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Bahamas, The

6. Financial Sector

Capital Markets and Portfolio Investment

The Bahamian government encourages the free flow of capital to markets, and the Central Bank of The Bahamas supports this flow through its functions. The Bahamas is an Article VIII member of the IMF and has agreed not to place restrictions on currency transactions, such as payments for imports. The Bahamas Securities Commission regulates the activities of investment funds, securities, and capital markets (www.scb.gov.bs ). The fledgling local stock market excludes foreign investors but is effectively regulated by the Securities Commission.

There are no legal limitations on foreigners’ access to the domestic credit market, and commercial banks make credit available on market terms. The government encourages Bahamian-foreign joint venture businesses, which are eligible for financing through both commercial banks and the Bahamas Development Bank (http://www.bahamasdevelopmentbank.com/ ).

Customarily the government does not prohibit its citizens from investing internationally. However, all outward direct investments by residents, including foreign portfolio investments, require the prior approval of the Exchange Control Department of the Central Bank of The Bahamas (www.centralbankbahamas.com/exchange – controls). Applications are assessed considering the probable impact the investments may have on The Bahamas’ balance of payments, specifically business activities that promote the receipt of foreign currency.

During the COVID-19 pandemic, in an effort to maintain adequate foreign reserves to support the Bahamian dollar fixed exchange rate and preserve access to foreign exchange for priority international transactions, on May 4, 2020, the Central Bank announced the suspension of approvals of applications to purchase foreign currency for transactions via the Investment Currency Market (ICM) and the Bahamas Depositary/Depository Receipt (“BDR”) program. Both programs fund foreign portfolio investments, the latter also promoting deepening of domestic capital markets. The Central Bank announced foreign exchange access through the channels would resume once market uncertainties around the COVID-19 pandemic subsided. Meanwhile, the ICM was expected to continue to facilitate the repatriation of foreign currency income, capital gains, and liquidated capital at the appropriate premium.

Money and Banking System

The financial sector of The Bahamas is highly developed and dynamic and consists of savings banks, trust companies, offshore banks, insurance companies, a development bank, a publicly controlled pension fund, a housing corporation, a public savings bank, private pension funds, cooperative societies, credit unions, commercial banks, and the majority state-owned Bank of The Bahamas. These institutions provide a wide array of services via several types of financial intermediaries. The Central Bank of The Bahamas, the Securities Commission, Insurance Commission, the Inspector of Financial and Corporate Service Providers, and the Compliance Commission regulate the financial sector.

According to the Central Bank’s Quarterly Economic Review ending December 2019, bolstered by the receipt of re-insurance proceeds, both bank liquidity and external reserves expanded during the fourth quarter, with the growth in the deposit base outpacing the rise in domestic credit. However, the latest indicators for the third quarter of 2019 indicated a decline in overall bank profitability, largely reflecting a rise in bad debt provisioning. Banks maintained robust capital levels during the fourth quarter, although the average ratio of capital to risk-weighted assets moved lower by 90 basis points, to 30.4 percent; remaining well in excess of the Bank’s regulatory prescribed target and trigger ratios of 17 percent and 14 percent, respectively. The ratios of provisions to both non-performing loans and total arrears, firmed by 6.0 percentage points each, to 94.4 percent and 62.5 percent, respectively. Further, banks also wrote-off an estimated $29.3 million in delinquent loans and recovered approximately $6.2 million, during the review quarter.

In the domestic banking sector, four of the eight commercial banks are subsidiaries of Canadian banks, three are locally owned, and one is a branch of a U.S.-based institution. Continued reorganization by the Canadian banks has severely limited banking services on some of the less populated islands.

The Central Bank’s strategic goals include responding to the loss of brick-and-mortar banks, particularly in the Family Islands, by implementing electronic funds transfer across the country and providing access for individuals to basic financial services through digital media. To this end, the Bank introduced a digital currency called the Sand Dollar in December 2019, with a pilot phase in the Exuma islands, extending to the Abaco islands during the first quarter of 2020. This initiative, known as Project Sand Dollar, targets improved outcomes for financial inclusion and access, making the domestic payments system more efficient and non-discriminatory in access to financial services. The project has the support of the domestic financial community, which welcomes the opportunity for financial inclusion of unbanked and underbanked residents. Authorized financial institutions participating in the pilot include clearing banks, money transfer services, and payment service providers. Additional information on the Sand Dollar can be accessed via www.sanddollar.bs/ .

Foreign Exchange and Remittances

Foreign Exchange Policies

The Bahamas maintains a fixed exchange rate policy, which pegs the Bahamian dollar one-to-one with the U.S. dollar. The legal basis for the policy is the Exchange Control Act of 1974 and Exchange Control Regulations. The controls ensure adequate foreign exchange flows are always available to support the fixed parity of the Bahamian dollar against the U.S. dollar. For the tourism-dependent economy, the peg removes issues of rate conversions and allows for unified pricing of goods and services for tourists and residents. To maintain this structure, individuals and corporations resident in The Bahamas are subject to capital or exchange controls.

Exchange controls are not an impediment to foreign investment in the country. The government requires all non-resident investors in The Bahamas to register with the Central Bank, and the government allows non-resident investors who finance their projects substantially from foreign currency transferred into The Bahamas to convert and repatriate profits and capital gains freely. They do this with minimal bureaucratic formalities and without limitations on the inflows or outflows of funds.

In the administration of exchange controls, the Central Bank does not withhold or delay approval for legitimate foreign exchange purchases for currency transactions and, in the interest of facilitating international trade, it delegates this authority to major commercial banks and selected trust companies. International and local commercial banks, which are registered by the Central Bank as ‘Authorized Dealers,’ may administer and conduct foreign currency transactions with residents of The Bahamas. Similarly, private banks and trust companies which are designated as ‘Authorized Agents’ are permitted to act as depositories for foreign securities of residents and to conduct securities transactions for non-resident companies under their management.

The Central Bank directly approves foreign exchange transactions that fall outside of the delegated authority, including loans, dividends, issues and transfer of shares, travel facilities, and investment currency. The government has continued gradual liberalization of exchange controls over the years with the most recent measure implemented in April 2016. The most recent measures delegated increased authority to commercial banks for exchange control and seek to regularize nationals holding accounts in the United States by allowing nationals to open U.S. dollar denominated accounts within the jurisdiction.

As mentioned, during the COVID-19 pandemic, in an effort to maintain adequate foreign reserves to support the Bahamian dollar fixed exchange rate and preserve access to foreign exchange for priority international transactions, on May 4, 2020, the Central Bank announced the suspension of approvals of applications to purchase foreign currency for transactions via the Investment Currency Market (ICM) and the Bahamas Depositary/Depository Receipt (“BDR”) program. The Central Bank announced foreign exchange access through the channels would resume once market uncertainties around the COVID-19 pandemic subsided. Meanwhile, the ICM was expected to continue to facilitate the repatriation of foreign currency income, capital gains, and liquidated capital at the appropriate premium.

Remittance Policies

There are no restrictions on investment remittances. Foreign investors who receive a Central Bank designation as a non-resident may open foreign currency-denominated bank accounts and repatriate those funds freely. In addition, with Central Bank approval, a foreign investor may open an account denominated in Bahamian currency to pay local expenses. As mentioned, increased authority has been delegated to commercial banks and money transfer businesses.

The Bahamas is a member of the Caribbean Financial Action Task Force (CFATF). Its most recent peer review evaluation and follow-up reports can be found at (https://www.cfatf-gafic.org/index.php/member-countries/the-bahamas ).

Sovereign Wealth Funds

The Bahamian government passed omnibus legislation for the effective management of the oil and gas sector in 2017, which included the creation of a sovereign wealth fund, but has not yet promulgated supporting regulations. Discussions on a possible sovereign wealth fund have been reignited as the Bahamas Petroleum Company, an Isle of Man-registered company, received Bahamian government approval to begin drilling a test well in southern Bahamian waters off the north coast of Cuba.

7. State-Owned Enterprises

State-Owned Enterprises (SOEs) are active in the utilities and services sectors of the economy. There is a published list of the 25 SOEs available on www.bahamas.gov.bs . Key SOEs include:

Bahamasair Holdings Ltd. (National Airline); Public Hospitals Authority; Civil Aviation Authority; Nassau Airport Development Authority; University of The Bahamas; Health Insurance Authority; Bank of The Bahamas (65 percent Bahamian government); Bahamas Power and Light (BPL); Water and Sewerage Corporation (WSC); Broadcasting Corporation of The Bahamas (ZNS); Nassau Flight Services; and the Hotel Corporation of The Bahamas.

Within the past decade, no SOE has returned profits or paid dividends. The government’s 2018-2019 budget listed $398m in subsidies allocated to SOEs and agencies for the 2018-2019 fiscal year, down slightly from the prior year’s $410m. The bulk of this sum, some $216m or more than 50 percent, was due to the Public Hospitals Authority (PHA) to cover its operational costs.

The government’s budget revealed the acquisition of, and investment in, the Grand Lucayan resort through the government’s capitalization of the special purpose vehicle, Lucayan Renewal Holdings incurring a $47m cost as at end-March 2019. The budget also disclosed transfers to non-financial SOEs rose by $29.2m to $75.8m during the first nine months of the 2018-2019 fiscal year. The government also facilitated the budgeted settlement of $7.2m in interest payment on Bahamas Resolve’s $167.7m promissory note to the Bank of The Bahamas.  In April 2019, the government announced plans to introduce a State-Owned Enterprises Bill to impose proper corporate governance, accountability, and discipline and to address the risk loss-making, inefficient SOEs pose to its financial health.

The government has permitted investment in sectors where SOEs operate and has approved licenses to private suppliers of electrical and water and sewerage services. These licenses have been issued for private real estate developments or in locations in which there is limited government capacity to provide services. An exception is the city of Freeport on the island of Grand Bahama, which has its own licensing authority and maintains monopolies for the provision of electricity, water, and sanitation services.

In May 2019, the Bahamian government issued a Request for Proposal for the purchase or franchise agreement for Nassau Flight Services. Bahamian investor groups were targeted by the FNM administration, adding that only Bahamians needed to apply for the ground handling services provider’s takeover. However, in February 2019 the government announced its decision to ‘maintain the status quo’ in deciding against the privatization of Nassau Flight Services.

Privately owned domestic and foreign airlines have complained of the market distortions created by Bahamasair, claiming the national airline sells key routes below market value and benefits from not remitting licensing and other fees required by private companies. The airline has recorded annual losses for more than two decades.

Privatization Program

The Bahamian government has not taken definitive steps to implement its proposed privatization plans but has indicated a preference for public-private partnerships as the model for privatizing SOEs. The government divested 49 percent of the Bahamas Telecommunication Company in 2011, but issued a second license for cellular services and retained 51 percent equity in the new company. In his February 2018 speech, the Deputy Prime Minister serving as Minister of Finance announced the government’s intention to divest additional equity in the Bahamian telecommunications sector. In February 2019, the Bahamian government selected UK-based Global Ports Holding’s $250 million proposal to redevelop the New Providence cruise terminal, entering a 25-year lease agreement with the company. In early 2019, the company announced a bond offering which is expected to fund $130 million of the capital for the new Port of Nassau.

Barbados

6. Financial Sector

Capital Markets and Portfolio Investment

Barbados has a small stock exchange, an active banking sector, and opportunities for portfolio investment.  Local policies seek to facilitate the free flow of financial resources, although some restrictions may be imposed during exceptional periods of low liquidity.  Historically, the CBB independently raised or lowered interest rates without government intervention.  There are a variety of credit instruments in the commercial and public sectors that local and foreign investors may access.

Barbados continues to review legislation in the financial sector to strengthen and improve the regulatory regime and attract and facilitate retention of foreign portfolio investments.  The government continues to improve its legal, regulatory, and supervisory frameworks to strengthen the banking system.  The Anti-Money Laundering Authority and its operating arm, the government’s Financial Intelligence Unit, review anti-money laundering policy documents and analyze prudential returns.

The Securities Exchange Act of 1982 established the Securities Exchange of Barbados, which was reincorporated as the Barbados Stock Exchange (BSE) in 2001.  The BSE operates a two-tier electronic trading system comprised of a regular market and an innovation and growth market (formerly the junior market).  Companies applying for listing on the regular market must observe and comply with certain requirements.  Specifically, they must have assets at least USD 500,000 and adequate working capital, based on the last three years of their financial performance, as well as three-year performance projections.  Companies must also demonstrate competent management and be incorporated under the laws of Barbados or another regulated jurisdiction approved by the Financial Services Commission.  Applications for listing on the innovation and growth market are less onerous, requiring minimum equity of one million shares at a stated minimum value of USD 100,000.  Reporting and disclosure requirements for all listed companies include interim financial statements and an annual report and questionnaire.  Non-nationals must obtain exchange control approval from the CBB to trade securities on the BSE.

The BSE publicized its intent to fully immobilize traditional share certificates and to computerize clearance and settlement through the Barbados Central Securities Depository Inc., a wholly owned subsidiary of the BSE.  The FSC under the Property Transfer Tax Act, can accommodate investors requiring a traditional certificate for a small fee.  The Financial Services Commission also regulates mutual funds in accordance with the Mutual Funds Act.

The BSE adheres to rules in accordance with International Organization of Securities Commissions guidelines designed to protect investors, ensure a fair, efficient, and transparent market, and reduce systemic risk.  Public companies must file audited financial statements with the BSE no later than 90 days after the close of their financial year.  The authorities may impose a fine not exceeding USD 5,000 for any person under the jurisdiction of the BSE who contravenes or is not in compliance with any regulatory requirements.

The BSE launched the International Securities Market (ISM) in 2016.  It is designed to operate as a separate market, allowing issuers from Barbados and other international markets.  The ISM is founded on a strong regulatory framework.  To date, the ISM has five listing sponsors.

The BSE collaborates with its regional partners, the Jamaica Stock Exchange and the Trinidad and Tobago Stock Exchange, through shared trading software.  The capacity for this inter-exchange connectivity provides a wealth of potential investment opportunities for local and regional investors.  The BSE obtained designated recognized stock exchange status from the United Kingdom in 2019.  It is also a member of the World Federation of Exchanges.

Barbados has accepted the obligations of Article VIII, Sections 2, 3, and 4 of the IMF Articles of Agreement and maintains an exchange system free of restrictions on current account transactions.

Money and Banking System

The government established the Central Bank of Barbados in 1972.  The CBB manages Barbados’ currency and regulates its domestic banks.

The Barbados Deposit Insurance Corporation (BDIC) provides protection for depositors.  Oversight of the entire financial system is conducted by the Financial Oversight Management Committee, which consists of the CBB, the BDIC, and the FSC.  The private sector has access to financing on the local market through short-term borrowing and credit, asset financing, project financing, and mortgage financing.

Commercial banks and other deposit-taking institutions set their own interest rates.  The CBB requires banks to hold 17.5 percent of their domestic deposits in stipulated securities.

Bitt, a Barbadian company, introduced a blockchain-based digital mobile wallet service for consumers.  Bitt offers a digital asset exchange, remittance channel, and merchant-processing gateway available via a mobile application.  The CBB and the FSC established a regulatory sandbox in 2018 where financial technology entities can do live testing of their products and services.  This allowed regulators to gain a better understanding of the product or service and to determine what, if any, regulation is necessary to protect consumers.  Bitt completed its participation and formally exited the sandbox in July 2019.  The CBB concluded that the company’s digital wallet service is a good candidate for regulation under legislation that is currently being drafted.

International banks domiciled in the United States, Canada, and Europe are reviewing their correspondent banking relationships in regions they deem high-risk for financial services.  The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S. and European banks.  CARICOM remains committed to engaging with key stakeholders on the issue.

Foreign Exchange and Remittances

Foreign Exchange

Barbados’ currency of exchange is the Barbadian dollar (BBD).  It is issued by the CBB.  Barbados’ foreign exchange operates under a liberal system.  The Barbadian dollar has been pegged to the United States dollar at a rate of BBD 2.00: USD 1.00 since 1975.  This creates a stable currency environment for trade and investment in Barbados.

Remittance Policies

Companies can freely repatriate profits and capital from foreign direct investment if they are registered with the CBB at the time of investment.  The CBB has the right to stagger these conversions depending on the level of international reserves available to the CBB at the time capital repatriation is requested.

The Ministry of Finance, Economic Affairs and Investment controls the flow of foreign exchange and the Exchange Control Division of the CBB executes foreign exchange policy under the Exchange Control Act.  Individuals may apply through a local bank to convert the equivalent of USD 10,000 per year (effective July 1, 2019) for personal travel and up to a maximum of USD 25,000 for business travel.  The CBB must approve conversion of any amount over these limits.  International businesses, including insurance companies, are exempt from these exchange control regulations.

Barbados is a member of the CFATF.  In 2014, the government of Barbados signed an Intergovernmental Agreement in observance of FATCA, making it mandatory for banks in Barbados to report the banking information of U.S. citizens.

Sovereign Wealth Funds

Currently, the CBB does not maintain a sovereign wealth fund.  In the past, the government announced plans to create a sovereign wealth fund to ensure national wealth is available for present and future generations of Barbadians.  Barbadians 18 years and older are expected to gain a stake in the fund after it is established.  It is envisioned that the fund will hold government assets, including on- and offshore real property, revenues from oil and gas products, and non-tangible assets such as trademarks, patents, and intellectual property.  As part of the government’s pandemic response, the prime minister has signaled plans to reengage on this issue.

7. State-Owned Enterprises

State-owned enterprises (SOEs) in Barbados work in partnership with ministries, or under their remit, and carry out certain specific ministerial responsibilities.  There are currently about 70 SOEs in Barbados operating in areas such as tourism, investment services, broadcasting and media, sanitation services, sports, and culture.

SOEs in Barbados are not found in the key areas earmarked for investment.  They are all wholly owned government entities.  They are headed by boards of directors to which their senior management reports.

As part of the ongoing BERT Program, the government of Barbados is addressing the expenditure position of the SOEs by defining clear objectives for SOE reform, reducing the wage bill of these entities, and implementing other necessary reform measures.

Privatization Program

Barbados does not have a targeted privatization program.  However, the government has announced plans for public-private partnerships in airport and broadcasting services which will still see government retaining ownership of these entities.  The process remains open to foreign investors and is transparent.  More information can be obtained from www.gisbarbados.gov.bb  .

Haiti

6. Financial Sector

Capital Markets and Portfolio Investment

The scale of financial services remains modest in Haiti. The banking sector is well capitalized and profitable. In principle, there are no limitations to foreigners’ access to the Haitian credit market, but limited credit is available through commercial banks. The free and efficient flow of capital, however, is hindered by Haitian accounting practices, which are below international standards. While there are no restrictions on foreign investment through mergers or acquisitions, there is no Haitian stock market, so there is no way for investors to purchase shares in a company outside of direct transactions.

The standards that govern the Haitian legal, regulatory, and accounting systems do not comply with international norms. Haitian laws do not require external audits of domestic companies. Local firms calculate taxes, obtain credit or insurance, prepare for regulatory review, and assess real profit and loss. Accountants use basic accounting standards set by the Organization of Certified Professional Accountants in Haiti.

Administrative oversight in the banking sector is superior to oversight in other sectors. Under Haitian law, however, banks are not required to comply with internationally recognized accounting standards, and they are often not audited by internationally recognized accounting firms. Nevertheless, Haiti’s Central Bank requires that banks apply internal audit procedures. As part of their corporate governance all private banks also have in-house audit functions. Most private banks follow international accounting norms and use consolidated reporting principles. The Central Bank is generally viewed as one of the well-functioning Haitian government institutions.

Money and Banking System

The banking sector has concentrated credit in trade financing and in the proliferation of bank branches to capture deposits and remittances. Telebanking has expanded access to banking services for Haitians. Foreign banks are free to establish operations in Haiti. Three major banking institutions (Unibank, Sogebank and Banque Nationale de Crédit) hold 80 percent of total banking sector assets. With the acquisition of the Haitian operations of Scotiabank in 2017, Unibank became Haiti’s largest banking company with a deposit market share of 36 percent. As part of the deal, Scotiabank remains one of Unibank’s international correspondent banks. U.S.-based Citibank also has a correspondent banking relationship with Unibank.

The three major commercial banks hold 74 percent of the total loan portfolio, while 70 percent of total loans are monopolized by 10 percent of borrowers. This increases the Haitian banking system’s vulnerability to systemic credit risk and restricts the availability of capital. The quality of loan portfolios in the banking system has deteriorated since May 2019 as Haiti’s economy went into a recession. Per Haiti’s Central Bank, the ratio of nonperforming loans over total loans was 7.2 percent in February 2020 compared to 6.8 percent in December 2019 and 4.15 percent in February 2019. The Central Bank conducts regular inspections to ensure that financial institutions are in compliance with minimum capital requirements, asset quality, currency, and credit risk management.

The Central Bank’s main challenge is maintaining sound monetary policy in the context of a larger-than-expected government deficit and a depreciating local currency. As of April 2020, the Central Bank’s reference exchange rate was approximately 102 gourdes for one USD and inflation reached 20.3 percent, remaining on a gradual upwards trend. The exchange rate suffers from continued pressure on the foreign exchange market. As of mid-April 2020, Haiti’s stock of net international reserves was approximately USD 558 million. Haiti’s Central Bank has been adjusting its interest rates to contain inflation while at the same time trying to support the private sector through the economic recession exacerbated by the coronavirus pandemic.

There are no legal limitations on foreigners’ access to the domestic credit market. However, banks demand collateral of real property to grant loans. Given the lack of effective cadastral and civil registries, loan applicants face numerous challenges in obtaining credit. The banking sector is extremely conservative in its lending practices. Banks typically lend exclusively to their most trusted and credit-worthy clients. Based on a 2018 study by FinScope Haiti, only one percent of the adult population has access to a bank loan. The high concentration of assets does not allow for product innovation at major banks.

To provide greater access to financial services for individuals and prospective investors, the Haitian government’s banking laws recognize tangible movable property (such as portable machinery, furniture, and tangible personal property) as collateral for loans. These laws allow individuals to buy condominiums, and banks to accept personal property, such as cars, bank accounts, etc., as collateral for loans. USAID has a loan portfolio guarantee program with a diversified group of financial institutions to encourage them to expand credit to productive small and medium enterprises, and rural micro-enterprises. Haiti has a credit rating registry in effect for users of the banking sector but does not have the relevant legislation in place to establish a credit rating bureau.

Haiti’s Central Bank issued a series of monetary policy measures to alleviate the potential impact of the COVID-19 on the financial system and the economy on March 19, 2020. These measures include: the reduction in the Central Bank’s policy rate which should help lower interest rates on loans; the decrease of the reserve requirement ratios to reduce the cost for banks to capture resources and grant loans; the reduction in the Central Bank’s refinancing rate to lower the cost of access to liquidity; the alleviation of loan repayment conditions for customers over a three-month period; the waiver of the Central Bank’s fees on interbank transfers to reduce transaction costs for customers; and the increase of limits in transactions through mobile payment services.

Foreign Exchange and Remittances

Foreign Exchange

The Haitian gourde (HTG) is convertible for commercial and capital transactions. Banks and currency exchange companies set their rates at the market-clearing rate. The Central Bank publishes a daily reference rate, which is a weighted average of exchange rates offered in the formal and informal exchange markets. The market determines the exchange rate for the HTG. The difference between buying and selling rates is generally less than five percent. Declining aid inflows and low domestic production led to a 25 percent depreciation of the HTG against the USD in FY2019.

Remittance Policies

The Haitian government does not impose restrictions on the inflow or outflow of capital. The Law of 1989 governs international transfer operations and remittances. Remittances are Haiti’s primary source of foreign currency and are equivalent to approximately one-third of GDP. In 2019, Haiti received about USD 3 billion in remittances. There are no restrictions or controls on foreign payments or other fund transfer transactions. While restrictions apply on the amount of money that may be withdrawn per transaction, there is no restriction on the amount of foreign currency that residents may hold in bank accounts, and there is no ceiling on the amount residents may transfer abroad.

The Haitian government has expressed an intention to put in place stricter measures to monitor money transfers in accordance with Haiti’s efforts to deter illicit cash flows, as mandated by the 2013 Anti-Money Laundering Act.

Sovereign Wealth Funds

To date Haiti does not have a Sovereign Wealth Fund.

Per information released by the Central Bank in September 2018, since 2011 Haiti has levied a tax of USD 1.50 on all transfers into and out of the country, with the proceeds designated for the National Fund for Education. According to a Central Bank report in September 2018, more than USD 120 million has been collected since July 2011 on taxes from remittances from the diaspora.

7. State-Owned Enterprises

The Haitian government owns and operates State-Owned Enterprises (SOE). The Haitian commercial code governs the operations of the SOEs. The sector included a flourmill, a cement factory, a telephone company, the electricity company (EDH), the national port authority, the airport authority, and two commercial banks: Banque Nationale de Crédit and Banque Populaire Haïtienne. The law defines SOEs as autonomous enterprises that are legally authorized to be involved in commercial, financial and industrial activities. All SOEs operate under the supervision of a sectorial ministry, and are expected to create economic and social return. Today, some SOEs are fully owned by the state, while others are jointly owned commercial enterprises. The Haitian Parliament has full authority to liquidate state enterprises that are underperforming. The majority of SOEs are financially sound, with the exception of EDH. EDH receives substantial annual subsidies from the Haitian government to stay in business.

Privatization Program

In response to the economic difficulties of the late 1990s and mismanagement of the SOEs, the government liberalized the market and allow foreign firms to invest in the management and/or ownership of Haitian state-owned enterprises. To accompany the initiative, the government established the Commission for the Modernization of Public Enterprises in 1996 to facilitate the privatization process.

In 1998, two U.S. companies, Seaboard and Continental Grain, purchased shares of the state-owned flourmill. Each partner currently owns a third of the company, known today as Les Moulins d’Haiti. In 1999, a consortium of Colombian, Swiss, and Haitian investors purchased a majority stake in the national cement factory. In 2010, a Vietnamese corporation, Viettel, officially acquired 60 percent of the state telecommunications company Teleco (now operating as Natcom), with the Haitian government retaining 40 percent ownership. The government has allowed limited private sector investment in selected seaports. Competition is not distorted in favor of state-owned enterprises to the detriment of private companies.

The Haitian government has allowed private sector investment in electricity generation to compensate for EDH’s inability to supply sufficient power. Three independent power producers previously provided electricity generation for EDH in the Port au Prince metropolitan area. The Finance Ministry was instructed in 2019 to suspend payments of any value in connection with the execution of contracts between the government and the three independent power producers. During a council of ministers meeting on October 2019, the Haitian government, through the Ministries of Finance and Public Works, had expressed its intention to suspend contracts with the three private companies which supplied it with electricity: Haytian Tractor & Equipment Co. SA (Haytrac), E-Power, and Société Générale d’Energie SA (Sogener). As of April 2020, E-Power was the only independent power producer still operating in Port au Prince. E-Power opened a 32-megawatt heavy fuel oil power generation plant with financing from the World Bank and International Finance Corporation in 2011. In November 2019, the Haitian government filed criminal fraud charges against Sogener, which had been operating two collocated power plants in Port au Prince starting in 2004.

The National Regulatory Authority of the Energy Sector in Haiti (ANARSE), a state body created by decree in February 2016, launched a series of prequalification rounds for regional electricity grids and power production starting in August 2019. The ANARSE tenders are for the concession of the public service for the production, transmission, and distribution of electrical energy in the Miragoane, South (Les Cayes) and North East (Caracol) networks. On March 2020, the names of prequalified firms were released. More prequalification tenders for additional regional grids are expected in 2020. ANARSE also concluded a prequalification round for mini electricity grids in 2019.

Jamaica

6. Financial Sector

Capital Markets and Portfolio Investment

Credit is available at market terms, and foreigners are allowed to borrow freely on the local market at market-determined rates of interest. A relatively effective regulatory system was established to encourage and facilitate portfolio investment. Jamaica has had its own stock exchange, the Jamaica Stock Exchange (JSE), since 1969. The JSE was the top performing capital market indices in 2018 and was among the top five performers in 2019. The Financial Services Commission (FSC) and the Bank of Jamaica (BOJ), the central bank, regulate these activities. Jamaica adheres to IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.

Money and Banking System

At the end of 2019 there were 11 deposit-taking institutions (DTIs) consisting of eight commercial banks, one merchant bank (Licensed under the Financial Institutions Act) and two building societies. The number of credit unions shrank from 47 at the end of 2009 to 25 at the end of 2019. Commercial banks held assets of approximately $12 billion and liabilities of $10 billion at the end of 2019. Non-performing loans (NPL) of $140 million at end December 2019, were 2.2 percent of total loans. Five of the country’s eight commercial banks are foreign-owned. After a financial sector crisis in the mid-1990s led to consolidations, the sector has remained largely stable.

In October 2018, the GOJ took legislative steps to modernize and make the central bank operationally independent through the tabling of amendments to the Bank of Jamaica (BOJ) Act. The modernization program includes, inter alia, the institutionalization of the central bank independence, improved governance, and the transitioning of monetary policy towards inflation targeting. These developments follow previous strengthening of the BOJ, in 2015, when it undertook independent responsibility for banking supervision. Jamaica’s financial governance framework is in line with international standards and legislative amendments continue to enhance the BOJ’s regulatory powers.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions on holding funds or on converting, transferring, or repatriating funds associated with an investment. In 2017, the BOJ implemented a new system called the BOJ Foreign Exchange Intervention & Trading Tool (B-FXITT) for the sale and purchase of foreign exchange (FX) to market players. The new system is a more efficient and transparent way of intervening in the FX market to smooth out demand and supply conditions.

Investment-related funds are freely convertible to regularly traded currencies, particularly into United States, Canadian dollars, and United Kingdom pounds. However, foreign exchange transactions must be conducted through authorized foreign exchange dealers, “cambios,” and bureau de change. Foreign exchange is generally available and investors are free to remit their investment returns.

Remittance Policies

The country’s financial system is fully liberalized and subject to market conditions. There is no required waiting period for the remittance of investment returns. Any person or company can purchase instruments denominated in foreign currency. There are no restrictions or limitations on the inflow or outflow of funds for the remittance of profits or revenue. The country does not possess the financial muscle to engage in currency manipulation.

Jamaica was listed among the Major Money Laundering Jurisdictions in the U.S. Department of State’s 2019 International Narcotics Control Strategy Report (INCSR), while noting that the GoJ has enacted legislation to address corruption.

In February 2020, Jamaica was grey listed by the Financial Action Task Force, for failing to address some of the deficiencies identified in the 2017 Caribbean Financial Action Task Force Mutual Evaluation Report (MER) on anti-money laundering and counter-terrorist financing measures (https://www.cfatf-gafic.org/index.php/documents/4th-round-meval-reports ).

Having entered an Observation Period following the 2017 publication of the MER, Jamaica’s progression towards remedying partially and non-compliant areas was slow. GoJ has developed a FAFT action plan which includes developing a broader understanding of its money laundering/terrorist financing risk and including all financial institutions and designated non-financial businesses and professions in the AML/CFT regime, and ensuring adequate risk-based supervision in all sectors.

Sovereign Wealth Funds

Jamaica does not have a sovereign wealth fund or an asset management bureau.

7. State-Owned Enterprises

A legacy initiative of Jamaica’s Stand-By Agreement with the IMF, is the reformation of the public sector to include State-Owned Enterprises (SOEs). Jamaican SOEs are most active in the agriculture, mining, energy, and transport sectors of the economy. Of 148 public bodies, 55 are self-financing and are therefore considered SOEs as either limited liability entities established under the Companies Act of Jamaica or statutory bodies created by individual enabling legislation. SOEs generally do not receive preferential access to government contracts. SOEs must adhere to the provisions of the GOJ (Revised) Handbook of Public Sector Procurement Procedures and are expected to participate in a bidding process to provide goods and services to the government. SOEs also provide services to private sector firms. SOEs must report quarterly on all contracts above a prescribed limit to the Integrity Commission. Since 2002, SOEs have been subject to the same tax requirements as private enterprises and are required to purchase government-owned land and raw material and execute these transactions on similar terms as private entities.

Jamaica’s Public Bodies Management and Accountability Act (PBMA) requires SOEs to prepare annual corporate plans and budgets, which must be debated and approved by Parliament. As part of the GOJ’s economic reform agenda, SOE performance is monitored against agreed targets and goals, with oversight provided by stakeholders including representatives of civil society. The GOJ prioritized divestment of SOEs, particularly the most inefficient, as part of its IMF reform commitments. Private firms compete with SOEs on fair terms and SOEs generally lack the same profitability motives as private enterprises, leading to the GOJ’s absorbing the debt of loss-making public sector enterprises.

Jamaica’s public bodies report to their respective Board of Directors appointed by the responsible portfolio minister and while no general rules guide the allocation of SOE board positions, some entities allocate seats to specific stakeholders. In 2012, the GOJ approved a Corporate Governance Framework (CGF) under which persons appointed to boards should possess the skills and competencies required for the effective functioning of the entity. With some board members being selected on the basis of their political affiliation, the government is in the process of developing new board policy guidelines. The Jamaican court system, while slow, is respected for being fair and balanced and in many cases has ruled against the GOJ and its agents.

Privatization Program

As a condition of Jamaica’s Stand-By Agreement with the IMF, the GOJ identified a number of public assets to be privatized from various sectors. Jamaica actively courts foreign investors as part of its divestment strategy. In certain instances, the government encourages local participation. Restrictions may be placed on certain assets due to national security considerations. Privatization can occur through sale, lease, or concession. Transactions are generally executed through public tenders but the GOJ reserves the right to accept unsolicited proposals for projects deemed to be strategic. The Development Bank of Jamaica, which oversees the privatization program, is mandated to ensure that the process is fair and transparent. When some entities are being privatized, advertisements are placed locally and through international publications, such as the Financial Times, New York Times, and Wall Street Journal, to attract foreign investors. Foreign investors won most of the privatization bids in the last decade.

While the time taken to divest assets depends on state of readiness and complexity, on average transactions take between 18 and 24 months. The process involves pre-feasibility and due diligence assessments; feasibility studies; pre-qualification of bidders; and a public tender. In 2019, the GoJ divested two of its major assets through initial public offerings: a 62-megawatt wind farm, through a public offering, which raised almost $40 million, and a toll highway, which raised almost $90 million. In 2018, the GOJ signed a 25-year concession for the management and development of the Norman Manley International Airport in Kingston. Other large privatizations include the 2003 privatization of Sangster International Airport in Montego Bay and the 2015 privatization of the Kingston Container Terminal port facility. The GOJ also seeks to divest assets owned by large government entities such as the Urban Development Corporation and the Factories Corporation of Jamaica.

List of current privatization transactions can be found at http://dbankjm.com/current-transactions/ 

Saint Kitts and Nevis

6. Financial Sector

Capital Markets and Portfolio Investment

St. Kitts and Nevis is a member of the ECCU. As such, it is also a member of the ECSE and the Regional Government Securities Market.  The ECSE is a regional securities market established by the ECCB and licensed under the Securities Act of 2001, a uniform regional body of legislation governing the buying and selling of financial products for the eight member territories. In 2019, the ECSE listed 149 securities, comprising 128 sovereign debt instruments, 13 equities, and eight corporate bonds.  Market capitalization stood at USD 1.8 billion, a significant decrease from 2018. This decrease was primarily due to the delisting of CIBC FirstCaribbean International Bank Ltd., which previously accounted for 79.2 percent of total capitalization. St. Kitts and Nevis is open to portfolio investment.

St. Kitts and Nevis accepted the obligations of Article VIII of the International Monetary Fund Agreement, Sections 2, 3 and 4 and maintains an exchange system free of restrictions on making payments and transfers for current international transactions.  The private sector has access to credit on the local market through loans, purchases of non-equity securities, trade credits and other accounts receivable that establish a claim for repayment.

Money and Banking System

The eight participating governments of the ECCU have passed the Eastern Caribbean Central Bank Agreement Act.  The Act provides for the establishment of the ECCB, its management and administration, its currency, relations with financial institutions, relations with the participating governments, foreign exchange operations, external reserves, and other related matters.  St. Kitts and Nevis is a signatory to this agreement, and the ECCB controls St. Kitts and Nevis’s currency and regulates its domestic banks.

Domestic and foreign banks can establish operations in St. Kitts and Nevis.  The Banking Act requires all commercial banks and other institutions to be licensed in order to conduct any banking business.  The ECCB regulates financial institutions. As part of ongoing supervision, licensed financial institutions are required to submit monthly, quarterly, and annual performance reports to the ECCB.  In its latest annual report, the ECCB listed the commercial banking sector as stable. Assets of commercial banks totaled USD 2.5 billion at the end of December 2019, a decrease of approximately ten percent from the previous year due primarily to contraction in the net foreign asset position. The reserve requirement for commercial banks was six percent of deposit liabilities.

St. Kitts and Nevis is well served by bank and non-bank financial institutions.  There are minimal alternative financial services. Some citizens still participate in informal community group lending.

The Caribbean region has witnessed a withdrawal of correspondent banking services by U.S. and European banks.  CARICOM remains committed to engaging with key stakeholders on the issue and appointed a Committee of Ministers of Finance on Correspondent Banking to monitor the issue.

St. Kitts and Nevis enacted the Virtual Assets Bill, 2020, to regulate virtual currencies with the expectation that they will become increasingly prevalent. The bill is intended to facilitate the ease of doing business in a cashless society, and to combat theft, fraud, money laundering, Ponzi schemes, and terrorist financing.

Foreign Exchange and Remittances

Foreign Exchange

St. Kitts and Nevis is a member of the ECCU and the ECCB.  The currency of exchange is the Eastern Caribbean Dollar (XCD).  As a member of the OECS, St. Kitts and Nevis has a fully liberalized foreign exchange system.  The XCD was pegged to the United States dollar at a rate of 2.7 to USD 1.00 in 1976. As a result, the XCD does not fluctuate, creating a stable currency environment for trade and investment in St. Kitts and Nevis.

Remittance Policies

Companies registered in St. Kitts and Nevis have the right to repatriate all capital, royalties, dividends, and profits.  There are no restrictions on the repatriation of dividends for totally foreign-owned firms. However, a mixed foreign-domestic company may repatriate profits to the extent of its foreign participation.

As a member of the OECS, there are no exchange controls in St. Kitts and Nevis and the invoicing of foreign trade transactions are allowed in any currency.  Importers are not required to make prior deposits in local funds and export proceeds do not have to be surrendered to government authorities or to authorized banks.  There are no controls on transfers of funds. St. Kitts and Nevis is a member of the Caribbean Financial Action Task Force (CFATF).

The country passed the Anti-Money Laundering Bill, 2019. The stated intent of this bill is to begin to bring the country into alignment with international standards for combating money laundering. St. Kitts and Nevis also passed the Proceeds of Crime and Asset Recovery Bill, 2019, which aims to provide the government with an additional tool to combat money laundering and terrorist financing.

In 2016, the government signed an Intergovernmental Agreement in observance of FATCA, making it mandatory for banks in St. Kitts and Nevis to report the banking information of U.S. citizens.

Sovereign Wealth Funds

Neither the government of St. Kitts and Nevis, nor the ECCB, of which St. Kitts and Nevis is a member, maintains a sovereign wealth fund.

7. State-Owned Enterprises

State-owned enterprises (SOEs) in St. Kitts and Nevis work in partnership with ministries, or under their remit to carry out certain specific ministerial responsibilities. There are currently about ten SOEs in St. Kitts and Nevis in areas such as tourism, investment services, broadcasting and media, solid waste management, and agriculture. They are all wholly owned government entities.  Each is headed by a board of directors which the senior management reports.  A list of SOEs can be found at http://www.gov.kn .

Privatization Program

St. Kitts and Nevis does not currently have a targeted privatization program.

Suriname

6. Financial Sector

Capital Markets and Portfolio Investment

The government does not promote portfolio investment.

There is a small self-regulating stock market with eleven companies registered. It meets twice a month but does not have an electronic exchange. There is no effective regulatory system to encourage and facilitate portfolio investment. At present, Suriname is facing liquidity shortfalls.

Sufficient policies do exist to facilitate the free flow of financial resources.

As an IMF Article VIII member, Suriname has agreed to refrain from restrictions on payments and transfers for current international transactions.

Credit is allocated on market terms and at market rates. Foreign investors that establish businesses in Suriname are able to get credit on the local market, usually with a payment guarantee from the parent company. The private sector has access to a variety of credit instruments. Larger companies can obtain customized credit products. There is, however, a Central Bank regulation that limits a commercial bank’s credit exposure to a single client.

Money and Banking System.

The private sector has access to a variety of credit instruments. Larger companies can obtain customized credit products.

According to the IMF Article IV Consultation in 2019, the banking system faces pressing vulnerabilities. Based on the latest (July 2019) data, the capital adequacy ratio for the banking system stood at 10.5 percent (above the 10 percent minimum requirement), but non-performing loans in the banking system remained high (12.5 percent of gross loans), and profitability was low (0.7 percent return on assets). Deposit and loan dollarization remain high.

Total estimated assets of Suriname’s largest banks:

DSB Bank (annual report, 2018): USD 1,007 billion

Hakrin Bank (annual report 28, 2018): USD 627.6. million

Republic Bank Limited (2019 annual report, Suriname-based assets): USD 473 million. (The Republic Bank Limited of Trinidad and Tobago acquired Royal Bank of Canada’s Suriname holdings in 2015.)

Finabank (annual report, 2018): $269 million.

Suriname has a central bank system Foreign banks or branches are allowed to establish operations in Suriname. They are subject to the same measures and regulations as local banks. According to an IMF assessment in 2016, banks in Suriname are among those in the region that have lost their correspondent relationships. The IMF notes that though the loss of correspondent banking relationships has not reached systemic proportions, a critical risk still exists. The Central Bank admits that compliance regarding legislation and procedures is lacking, and that strengthening of enforcement is needed. According to the IMF’s Article IV Consultation report in 2019, there is a possibility of losing corresponding banking relationships given recent overseas investigations of potential money laundering via Suriname’s financial sector. The reputational risk to both local and foreign banks acting as their correspondents is substantial. Suriname is in the process of completing a National Risk Assessment to identify and assess the money laundering risks.

There are no restrictions for foreigners to open a bank account. Banks require U.S. citizens to provide the information necessary to comply with the Foreign Accounts Tax Compliance Act (FATCA).

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions or limitations placed on foreign investors in converting, transferring, or repatriating funds associated with an investment, such as remittances of investment capital, earnings, loan or lease payments, or royalties. There can be shortages in the availability of U.S. cash dollars at local banks, which can affect businesses.

Funds associated with any form of investment can be freely converted into a usable currency at legal market clearing rates with the permission of the Foreign Exchange Commission. However, the criteria for obtaining permissions are opaque.

Suriname maintains an official exchange rate of 7.52 Surinamese dollars (SR to $1.) government also registers and supervises money exchanges called cambios, which offer parallel exchange rates. For much of 2019, those parallel rates exchange rate fluctuated between 8.40 to 8.65 SRD to $1. In March 2020, they reached as high as 14 to 16 SRD

Remittance Policies

There are no recent changes or plans to change investment remittance policies.

The waiting period on remittances can be relatively short for dividends; return on investments, interest, and principal on private foreign debt; lease payments; royalties; and management fees. The time needed to process the requests depends on the sector and the amount transferred. Transfers through the banking system can range from same day to one week waiting times, contingent upon approval by the Foreign Exchange Commission.Sovereign Wealth Funds

On May 4, 2017, the National Assembly passed legislation establishing a Sovereign Wealth Fund (SWF). Suriname does not participate in the International Forum of Sovereign Wealth Funds.

7. State-Owned Enterprises

State owned enterprises (SOEs) operate in the oil, agribusiness, mining, communication, travel, energy, and financial sectors. SOEs provide little information regarding their operations. Only a few produce annual reports accessible to the public. Staatsolie, Suriname’s state-owned oil company, has publicly available audited accounts. As of 2020, all state-owned enterprises will be required to publish annual accounts. Several have been accused of fraud or corrupt practices.

There is no public list of SOEs.

SOEs receive advantages when competing in the domestic market. These include access to government guarantees and government loans otherwise unavailable to private enterprises. Additionally, SOEs have access to land and raw materials inaccessible to private entities.

The government does not yet adhere to the OECD Guidelines on Corporate Governance for SOEs.

Privatization Program

The GOS did announce a privatization program largely in the agricultural sector, but the only privatization was the state-owned banana company in 2014.

Foreign investors can participate in privatization programs. In 2014, the Belgium multinational UNIVEG acquired a 90 percent stake in the state-owned banana company through a public, international bidding process. The European Commission assisted with the bidding process. UNIVEG later pulled out of Suriname. As this is the only example of privatization within Suriname, no standard privatization or public bidding processes have been established by the GOS.

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