Over the long-term, the Panama Canal may face competition from other projects that provide transportation links through Central America between the Atlantic and Pacific Oceans. Over the short-to medium term, though, the country should continue to benefit from an investment boom which involves far more than an approximate doubling of the Canal's capacity. The boom takes place in the context of continuing fiscal and monetary stability and reducing risk. Unsurprisingly, the 2012 annual report (and other publications) of the Autoridad del Canal de Panamá (ACP), the state-owned enterprise that manages the canal, give prominence to the US$5.33bn Expansion Program. Sometimes…
Imagine you have just been appointed the finance minister of a (fictional) Latin American country. You desperately need to raise foreign currency loans. For whatever reason, traditional western banks and international financial institutions (IFIs) are cut off to you – perhaps your country defaulted on its foreign debt in the recent past, or your government dislikes the policy conditions imposed by the International Monetary Fund (IMF), or it has a major political quarrel with Washington. You decide to turn to China. What can you expect? In a February 2012 paper for Boston University’s Pardee Centre, Kevin Gallagher, Amos Irwin, and…
In September or October coming the US Supreme Court must consider whether to issue a ruling on a dispute over Argentina’s foreign debt. Under existing rules various institutions have the right to file a ‘friend of the court brief’, taking a position on the matter in hand, which is submitted for consideration by the Justices. The International Monetary Fund (IMF) said it was considering filing a brief supporting Argentina’s position. So did the US government. Then White House sources said they wouldn’t be filing a brief after all. That caused the IMF to say that if the US wasn’t going…
With an overhang of political discontent and middle class disaffection, what would really help the government of President Dilma Rousseff right now would be a sharp and vigorous economic recovery. The latest indicators suggest that instead what she is getting lies somewhere between a flat economy and a weak upturn The weekly central bank Focus survey of over one hundred private analysts released on 29 July showed that their average GDP growth expectations for the Brazilian economy in 2013 had bottomed out at 2.3%, after 10 weeks of consistent week-on-week reductions. Although this still will technically represent a recovery on…
As a business crash and a riches-to-rags narrative, there is almost nothing that can beat the Eike Batista story at present. According to the latest estimates at the end of July, the publicity-loving Brazilian entrepreneur, once ranked as the eight wealthiest person in the world, has lost over US$33bn in little over one year. According to estimates by the news agency Bloomberg, the fall of his business empire took him from a net worth of US$34bn in early 2012, down to ‘sub-billionaire status’ now, at around US$200m. How did this happen? Batista proved brilliant at riding the Brazilian boom –…
The Banco Central de Bolivia (BCB-the central bank) is by some measure the largest provider of development finance in the country. It appears that the pending new Financial Services Law will also require Bolivia's commercial banks to extend credit for social purposes, and at interest rates that are determined by the government - and not market forces. In practice, though both the commercial banks, and the government especially, are in a formidably strong financial position. This means that the radical left-wing administration led by President Evo Morales, which has already been successful in reducing extreme poverty in Bolivia, is very…