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LATAM PULSE

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This week, Argentina sees another week of debt-related discussions – probably without much in the way of specifics materializing; also this week, January’s inflation data will be published. Venezuela could face more US sanctions, while Colombia will confirm its final figure for 2019 growth as the debate over the country’s own brand of “jobless growth” continues. Brazil’s Congress will battle over budget funds. Finally, in Ecuador, former president Rafael Correa’s once-unassailable political aura faces further erosion.

Argentina

An IMF technical team arrives in Buenos Aires on 12 February to evaluate economic measures taken so far under Alberto Fernandez’s presidency. On 8 February, VP Cristina Fernandez (CFK) described the IMF’s loan to Argentina as “illegal” and raised the prospect of substantial haircuts. Also on 12 February, Finance Minister Martin Guzman is due to appear before Congress to explain the outlines of the government’s debt restructuring strategy. Guzman appears unlikely to produce a comprehensive economic plan with fiscal, growth, and inflation targets despite creditors’ calls for policy specifics to be made public.

In parallel, on 13 February, the monthly inflation figure for January will be published; the government will attribute anything under 3.7% – December 2019’s rate – as a success, and the result of its expanded price controls. Inflation-targeting has become a secondary concern under the new Central Bank (BCRA) management as the bank lowers benchmark interest rates to reactivate growth. BCRA president Miguel Pesce has said his only target is for 2020 to close with lower inflation than 2019, when it reached 53.8% for the year.

Venezuela

The US government has said it intends to intensify measures against President Nicolas Maduro’s regime over the next month. Late last week sanctions were placed on state-owned airline Conviasa. Whether US President Donald Trump intends to enforce secondary sanctions against companies trading with Venezuela remains the key question; Russia’s Rosneft is the main handler of Venezuelan crude exports, while the likes of Spain’s Repsol and Italy’s ENI also continue to trade with state oil company PDVSA in compliance with existing sanctions. The recent extension of special waivers for a handful of US oil and oil service companies to allow them to continue to do business in Venezuela suggests that there are restraints on the application of “maximum pressure” by the US.

Colombia

The government should this week confirm what the 2019 growth rate was – probably in the region of 3.3%. Last week Finance Minister Alberto Carrasquilla lowered his 2020 growth forecast from 4% to 3.7%, which is still seen as optimistic by some. Growth needs to come in at close to the economy’s potential rate (around 3.5%) to have any real impact on unemployment, which reached 10.5% in 2019, up from 9.7% in 2018. Unemployment is one of the issues that have driven the protest movement. Unions have rejected recent comments by the outgoing Labor Minister Alicia Arango in favor of introducing hourly working; Arango is due to take up her new post of Interior Minister – with responsibility for shepherding labor reforms through Congress – on 15 February.

Brazil

The week may see the overriding of a December presidential veto against permitting the rapporteur of the Budget Guidelines Law to define which projects would be eligible to receive the greater part of BRL 42.6 billion (USD 10.2 bn) in government funds set out in parliamentary amendments in the draft. According to such amendments, the government is obliged to pay out sums to individual parliamentarians and state benches in addition to those determined by the rapporteur and congressional committees. The obligation to pay is already secured according to a 2019 law but no deadlines are foreseen and government tends to wait until the end of the year to follow through. Parliamentarians want to ensure they control the disbursement of the funds before the October municipal elections. Senate Chairman David Alcolumbre said he will not put the veto to a vote until there is an agreement between the government and Congress – but much will hinge on evolving negotiations.

Ecuador

The bribery trial known as Sobornos 2012-2016 against former president Rafael Correa (2007-2017) opens today, 10 February. Correa, alongside 20 other people including former VP Jorge Glas (already in prison following a separate corruption conviction) and former Correa-era ministers and advisors, are accused of bribery as part of a public works kickback scheme. Correa, who now lives in Belgium, will be tried in absentia. The former president already faces an arrest order relating to a separate kidnapping case. However, without a sentence against him, Correa is technically free to run for any position – except president – in next year’s elections.

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LATAM PULSE

This week, Argentina sees another week of debt-related discussions – probably without much in the way of specifics materializing; also this week, January’s inflation data will