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Monday, November 24 2014 @ 08:00 AM AST

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Moody's downgrades St Vincent and the Grenadines, Fitch upgrades Dominican Republic

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LatAm development bank enrolls T&T, Jamaica, Barbados

At a time when Caribbean countries are grappling with high debt, CAF, the former Andean Development Corporation that now brands itself as the Development Bank of Latin America, is advising T&T, Jamaica, and Barbados. T&T carries a gross public debt load of 46 per cent of gross domestic product (GDP), Barbados 109.2 per cent of GDP, and Jamaica 146.2 per cent of GDP, according to the October 2014 edition of the RBC Caribbean Economic Report.

"Currently, CAF is providing advisory support to various countries in the Caribbean (T&T, Jamaica, and recently Barbados). In the specific case of T&T, CAF is now assisting the government with the conclusion of the process to facilitate T&T's entrance as a full member of CAF," said CAF Director Representative in T&T Iwan Sewberath in an email reply to questions. CAF quietly opened its office for the Caribbean in Port of Spain last year (2013).

Asked what was meant by advisory support, Sewberath said: "Advisory services are specialized services to assist stakeholders (public and private sectors) with analytical work that is needed to undertake necessary due diligence, or to assist with the management of the execution of projects. This is so often needed, because so many of our countries lack a proper institutional capacity to pull off these fairly complicated and specialized activities."

In a May 13 (2014) US Securities and Exchange Commission (SEC) filing, CAF said T&T still has to pay US$107.8 million to become a full CAF member. T&T already paid US$215.6 million, according to the filing. T&T will become the 11th full member of CAF holding Series A shares, which have a par value of US$1,200 each. Argentina, Bolivia, Brazil, Colombia, Ecuador, Panama, Paraguay, Peru, Uruguay and Venezuela are the existing full CAF members. CAF's other shareholders are Chile, Costa Rica, the Dominican Republic, Jamaica, Mexico, Portugal, Spain and 14 private banks in the region.

According to CAF's 2013 annual report, T&T increased its 2012 shareholding from 8,134 Series C shares (which like Series B shares, have a par value of US$5) to 15,867 Series C shares in 2013.

"Simultaneously, CAF is in dialogue with the government of T&T about the development of an operative (work) programme for the period 2014-2016, which includes projects in the infrastructure area (such as roads and bridges rehabilitation), improvement of education infrastructure, mass urban transit," Sewberath said.

"In addition, CAF stands ready to facilitate a stronger connection between the private sectors of T&T and Latin America. Lastly, CAF is assisting the minister of finance (Larry Howai) with the design of a new model for catalyzing investments in relevant sectors of the economy using an enhanced synergy between the private and public sectors."

Asked if Caribbean countries can and should take on more debt through loans from multilaterals like CAF, he said: "The relationship between Caribbean countries and CAF goes well beyond developing a lending portfolio. In fact, CAF would like to present itself as a key development partner with accumulated experience in Latin America, and is willing to share this experience with the Caribbean in the form of policy advice, technical assistance, and if the situation so requires, with loan programmes. The loan programmes could be developed with both the public and private sectors. Every country must exercise prudent debt management, and CAF operations are always placed in a proper macro-economic framework and environment. In an environment with proper revenue and expenditure management, and within the country's own planning context."

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Oppenheimer sees upside for Petrotrin bonds despite lower oil prices