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In July a delegation of experts appointed by the United Nations (UN) arrived in Tegucigalpa to begin analysing the creation of a new international commission against corruption and impunity in Honduras (CICIH). CICIH’s establishment was a major electoral pledge by President Xiomara Castro who took office in January 2022. While in December 2022 the Castro government and UN inked a memorandum of understanding (MoU) regarding CICIH’s installation, frustration persists regarding the lack of progress on the issue. Meanwhile a report released in May by anti-corruption NGO Consejo Nacional Anticorrupción (CNA), accusing the government of nepotism, and the brief departure of CNA’s director Gabriela Castellanos who cited threats, have provided an uncomfortable backdrop for discussions regarding the CICIH’s establishment.

The deployment of UN experts is the first phase of the MoU inked in December 2022. The panel comprises Amerigo Incalcaterra, an Italian legal expert with extensive experience working with the UN in Latin America; Ana Gabriela Contreras, a Guatemalan jurist, a former consultant for the now-defunct UN-backed anti-impunity commission in Guatemala (Cicig), and Pedro Biscay, an Argentine jurist with over 20 years’ experience investigating financial and economic crimes. It is tasked with analysing the strengths and weaknesses of Honduran institutions like the attorney general’s office and judiciary, and with identifying necessary constitutional, legal and administrative reforms.

• MoU

The MoU inked by the Honduran government and United Nations in December 2022 also stipulates that parallel to the first phase, the two sides will negotiate the terms of the bilateral agreement to establish the mechanism. The second phase begins with the ratification of this bilateral agreement, with the two sides then to define the terms of reference to select CICIH’s leadership, as well as issues like staffing, contracts, and finance.

Having arrived in Honduras on 9 July to much media attention, the panel left on 23 July without providing any further declarations. While Foreign Minister Enrique Reina has since revealed plans for the panel to return from 13-19 August to continue its work, Transparency Minister Edmundo Orellana was compelled to reject media speculation regarding “negative, hostile or adverse circumstances” regarding the panel’s departure.

This speculation follows tensions which had emerged between the Castro government and foreign community over Castellanos, who briefly left the country in June following death threats, having accused government members of nepotism. On returning to Honduras, on 20 July Castellanos gave a press conference attended by the UN representative in the country, Alice Shackelford, whose presence led Castro to tweet that the “politicisation of the United Nations in Honduras [is] unacceptable!”. This prompted Shackelford to respond with a further tweet lamenting any discomfort her presence may have caused, underlining that her role as UN representative is based on “good faith and… principles of objectivity, neutrality and independence.”

Nepotism allegations

On 24 May CNA released a report accusing Castro’s government of nepotism and related practices, and drew comparisons with her disgraced predecessor, Juan Orlando Hernández (Partido Nacional, 2014-2022), who was extradited to the US in April 2022 to face drug- and weapons-related charges [SSR-22-05].

The CNA report highlights that multiple members of Castro’s close family hold key government posts. Examples include her husband, ejected former president Manuel Zelaya (2006-2009), and son José Manuel Zelaya Castro, both presidential advisors. It highlights that another son, Héctor Manuel Zelaya Castro is private secretary to the president, while a daughter, Xiomara Hortencia Zelaya Castro, is a national legislator, as is Castro’s brother-in-law Carlos Armando Zelaya Rosales, whose daughter, María Alejandra Zelaya Rosales, is director general of foreign policy within the foreign ministry. Castro responded to CNA’s report by defending those in her government, insisting that her administration and that of her predecessor were not comparable.

A rapid rise in regional political tension may bode ill for Trinidad and Tobago’s critically important gas industry.

On 27 October Venezuela’s President Nicolás Maduro announced his government was suspending all energy development cooperation with Trinidad and Tobago’s government led by Prime Minister Kamla Persad-Bissessar. The decision reflects deep political divisions between the two leaders: Trinidad and Tobago has been supporting a US Navy strike force operating in the southern Caribbean, which has sunk allegedly drug-carrying boats from Venezuela. At the time of writing over 80 people had been killed in the attacks.  Maduro claims his government is a victim of a US aggression plan.

Maduro’s decision has a direct impact on plans to develop the Dragon gas field – offshore natural gas deposits which lie in Venezuelan waters but which would be connected by pipeline to Trinidad and Tobago, judged the most efficient way of delivering the gas to international markets and for using it as feedstock in the island’s downstream petrochemicals industry. Dragon is estimated to hold between 3.2trn and 4.2trn cubic feet of gas reserves. If fully developed the field could deliver 185m cubic feet of gas per day.

The project, run by British-headquartered Shell and Trinidad and Tobago’s National Gas Company (NGC), has been under negotiation since 2019. Initial hopes that gas production might start in 2026 or 2027 with deliveries to Atlantic LNG, a major Trinidadian downstream petrochemicals player, have faded. The date for first gas from Dragon is now slipping back. Revenues from the project would be shared. Although Dragon has been subject to various US economic sanctions imposed against Venezuela, earlier in October NGC received a permit from the US Office of Foreign Asset Control (Ofac) allowing it to continue developing the project on condition that US companies are involved in the development stage.

Persad-Bissessar was keen to downplay her government’s dependence on Dragon. She told local media outlet Newsday that Trinidad and Tobago’s future “does not depend on Venezuela and never has” adding that “the last government mistakenly placed all their hopes in the Dragon project. We have not done so.” As a result, she claimed, her administration is not “susceptible” to “blackmail from the Venezuelans”.

Despite Persad-Bissessar’s uncompromising assurances, it is clear that regional political tensions will make it more difficult to plan the for the medium- and longer-term future of gas supply and petrochemical output, which is critical to the twin-island economy. Venezuela is also ending cooperation over a similar plan by Shell to develop the Manatee gas field which straddles both Venezuelan and Trinidadian waters and is believed to contain 2.7trn cubic feet of reserves.  Trinidad and Tobago relies on gas for over 90% of its energy needs. Renewable energy sources cover less than 1% of total energy demand.

With gas projects often taking 10 years or more to develop, timing will be critical. After reaching peak levels in the 1990s and 2000s Trinidadian gas output has recently fallen, as existing fields mature. Output in 2024 was 2.53bn cubic feet/day, slightly down from 2023. Trinidad has high hopes of seven ultra-deep water offshore blocks recently awarded to ExxonMobil; they lie northwest of Guyana’s prolific Stabroek block. But they won’t come onstream until some point in the 2030s, in the best-case scenario. In the nearer term production has commenced (in April 2025) at the Cypre field off the south east coast which is owned by British multinational BP.

• Cypre

At its peak in a few years Cypre is expected to produce 250m cubic feet/day (more than Dragon), but Trinidad and Tobago’s gas deficit will remain challenging.

COLOMBIA | Growth and investment up. The economy expanded by 5.2% year-on-year in the second quarter of 2011, according to the national statistics department (Dane). GDP growth was driven by the mining sector (10.3%), trade (7.2%), transport and communications (7.1%) and the financial sector (6.1%).

Foreign investment in the energy-mining sector in Colombia climbed to US$9.76bn in the first eight months of the year, up 51% on the same period in 2010, surpassing the government’s target for the whole year, President Juan Manuel Santos announced. Santos said that, at this rate, the record of US$10.60bn of foreign investment in the sector, set in 2008, would be eclipsed this year. Santos was speaking during the swearing-in ceremony this week of the new energy and mines minister, Mauricio Cárdenas, who takes over from Carlos Rodado Noriega, now ambassador to Argentina. Formerly economic development and transportation minister and director of national planning, Cárdenas most recently served as director of the Latin American initiative at the Brookings Institution in Washington.

PERU | New mining tax. Congress has approved a package of bills on mining taxes thrashed out with foreign companies in recent weeks by the administration of President Ollanta Humala. This is a major fillip for Humala, not just because it removes uncertainty which might have deterred investment in the mining sector but also because he managed to win the support of two-thirds of the deputies in the 130-seat congress.

The government anticipates that the tax take from the mining sector will increase by some NS$3bn (US$1.1bn) a year over the next five years under the new tax regime. This extra revenue will be ploughed into anti-poverty policies and the improvement of national infrastructure.

The government’s desire to present a firm figure is understandable but it is somewhat misleading. It can only really be a projection as the royalty agreed with foreign mining companies will be based upon operating profits, which will, of course, vary.

ARGENTINA-BRASIL | Vale aún aguarda una respuesta de Argentina. El 7 de febrero una fuente del gobierno brasilero dijo a Reuters que el gigante minero de Brasil, Vale, aún estaba aguardando una respuesta oficial del gobierno de Argentina a su pedido de incentivos fiscales adicionales a fin de seguir adelante con su proyecto de US$6mm  de una mina de potasio en la provincia argentina de Mendoza. La Presidenta de Argentina, Cristina Fernández, dijo que el proyecto minero de Río Colorado era de “importancia estratégica” cuando se anunció por primera vez en julio del año pasado. Vale estima que la mina Río Colorado contiene 430m de toneladas (t) de potasio, y que podría producir unas 4,35m t al año.

Con la producción programada para comenzar para el 2014, Argentina podría convertirse,  de la noche a la mañana, en el quinto mayor productor de potasa en el mundo. (La potasa es un derivado del potasio utilizada ampliamente en los fertilizantes). En diciembre del 2012, Vale anunció que estaba revisando sus planes de inversión para el 2013, teniendo en cuenta el “giro en los mercados internacionales hacia precios más bajos para algunos minerales”. Los beneficios netos de Vale cayeron un 66,2% año en año en el 2012. En enero, Vale notificó al gobierno argentino que estaba suspendiendo indefinidamente el proyecto Río Colorado mientras evaluaba las “variaciones en los fundamentos económicos” en Argentina.

En particular, Vale expresó preocupaciones acerca de los más altos costos de producción en Argentina debido a la alta inflación (según economistas locales, la ‘verdadera inflación’ de Argentina está en alrededor del 25%); y el comparativamente alto valor del peso, que es artificialmente apoyado por el banco central. Según Reuters, Vale pidió a Argentina exenciones al Impuesto al Valor Agregado (IVA) y más flexibilidad en los controles de la tasa de cambio del país, como precondiciones para reiniciar el proyecto. Reuters no logró obtener confirmación de esto de parte de Vale, pero una fuente no nombrada en el gobierno brasilero confirmo esto, agregando que Vale aguardaría hasta el 28 de febrero por una respuesta.

Las operaciones de Vale en Argentina son de interés para el gobierno brasilero liderado por la Presidenta Dilma Rousseff, pues Brasil actualmente importa el 90% de todos los fertilizantes usados en el país y está interesado en abastecerse de potasa barata de su principal socio en el Mercado Común del Sur (Mercosur). La fuente del gobierno dijo a Reuters que Vale ya ha invertido más de lo que inicialmente tenía previsto en el proyecto, con US$1,8mm invertidos en la infraestructura física inicial, y que no estaba preparada para pasarse del presupuesto. La fecha límite del 28 de febrero podría extenderse, asumiendo que la Presidenta Rousseff busque discutir la cuestión con la Presidenta Fernández en su próxima reunión bilateral, programada para principios de marzo en Argentina.

PARAGUAY | Interviene el BCP. El 13 de febrero, el banco central del Paraguay (BCP) intervino en el mercado de la moneda local por primera vez en este año, desembolsando US$9,0m para comprar dólares de EU. El BCP se vio forzado a actuar después de que la tasa de cambio llegó a una nueva baja de G$4.100/US$1, cayendo el dólar 15 puntos básicos en sólo tres días. El BCP dijo que la decisión intentaba reducir la especulación con la tasa de cambio conducida por “un importante flujo de dólares”.

La fortaleza del Guaraní contra el dólar está empujando la inflación hacia arriba. En su última reunión de política monetaria, el 7 de febrero, el BCP revisó hacia arriba su pronóstico de inflación para todo el año a poco más de su tasa meta oficial del 5%. La inflación mes en mes en enero fue de un fuerte 1,2%, debido a una “demanda interna más fuerte de lo esperado, que pone presión hacia el alza en los precios”. La tasa anual fue del 4,1%. Un Guaraní más fuerte podría alimentar aún más la demanda interna y la inflación, por consiguiente el BCP tiene apuro en controlarlo. Problemáticamente, su intervención obtuvo poco; ese mismo día, el Guaraní ganó un 5% más contra el dólar. El BCP ha anunciado planes para comprar unos US$75m en las próximas cinco semanas. Sin embargo, el banco podría también analizar un incremento en las tasas de interés, que han permanecido constantes en 5,5% desde el año pasado.

• ‘Shopping favela’

El 13 de febrero un empresario brasilero, Elías Tergilene, reveló un plan de US$11,5m para construir un nuevo centro comercial en Río de Janeiro, en el recientemente ‘pacificado’ Complexo do Alemão, una de las más grandes favelas de la ciudad. Tergilene, el propietario de la cadena de centros comerciales de precios bajos, Uai, que tiene presencia en Belo Horizonte y Manaus, dijo que el centro comercial estaría ubicado en un galpón abandonado de 15.000m² en el llamado Morro do Alemão, con planes para cuatro salas de cine y 20 a 30 pequeños comercios, así como también un estacionamiento de 23.000m². Tergilene dijo que la idea no era solamente llevar tiendas a los moradores de la favela sino también proveer empleo a los habitantes locales. Según Tergilene, vendedores minoristas internacionales y locales, incluyendo Burger King, Chilli Beans, Camisaria Colombo y Barred’s ya han expresado su interés.

POLITICS | The son of Chávez pledges support for Colombian peace talks. On 11 March acting President Nicolás Maduro pledged Venezuela’s continued support for the Colombian peace talks. The former president Hugo Chávez (1999-2013) was believed instrumental in getting the Fuerzas Armadas Revolucionarias de Colombia (Farc) to the dialogue table with the government led by President Juan Manuel Santos.  Venezuela, along with Chile, is accompanying the talks in Havana, Cuba. Maduro said that Chávez (who previously called for the Farc to be recognised as a belligerent group and was accused by Colombia and the US of sheltering Farc guerrillas inside the Venezuelan border), was passionate about the talks and wanted to see an agreement inked this year. There is some speculation that without Chávez around, the Farc might now feel more pressure to sign a deal.

The government’s economic enforcer, also known as the secretary for internal trade, Guillermo Moreno, is to face charges for abuse of public office. The head of the Finsoport consulting firm, Jorge Todesca, filed a complaint after his business was fined Arg$500,000 (US$90,000, at the official rate) over the disclosure of inflation rates that contradict figures by the official statistics agency, Indec.

According to Judge Claudio Bonadío, Moreno, along with two other officials acted “illegally” and “arbitrarily” in sanctioning Todesca’s company, as well as other consulting agencies targeted by the government for disseminating inflation figures about three times as high as the official figures released by Indec. Bonadío said this constituted “abuse of authority”.

Moreno is appealing against the charges. His lawyer, Alejandro Rúa, said the appeal was based on the fact that Bonadío’s judicial resolution was “arbitrary and should not take effect”. Rúa said that Moreno had faced similar charges in 2012 for “abuse of authority” which had been thrown out.

There is some speculation that Moreno might finally be put out to pasture by President Cristina Fernández. The TV programme, Periodismo Para Todos, presented by investigative journalist Jorge Lanata, released an audio on 22 September in which Moreno can be heard suggesting that businessmen should contribute to a “solidarity fund” for victims of serious floods in La Plata, the capital of the province of Buenos Aires, on 2 and 3 April. Lanata claimed that none of the victims had received any money from this fund.

Budget approved

After a 17-hour debate in the chamber of deputies on 25 September, the government’s 2014 budget, which assumes growth of 6.2% and inflation of 9.9%, was approved.

Voting followed predictable lines: with 134 votes the FPV and its allies pushed the bill through; 113 opposition politicians voted against it. As well as the budget, congress also approved the extension of two taxes which were due to expire at the end of the year.

Opposition politicians toured radio studios in the immediate aftermath to criticise the data presented in the budget. Most think 6.2% growth to be wildly over-optimistic, while private-sector economists put current inflation levels at around 25%.

• Inflation

The Argentine government is predicting inflation of 11.2% for 2013. Private consulting firms claim that inflation is likely to be close to 26%.

ARGENTINA-BRASIL | Cae el comercio. El comercio entre Argentina y Brasil fue de solamente US$2,25mm en febrero, la cifra más baja en cuatro años. Las exportaciones totales alcanzaron US$1,094mm, una caída del 23,4% año en año, mientras que las importaciones llegaron a US$1,165mm luego de una caída del 9,7% sobre febrero del 2013. Las menores ventas de vehículos, petróleo, y autopartes fueron citadas como la razón central de la declinación. Después de los primeros dos meses del 2014, Brasil está con un déficit de US$297m con Argentina.

Las exportaciones de Argentina representan el 6% del total de bienes importados por Brasil, ubicándola detrás de China y EU, los principales socios comerciales. Luego de la pronunciada devaluación del peso en enero, Argentina espera que las exportaciones a Brasil se incrementen en los meses próximos. Por su lado, solamente el 7,3% de las exportaciones de Brasil van a la Argentina. Una delegación brasilera tiene fijada una visita a Buenos Aires más tarde esta semana para presionar al gobierno a que levante algunas de las restricciones sobre las importaciones que están frustrado los negocios brasileros.

El equipo brasilero estará compuesto por el ministro de desarrollo, industria & comercio, Mauro Borges, y el asesor presidencial en política exterior, Marco Aurélio García. Ellos se reunirán con el ministro de economía de Argentina, Axel Kicillof. Entre otras cuestiones, es probable que ellos planteen la cuestión de las barreras aduaneras impuestas por Buenos Aires sobre los productos brasileros, que a menudo causan retrasos en las importaciones. Los funcionarios brasileros también negociarán con el gobierno argentino una línea de crédito con un banco estatal que se aplicaría a todas las áreas del comercio entre los dos países.

• YPF halla nuevas reservas de petróleo

La petrolera estatal de Argentina, YPF, anunció el 11 de marzo el descubrimiento de un yacimiento petrolífero en la provincia de Río Negro que se estima que contiene 15m de barriles de crudo. El bloque exploratorio había estado inactivo desde 1999.

El gobierno del Presidente Evo Morales recibió un estímulo con relación a la seguridad después de que Timothy Torlot, el titular de la delegación de la Unión Europea (UE) en Bolivia, calificó la lucha contra las drogas en Bolivia como “un éxito” el 17 de septiembre. Mientras que reconoció que “siempre hay más por hacer, especialmente cuando se trata del control del tráfico ilegal de las drogas”, Torlot parecía minimizar la situación del tráfico en Bolivia como una situación común a muchos otros países.

La aprobación de la UE fue particularmente oportuna para el gobierno del Movimiento Al Socialismo (MAS), llegando solamente dos días después de que el gobierno de EU designara a Bolivia (junto con  Burma y Venezuela) como un país que había fallado demostrablemente en los últimos 12 meses en sus obligaciones bajo los acuerdos internacionales sobre antinarcóticos. Esto, a pesar del hecho de que en el último (junio del 2014) sondeo anual de la oficina sobre drogas y delito de la ONU (Unodc) estimó que el área total de cultivo de coca en Bolivia fue de 23.000 hectáreas (ha) en el 2013, cayendo un 9% con relación al año anterior –el más bajo desde el 2002.

La designación de EU también se produjo a pesar del reconocimiento en el informe del gobierno de EU de que, junto con Perú y Colombia, Bolivia continuó reduciendo la producción ilegal, que ahora está “en su nivel más bajo desde que las autoridades comenzaron a establecer las estimaciones en 1990”.

De acuerdo con el medio estatal de Bolivia, Cambio, el argumento de EU es que el gobierno de Morales “podría haber hecho más con relación a las incautaciones de cocaína producida en Bolivia y en tránsito por el país”.

El informe de Unodc halló que comparado con el 2012, las incautaciones de hojas de coca en el 2013 cayeron un 36% a 476 toneladas (t); las incautaciones de pasta base de cocaína cayeron un 37% a 20t; y las incautaciones de cocaína hidroclorhídrica cayeron un 62% a 1,6t.

COLOMBIA | IMF credit line. On 13 June the deputy managing director of the International Monetary Fund (IMF), Mitsuhiro Furusawa, approved an extension of a two-year Flexible Credit Line (FCL) programme with Colombia. Under the new deal Colombia will have access to an FCL of US$11.5bn, which replaces a previous agreement with the IMF, signed in June 2015, which offered US$5.4bn. Furusawa said that the decision answered to the fact that “Colombia has a track record of very strong policy frameworks, including an inflation-targeting regime, a flexible exchange rate, and a fiscal policy guided by a structural balance rule”. Meanwhile an IMF press release stated that while “Colombia’s macroeconomic policies have provided flexibility to deliver a coordinated and gradual response to the large decline in oil prices”, the new FCL agreement would “provide added buffers” to ensure that the government’s economic policies can be maintained in the presence of “increased downside risks”.

The IMF’s decision suggests that there is confidence in the economic management of the government led by President Juan Manuel Santos. This confidence would have been bolstered by the release of Colombia’s first quarter economic growth figures last week. According to a 3 June government press release, Colombia’s economy grew by 2.5% in the first quarter of 2016, driven by the industrial, construction, and financial sectors.

Colombia’s industrial sector saw an increase in activity of 5.3% during the period, while activity in the construction sector increased by 5.2%, and in the financial services sector by 3.8%. Activity in the mining and hydrocarbons sectors, hit hard by the fall in international oil prices, contracted by 4.6%.

The resilience shown by Colombia’s economy throughout this adverse scenario, which is being felt more deeply by other, more oil-dependent Latin American countries, was highlighted by the international ratings agency Moody’s in its latest country report issued on 2 June. Moody’s maintained Colombia’s overall rating at ‘Baa2’ (medium grade and moderate credit risk) with a ‘stable’ outlook, citing a “solid macroeconomic policy” and “an effective response to external shocks”.

Prime Minister Gaston Browne, leader of the ruling Antigua and Barbuda Labour Party (ABLP) has called an election for 21 March, more than a year before the next election is constitutionally required. The once dominant ABLP is seeking a consecutive second term having ousted the United Progressive Party (UPP) in 2014 after the UPP’s two terms in power from 2004. In the 2014 election, the ABLP won by 14 seats to three for the UPP in the 17-seat House of Representatives.

The ABLP was the party of the Bird family, first led by Vere Bird, who rose to fame as a union leader in the 1950s and took the country to independence in 1981, and then by his son Lester. Apart from one term from 1971-1976, the ABLP was the dominant political force in Antigua from 1951 to 2004. The ageing Lester Bird was only finally removed from the leadership of the party after the second successive defeat at the polls for the ABLP. But the leadership didn’t move far from the Bird family. Gaston Browne is married to Lester’s niece.

The ABLP under the Birds was characterised by corruption tempered by paternalism, and by 2004 the electorate had clearly decided that the disadvantages of this trade off outweighed the benefits, and they were helped in expressing this dissatisfaction by the creation of an independent Electoral Commission after the 1999 election.

The ABLP’s return to power was no doubt helped by the change in leadership, but it was also a consequence of bad economic luck for the UPP. There were three years of sharp contraction after the global financial crisis, from 2009-2011. But the real problem was that the recovery in 2012 (2.8% growth) was quickly snuffed out, with a further contraction of -0.1% in 2013.

The ABLP has been luckier. There was an immediate return to growth, with a 5.1% advance in 2014, 4.1% in 2015, and 5.3% in 2016. The estimated growth for 2017 is a lower 3.0%, but the prime minister has been notably bullish about 2018, talking about a double-digit expansion on the back of a US$90m port-expansion project which started in January and a huge new 400-room hotel project. Barbuda, which lost 95% of its buildings to Hurricane Irma, will also benefit from reconstruction work.

The prime minister’s promise of a double-digit expansion may be too bullish, but it makes good electioneering, and in any case the Caribbean Development Bank is predicting a perfectly acceptable 5.3% expansion for 2018. It would seem like a sensible time to call an election.

COLOMBIA | Avianca files for bankruptcy. On 10 May Avianca Holdings, the parent company of Colombia’s flag carrier Avianca, filed for bankruptcy proceedings in the US courts under Chapter 11 of the US bankruptcy code.

Established in 1919, Avianca is the world’s second oldest airline and Latin America’s second largest, carrying over 30m passenger per year. But in a statement Avianca Holdings said that it had to file for bankruptcy due to the “dramatic” impact that the coronavirus (Covid-19) pandemic has had on its global operations.

The firm notes that, as a result of the coronavirus outbreak, there has been a 90% decline in international air travel and that its passenger fleet has been grounded since mid-March after Latin American governments suspended all flights as part of efforts to contain the pandemic. According to the statement, all of this has resulted in the loss of over 80% of the firm’s consolidated revenue placing “significant pressure on its cash reserves”.

Avianca’s CEO, Anko van der Werff, said that the firm aims to use the bankruptcy process to sort out its debts and reorganise its businesses under the auspices of the US judicial system. Van der Werff added that the firm is also seeking financial assistance from the governments of the countries in which it “provides essential services” (Avianca’s subsidiaries are the flag carriers in various Latin American countries); and that it hopes that, after a successful restructuring process, Avianca will continue operating and preserving jobs in all the countries in which it operates (many of Avianca’s 21,000 employees in Latin America have been furloughed). However, the firm has already announced that as part of the restructuring process it will liquidate its Peruvian subsidiary, Avianca Perú.  

Brazil’s centre-right opposition Partido da Social Democracia Brasileira (PSDB) of former president Fernando Henrique Cardoso (1995-2003) was once the main rival of the left-wing Partido dos Trabalhadores (PT) of President Luiz Inácio Lula da Silva, but the party has faded in influence over the past decade, and on 10 March it lost one of its few governors. Raquel Lyra, the governor of the north-eastern state of Pernambuco, who enjoys a good relationship with the Lula administration, left the PSDB and moved to the Partido Social Democrático (PSD), an ideologically flexible big tent party which currently holds positions in Lula’s cabinet.

Lyra had been a member of the PSDB for nine years until this week, but before that, she was a member of the centre-left Partido Socialista Brasileiro (PSB) from 2007-2016. She also served as the secretary for youth and children from 2011-2012 in the state government led by former governor Eduardo Campos (PSB, 2007-2014). Ahead of the 2016 municipal elections, she switched to the PSDB and successfully ran for the mayorship of Caruaru, where her father João Lyra Neto served two terms as mayor (1989-1993, 1997-2001). Lyra Neto went on to serve as Campos’ deputy governor and assumed the governorship of Pernambuco in April 2014 after Campos stepped down from the post to focus on his presidential campaign, but he died in a plane crash in August that year.

Lyra is reportedly planning to run for re-election in the gubernatorial race next year, but media reports suggest that one of her main rivals would be Campos’ son, João Campos (PSB), the current mayor of Pernambuco’s capital, Recife. He first won the mayorship of Recife in the 2020 municipal election, and last year he cruised to re-election with 78% of the vote share. João Campos’ comfortable re-election cemented his reputation as a rising political star and fuelled speculation that he might follow in his father’s footsteps and run for the governorship of Pernambuco, and maybe even challenge for the presidency of Brazil in the future.

If Lyra and Campos face each other as rival candidates in the gubernatorial election next year, it is unclear who would be a more useful ally for Lula in the north-eastern state. Campos would appear to be the more obvious option for Lula to endorse, given that his PSB is ideologically closer to the PT. However, now that Lyra is a member of the PSD, an endorsement by Lula for Lyra’s re-election bid would be a valuable bargaining chip to facilitate a local partnership between the PSD and PT. Last year’s municipal elections saw the PSD emerge as the party with the most mayorships in Brazil, proving the party’s worth as an ally to help with election campaigns.

Even though north-eastern states like Pernambuco have traditionally been considered political strongholds for the PT, Lula’s approval ratings are slipping in the north-east, so he might have to count on an electoral alliance with the PSD in order to consolidate the PT’s influence in the state. A PSB-PT partnership would mainly appeal to left-leaning voters, rather than the centrist and centre-right voters who backed Lyra during her 2022 gubernatorial victory.

Lyra has not openly stated her intentions to shore up ties with the Lula government and seek his endorsement, but in recent months she has been making comments to the press suggesting her dissatisfaction with the PSDB for its opposition to the PT-led government. During a TV interview last month, she criticised the party for opposing the Lula government without proposing a clear project of its own.

Campos the favourite

If Raquel Lyra runs for re-election next year for the governorship of Pernambuco state, she is not considered to be the frontrunner at the moment. On 25 February polling firm Quaest released figures showing that her state government had a 51% approval rating. But, when asked who they would back in the 2026 gubernatorial race, only 28% of survey respondents said they would vote for Lyra. Recife’s mayor, João Campos, is currently the favourite, polling 56% of voter intentions. Lyra would hope that her migration from the declining PSDB to the rising PSD would give her potential campaign a boost against Campos.

The effects of the war in Iran are cascading unevenly through the Caribbean, with a strongly negative bottom line.

Speaking in April, Nigel Chalk, the director of the International Monetary Fund (IMF)’s Western Hemisphere Department, said tourism-dependent Caribbean countries are likely to be the hardest hit by the wave of global energy shortages and price spikes triggered by the US and Israeli war on Iran. He said, “The conflict carries unambiguously negative economic impacts for both economic activity and the population.” An IMF blog post by Chalk published on 17 April notes that for the tourism-dependent Caribbean economies, “their debt is high and their net energy imports are large”, averaging around 6% of GDP. Overall, the IMF says regional Caribbean GDP growth will be 5.7% this year and 8.6% next year. Admittedly, in the face of the crisis both sound very impressive.

The problem is that these high averages conceal deep and possibly damaging variations between country performances. Tourism-driven economies, including Barbados, The Bahamas, Antigua and Barbuda, and Grenada will grow on average by only 0.9% this year and by 2.5% in 2027. In contrast commodity exporters including Trinidad and Tobago, Suriname, and oil-boom Guyana will grow on average by 10.1% in 2026 and 13.5% in 2027. The IMF says the growth gap between commodity exporters and tourism-reliant states “could deepen through 2027, straining Caricom (Caribbean Community) cohesion on regional economic policy”.

In a report published on 17 April international credit ratings agency Fitch Ratings said that the war in Iran has had limited direct credit effects on the Caribbean but could have a greater effect in more severe scenarios. If for example oil prices average for the rest of this year at over US$100 per barrel (above the US$70 ‘baseline scenario’ used by the agency), and if the hoped-for recovery in remittances sent home by expatriate workers does not materialise, then pressure for sovereign credit downgrades may rise.

Food price inflation is an important part of the combination of risks facing the Caribbean. Speaking on 10 April at a hybrid event held by the United Nations’ Food and Agriculture Organization (FAO), Caricom’s assistant secretary general, Wendell Samuel, warned that the region’s “high import-dependence for food, fertilisers, and shipping services means that the external geopolitical tensions quickly morph into domestic economic challenges…inflation, food affordability, fiscal stability are not abstract risks for us. They are immediate public policy concerns.”

In fact, data for 2022, the most recent available, shows Caricom imports more than 60% of the food it consumes – as outlined by Caricom’s secretary general, Carla Barnett, in 2022, at the launch of the Caribbean Investment Forum. Barnett also noted that in 2018-2020 the import bill was US$13.76bn or roughly 5% of GDP. This is likely to rise as scarcities emerge pushing global inflation upwards.

Samuel described rising food insecurity as “the gravest risk”, noting that small changes in real income can “translate into large movements in poverty rates and consequently, food insecurity”. He called for more improved resilience through productivity-enhancing technologies, climate-smart agriculture, and strengthened regional food systems. Governments should respond to fertiliser scarcity by diversifying supplies and using alternative or organic farming inputs, Samuel stated.

Cruise lines feel the pressure

In early May Norwegian Cruise Line (NCL) cut its profit forecast for 2026 to U$1.45-US$1.79 per share, down from US$2.38 previously, citing surging fuel costs linked to the war in the Middle East and tepid demand for sea voyages. Rivals Carnival (CCL) and Royal Caribbean (RCL) have also highlighted potential hits to profits from rising fuel costs. Airlines have also been affected, cancelling some services because of the impact of jet fuel shortages. RCL said there was some resilience in the market with demand for luxury Mediterranean cruises holding up. Equity analyst Alex Fasciano of US-headquartered research firm CFRA Research was cited by Reuters in a 30 April report as saying,

The new Mexican administration thinks the country’s banks are too conservative, and is preparing legislation to try to force them to be more competitive and to lend more.

President Enrique Peña Nieto's financial reform package got off to a rather inauspicious start when its announcement, planned for April 23, had to be postponed because of a squabble among the three main national political parties that have signed up to the Pact for Mexico, an agreement in principle to support structural economic reforms. Nevertheless, officials in the administration including Finance Minister Luis Videgaray have said enough about the proposed measures to allow an initial assessment. At the root of the new approach is the belief that the country's big banks have been too conservative, protecting their profits while not doing enough to lend to small and medium-sized enterprises (SMEs) and to the household sector.

The administration believes the banking sector is too oligopolistic and as currently configured has been holding back the country's growth. Seven of the largest banks hold 78% of total banking assets between them. The finance ministry has produced data showing Mexican bank lending to the private sector represented 27% of GDP last year, vs. nearly 50% in Brazil. Interest rates charged to consumers remain extremely high (over 30% in early 2013) despite single-digit central bank policy rates.

Concrete measures in the works include steps to favour competition and the growth of small banks; legal changes to improve the collection of guarantees on unpaid debt thereby speeding up bankruptcy processes, a boost in lending by development banks, and limits on trading in government bonds, also designed to make banks lend more proactively. Deputy Finance Minister Fernando Aportela told the annual meeting of Mexican bankers that the aim was to “change the legal framework” so that banks would be able to lend more at lower interest rates. “Competition is the best tool to achieve greater efficiency and effectiveness and to create greater incentives for better customer care”, he said.

Relations between Nicaragua and Russia have strengthened under the Frente Sandinista de Liberación Nacional (FSLN) government led by President Daniel Ortega, since it took office for a second time in 2007. A high level Nicaraguan delegation headed up by the country’s finance and trade ministers, Iván Acosta and Orlando Solorzano Delgadillo respectively, recently attended the 22-24 May St Petersburg International Economic Forum (SPIEF), while in April Russia’s foreign minister, Sergey Lavrov, visited Managua where he and President Ortega reaffirmed bilateral ties.

The Ortega government, which also sent Ortega’s son, Laureano Ortega Murillo, an advisor to the state investment promotion agency, ProNicaragua, to St Petersburg, continues to trumpet efforts to strengthen bilateral trade. This reached US$109.9m in 2013 (of Nicaragua’s total trade of US$7.9bn), up from US$94.5m in 2012 (of total trade of US$8.7bn), on latest figures from the Central American Economic Integration System (Sieca). Co-operation has also remained strong; according to the most recent report on foreign co-operation (dated April 2014) from Nicaragua’s central bank, Russia was Nicaragua’s second biggest single overall donor after Venezuela in 2013, accounting for US$35.1m of a total of US$1.29bn received in foreign cooperation.

Amidst the recent flurry of diplomatic activity, top officials from both countries announced that Nicaragua is set to be one of the first countries to host land installations for GLONASS, the Russian satellite-based global navigation system (see sidebar). Russia has also expressed an interest in collaborating in the US$40bn plan, led by the Hong Kong-based company HKND, to build and operate an inter-oceanic canal (‘Gran Canal’) in Nicaragua. In an interview with the Russian news agency RIA Novosti published on 6 May, Russia’s deputy foreign minister, Sergei Ryabkov, said that Russia was considering participating in the project. These remarks were reiterated by Russia’s ambassador to Managua, Nikolay Vladimir, who told the national daily La Prensa on 17 May that Russia has an interest in the project.

Security cooperation is also intensifying, prompting some international attention from the likes of the US. Signs of this closer collaboration were evident last year, with the construction of a new Russian-built training centre for anti-drugs officials and joint anti-drugs operations [RC-13-04]. The prospect of military cooperation has drawn suspicion from Costa Rica, with which Nicaragua has a territorial dispute before the International Court of Justice (ICJ) at The Hague. In an interview with the Costa Rican daily Nación published on 4 May, four days before the Partido Liberación Nacional (PLN) government of President Laura Chinchilla left office, Costa Rica’s departing foreign minister, Enrique Castillo, expressed concern that Nicaragua is building up its military with the help of Russia. This followed remarks by Russia’s defence minister, Sergei Shoigu, back in February (which were seized on by international media), that Russia is planning to expand its permanent military presence outside its borders by placing military bases in a number of foreign countries – including Nicaragua.

These claims since have been contradicted by Russian officials, however. In March, Ambassador Vladimir denied that Russia was planning to build military bases in Latin America, claiming that Moscow was discussing with Managua a possible agreement for Russian military planes and ships to use Nicaraguan facilities for maintenance purposes only. Similarly, in an interview with “Russian media” published by the FSLN-aligned publication, el19digital, on 17 May, Foreign Minister Lavrov echoed these remarks, insisting that the two sides were discussing “technical maintenance bases” to assist the Russian navy.

• GLONASS

On 11 May, Nicaragua’s state-aligned media, el19digital, reported that Nicaragua would host “land installations” for GLONASS, the Russian satellite-based global navigation system. The GLONASS system, which performs a localization service for land- and sea-based targets comparable to the one provided by the US-managed Global Positioning System (GPS), is set to expand its coverage with new installations in 36 countries, including Nicaragua. According to the opposition newspaper La Prensa, some high-end mobile phones in Nicaragua already rely on the GLONASS system.

PARAGUAY | Bond issue. On 4 February Paraguay’s finance ministry (Hacienda) announced the issuance of US$500m in 31-year bonds in the international markets, with an interest rate of 5.4%. According to a finance ministry press release, two previous issues of 30-year bonds were at rates of 6.1% and 5.6% in 2014 and 2018 respectively, suggesting that market confidence in Paraguayan bonds is improving. The underwriters of the operation – Citibank, Goldman Sachs, and Morgan Stanley – priced the new notes with a coupon of 5.4%, or 234 basis points (bps) above US Treasury bonds, the lowest spread for any of Paraguay’s 30-year papers. Paraguay paid slightly more than Colombia, which issued US$1.5bn in 30-year bonds at 5.2%, but less than half than Ecuador, which sold US$1bn in 10-year notes at 10.75%. Hacienda noted that that the funds raised via the bonds are to be used to finance infrastructure projects (mostly road maintenance, the construction of social housing, and new prisons), capital expenditure, and to refinance a portion of Paraguay’s outstanding debt, in line with the approved 2019 national budget. According to the ministry, US$257m would be destined for infrastructure spending, US$200m to debt refinancing, and US$43m to capital spending.

URUGUAY | Inflation. The consumer price index (CPI) rose 2.17% in January compared with the previous month, Uruguay’s national statistics institute (INE) reported on 5 February. With the January figures, the accumulated inflation rate for the last 12 months now stands at 7.39%, while the yearly inflation rate in January was 2.17%. Housing was the main driver of inflation in Uruguay in January at 0.89%, explained partially by increases in renting costs (0.34%), cement (5.82%), running water (7.79%), common expenses (4.9%), electricity tariffs (17.98%), and gas tariffs (7.81%). Other sectors that recorded an increase in prices include food and non-alcoholic drinks (0.33%), and leisure and culture (0.2%).

Support for this sector of the population, which López Obrador claims has been neglected for too long, comprises key policies of his administration. According to figures from the Organisation for Economic Cooperation and Development (OECD) the proportion of 15-to-29-year-olds in Mexico that are considered NEETs reached 20.88% in 2018, equivalent to 6.4 million people.

The importance of these measures for the administration is reflected in budget increases between 2019 and 2020. The ‘Youths Writing the Future’ programme, which provides scholarships for higher education students, received M$4.5bn in the 2019 budget. Its resource allocation increased by 74% in the 2020 budget.

With the aim of increasing the number of young people in education, López Obrador also promised to create 100 new universities across the country and to scrap entrance exams to universities (currently only one in ten applicants is admitted to the country’s main university, the National Autonomous University of Mexico – UNAM). In his first state of the nation address of 1 September, López Obrador claimed that he had achieved that goal, with 815 teachers and 39,170 students enrolled in his ‘Benito Juarez Universities for Wellbeing’, who receive a scholarship of M$2,400 per month.

The ‘Youths Building the Future’ programme, which is run by the Labour Ministry (STPS), is also one of the priorities of the administration, having received M$41.4bn in the 2019 Budget. It provides apprenticeships that include a monthly stipend of M$3,600 for one year, and its goal is to benefit 2.3m 18-to-29-year-olds during López Obrador’s six-year term of office. Although it was well received by young people and by business representatives as well, the actual running of the programme has been problematic due to allegations of corruption that include illegal charging of fees, identity theft, nepotism, and non-existing employers, among others. The 2020 budget proposes a cut of 38% of resources relative to 2019. However, it continues to be paramount to the administration as it accounts for 89% of the resources allocated to the ministry.

While the country’s young population may benefit from these stipends, and they may even prevent them from going into crime, the steps taken so far will not necessarily improve their employability and their access to better paying jobs because knowledge and training are limited.

During his election campaign last year, Brazil’s President Luiz Inácio Lula da Silva had rattled investors with talk about undoing the labour market liberalisation undertaken by his party’s archenemy, centre-right former president Michel Temer (2016-2019).

Too many workers are getting sub-par pay and don’t have contracts that extend them the appropriate legal benefits, like health and pension coverage, Lula had argued. But in an effort to portray a more centrist image and allay concerns from business, he later backtracked and said he would no longer seek to scrap the 2017 law that gave workers and employers more freedom to negotiate their own contracts. Instead he would seek to reach an accord with certain industries offering low-paying part-time jobs, the so-called gig economy, and particularly transportation and food delivery apps such as Uber, iFood, and others.

But after nearly a year in office, he has struggled to even reach a limited agreement between government, labour unions, and app companies. Labour Minister Luiz Marinho said in October that there was resistance particularly by food delivery apps but that the government would send a bill to congress even without a previous accord.

However, it’s not always only the entrepreneurs who don’t want to be bound by stricter regulations. In some cases, gig workers don’t either. “Workers today don’t want to be formal employees,” said Eduardo Lima de Souza, president of AMASP, an association of courier workers in São Paulo. What unions ask for is better pay and working conditions.

Judges not politicians

Like in the US, this battle in Brazil is being fought not only in congress but in the courts as well. But it’s so far been a bit of a free-for-all in the courts, with sentences going in all directions without setting a clear precedent. In October, a regional labour court ordered food delivery company Rappi to hire all couriers who for at least six months made only occasional deliveries between 2017 and 2023. Rappi, which was fined 1% of its 2022 revenue, will appeal. Uber too was told that it must register all drivers as formal workers, which of course means paying social security contributions and respecting tomes of labour rules and regulations, many of them sensible, others utterly outdated and unrealistic. 

But upper courts tend to have a different view. Supreme Court Justice Alexandre de Moraes recently annulled a ruling by a regional labour court in favour of an app driver, saying that the legal status of such drivers is primarily a commercial relationship, not a labour one. That could mean that any attempts to extend existing labour laws to the gig economy may fail.

• Not just Brazil

Brazil isn’t the only country grappling with the issue of how to give gig economy workers better labour conditions. The US government in October 2022 proposed landmark legislation that would strengthen benefits such as federal minimum wage and collective bargaining rights for gig economy workers.

While Lula may not have made much progress in formalising contracts for the country’s 1.5m app workers, he created just as many formal jobs the traditional way, through economic growth. Unemployment fell to 7.7% in September, the lowest level since the first quarter of 2015.

Giggers work more

A recent survey by the national statistics agency IBGE showed that 1.5m workers are active in the country’s gig economy, equivalent to 1.7% of the private sector workforce. Of those, the vast majority (more than 80%) were male and most had mid-level education. Gig workers laboured 46 hours per week on average, compared with 39.6 hours in the rest of the private sector. Only 36% of them contributed to retirement, versus 61% for all other private sector workers, the IBGE study showed.

On 23 May international credit ratings agency Moody’s upgraded El Salvador, but worries over the economy are growing in the country amid rising poverty rates.

Moody’s said it had upgraded El Salvador’s long-term foreign currency issuer and senior unsecured ratings to Caa1 from Caa3, with a stable outlook, citing a “material decrease in credit risks, from very high-risk levels” and a “lower likelihood of liquidity stress episodes”. Moody’s underlined that moderate and relatively stable fiscal deficits have seen government financing needs decline from 13.2% of GDP in 2023 to 11.1% in 2024, with a further decline to 9.1% forecast in 2025. 

The agency highlighted the government’s restructuring of its external debt in April. By buying back notes maturing in 2025, 2027, and 2029 and refinancing with two different 2030 notes the government has relieved some short-term pressures, according to Moody’s. One new instrument is a US$1bn note used to finance the purchase and other spending, with a yield of 12%. While this is expensive debt for the government to service, Moody’s qualifies the yield as “elevated” rather than “distressed”.

The second new instrument is more controversial: a 2030 note that will pay a coupon of 0.25% until October 2025, when that rate will increase to 4% if El Salvador has not either agreed a financial deal with the International Monetary Fund (IMF) or achieved a B2 or B credit rating from two of the three main credit rating agencies.

President Nayib Bukele who began his second five-year term on 1 June pledging to prioritise the economy, has hailed the ratings upgrade as evidence that his management of the economy is working, and there are some bright spots. At the end of March the president of El Salvador’s central bank (BCR), Douglas Rodríguez, reported that El Salvador’s GDP grew by 3.5% in 2023, up from 2.8% in 2022, with growth of 3%-3.5% projected for this year. Rodríguez cited as the main driver of growth, falling levels of violent crime following Bukele’s crackdown on gangs which began in March 2022.

A BCR presentation highlighted an increase in foreign direct investment (FDI) to El Salvador which reached US$759.7m in 2023, up from US$170.9m in 2022 – the highest in five years. The BCR presentation also underlined growth in the tourism sector, citing a record 3.4m visitors in 2023, up 36% on 2023, while revenue generated by tourism reached US$2.75bn, up 47.8% on 2022.

While Bukele does have some positive indicators to highlight, not everything is as it seems. One example is the fall in the non-financial public sector (NFPS) deficit from 5.5% in 2021 to 2.6% in 2022 and 2.3% in 2023, its lowest level since 2007, which Moody’s references in its rationale for the ratings upgrade. The agency recognises that falling deficits are due in part to the December 2022 pension reform, which allowed the government to reduce transfers to the private pension system. This means that Bukele has been able to massage the numbers by separating the pension system from central government spending.

The reform also allowed Bukele to fudge the figures on the country’s fiscal performance through the use of securities known as pension obligation certificates (certificados de obligaciones previsionales - COP). These certificates mean the government won’t pay interest on debts with the pension fund for four years. Since the reform was passed at the end of 2022, as of April the state had taken out US$1.6bn from the pension fund, leading to allegations that Bukele is using retirement savings as a source of financing for other spending and putting the sustainability of the system at risk.

In March, a research note by British multinational bank, Barclays Bank, recommended selling Salvadorean bonds maturing in 2027 and 2029 in part due to concerns over “an opaque financing arrangement involving the recently reorganized pension system”.

More pressingly, the poverty rate has continued to rise. Official figures cited by national newspaper La Prensa Gráfica in April show that 1.9m Salvadoreans, equivalent to more than 30% of the population, were unable to afford a basic basket of goods in 2023. La Prensa Gráfica notes that this is the highest level since 2018. It cites a local economist Carlos Argueta as attributing this to the fact that inflation, which closed 2023 at 1.23%, has pushed up prices at a time when wages have remained low.

It is therefore unsurprising that a survey by local think tank Fundaungo published on 14 May found 75.1% of respondents cited the economy, as the biggest challenge facing the country, up from 28.9% end 2021. Meanwhile 48.7% of respondents said that the government should control the price of the basic basket of goods, create more jobs, or boost salaries.

These figures underline the importance of the economy in Bukele’s second term. For the moment he is riding a wave of popularity due to the success of his security policies, but this will decline if he cannot improve the economic situation. Bukele has an opportunity to impact workers’ lives by increasing the minimum wage, which has not been increased since 2021 and has to be reassessed this year by law. While leading consumer rights organisation Centro para la Defensa del Consumidor (CDC) called for a minimum wage increase of 25% and civil society group Mesa por la Soberanía Alimentaria is urging a 40% rise, this seems unlikely to happen due to the government’s precarious financial position, which also limits Bukele’s ability to ramp up social spending. 

A deal with the IMF would provide a lifeline by bringing down the overall cost of borrowing and providing a fiscal anchor that would grant access to international capital markets at more affordable rates, according to Moody’s. Negotiations with the IMF have been ongoing for years but have stalled in part due to wrangling over Bukele’s implementation in 2021 of a reform making cryptocurrency bitcoin legal tender. One reading of the situation is that Bukele has been stalling for time using increasingly complex accounting tricks as he tries to work out a way to avoid agreeing to the IMF’s usual requirements on transparency. With the issuance of a new bond linked to the signing of a deal, it appears that Bukele is attempting to have his cake and eat it too. 

It is highly unlikely that El Salvador will achieve a B or B2 credit rating with two of three major ratings agencies, and so an IMF deal would be the only remaining solution to a significant increase in borrowing costs that would further complicate El Salvador’s fiscal situation and leave the country closer to default. Bukele would then be able to try and blame the Fund for a future default, meaning that the bond has been interpreted in some quarters as an attempt to bounce the IMF into giving him a deal without the usual conditions around transparency.

In the absence of a deal Moody’s believes that “weak governance will continue to undermine policy predictability”. Bukele may also find that his attempts to kick the can down the road have a limit, and he needs to agree to the IMF’s terms in order to agree a deal and secure loans that can be used to boost investment and social spending to kickstart the economy and secure his political future.

Tourism

A report published in May by the United Nations World Tourism Organisation (UNWTO) singles out El Salvador as one of the countries in the world to have achieved the largest increases in tourist arrivals in Q1 2024 compared with levels registered prior to the coronavirus (Covid-19) pandemic which struck in 2020. According to the UNWTO report, tourist arrivals to El Salvador were up 90% in Q1 2024 compared with Q1 2019. More generally, the UNWTO highlights Central America as the subregion to have registered the second largest increase in Q1 2024 after North Africa, seeing 15% more international arrivals than before the pandemic. The report also highlights Guatemala in Central America, which it said posted growth of 41% in Q1 2024 compared with Q1 2019 with regard to tourist arrivals.

Exports down

A new report released on 5 June by the Inter-American Development Bank (IDB) highlights that in the first quarter of 2024, El Salvador experienced a 13.7% year-on-year decline in exports, further deepening the average contraction over 2023 (–8.7%).

President Javier Milei has issued a decree of necessity and urgency (DNU) to tighten Argentina’s migration laws. The new rules aim to curb abuse of public services and reduce crime by rejecting entry to foreigners with criminal records and deporting anyone who enters illegally or commits a crime. While the government has framed these measures in the context of efforts to boost security as well as reduce the strain on public finances, the anti-migrant crackdown has faced legal concerns from human rights groups such as the Centro de Estudios Legales y Sociales (Cels).

The measures were announced on 15 May and the decree itself was issued on 28 May. The DNU not only facilitates deportations but also increases the barriers to citizenship. Under the new terms, a foreign national can become an Argentine citizen by residing in the country for two continuous years or by making a “relevant investment” in Argentina – the decree mandates for the creation of a new agency tied to the economy ministry which will be dedicated to reviewing whether an investment should be deemed relevant. Regarding deportations, the decree allows for the expulsion of any foreigner who commits any crime. Foreigners with a criminal record abroad will also be barred entry.

The text of the decree also argues that foreigners were abusing the right to free healthcare, a right which all Argentine citizens are granted. Therefore, the new measures authorise public health establishments to charge foreigners that do not have permanent residence. Similarly with education, schooling is a free public service in Argentina, but Milei’s decree will allow public universities to charge tuition fees for foreign students, although the children of foreign nationals will still be allowed to attend public primary and secondary schools for free.

Many media reports in Argentina have highlighted the timing of the announcement in mid-May, which came just before voters in the City of Buenos Aires (Caba) went to the polls to elect local legislators on 18 May. The migration crackdown was seen as a political move to boost local support for Milei’s right-wing La Libertad Avanza party (LLA), rather than a response to anti-migrant attitudes among the general population, since migration rarely ranks among the top public concerns in Argentina. The country has historically been relatively open to immigrants, with legislation passed in recent decades to boost access of foreigners to public services, such as the migration law (Law 25,871) signed by former president Néstor Kirchner (2003-2007) in December 2003 and promulgated in January 2004. The last time an Argentine president sought to tighten migration laws was in 2017, when former president Mauricio Macri (2015-2019) signed an anti-migrant decree which faced major backlash from civil society and was struck down in the courts.

Criticisms of Milei’s decree

On 14 May Argentine human rights expert Pablo Ceriani Cernadas, who sits on the United Nations (UN) Committee on the Protection of the Rights of All Migrant Workers and Members of their Families (CMW), took to social media to criticise the government’s announcement. He stated that the move was for “electoral ends” and distorted reality, refuting the attempts by the government to link migration and criminality. Ceriani argued that immigrants do pay taxes in Argentina and that official data do not show that foreigners have been driving a significant rise in crime in recent decades. Buenos Aires-based human rights group Cels also released a statement on 29 May warning that the decree will also contribute to a more “intrusive and punitive” approach to migration policy, as there is the risk of authorities harassing foreigners with demands for documents.

Census data on foreigners

According to data from the 2022 census carried out by the national statistics institute (Indec), 4.2% of residents in Argentina, around 1.9m people, are foreigners. Most immigrants, over 80% of foreign residents living in Argentina, are from other South American countries, such as Paraguay (522,598 residents), Bolivia (338,299), Venezuela (161,495), Peru (156,251), and Chile (149,082). There has not been a dramatic increase in immigrants since Indec’s 2010 census, which registered 1.8m foreign residents.