it entails a risk, it's an acceptable risk."
Luma's budget, proposed to Puerto Rico's Energy Bureau, includes $1.3 billion for the entire electrical sector, with 65% allocated to Luma, which is in charge of transmission and distribution, 32% to Genera PR, which operates and maintains the grid, and 3% to the Puerto Rico Electric Power Authority.
Peter Morgan/AP
3.1% growth in the fourth quarter of 2023 from a year earlier.
The UBS economists say U.S. households in the bottom 40% of the country for income are burning through their savings after depleting the cushions they had built through the pandemic. That could further slow retail sales, which have been up and down as companies highlight how lower-income customers are often struggling to keep up.
Wall Street is actually hoping for a slowdown in the economy, one that will take upward pressure off inflation and push the Federal Reserve to cut rates. Goldman Sachs economist David Mericle said a rate cut could happen as soon as September if inflation reports like the one coming up on Friday turn out as expected.
The Fed just needs to make sure it cuts interest rates at the right time. If it waits too long, the economy's slowdown could careen into a recession. If it's too early, inflation could reaccelerate.
In stock markets abroad, indexes rose across much of Europe after mostly falling in Asia.
Luma's announcement to defer millions of dollars' worth of projects amid chronic power outages has angered many.
"It is unacceptable that Luma Energy can unilaterally decide to suspend crucial tasks," Jesús Manuel Ortiz, a member of the House of Representatives who's also running for governor, said in a statement Monday. "It is evident that Luma continues to fail in its responsibilities, and that no one in the Government of Puerto Rico is responsible."
The company confirmed a delay in funds disbursement from the Federal Emergency Management Agency on Friday. Luma has submitted about 400 projects for approval to upgrade the energy grid, and about 100 have been approved, Hurtado said.
The budget hearing comes as the island of 3.2 million people contends with frequent power outages more than six years after Hurricane Maria ravaged Puerto Rico as a Category 4 storm. The combination of storms, earthquakes and underinvestment has hindered recovery efforts.
A massive blackout in mid-June left over 340,000 customers in the capital, San Juan, and nearby cities without power during a heat wave. Prior to the blackout, towns in central and southern Puerto Rico were left without power for about five days after a transformer collapsed early June. The company restored the service on June 9, with some residents still experiencing sporadic outages last week.
The budget aims to inject funds into Luma's customer service, personnel safety and renewable energy projects.
