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November 16, 2020

Latam

LATAM PULSE

BY Nicholas Watson, Mario Marconini

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( 5 mins)

This week, Peru’s Congress should vote in a new president after the collapse of the Manuel Merino administration after only five days. In Argentina, President Alberto Fernandez has seemingly been blindsided by his VP as Cristina Fernandez (CFK) looks to distance herself from any eventual International Monetary Fund (IMF) agreement. Brazil’s congressional divisions and other distractions will continue to hold up economic initiatives. In Chile, a second pension withdrawal will advance through the legislative process. In Mexico, the Covid-19 situation is set to become increasingly politicized.

Peru

Congress is scheduled to vote in a new president in a special session starting at 14:00 (local time) today, 16 November, following Manuel Merino’s resignation yesterday. Congress forced Merino to resign – just five days after he was controversially sworn in – by threatening to impeach him if he refused. The death of two protestors on 14 November made Merino’s already fragile position untenable. There is agreement that the new caretaker president must come from the group of 19 legislators who voted against Martin Vizcarra’s impeachment on 9 November. However, parties in Congress last night failed to agree on a compromise slate of candidates that would have seen Rocio Silva of the leftist Broad Front (FA) voted in as acting president. The Purple Party (PM) has come up with a new list overnight which has Francisco Sagasti as candidate for president. Complicating matters further, the Constitutional Court (TC) has agreed to bring forward to today a hearing to consider the legality of Vizcarra’s ouster.

Argentina

The IMF’s in-country visit continues this week, albeit in virtual format after one of the team tested positive for Covid-19. The IMF visit will proceed under the shadow of a letter from the Front for All (FdeT)’s Senate bloc to the Fund that was made public yesterday. The letter criticizes the IMF, accuses the Fund of acting politically rather than on the basis of technical factors, and all but refuses to accept difficult conditionalities in any re-worked deal. The senators’ letter, which VP Cristina Fernandez (CFK) okayed and likely encouraged, is designed to distance Kirchnerismo from unpopular economic adjustments to come – and acts as another reminder that CFK will continue to put her own interests before any loyalty to President Alberto Fernandez.

Brazil

The leader of the government in the House, Ricardo Barros, wants to discuss an extensive economic agenda this week, including the autonomy of the central bank, a new framework law for cabotage and a new low-income housing program – but the climate is not promising given congressional divisions. Municipal elections took place on Sunday, 15 November. In the most important capitals (Sao Paulo and Rio de Janeiro) a run-off election will be required on 29 November. Political leaders and the government in Brasilia will not wait until the end of the month to try to establish priorities that could still be addressed in December.

In parallel, the Senate intends to discuss a new bankruptcy law and a new regulatory framework for natural gas. In both chambers, the race for the presiding posts in February will continue to delay progress, particularly if the government fails to take the leadership in advancing the reform agenda. In addition, there is no agreement to proceed with a vote on the 2021 Budget Guidelines Law (LDO), which is normally passed by August every year.

Chile

The government will remain on the defensive this week. The Senate votes today on whether to confirm a motion of censure against former interior minister Victor Perez; there is cautious optimism that Perez will be spared, though the political damage has already been done – Perez resigned as interior minister on 3 November. His successor, Rodrigo Delgado, has been attempting to paper over internal divisions within the Chile Vamos (CV) coalition in recent days. Divisions worsened after last week’s lower house vote to approve a second withdrawal from the private pension (AFP) system, an initiative that over 40 CV deputies voted for despite government opposition. The Senate’s constitutional commission meets tomorrow, 17 November, to discuss the pension withdrawal bill, which looks increasingly unstoppable.

Mexico

The opposition National Action Party (PAN) is planning to step up its criticism of President Andres Manuel Lopez Obrador (AMLO)’s handling of the Covid-19 crisis this week. The party is calling for a national day of mourning when the official Covid-19 death toll reaches 100,000, which is likely to happen in the coming days. The official caseload now exceeds 1mn, though under-testing means the true total is likely to be significantly higher. The PAN also plans to file a criminal negligence case against the government, while continuing its attacks against AMLO over the lack of budgetary resources earmarked for a vaccine next year. Increased political contestation around the pandemic reflects the onset of the 2021 mid-term and state elections, though AMLO is likely to hit back by accusing the PAN of exploiting an unavoidable tragedy for political ends.

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