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LATAM PULSE

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This week is likely to see the climax of a mini-debt drama in Argentina even as the national debt question remains pending. In Colombia, long-rumored cabinet changes could finally materialize, while in Venezuela, the possible return of opposition leader Juan Guaido could set off new tensions. Brazil’s Congress returns to session with tensions between President Jair Bolsonaro and congressional leaders seemingly diminished. Finally, in Mexico, this will be an important week for President Andres Manuel Lopez Obrador’s proposed 1,525km Mayan Train (Tren Maya), one of his flagship infrastructure projects.

Argentina

Tomorrow, 4 February, is the new deadline for bondholders to accept a proposal by the Buenos Aires provincial government to defer an amortization payment originally due 26 January to May. To take effect, 75% of bondholders are required to agree to the extension proposal; it is rumored that the initial proposal fell well short of 75%. However, provincial Governor Axel Kicillof early today, 3 February, sweetened the deal by offering to pay immediately 30% of the capital payment due. Failure to reach an agreement – and assuming there is no last-minute U-turn from Kicillof or a bail-out from central government – would result in the province officially defaulting on 5 February. A default by the country’s most economically important province would inject fresh uncertainty into the incipient national debt renegotiations.

In parallel, President Alberto Fernandez will meet Germany’s Angela Merkel in Berlin today, 3 February, and France’s Emmanuel Macron later this week, in a bid to win European support in future International Monetary Fund (IMF) debt negotiations. Finance Minister Martin Guzman will meet the IMF’s Kristalina Georgieva on 5 February. On the same day, the Senate is expected to pass the government’s debt restructuring bill to authorize a debt restructuring. However, there is still no sign of either a macroeconomic plan or an actual debt offer; according to an official timetable published last week, the government will only make its offer in the second week of March even though Fernandez has said he wants talks wrapped up by 31 March.

Colombia

Cabinet changes appear to be a matter of when, not if, after the appointment on 31 January of Alicia Arango to the Ministry of Interior to replace Nancy Patricia Gutierrez. Cabinet changes have been under consideration for several weeks already, but President Ivan Duque has struggled to balance competing demands. Talks with the Radical Change (CR) party suggest it could gain representation in the cabinet in exchange for the party’s support in Congress, where the Democratic Center (CD) has struggled to forge durable alliances. The “U” party also wants a ministerial portfolio. Arango, who is close to former president Alvaro Uribe and was previously labor minister, could help advance labor reforms in Congress, assuming on-off talks between government and the protest movement succeed in avoiding more public rancor.

Venezuela

Two possible areas of political conflict will arise this week. First, the government has said it has not authorized a delegation of the Inter-American Commission on Human Rights (IAHCR) to undertake an inspection visit to Venezuela; the opposition insists the delegation will arrive on 4 February. Second, opposition leader Juan Guaido has said he will return soon to Venezuela following a two-week tour that most recently has seen him in Florida campaigning among the large Venezuelan community. Given uncertainty over how the regime will react when Guaido returns, it is possible that Guaido could arrive back in Venezuela together with the IAHCR delegation. Guaido’s detention would heighten tensions with the US. However, regime number two Diosdado Cabello has previously said that Guaido will be allowed to re-enter the country normally.

Brazil

This week, when Congress returns from recess, will be dominated by the need to pass an executive order that regulates the establishment of quarantines in Brazil. There are 55 Brazilian citizens in Wuhan who will be evacuated once the order is approved, which is expected to happen on the same day it arrives in Congress. In the absence of an executive order that permits quarantines, they could be contested in the courts. The week may also serve to clarify reform priorities at a time when the tension level seems to have decreased between President Jair Bolsonaro and Congressional leaders, particularly House Speaker Rodrigo Maia.

Mexico

On 7 February, the first construction tenders for President Andres Manuel Lopez Obrador (AMLO)’s Mayan Train (Tren Maya) project will open, with winners announced in April. The idea is for construction to start at the end of April, and to be complete by the second half of 2023. However, on 6 February, a Campeche district court is supposed to consider an injunction filed by an indigenous group against the project. There has been some confusion over the injunction, which prompted a judicial order temporarily suspending the project; the government last week said it had not received any information relating to the court order. Over the weekend, AMLO toured areas where the train will run in the states of Chiapas, Yucatan, and Campeche, and also said the project would now cost USD 6bn, slightly less than previously estimated.

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LATAM PULSE

This week is likely to see the climax of a mini-debt drama in Argentina even as the national debt question remains pending. In Colombia, long-rumored cabinet changes