March 1, 2021

Latam

LATAM PULSE

BY Mario Marconini, Nicholas Watson

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( 5 mins)

This week, Brazil debates emergency spending, while another state-controlled entity faces a sudden leadership change. Meanwhile in Ecuador, there is as yet no resolution to the electoral impasse. Argentina’s new congressional session gets underway with the government on the backfoot over a recent Covid-19 vaccine scandal. Mexico’s President Andres Manuel Lopez Obrador (AMLO) will hold a virtual summit meeting with Joe Biden. Finally, Chile begins its second dose rollout even as continuing public health concerns prompt a debate about the logistics of April’s constituent assembly and local elections.

Brazil

The Senate will attempt once again this week to reach an understanding that permits the approval of Constitutional Amendment 186/2019 – the “PEC Emergencial”. The original objective of the amendment was to reduce expenditures by means of restructuring spending and creating triggers that would allow government at all levels to take necessary measures to achieve that objective. However, since the pandemic, the draft has been expanded to include the reintroduction of the emergency assistance that expired on 31 December 2020. The vote was to take place on 25 February, but it was postponed due to strong opposition to the removal of mandatory minimum threshold levels of spending for health and education.

Following the controversial dismissal by President Jair Bolsonaro of Petrobras CEO Roberto Castello Branco on 19 February, current Banco do Brasil CEO Andre Brandao is likely to resign as soon as a replacement is found. Like Petrobras, Banco do Brasil is also state-controlled and publicly traded, which explains why rumors of Brandao’s resignation prompted a strong negative reaction from markets towards the end of the week. Markets are also concerned about how the president will compensate for announced tax reductions for diesel (a promise to truckers) and domestic fuel so as to comply with the Fiscal Responsibility Law.

Ecuador

Pachakutik (PK), the political arm of the Confederation of Indigenous Nationalities of Ecuador (Conaie), is expected to file a legal challenge with the TCE electoral court as it seeks a much fuller vote recount in the aftermath of the 7 February first round presidential election. Over the weekend, the National Electoral Council (CNE) reviewed 31 vote tally sheets, a tiny proportion of the roughly 20,000 tally sheets that PK’s candidate Yaku Perez says need auditing for irregularities. Recall that Perez was edged out of the April run-off vote by just 32,600 votes by the conservative Guillermo Lasso. Note too that the TCE and CNE have clashed previously. Possibly adding to tensions, more radical groups within Conaie are also planning protests in various provinces this week.

Argentina

President Alberto Fernandez opens a new congressional session today, 1 March. The event is unlikely to have its usual luster given that most legislators will be in virtual attendance. Fernandez is expected to make a renewed push for a controversial judicial reform that is seen as benefitting his VP Cristina Fernandez, whose legal difficulties remain a top government priority following the sentencing for money laundering last week of Lazaro Baez, a one-time close Fernandez ally. The government has backed away from a plan to encourage rallies by pro-government unions; the idea for the rallies was to help turn the page on the recent scandal over preferential access to vaccines, which prompted major opposition protests on 27 February.

Mexico

President Andres Manuel Lopez Obrador (AMLO) will hold a virtual meeting with US President Joe Biden today, 1 March. Migration, security cooperation, trade, and energy issues will all be important topics. AMLO is also expected to urge Biden to share Covid-19 vaccines. While the Biden administration has emphasized “shared goals” and common ground, the reality is that bilateral relations with the US are likely set for a more complex period ahead as AMLO is challenged on a wider range of issues than was the case under Donald Trump.

Chile

With almost 20% of the population having received at least one dose of a coronavirus vaccine, the administration of second doses will begin at scale from 3 March – exactly one year since the country’s first confirmed Covid-19 case. The vaccine campaign will also this week focus on teachers as schools begin re-opening from today, 1 March; there has been some concern about low vaccine take-up in the education sector, though this could be down to confusion over eligibility and the holiday season. Despite the success of the vaccine rollout, health authorities are also concerned about the current Covid-19 caseload; the country’s three most populous areas – Santiago, Valparaiso, and Biobio – currently have their highest active caseloads since June/July of last year.

In parallel, a decision on whether to spread voting in the upcoming municipal, gubernatorial, and constituent assembly elections over two days could come as soon as this week. The mega vote is currently scheduled for 11 April but the idea of holding the election over two days – 10 and 11 April – for public health reasons has gained support in recent days. Although it is late in the day for such a change, the government could be swayed by apparent public support for such a move; 72% of voters reportedly support the idea.

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