February 18, 2020


BY Mario Marconini, Nicholas Watson

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( 4 mins)

This week, Argentina’s precursory debt moves will continue – with little to ease creditor skepticism. Venezuela takes another step towards international isolation, while Brazil will see budget wrangles in Congress. Chile marks four months since the outbreak of serious unrest. Finally, in Mexico, President Andres Manuel Lopez Obrador is under pressure over gender violence.


The International Monetary Fund (IMF) team currently in Buenos Aires wraps up their visit tomorrow, 19 February; they should leave with a clearer idea of whether the government’s modest – and still vague – fiscal targets are driven more by politics than by economic reality. The following day, 20 February, Finance Minister Martin Guzman will head to Riyadh for a meeting of G20 finance ministers and central bank governors, where he will hold another meeting with the IMF’s Kristalina Georgieva and with Paris Club creditors. Argentina faces a payment of almost USD 2bn to the Paris Club in May, which the government wants to restructure. Whether – as is rumored – the government is preparing to offer a new investor-friendly development plan for the Vaca Muerta shale deposit as a guarantee behind a restructured repayment plan remains unconfirmed.


Transport Minister Hipolito Abreu yesterday, 17 February, announced the suspension for 90 days of TAP Portugal flights in and out of the country. TAP was the carrier that brought opposition leader Juan Guaido back to Venezuela last week following his three-week international tour. The regime says TAP flouted technical regulations, and alleges that Guaido’s uncle, Juan Jose Guaido, who was on the same flight, was carrying explosives; he is now under arrest. There has been a drastic reduction in flights in and out of the country over recent years as airlines were impacted by exchange controls and security problems.


This pre-Carnival week may see lesser activity in Congress but the need to vote on executive orders and presidential vetoes to unblock the agenda should ensure greater attendance than usual. The main item still refers to a December presidential veto against permitting the rapporteur of the Budget Guidelines Law (LDO) to define which projects would be eligible to receive BRL 30bn (USD 7.2bn) of the total BRL 42.6bn (USD 10.2bn) in government funds set out in parliamentary amendments in the draft. Considering individual parliamentarian and state bench earmarks that are already mandatory, if the veto is not overridden, Congress would be in charge of more than 60% of the overall budget, thus tying the hands of the government in directing spending even further. If an agreement is not reached today, Tuesday, 18 February, on the contours of a possible veto, the vote will be delayed.


According to the latest CADEM poll tracker released yesterday, 17 February, President Sebastian Pinera’s approval rating went up four points over the last week and now stands at 13%. At the same time, support for continuing public protests has dropped to 56%, a decrease of 16 points from October. According to the police, there have been almost 11,500 public order incidents in the four months since the protests broke out on 18 October. Next week, campaigning for the 26 April on a new constitution gets underway. Polls continue to show majority support for a new constitution.


The recent kidnap and murder of a seven-year old girl in Mexico City, which follows the particularly brutal murder of a young woman in the capital last week, have put the government under pressure to address feminicides and gender violence. President Andres Manuel Lopez Obrador (AMLO)’s response when questioned yesterday, 17 February, and in his daily press conference earlier today, was to blame the “decadence” of the “neo-liberal model” and socio-economic inequalities. Whether AMLO sees his approval ratings (currently above 50%) dip as a result of these cases should become clearer in the days ahead; security – or the failure to improve security indicators – is perhaps AMLO’s biggest vulnerability.

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