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August 24, 2020


Latam Pulse

BY Nicholas Watson, Mario Marconini

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( 4 mins)

This week, the region’s sustained “first wave” of Covid-19 will continue to weigh across most countries. Meanwhile, in Argentina, a controversial judicial reform may pass a Senate vote but still faces an uncertain horizon; in parallel, the new deadline for bondholders to accept the government’s debt restructuring offer falls this week. In Brazil, a “Big Bang” infrastructure package goes to Congress as Economy Minister Paulo Guedes tries to get out of political hot water. Venezuela’s opposition is hoping for a relaunch. Finally, in Chile, campaigning starts ahead of the 25 October referendum on a new constitution.


A clear passing of the Covid-19 peak remains elusive for much of the Latin American region as new cases stabilize at high levels – in some cases despite prolonged lockdowns. Peru’s caseload remains stubbornly high as it heads towards 600,000 confirmed cases. The situation in Chile has improved in recent weeks, especially in the capital, a previous Covid-19 hotspot, though the total caseload is likely to breach the 400,000 this week. New cases continue to increase in Argentina and Colombia, which have averaged around 6,800 and 10,000 new cases per day respectively over the last seven days. These figures are dwarfed by Brazil’s seven-day average of almost 38,000 daily new cases.


The government’s controversial judicial reform is headed to a Senate vote on 27 August; the governing Front for All (FdT) has the votes to pass the bill, which is widely seen as a bid to dilute the power of powerful investigative judges and shield VP Cristina Fernandez (CFK) from prosecution in multiple corruption cases. The opposition Together for Change coalition says the reform would allow the government to pack the judicial system with loyalists and further weaponize the courts for political ends. The reform was one of the triggers behind major protests that took place last week. The initiative faces a much tougher test in the lower house, where the FdT lacks a majority and some Peronists who are independent of the government have already said they will vote against the reform.

Separately, the deadline for bondholders to accept the government’s latest debt restructuring offer falls on 28 August; Argentina’s three main creditor groups announced on 4 August that they had reached an agreement in principle on the terms. The results are expected to be announced on 31 August. While a positive outcome on the debt situation would be a welcome fillip, economic stress points remain numerous, with the steady drain on the Central Bank (BCRA)’s reserves the latest concern for the government.


This week Congress will continue to negotiate and vote on presidential vetoes, starting with eleven relating to an anti-crime package. The government will also send a proposal to Congress for a BRL 5bn (USD 890mn) infrastructure package that will require a negotiation to avoid a violation of mandate primary deficit limits and to determine allocations to senators and representatives. This proposal may be part of a broader set of proposals that would cover – in addition to public works – spending cuts, job creation measures, and privatizations: a so-called “Big Bang” package. Finally, the government should also focus its attention on fixing relations with the Senate after economy minister Paulo Guedes said the chamber had committed a crime in overturning last week a presidential veto on public servant wage increases until 2021.


Opposition leader Juan Guaido, who is recognized as interim president by almost 60 countries, is due to unveil details of an opposition “unity pact” this week. Last week, Guaido called on other prominent opposition figures to contribute to a joint roadmap to confront President Nicolas Maduro. Guaido’s call for an opposition relaunch comes as the regime presses ahead with its plans for the December legislative elections, which the Guaido-led opposition is boycotting. Guaido needs to rally the heterogeneous and division-prone opposition because, after December, his own legitimacy will come under question since he will no longer be National Assembly president. With only one in three Venezuelans supportive of public protests, taking to the streets is not a feasible option.


Campaigning for October’s constitutional referendum officially starts on 26 August. Congress has been scrambling to pass campaign finance regulations and to ensure that the Servel electoral body has the tools to take all necessary health precautions to enable the vote to go ahead. Although some – mainly on the Right – have argued in favor of another referendum postponement, only a significant deterioration in the Covid-19 situation would force a date change. The Covid-19 new daily caseload has been plateauing in recent weeks, though the last five days have seen daily cases nudging back up towards the 2,000 mark. Support for a new constitution remains high, though there are worries that the pandemic could affect participation.


( 5 mins) This week, Argentina has a new cabinet after Vice-President Cristina Fernandez (CFK) flexed her political muscles in the wake of the 12 September mid-term primaries. In Brazil, a report from the Senate inquiry into the

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( 4 mins) This week, Argentina‘s governing coalition is reeling from a heavy setback in yesterday’s obligatory primary voting which will be difficult to reverse in November’s mid-terms. Ecuador will see union-led protests against government reform proposals. This

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ARGENTINA: Mid-term primary takeaways

( 3 mins) The governing Front for All (FdT) suffered a major setback in the party primaries held yesterday ahead of the partial mid-term legislative elections scheduled for 14 November – as we previously anticipated. Since voting is

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( 6 mins) This week, in Brazil, President Jair Bolsonaro is aiming for a show of force in a day of protests. Argentina holds its primaries ahead of November’s mid-terms. In Colombia, the new tax reform – the

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( 5 mins) This week, a new congressional session opens in Mexico. Brazil gears up for potentially stormy protests next week. In Chile, another pension withdrawal is under consideration but faces a more difficult path than previous withdrawal

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