The Travel Foundation and Virgin Atlantic were concerned to read your comments on our work together in the Caribbean. We believe that the projects will bring huge benefits and stimulate entrepreneurship along with addressing pressing environmental issues. Here is further information which should allay any concerns and provide more information.
You are correct in saying that tourism is key to the region’s economy. In 2008, travel and tourism provided over 2.1m jobs and 15% of the region’s GDP but there is an opportunity to spread the benefits tourism brings further.
There are significant issues with youth unemployment in the Caribbean with as many as 30% of 20-24 year olds out of work.
The projects that we have chosen to develop may seem small, but they are very significant. They link to the globally-important environmental issues of waste management, fish and bee conservation – issues that are vital to food security.
By creating new, small-scale, local business opportunities many of the skills learned can be applied to any business which gives young people independence and choice.
These initiatives will offer choice, new opportunities and new skills for entrepreneurship with the aim that this will create new jobs and opportunities for income generation.

To which I have this to say:

I did not say that tourism is key to the region’s economy. In fact, most of the islands are attempting to diversify away from a dependency on tourism, particularly in light of the ongoing global financial crisis.

You – Virgin and the Travel Foundation – are talking your book. Tourism in the Caribbean is to your benefit.

Your projects are not merely small; they are insulting. The Caribbean’s youth are educated, technically savvy, computer-literate, driven and ambitious. But you think ’small scale’ fish farming is more important than developing financial services, media, advertising, marketing, manufacturing…

Pardon me if I don’t buy into your argument that relying on the fickle tastes of British tourists gives my peers “independence and choice”.

Your pitch might work on someone who has not grown up in the region, who has no idea of the scale and speed of the development in the Caribbean, someone whose idea of these islands is ’sun, sea, sand and subservience.’ I am not that person. You, however, quite obviously are.

The Travel Foundation cares for the people and places we all love to visit. Sustainable tourism can help protect traditions, culture and the natural environment – the things that make your holiday special. It can also improve the lives of the people who live in tourist destinations so they are happy and able to give you a warm welcome.

And the great news is that all of this gives you an even better holiday experience as well as ensuring there are great places for us all to visit, for generations to come.

We’re changing lives in the Caribbean – Over the next three years, the Travel Foundation will work on the profound social and environmental effect of tourism in the Caribbean, where we fly 800,000 customers a year. They will support entrepreneurial business development among disadvantaged youth, particularly in the areas of craft making, beekeeping and fishing.

Our fantastic beekeeping project will help young people learn about traditional skills so they can produce honey to sell to the tourism industry. This will aid the conservation of the honey bee and give you an even sweeter taste of the Caribbean.

Tilapia fish farming is an educational programme that will teach about over-fishing and help young people develop small businesses, enabling them to sell farmed fish to local hotels and restaurants. This will demonstrate an alternative livelihood to traditional fishing and allow you to enjoy fresh fish from a sustainable source while you’re having a fabulous holiday.

Our craft making project will teach new skills, helping young people produce crafts from recycled materials collected from hotels, thereby reducing waste and offering new business opportunities. So, in the near future, you’ll also get to buy hand-made souvenirs in a new craft centre – a unique reminder of your time away!

That text, taken from the airline’s website, was also included in Virgin’s in-flight ‘Seatback’ magazine, which is where I first saw it. I am incensed by the campaign, however well-intentioned those behind it may purport to be.

Both Virgin and the Travel Foundation appear to think that the only opportunities for ‘disadvantaged youth’ in the Caribbean are in ‘craft making, beekeeping and fishing.’ Gosh, development has just passed those backward-but-smiling natives right by!

Both the language and the substance of the text contrive to reinforce the image of the Caribbean as a homogenous, tourist-dependent bloc, and of its people as suited only to such ‘traditional skills’ as fish farming and craft making. The emphasis on the contributions of these poor, straw-hat wearing Caribbean folk to the hotel and restaurant industries in the region is even more infuriating.

Thanks, Virgin and the Travel Foundation, for reducing the ambitions and potential of an entire generation of young people in the Caribbean to kowtowing to tourists.

It’s not all bad news though – the debt exchange that triggered the rating actions will significantly improve Jamaica’s fiscal footing, and affects virtually all of the country’s J$ denominated outstanding debt.

And as an IMF official quoted by Reuters pointed out, the country is likely to have its ratings *upgraded* once the exchange has been successfully completed – as defined by rating agency criteria.

Here’s a line from Fitch on the prospect of an upgrade:

“In the event that the successful conclusion of the upgrade is followed by approval of an IMF program in support of the government’s fiscal and economic program, Jamaica’s ratings will likely be raised into the single ‘B’ category.”

According to the anonymous IMF official, S&P had also “acknowledged they would raise Jamaica’s credit rating by a number of notchratingses once the debt restructuring was complated,” Reuters said.

The S&P statement:

Jamaica has announced a domestic debt exchange program that officially launches today.

We consider this exchange to constitute a default, so we have revised the foreign- and local-currency sovereign credit ratings on Jamaica to ‘SD’ from ‘CCC/C’ and the ratings on the exchanged bonds to ‘D’.

NEW YORK, Jan. 14, 2010–Standard & Poor’s Ratings Services said today that it revised its foreign- and local-currency sovereign credit ratings on Jamaica to ‘SD’ from ‘CCC/C’.

Standard & Poor’s also said that it revised its ratings on the rated bonds that are included the sovereign’ proposed domestic debt exchange to ‘D’.

The ratings on the government securities not included in the debt exchange remain at ‘CCC’. The recovery rating remains at ‘4′.

…

“These rating actions follow Jamaican Prime Minister Golding’s announcement yesterday of the domestic debt exchange and its official launch today,” explained Standard & Poor’s credit analyst Roberto Sifon Arevalo. The offer seeks to exchange all categories of the Jamaican domestic debt except Treasury bills. It does include foreign-currency-denominated domestic debt, which carries foreign-currency ratings, which is why we have revised the foreign-currency credit rating to ‘SD’. External debt is excluded from this transaction

“Overall, the domestic efforts, together with the ongoing multilateral support, should help Jamaica manage its long-standing fiscal and structural problems going forward,” Mr. Sifon Arevalo added. “In this context, we expect to assign a ‘B-’ sovereign credit rating and ‘B-’ debt ratings to the new bonds upon the completion of the debt restructuring and issuance of the new bonds, which is scheduled for Feb. 16, 2010.”

Other Jamaica-related limes are available in the archives.

What, exactly, is your excuse for your utter inability to update your sites to reflect this state of affairs, per the following screenshots (taken at approximately 8.55pm Trinidad time):

Screenshot of the Express front page at 8.55pm on Tuesday Jan 12

Screenshot of the Guardian Online's front page at 8.55pm on Tuesday Jan 12

Screenshot of the Newsday's website front page at 8.55pm on Tuesday Jan 12

Poor.

But what is happening in Haiti – dozens dead, many more injured and dying in the aftermath of a 7.3 earthquake that also damaged and possibly destroyed the country’s National Palace – is a tragedy.

Readers, Haiti needs your help. In the coming days, weeks and months the island’s people will need food, water, shelter, medical care as they attempt to rebuild – for the umpteenth time – their shattered lives and nation.

There will undoubtedly be campaigns by the Red Cross, AmeriCares and other such organisations. Please give.

Give, and give generously, because the Haitian populace needs your support more than the myriad fete promoters and purveyors of glorified bikinis do; more than the enforcers of racism and classism along Ariapita Avenue.

Give.

Long-Term Ratings On The Commonwealth of the Bahamas Lowered To ‘BBB+’; Outlook Stable

The Bahamas’ fiscal position has deteriorated, as the government has increased spending while its narrow revenue base has declined amid economic recession.
This has led to a rise in general government debt, and medium-term growth prospects are subdued because of the dependence on U.S. tourism.
As a result, we have lowered the sovereign credit ratings on The Bahamas to ‘BBB+/A-2′ from ‘A-/A-2′.
The stable outlook reflects a gradual tightening of the government’s fiscal stance and generally stable external financing profile.

NEW YORK Dec. 23, 2009–Standard & Poor’s Ratings Services said today that it lowered its long-term sovereign credit ratings on The Commonwealth of The Bahamas to ‘BBB+’ from ‘A–’. The short-term credit ratings are unchanged at ‘A-2′. At the same time, Standard & Poor’s lowered the transfer and convertibility assessment on The Bahamas to ‘A-’ from ‘A’. The outlook is stable.

“The downgrade reflects The Bahamas’ weakened fiscal profile,” said Standard & Poor’s credit analyst Lisa Schineller. “Its debt and deficits have increased, and the composition of its debt has weakened somewhat. In addition, following three years of economic contraction, The Bahamas’ growth prospects beginning in 2011 are modest.”

The increased pressure on The Bahamas’ fiscal profile stems from the combination of higher levels of debt amid a stagnant growth outlook. The higher debt levels reflect the government’s financing its rising fiscal deficits, a result of countercyclical fiscal spending against a drop in The Bahamas’ already narrow revenue base. Specifically, the government has increased capital and social spending to mitigate the social impact of recession. At the same time, revenues fell by 9.2% in fiscal-year 2008/9 (ending June 2009), and Standard & Poor’s expects them to contract again in 2009/10. Compounding revenue vulnerability is The Bahamas’ reliance on the taxes on international trade and transactions (more than 50% of tax revenue) ); the government aims to minimize their decline by modernizing collection mechanisms, especially at customs.

The country’s dependence on one product (tourism accounts for more than 50% of GDP and employs over 50% of labor force) and one market (U.S. tourists account for more than 80% of total) colors prospects for a robust economic recovery given that Standard & Poor’s forecasts a weak U.S recovery. The Bahamian hotel industry does not expect a meaningful revival of tourism until 2011. In addition, once-buoyant prospects for a major expansion of tourism projects are now far more muted. Although high-end niche projects continue to advance, many others are delayed. In the midst of the slowdown in tourism and construction, unemployment has risen to the highest levels since early 1990s and is projected to close the year at about 14%, a jump from 8.7% in 2008.

The stable outlook reflects Standard & Poor’s expectation of a gradual tightening of the government’s fiscal stance and generally stable external financing profile. The Bahamas’ tourism sector is expected to improve only as the U.S. economy recovers. In the meantime, the government is working to put the offshore financial sector, a second economic pillar, on a stronger footing after it was included on the G-20/OECD grey list of offshore financial centers. The authorities have negotiated 10 Tax Information Exchange Agreements (TIEAs), an important step to getting off the grey list. Although The Bahamas’ external financing gap (defined as current account payments plus short-term debt plus medium- and long-term amortization) is high at 135% of current account receipts and useable reserves, it improved in 2009 amid lower current account deficit and higher international reserves. Importantly, the government’s external amortization needs are low, and the bank’s foreign depositor base remains stable. We expect financing needs to remain, on balance, little changed in 2010-2011.

“The ratings could come under downward pressure if The Bahamas’ fiscal deterioration persists and the economic base erodes more severely,” Ms. Schineller added. “Conversely, the ratings could improve following a more proactive government policy response to reduce debt levels or if the commonwealth’s economic prospects strengthen.”

First Citizens Bank

Last year, Trinidad and Tobago was significantly affected by the meltdown of the largest conglomerate in the Caribbean, the CL Financial Group. This affected the whole of the local financial system and economy, and had a knock-on effect on First Citizens Bank’s loan book. Further, the government-owned bank had to assist with the restructuring of loan facilities, raising new capital and allocating management time to addressing the various issues arising from the crisis.

First Citizens Bank’s solutions not only helped the local economy, they also provided growth for the bank itself. The acquisition of some troubled institutions were turned to the bank’s advantage and confirmed its counterparty credit rating (BBB+/A2) by Standard & Poor’s, the highest among local banks.

“First Citizens, as a bank owned by the government, was called upon to assist with the management of the crisis,” says chief executive Larry Howai. “The end result has been the maintenance of stability within the local financial system. In addition, the bank was able to acquire a solid base of new customers from the [troubled] CL Financial Group and also acquired [Caribbean Money Market Brokers], one of the premier brokerage houses in the Caribbean. This has resulted in increased profitability, a 70% increase in the bank’s asset base and a presence in several Caribbean islands.”

Last year’s results have encouraged the bank to aim even higher for the future and to look at acquisition targets in the region.

“Our main focus in the coming year will be on risk management, close monitoring and management of our loan and investment portfolios and strategic expansion in key markets,” says Mr Howai. “This latter will include potential acquisition opportunities both locally and in the Caribbean region.”

Barbados Outlook Revised To Negative On Deteriorating Public Finances; ‘BBB’ And ‘A-3′ Foreign Currency Ratings Affirmed

– We believe the timeliness and magnitude of Barbados’ fiscal consolidation is uncertain because of a worse-than-anticipated economic recession.

– We’re revising the outlook on Barbados to negative from stable.

– We’re affirming the ‘BBB’ long-term and ‘A-3′ short-term foreign currency sovereign credit ratings.

– The negative outlook reflects the possibility of a downgrade if the authorities fail to consolidate the general government deficit (estimated at 7.1% of GDP in 2009) and to curb the rising debt. We forecast net government debt at 52% of GDP this year, up from 42% just three years ago.

NEW YORK, Nov. 13, 2009–Standard & Poor’s Ratings Services said today that it revised its outlook on Barbados to negative from stable. At the same time, we affirmed the ‘BBB’ long-term foreign and ‘BBB+’ long-term local sovereign credit ratings. The short-term ratings remain at ‘A-3′ for foreign currency and ‘A-2′ for local currency. The transfer and convertibility assessment for Barbados is ‘BBB+’.

“The outlook revision on Barbados to negative is due to our view that the timeliness and magnitude of the government’s fiscal consolidation, necessary to preserve Barbados’ credit fundamentals at the current ‘BBB’ level, is uncertain because of a worse-than-anticipated economic recession in the country,” said Standard & Poor’s credit analyst Olga Kalinina. Results for the first three quarters of 2009 underscore a rapid deterioration in Barbados’ public finances, at a faster rate than we had previously assumed, and a sharper economic contraction. We have revised Barbados’ real GDP estimate to negative 4.8% in 2009 (from our previous estimate of negative 2.5%), with a further decline of 1% expected in 2010, before a return to growth in 2011.

Also, we have made a significant revision to our expectations for the government’s fiscal deficits, both for 2009 (based on three quarters of 2009 data) and for the last three years (based on new information on the off-budget activities). We now expect the general government deficit at 7.1% of GDP in fiscal 2009 (ending March 31, 2010), up from 5.6% last year, 6% in 2007, and 3.8% in 2006. This encompasses the central government deficit of 9.1% of GDP (including 0.5% of off-budget deficit) and the National Insurance Scheme (NIS) surplus of 2%.

Our projections incorporate an assumption of a gradual reduction in the fiscal deficits starting in 2010, although the debt is likely to peak in 2010 at 55% of GDP (on a net basis), before starting to decline in 2011. We note that there is support across the political spectrum, private sector, and unions for fiscal tightening and that the government is preparing a medium-term framework to address the situation. The risk to our projections, however, is the timeliness and efficiency of the anticipated measures amid a slowing economy and rising unemployment.

The negative outlook reflects the possibility of a downgrade if the authorities fail to contain fiscal deficit widening this year and reduce fiscal deficits starting in 2010. Conversely, rapid consolidation of public finances, most probably accompanied by a return of foreign investment, would restore strength to Barbados’ balance sheet and support the stable outlook. We will closely watch the trends in Barbados’ international reserve levels in order to identify any potential stress on its external liquidity position and currency peg.

The IMF, which has been negotiating the terms of a $1.2 billion stand-by facility with Jamaica for several months, said on Friday after fund officials spent several days in Kingston, that discussions would continue in Washington next week. The focus, said the IMF, is “on how to reduce the large fiscal deficit and put the debt on a clear downward path.” There was no clarification with respect to the timing for finalizing the discussions.

A delay in reaching an agreement with the IMF could have potentially adverse credit consequences given Jamaica’s continued fiscal underperformance. An agreement with the IMF is crucial to provide essential multilateral funding to strengthen Jamaica’s external position, shore up confidence and meet financing obligations.

A sizeable fiscal adjustment required to stabilize debt dynamics is presenting a major challenge to the government as the majority of expenditures are devoted to wages – which have already been frozen – and interest payments while revenues are declining amid depressed economic activity. This year’s fiscal deficit is projected at 8.7% of GDP and public debt is expected to reach some 120% of GDP.

The government has repeatedly expressed its commitment to service its obligations in both local and foreign currency and has a long track record of timely debt service even during difficult times. However, Jamaica’s limited resources relative to the size of the public debt raise the possibility of a debt restructuring in order to place the government financial position on a sustainable path.

Jamaica’s B2 rating, among the lowest assigned by Moody’s to a sovereign nation, already reflects significant concerns about the government’s ability to honor obligations given its limited policy options to deal with the effects of the on-going economic downturn. High levels of public debt and vulnerability to interest and exchange rate movements limit the country’s flexibility in meeting these challenges.

S&P: National Commercial Bank Jamaica Counterparty Credit Rating Lowered To ‘CCC’; Survivability Assessment Lowered To ‘B’

* On Nov. 2, 2009, we lowered the long-term sovereign rating on Jamaica to ‘CCC’ from ‘CCC+’.
* We are lowering our ratings on NCB, including the long-term counterparty credit rating, to ‘CCC’ from ‘CCC+’. We are also lowering our survivability assessment on NCB to ‘B’ from ‘B+’.
* The outlook on NCB remains negative, mirroring that on Jamaica, as a result of the bank’s concentration in government debt securities and loans to public entities in the country.

MEXICO CITY Nov. 4, 2009–Standard & Poor’s Ratings Services said today that it lowered its ratings on National Commercial Bank Jamaica Ltd. (NCB), including the long-term counterparty credit rating, to ‘CCC’ from ‘CCC+’. At the same time, we lowered our survivability assessment on NCB to ‘B’ from ‘B+’, as assigned on Aug. 6, 2009. The outlook is negative.

[In rating agency speak, the survivability assessment is "a current opinion on the likelihood that over the medium-term, a bank will either directly or through a successor organization, remain in operation, regardless of whether it is solvent or insolvent, paying all of its obligations on a timely basis or not."

Moreover: "A relatively low survivability assessment does not constitute an opinion by Standard & Poor's that a particular bank is likely to fail; rather it indicates a vulnerability to adverse circumstances which could affect the bank's ability to meet its financial obligations on a timely basis, without special circumstances which would clearly enhance the likelihood that it would continue to operate in such an event. "

And here's what S&P means by a "B" rating in this area: "A bank with a survivability assessment of 'B' is VULNERABLE. Adverse business, financial or economic conditions will likely impair the bank's ability to maintain operations in which case the bank may become subject to regulatory intervention."]

The rating action followed the downgrade of the long-term sovereign credit rating on Jamaica (CCC/Negative/C) to ‘CCC’ from ‘CCC+’.

“NCB has a very large exposure to Jamaican sovereign-debt securities and loans to public entities,” said Standard & Poor’s credit analyst Alfredo Calvo. “Also, Jamaica’s deteriorating economic situation and the more-challenging conditions for the Jamaican banking system will continue to pressure the financial performance of the bank.”

The action on the survivability assessment was based on the downgrade of NCB and our view that vulnerabilities in the government’s debt profile have grown significantly from previous years, narrowing the government’s capacity to support the bank in times of stress.

However, we are still maintaining our survivability assessment at three notches higher than the counterparty credit rating on NCB. This reflects our continuing expectation that the government could give certain assistance to the bank if needed because of NCB’s significant market share in the country, adequate financial performance, and large branch network and deposit base.

If the liquidity and market share of the bank shrink significantly, we could further adjust our survivability assessment.

The ratings on NCB are limited by the bank’s large exposure to Jamaica’s government; greater loan concentration than peers; operation within a relatively small and nondiversified economy with high debt; and the more challenging environment for the Jamaican banking system.

However, the bank’s leading market presence in the Jamaican banking system, adequate but pressured performance under more-challenging conditions, and consistent improvements in its operating performance support the rating.