Several developments since mid-July point to intensifying cash flow problems at the state oil company Petróleos de Venezuela (Pdvsa) and, by extension, in the central government. In last month’s edition, we noted that Pdvsa’s annual accounts for 2013 indicated that both the company (and the government) were short of ready cash. Pdvsa made a profit of US$9.5bn from the sale of a 40% stake in a company called Entidad Nacional Aurífera (ENA) to the government: this was shortly after the government had essentially given ENA, with a notional value of US$30bn, to Pdvsa. Pdvsa had earlier made a one-off profit…

“We have closed the negotiations and closed them well,” Ecuador’s foreign trade minister, Francisco Rivadeneira, said on 11 August in reference to the trade agreement struck with the European Union (EU) in July. A long legislative journey awaits before the trade accord can take effect but Rivadeneira was keen to stress that it had been “a very positive negotiation for Ecuador”, with widespread benefits for exporters and “extremely small” costs which were “difficult to identify”. He argued that the repercussions of failing to reach an accord would have been very negative, with “enormous unemployment in the country”. Ecuador completed its…

Ecuador’s new Monetary and Financial Code (Código Monetario y Financiero), due for final approval as we went to press in late August, has been widely criticised in the mainstream and financial press, on fears that it effectively formalises the ability of the left-wing government and the (government-controlled) Banco Central del Ecuador (BCE) to direct banks and other private sector actors. In reality, the new Code confirms powers that are available to governments in many other countries, and it will not necessarily result in outcomes that are detrimental to Ecuadorean financial institutions or their customers. In mid-August, President Rafael Correa asked…

In August the Economic Commission for Latin America and the Caribbean (ECLAC, also known under its Spanish acronym, CEPAL) became the latest multilateral institution to cut back its regional growth forecast. The UN commission now says regional GDP growth this year will be only 2.2%, down from its earlier 2.7% projection, made in April, and down from the 2.5% result achieved in 2013. The ECLAC reduction had been preceded by a similar revision by the IMF, which in its World Economic Outlook, published in July, reduced its growth forecast for Latin America to 2.0%, down from its earlier forecast of…