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PERU | Disappointing first quarter results.

On 15 May Peru’s national statistics institute (Inei) revealed that GDP grew by 4.76% in the first quarter of 2014, below what markets had forecast. The result suggests that after posting stellar average economic growth rates of above 5% in the past couple of years, the economy is now experiencing a clear slowdown. The first quarter GDP figure also casts doubts over whether the official economic growth forecast of 5.5% for 2014 is attainable. According to Inei, the result was driven by a significant drop in activity in the mining & hydrocarbons sector in March. Year-on-year GDP growth in March was an unexpectedly low 4.9%, after local economists had forecast 5.65%. This despite the fact that all sub-sectors posted positive growth rates in the month, led by finance (13.56%) and manufacturing (5.67%). But Inei’s figures show that activity in the mining & energy sector only increased by 0.8% year-on-year in March, the lowest level since March 2013. More worryingly, production in the key mining sub-sector actually contracted by 1.7% in March. While production of copper (9.9%), lead (6.7%) and molybdenum (4.6%), were all up, production of other minerals including zinc (-18.5%), gold (-14.7%) and silver (-1.9%) were all sharply down. In fact, Inei’s seasonally adjusted figures for March show that the economy as a whole contracted by 0.4% in the month compared to February. The economic slowdown is clearly a concern for the government led by President Ollanta Humala, as it is aware that it needs the economy to continue ticking over if it is to deliver on its promises of reducing poverty and inequality in the country. A few days after the release of the Inei’s data, on 17 May, Production Minister Piero Ghezzi presented the government’s new ‘national production diversification plan’ to the members of the national industrial society (SIN). Ghezzi said the aim of the plan is to transform the country’s production structure so as to create new “engines of growth” for the domestic economy; and reduce the economy’s dependence on the high commodity prices to drive growth. Ghezzi then presented 23 proposals designed to recue operational costs and red tape across various economic sectors that will help to boost the country’s productivity.

COLOMBIA| US investors bullish on Ecopetrol.

On 20 May Colombia’s state-owned oil firm, Ecopetrol, announced that it had raised US$2bn from its issue of 30-year bonds in the US stock markets, the largest such operation by a Colombian company to date. The latest bond issue was the second operation carried out by Ecopetrol in international markets after it raised US$2.5bn on similar letters issued back in September. These are part of the plans by the Colombian government led by President Juan Manuel Santos for Ecopetrol to launch a major oil exploration programme in the country in the next couple of years. Significantly, the Ecopetrol bonds were placed at a yield of 5.92%, just 255 basis points over the yields offered by comparable US Treasury bonds. Noting that the bond issue was five times oversubscribed, Ecopetrol’s CEO, Javier Gutiérrez, said that he was “very satisfied with the issue… [which] evidences the confidence that international investors have in the firm, the country; and their appetite to invest in a firm such as Ecopetrol, which has been  able to show consistent growth in the last couple of years”. A few days prior to conclusion of the bond issue, on 14 May, President Santos opened Colombia’s 10^th international mining and oil congress in Cartagena de Indias. Santos then highlighted that in the last four years activity in the sector had increased on average by 8.9% to the point that it now accounts for 7.8% of Colombia’s GDP, adding that the hydrocarbons sub-sector’s prospects in particular were very “positive”. According to Santos, last year alone, Colombia’s crude oil reserves increased by 2.8% to over 2.4bn barrels and the expectation is that Ecopetrol’s exploration programme will reinforce this. In fact, on that same day Ecopetrol confirmed the discovery of a new crude oil deposit in the eastern Santander department. According to Ecopetrol, a new well drilled in its Bloque Playón concession is now producing 765 barrels of oil a day and the company will now conduct evaluation studies to determine the deposit’s reserve potential.

• Laptop computer assembly plant

On 14 May Bolivia’s President Evo Morales inaugurated the country’s first state-owned laptop computer assembly plant in the city of El Alto, La Paz department. The US$60m ‘Quipus’ plant is expected to produce 800 computers a day that the government will deliver free-of-charge to students and teachers in state schools across the country. Since 2011 the Morales government has been handing out laptops to students and teachers in state schools in a bid to improve education quality in the country. In a short speech Morales explained that the plant will be run by local technicians who have received training in China.

An International Monetary Fund (IMF) report on the Uruguayan economy published on 25 May praises the country’s policy response to the coronavirus (Covid-19) pandemic, but its predictions for recovery may be over-optimistic, given the latest spike in infections.

Uruguay has become an intriguing case for Covid-19 analysis. For much of 2020 the government was regularly praised for keeping the virus under control. Uruguay had one of the lowest infection rates in Latin America, attributed to its rapid action to close borders, promote voluntary health protocols, and establish effective track and trace systems. However, starting from February this year, and at least partly connected to the arrival of the new P.1 variant from Brazil, the Covid-19 infection rate has exploded. Relative to population daily new confirmed cases shot up past those of its neighbours. By end-May Uruguay had the highest per capita death rate in Latin America (and one of the highest in the world), at 14.72 per million, above that of neighbours like Brazil and Argentina.

The government led by President Luis Alberto Lacalle Pou was forced to re-impose a range of restrictions, closing public offices, gyms, and theatres, along with a temporary closure of in-person school classes. These restrictions have been put in place despite good progress in immunisation – as of end-May 50.6% of the population had received at least one Covid-19 jab, roughly on a par with the US (50.2%) and a little behind Chile (55%).

The spike in infections casts a shadow over a broadly positive IMF report, suggesting that its short-term predictions could be overoptimistic. The IMF said Uruguay benefits from strong governance, high social cohesion, and low levels of poverty, inequality and informality. It also benefits from having strong financial reserves and investment grade borrowing status from the major credit ratings agencies. That said, prior to the pandemic the country had been somewhat weakened by the end of the commodities boom in 2014-2015, with lower growth, a higher fiscal deficit, low investment, and rising inflation. 

The IMF was impressed by the initial response to the pandemic, characterised by mitigating economic and social impacts while advancing reforms to tackle the country’s pre-existing macroeconomic imbalances. It praised the fiscal transparency of temporary relief measures as well as efforts to bring inflation back under control. Following a 5.9% GDP contraction in 2020 and a setback in early 2021 because of rising infections, the IMF said the Uruguayan economy was likely to recover in the second half, taking full-year growth to nearly 3%.

Under the government’s fiscal consolidation programme, planned savings were expected to stabilise the debt-to-GDP ratio. The IMF urged the government to press on with reforms, including labour market policies designed to promote re-training and to better align wage levels with productivity. While warning that the pandemic may exacerbate youth unemployment and child poverty, the IMF praises the country’s “prudent macroeconomic management”.

Restrictions but no lockdowns

The Uruguayan government has been forced to reintroduce restrictions in recent months in the face of rising Covid-19 infections, but President Luis Alberto Lacalle Pou has point-blank refused to consider a lockdown, despite repeated calls for stricter curbs on movement from the opposition and warnings from scientific advisers as to the severity of the public health situation.

In recent weeks Nicaragua’s attorney general’s office has issued arrest orders for one of the country’s most prominent writers, Sergio Ramírez, and leading journalist Carlos Fernando Chamorro, the director of opposition media outlet Confidencial, (both in exile) on what are widely considered trumped-up charges. The arrest orders come among other signs that, as a local rights group recently warned, independent journalism is under “ferocious attack” by the Frente Sandinista de Liberación Nacional (FSLN) government led by President Daniel Ortega ahead of the November general elections.

Once a close Ortega ally, serving as his vice president (1985-1990) during Ortega’s first presidency, Ramírez split from the FSLN in 1995 along with other Sandinista dissidents, amid concerns about Ortega’s perceived authoritarianism. The recipient of various international prizes including the Premio Cervantes, the most prestigious literary award in the Spanish-speaking world, Ramírez has remained a prominent Ortega critic ever since. On 8 September the attorney general’s office accused him of acts that “foment and incite hatred and violence”. It also accused him of having received, through his Fundación Luisa Mercado, a non-profit which promotes cultural and educational development, funds from local press freedom NGO Fundación Violeta Barrios Chamorro (FVBC), whose former director Cristiana Chamorro has been accused of money laundering. The daughter of former president Violeta Chamorro (1990-1997), Cristiana Chamorro, a leading presidential contender, was the first opposition figure detained in the latest crackdown which began in late May [SSR-21-07]. Her brother Carlos Fernando Chamorro, who left the country in June after his offices were raided the previous month, was also accused on 24 August of charges including money laundering.

As well as targeting individuals, on 13 August authorities raided the Managua office of La Prensa, a leading Ortega critic and the country’s oldest and largest newspaper. Dating back nearly 100 years to 1926, La Prensa’s former editor was Pedro Joaquín Chamorro, the father of Carlos and Cristiana, whose murder in 1978 sparked the unrest which ultimately brought about the demise of the Somoza dictatorship (1936-1979). Following the raid, La Prensa publisher Juan Lorenzo Holmann was arrested for alleged customs fraud and money laundering. Condemned by the US State Department and press watchdogs like the Inter American Press Association (IAPA), the raid occurred the day after La Prensa’s board of directors announced that they were pausing the paper’s print edition due to the customs authorities repeatedly withholding imported supplies, including newsprint. In September 2019, La Prensa reported that customs authorities had been withholding imported newsprint and ink supplies, although it said that these were lifted in February 2020, allowing the publication to continue printing.

The escalating crackdown comes amid ongoing warnings from press watchdogs and human rights groups that freedom of expression is under serious threat in Nicaragua. On 9 September local human rights group Colectivo de Derechos Humanos Nicaragua Nunca Más released a report which found that since April 2018, at least 30 journalists and media workers had suffered “persecution and criminalisation as a reprisal for their work”. This includes one assassination; ten arrests; and five forced to face justice “arbitrarily tried for defamation with the clear objective of silencing investigative journalism”. It identified eight “types and levels of repression” which include criminalisation and judicialisation; attacks on physical and psychological integrity; patrimonial damage; obstacles to carrying out journalism; fiscal and customs persecution; and guarantees of impunity for aggressors.

IAHCR-OHCHR warning

On 18 August the Inter-American Commission on Human Rights (IACHR) and its Office of the Special Rapporteur for Freedom of Expression (RELE) and the Central America regional office of the UN High Commissioner for Human Rights (OHCHR) issued a joint statement “energetically condemning repeated acts of persecution carried out by the Nicaraguan authorities against the media, journalists and press workers in the context of the general elections.” According to the press release in the two months prior, the institutions had documented at least 12 journalists forced into exile for fear of reprisals.

Although left-winger Gabriel Boric was pushed into second place by far-right candidate José Antonio Kast in the first round of the presidential ballot in November, opinion polls are now suggesting positions could reverse in the second round.

Various polls are now putting Boric in the lead for the second-round ballot due on 19 December. Last week a poll by Cadem showed Boric on 39% versus 33% for Kast. This poll also showed that a large block of voters – 28% - were either undecided or did not intend to vote. A more recent Activa poll gives 40% backing for Boric, 25% for Kast, and 20% saying they will cast blank ballots or not vote at all.

A potentially key trend is that those who voted for candidates who were unsuccessful in the first round appear more likely to favour Boric over Kast in the second round. Those who supported libertarian economist Franco Parisi in the first round - he came third with 12.8% of the vote - may play a critical role. According to Activa data, 37% of Parisi’s voters say that they will support Boric in the second-round run-off, compared with only 12% who said they will support Kast.  

Another possible factor in Boric’s favour is the controversial decision by the education minister, Raúl Figueroa, on 29 November to endorse Kast publicly. In an interview with the national daily La Tercera Figueroa said he had voted for Kast in the first round, and that the government itself could not remain “neutral” when it came to fundamental freedoms, rights, and security, maintaining that “Kast’s ideas offer greater freedom”.

Cabinet ministers are not supposed to comment on electoral matters. Boric sized upon Figueroa’s comments as confirmation that “Kast is the candidate of President Sebastián Piñera and all of this government”, adding that “they intend to defend him through both legal and illegal means”. Other left-wing politicians demanded that Figueroa resign.

The Kast campaign team, seeing the potential damage to his candidacy through association with an unpopular administration, was at pains to distance itself from Piñera, insisting that there would be no continuismo under Kast.

Equal marriage bill

A Chilean senate commission this week failed to agree on the government’s equal marriage bill, which would legalise same-sex marriages. At present, same sex couples are restricted to ‘civil unions’ which do not recognise parental rights and obligations. The debate on the equal marriage bill is nevertheless expected to reach the floor of the senate next week. Isabel Amor, director of equal rights lobby group Fundación Iguales, said she believed the bill was being delayed for electoral reasons. José Antonio Kast, the far-right candidate in the presidential race, has appealed to Catholic conservatives and opposes abortion and same-sex marriage.

Costa Rica’s President Rodrigo Chaves said this week that the economy was in “excellent health” and expressed surprise at “how quickly we have moved from such a terrible state to a state where we can feel much more secure”. Chaves was responding to the release of figures showing that Costa Rica registered a fiscal deficit of 3.3% of GDP in 2023 but, crucially, a primary surplus, excluding interest payments on public debt, of 1.6% of GDP, equivalent to ₡729bn (US$1.4bn).

Total revenues amounted to ₡7.1tn (US$13.7bn), 15.3% of GDP in 2023, while total expenditure hit ₡8.7tn (US$16.6bn), the finance ministry revealed on 14 February. The fiscal deficit was actually up from 2.5% of GDP in 2022 but well down on the 5.7% average of the previous decade. The finance minister, Nogui Acosta, said that the government had succeeded in reining in spending, which grew by 0.6% in 2023, as opposed to an annual average of 5.6% in the previous 12 years, and fastened on to the achievement of a primary surplus, saying the government was paying “less interest on debt and more on social programmes, the environment, security, culture, and infrastructure”.

Monthly inflation, meanwhile, hit a five-year low in January of 0.06%, Costa Rica’s national statistics institute (Inec) revealed on 7 February. While most of the world is struggling to tame high inflation in annual terms, Costa Rica posted annualised deflation of -1.84%. According to an Inec statement, of the 289 goods and services that make up the basic basket of goods, 40% decreased in price compared with the previous period, 10% remained unchanged, and 50% increased. Notable increases were observed in the price of electricity (8.11%), mobile phone services (7.39%), and certain food items such as onions (31.53%). Notable decreases, however, were observed in the price of airfares (-25.96%), petrol (-7.04%), and tomatoes (-12.37%). 

Deflation

In January, the Inec revealed that Costa Rica had posted deflation of -1.77% in 2023. This is the lowest figure of the last 10 years. 

Trinidad & Tobago’s ruling People’s Partnership (PP) coalition, under Prime Minister Kamla Persad-Bissessar, is in its penultimate year of power before it has to face the electorate in 2015. Two ministerial resignations during the past month have been unhelpful to restoring government stability after a turbulent 2013. The economy, however, is performing relatively well.

The coalition’s main constituent component, the United National Congress (UNC), lost four electoral contests during 2013. In January 2013, the PP had failed to win a single seat in the Tobago House of Assembly election; July saw the corruption-tainted former UNC chairman and security minister Jack Warner’s victory in Chaguanas West; in October, the opposition People’s National Movement (PNM) came out on top in the local elections; and then in November, the UNC lost the St Joseph by-election.

Between the Chaguamas West defeat and the local elections defeat in October, the prime minister had attempted to regain the political initiative with her third major cabinet reshuffle, but that seemed to have as little impact on the electorate as it did on opposition leader Keith Rowley, who jeered that the prime minister was in her fourth year of “chaotic government”. He said: “It is clear that we are in the throes of the most severe political and governance crisis that our country has ever seen. The country has lost all confidence in this government and this prime minister.”

Now the prime minister has lost two ministers within a week of each other. On 25 March, she fired Glenn Ramadharsingh from his position as Minister of the People and Social Development following an incident in which the minister was accused of behaving inappropriately towards a flight attendant on a Caribbean Airlines flight from Tobago. Then on 1 April Minister of Tourism Chandresh Sharma was forced to his resign because of a police investigation into an alleged assault on his girlfriend.

Seeking to make a virtue out of a necessity, the prime minister said: “Each member of my administration must be mindful that we are held to different, higher standards than ever before, even by those who are our most bitter critics. There is no privileged escape, no allowance for arrogance, no forgiveness for indiscretion. Those days are gone, such compromise has expired. The responsible leadership which we promised to usher in a new dawn era is the new political currency.”

The better news for Kamla is on the economy, with the International Monetary Fund (IMF) delivering a generally positive verdict following its 18 March-1 April Article IV consultation. The IMF’s headline verdict was that Trinidad & Tobago “is experiencing more robust growth after several years of sub-par performance”. Growth for 2014 is projected to reach 2.5% after 1.5% in 2013.

However, the IMF did issue a mild warning note on the fiscal deficit. It said: “The mission projects a fiscal deficit of about 1.5% of GDP in 1013/14, closer to balance than envisaged in the budget statement. However, this is due in part to one-off developments, without which the deficit would be closer to 3.5% of GDP.”

It is the longer term that is concerning the IMF – in particular, the moment when Trinidad’s energy reserves run out. It says: “Fiscal policy should be set in a long-term context that ensures the country’s non-renewable energy reserves are used as a steppingstone to lasting prosperity. This requires increasing savings from the substantial resources extracted from this sector, which should be accomplished by moving the fiscal position into surplus within a few years.”

The IMF’s main source of concern is fuel subsidies, which it describes as “extremely costly and inequitable, starving the government of resources that could be better targeted towards poverty reduction.”

The really bright spot for the government is unemployment, which in the first quarter of 2013 fell to 3.7%, the lowest rate in the country’s history and a significant improvement on the previous year’s 5.4%. But this good news only provided the IMF with another reason for calling for more economic responsibility, arguing that the time had come to tighten monetary policy. It said: “The time for withdrawing the accommodative monetary stance of the past few years may be coming nearer as the unemployment rate has fallen meaningfully.”

While the region’s main coffee producer, Brazil, is cutting projections for coffee output amidst continuing troubles with pests and drought, the Honduran coffee sector is enjoying a firm recovery. In its latest report, released on 7 November, the International Coffee Organization (ICO) revised up its global coffee production forecast for crop year 2016/2017 to 157.4m bags, a 3.4 % increase on 2015/2016, due largely to the increase in production in Honduras, the ICO noted.

Production

With crop year 2017/2018 now in progress in all exporting countries, the ICO said that on the basis of new information from member countries it had revised up its estimate of total production for crop year 2016/2017 upward to 157.4m bags, which would be a 3.4 % increase on 2015.2016.

Within this, according to the ICO, Arabica production is up by 14.7 % to 101.6m bags in crop year 2016/2017, with increases observed for all three Arabica groups. Production of Colombian Milds rose by 2.7 % to 15.82m bags, with other Milds up by 15.6 % to 30.29m bags, and Brazilian Naturals up by 18.1% to 55.44m bags.

However, Robusta production is estimated to have fallen by12.2% to 55.9m bags. Coffee production increased in Africa, Mexico & Central America and South America by 5.3%, 16.3% and 8.6%, respectively, while production decreased by 9% in Asia for crop year 2016/2017.

The significant increase in production in Mexico & Central America is largely attributed to increased production in Honduras, the ICO continued, amid recovery from the coffee leaf rust outbreak in the region, as well as beneficial weather.

Exports

Total exports in September 2017 reached 8.3m bags, compared to 9.8m in September 2016. While coffee year 2016/2017 registered a decrease in its final month, total exports reached a record 122.5m bags, 4.8 % greater than the 116.9m bags shipped in coffee year 2015/2016.

Export trends in coffee year 2016/2017 broadly matched trends for coffee production, with shipments of all three Arabica groups increasing. As such, exports of Colombian Milds grew by 8% to 14.66m bags, Other Milds by 15.6 to 27m bags, and Brazilian Naturals by 2.6 to 35.8m bags.

While production of Robusta coffee declined greatly in crop year 2016/2017, shipments were relatively stable, according to the ICO report., amounting to 44.9m bags.

Brazil

Of the ten largest exporters in coffee year 2016/2017, only Brazil and Vietnam recorded decreases compared to shipments in coffee year 2015/2016. While Brazil’s exports declined by 8.8% to 31.6m bags, its production increased by 9.2% to 55m bags in crop year 2016/2017. Compared to coffee year 2015/2016, preliminary figures for exports of green and soluble coffee from Brazil suggest that exports of both forms of coffee fell by 8.8%% in coffee year 2016/2017 to 28.1m bags and 3.43m bags, respectively. Shipments of roasted coffee are also estimated to have declined, but accounted for less than 1% of total exports.

Colombia

In crop year 2016/2017, Colombia is currently estimated to have produced 14.5m bags, up 3.5% on 2015/2016, recording its fifth consecutive season of growth. Increases in exports have followed the same pattern as production, aside from 2015/2016, when a strike at the country’s ports hindered shipments. Colombia’s total shipments increased by 9.6% to 13.49m bags in crop year 2016/2017, as gains in production have provided ample supplies. Green coffee exports, which account for 93% of total exports, have increased to 12.6m bags. Shipments of soluble coffee have increased to 0.77m bags, representing 6% of total shipments in coffee year 2016/2017.

Honduras

Exports of green coffee from Honduras rose by 41.8% to a record 7.3m bags in coffee year 2016/2017. This represents the third consecutive season of growth and makes Honduras the fifth largest exporter in coffee year 2016/2017. Beneficial weather and improved yields, resulting in part from tree renewal projects, have contributed to the boost in production and exports.

Prices

Coffee prices have drifted downwards since the end of August, the ICO reported, though prices in October were fairly stable, with a drop at the end of the month. In October, the ICO composite indicator price averaged 120.01 US cents/lb, down 4.45 US cents/lb from the average price in September.

The Arabica group all showed declining trends in October. The average price for Colombian Milds, Other Milds and Brazilian Naturals fell by 4.8%, 4% and 3.9%, respectively. Compared to the Arabica groups, Robusta was relatively stable, ranging between 98.16 US cents/lb and 99.46 US cents/lb for most of the month, before falling to 94.6 2US cents/lb on the last day of the month. As a result, the monthly average for the Robusta group was marginally lower (0.8%) than in September.

Global Consumption

Finally, the ICO noted that after increasing for two consecutive years, world coffee consumption is estimated to have remained stable at 155.06m bags, based on provisional figures for coffee year 2016/2017. Given the rise in global coffee output against stable consumption, the ICO now sees coffee year 2016/2017 in surplus, after two consecutive years of deficit, with production exceeding consumption by 2.38m bags. The market is well supplied at the start of coffee year 2017/2018 by the replenishment of stocks over this past year, the ICO concluded.

Green coffee exports
Preliminary

Source: International Coffee Organisation

Outlook

A report in the Financial Times (FT) in early November noted rising nervousness amongst commodity traders and farmers as meteorologists say there is an increased probability of a La Niña weather phenomenon in the first quarter of 2018.

Caused by the cooling of the tropical Pacific Ocean, brings increased drought in the north and more rainfall in the South, including Southeast Asia, Australia and South America. The US National Oceanic and Atmospheric Administration is predicting a 55-65% chance of the weather phenomenon occurring in the northern hemisphere autumn and winter 2017-18.

In the last La Niña, in 2012, heavy rains led in Colombia caused a deadly coffee fungus to spread rapidly, damaging production and leading to an increase in coffee.

Meanwhile, the FT notes that traders are also anxious about the Brazilian coffee crop. Although the main coffee regions in the country, including Minas Gerais, have had some rain recently, there is a need for more consistent rainfall in order to boost the chances of a decent crop next year.

ARGENTINA & BRAZIL | Soybeans. The drought which has ravaged soy-rich areas in Argentina since November could cost local agricultural producers US$5bn in losses according to government estimates, but it has presented an opportunity to neighbouring Brazil. Local agricultural consultancy Agripac cut its forecast for Argentine soybean production to 47m tonnes, down 18% from the start of the season.

After the water shortage, international soybean prices hit a seven-month high, allowing competitors such as Brazil and the US to see their profits soar. This has allowed Brazil to sell its outstanding soybeans which it accumulated from the bumper crop last season (2016/2017) and begin trading those which have been picked more recently and are better quality.

Another development which could benefit Brazil’s soy industry is the opening of a so-called ‘grain corridor’ on 20 February, running from a port in Paraguay’s northern city of Concepción to Brazil’s state of Mato Grosso do Sul. This will facilitate the transport of grains between both countries by land, rather than relying on the goods being shipped by sea.

*** BAHAMAS PLEDGES TO KEEP VAT AT 10%. The new Progressive Liberal Party (PLP) government in The Bahamas is to lower the value added tax (VAT) rate to 10% in January. In its election manifesto, the PLP promised to do this for 12 months, but now Minister of Economic Affairs Michael Halkitis has pledged to make the change permanent. Speaking on 28 October, he said: “We don’t expect to have to go back to 12% next year.” He added: “We see good demand, so we believe we can exist with 10% with a growing economy and improved revenue administration.” However, the government is to impose VAT on medicines, which are now exempt. He said: “We are going back to the model that is minimal exemptions, except for those things at a lower rate. When you take everything into the entire picture you will see a reduction in the cost of living.”

*** UNEMPLOYMENT DOWN IN JAMAICA. According to the Statistica Institute of Jamaica, unemployment dropped to 8.5% in July from 12.6% at the same time in 2020. More than 50% of the increase in employment was accounted for by the ‘Construction’ and ‘Real Estate and Other Business Services’ sectors. The number of people employed in the construction sector increased by 28.3% (26,100 workers).

Supreme court (STF) justice Alexandre de Moraes has removed the court seal on files relating to the federal police (PF) investigation into members of the Brazilian intelligence agency (Abin) who allegedly carried out illegal surveillance for the benefit of former president Jair Bolsonaro (2019-2023). The case files disclosed have heightened the legal pressure on the former president, as they included a recording of a suspicious meeting which suggested that Bolsonaro might have been planning to abuse Abin’s intelligence capabilities to protect his son, Senator Flávio Bolsonaro, from corruption investigations.

Police investigators believe that the recording was made by federal deputy Alexandre Ramagem, who previously served as director of Abin (2019-2022). The PF seized his phone and computer when they searched his home in January. According to PF documents, the meeting took place in August 2020 and was attended by Bolsonaro, Ramagem, two lawyers representing Flávio Bolsonaro, and the former head of the presidential security bureau (GSI), General Augusto Heleno Ribeiro Pereira (2019-2023). During Bolsonaro’s presidency, Abin was tied to the GSI, but the agency now answers to the chief of staff’s office.   

Before he won a seat in the senate, the former president’s eldest son served as a legislator in Rio de Janeiro’s state assembly (Alerj) from 2003-2019, during which time he allegedly committed embezzlement through salary kickback schemes. In the 2020 meeting, Bolsonaro and his associates seemed to be discussing how to access confidential information about staff from the tax authority Receita Federal do Brasil (RFB). Auditors from the RFB were examining Flávio Bolsonaro’s income to check for irregularities.  

During the discussion, Bolsonaro suggests reaching out to someone named Canuto. According to national media reports, he was most likely referring to Gustavo Canuto, the head of the state-owned information technology company Empresa de Tecnologia e Informações da Previdência (Dataprev), who previously served as regional development minister (2019-2020). The PF believe that Bolsonaro and the other attendees of the meeting wanted Canuto’s help to find compromising material on RFB staff that could be used to impede the investigations. Later in the discussion, the lawyers mention that this plan could be spun as a GSI case to investigate possible abuses in the RFB, but Ramagem advises against getting the GSI involved, warning that General Heleno would be “crucified”, as it might look like political interference.

After the recording was made public on 15 July, Flávio Bolsonaro took to social media to downplay the significance of the revelations. He reiterated that his lawyers were just expressing their suspicions of a politically motivated faction within the RFB which was allegedly persecuting the Bolsonaro family.

Even though the contents of the recording seem damaging, Ramagem stated on social media that Bolsonaro had consented to the meeting being recorded. Ramagem said that “the recording was made due to information received about a person who would participate in the meeting and who had contact with the governor of Rio de Janeiro at the time” and that he was hoping to record what this individual had to say, but the person ultimately did not come to the meeting. Rio’s governor in 2020 was Wilson Witzel (2019-2021), who was impeached in 2021 due to a corruption scandal. In the meeting, Bolsonaro claimed that he met Witzel in 2019 and the former governor allegedly offered to help “resolve the Flávio case”.

Other arrests

On 11 July the federal police arrested former agents of the national intelligence agency (Abin) and former government staff suspected of participating in the ‘gabinete do ódio’, a group of presidential aides and staff led by Carlos Bolsonaro, the second son of former president Jair Bolsonaro, which allegedly spread misinformation seeking to attack Bolsonaro’s opponents. Police files indicate that Abin might have been monitoring justices of the supreme court, prominent members of congress, as well as journalists working for major national newspapers.

BRAZIL | Vale’s annual iron ore production rises. Brazil’s largest mining company, Vale, released its fourth quarter production results on 28 January. Its main product, iron ore, registered a quarterly production figure of 85.28m tonnes (t), while annual production totalled 327.66m t. This quarterly figure was down 4.6% compared with the same quarter in 2023 and down 6.3% from the third quarter of 2024, but the annual figure rose by 2.0% from the previous year.

According to Vale’s latest report, the 2024 iron ore production figure is the highest on record since 2018. The company’s report highlighted high iron production figures registered last year in its Salobo mining complex, in the northern state of Pará. The annual sales figures for iron ore also increased in 2024, with sales totalling 306.65m t, up 1.9% from the previous year.

With regards to Vale’s other mining products, the production of iron pellets and copper also saw annual increases for 2024. Annual iron pellet production totalled 36.9m t (+1.2%), while copper totalled 348,200 t (+6.6%). However, annual nickel production decreased, registering 159,900 t, down 3.0% from 2023. The annual sales figures for iron pellets and copper were also more positive. Iron pellet sales totalled 38.3m t, up 6.9% from 2023, and copper sales reached 327,200 t, up 6.3%, while annual nickel sales came to 155,200 t, marking a 7.6% decrease from the previous year.

BRAZIL | Embraer to export more planes to US. Brazil’s state-owned development bank (Bndes) announced on 27 January that it had approved a R$2.1bn (US$358m) financing package to help cover the costs for Brazilian aircraft manufacturer Embraer to export 16 passenger planes to US airline Republic Airways.

According to a Bndes press release, Embraer will deliver the E-175 planes to Republic Airways throughout 2025. The airline runs regional flights in the US and Canada, operating under different brands such as American Eagle, Delta Connection, and United Express. Its fleet already includes over 200 planes manufactured by Embraer, of the E-170 model or the E-175. 

Airline financial concerns

Brazilian airline Azul announced on 24 January that it will cease operations in 12 Brazilian cities from 10 March. In a statement released to the press, Azul explained that the rollback of its services was due to factors such as an increase in operating costs and broader supply chain issues. This decision comes over a week after it announced plans for a possible merger with Gol, another Brazilian airline that is experiencing financial woes; Gol filed for bankruptcy in January 2024. The companies signed a memorandum of understanding on 15 January 2025 to begin negotiations for a merger. If a deal can be closed, the airlines’ combined market share of the domestic air travel sector in Brazil would be over 60%.

BOLIVIA | Natural gas and hydrocarbon production on the rise. Production of natural gas and liquid hydrocarbons (oil, crude and natural gasoline) in the first quarter of the year increased respectively by 7.54% and 9.76% over the same period last year, Bolivia’s state-owned energy firm, YPFB, revealed in a quarterly bulletin. The average daily production of natural gas between January and March 2014 was 61.38m cubic metres (mcm), whereas the average output of liquid hydrocarbons over the same period reached 63,650 barrels per day (bpd). The highest monthly average output for both products was registered in February, with 62.87mcm of natural gas and 65,310 bpd of liquid hydrocarbons produced. The most productive gas plants were those of Sábalo and Margarita-Huacaya, which accounted for the 31.1% and 23.4% of total production. The gas fields of Sábalo, Margarita-Huacaya and San Alberto also generated the majority of the liquid hydrocarbon production during the first quarter, accounting for 72.4% of the total.

COLOMBIA | Cerrejón mine reopens after six days of picketing. On 26 June multinational mining firm, Cerrejón, Colombia’s leading coal producer, announced that it had successfully negotiated the lifting of the picket set up on the railway leading to its eponymous open-pit coal mine by security workers. Since 20 June, employees of the local private security firm, Sepecol, had been protesting against the termination of the firm’s contract with Cerrejón by blocking the railway that links the mine with the harbour of Puerto Bolívar, preventing coal shipments.

Sepecol’s contract is due to expire at the end of the month and Cerrejón has already revealed that it will not be renewed, putting over 700 jobs at risk. The majority of Sepecol workers belong to the Wayúu indigenous group, which made the issue even more sensitive. However, in an official communiqué, Cerrejón said thanks to the mediation of the labour ministry, the mining ministry, and the regional government of La Guajira, it had reached a deal with the workers by which 80% of them would be kept on by the new contractors. Cerrejón, which last year was affected by over a month of strikes by its workers resulting in a 4.6% fall in production that year, added that the railway has now been cleared and that coal shipments were immediately resumed.

PERU | Gasoducto Sur concession awarded. On 30 June Peru’s investment promotion agency, ProInversión, announced that Gasoducto Sur Peruano (GSP), a consortium comprised of Brazilian construction giant Odebrecht and Spanish energy firm Enagás, has been awarded the concession to build the ‘Gasoducto del Sur’ gas pipeline mega project.

The Gasoducto del Sur project, which contemplates the construction of a 1,080km pipeline to transport natural gas from central Peru’s gas fields to the south of the country, was first floated in 2007 but has faced numerous setbacks that prevented its development. The project was revived by the government of President Ollanta Humala in 2012, as part of its efforts to expand the use of natural gas fuel in the country and to promote the economic development of Peru’s southern regions. The pipeline is projected to pass through the regions of Cusco, Puno, Arequipa, Moquegua and Tacna, providing the country with a second major natural gas distribution network that will help to lower energy costs in southern Peru significantly, to benefit an estimated 600,000 households.

A ProInversión statement said that GSP secured the 34-year build/operate concession after winning the public tender process with a US$7.33bn bid and after the other main contender for the contract, the Gasoducto Peruano del Sur consortium (GPdS, comprised of GDF Suez, Sempra, Techint and TGI) was disqualified due to irregularities in its bid. This prompted GPdS to complain that it had been unfairly left out of the process and to announce that it will seek to have the tender process annulled. Edgard Ramírez, the president of ProInversión’s energy security committee, said the authorities had found discrepancies in the information presented by GPdS in support of its bid, namely that related to the level of participation of each of the firms in the consortium. According to Ramírez, GPdS has no recourse to appeal the decision.

Peru’s energy & mining minister, Eleodoro Mayorga, came out in defence of ProInversión’s decision, stating that the consortium had “self-disqualified”. According to Mayorga, “when GPdS had to present the economic and technical proposal, it presented a letter in which it modified the [consortium’s] composition”, violating the terms of the competition.

The project, which also includes the construction of two new natural gas-fired combined cycle plants in Matarani (Arequipa) and Ilo (Moquegua) for a total investment of US$15bn, is slated for completion in 2018.

• Colombian families spend more

According to data published on 29 June by a market research company, Raddar, the annual growth rate of household consumption in Colombia reached 11.7% last May, and could further expand to 13% in the next three months. Raddar attributes the increase in consumption levels to rising employment (8.8% in May, down by 2.3 percentage points from January), improved job stability and higher family income. Entertainment is the area of household expenditure that has grown the most, going up by 15.5% during the cited period. The increase in household spending has also been accompanied by a decrease in personal loans, which went from an annual growth rate of 20.56% in December 2011 to 8.7% in April 2014.

In March, a PR disaster involving tainted Brazilian meat products threatened to dampen trade after various countries issued bans on imports. But the federal government has moved quickly to allay international concerns about health and safety, meaning fallout from the scandal may be less acute than first feared.

China, Chile and Egypt have all lifted their trade restrictions on Brazilian products after the government led by President Michel Temer recalled contaminated products and gave more details about how the meat industry was being regulated. “This solves many problems because people are really worried. But as embargos are scrapped, the situation tends to get better,” said agricultural consultant Cesar de Castro Alves from MB Agro in an interview with local news site Revista Globo Rural.

China, Chile and Egypt were just a handful of countries to suspend Brazilian meat imports temporarily after a corruption probe into 21 meatpacking companies found some products had been adulterated or spoiled. Nevertheless, other major importers of Brazilian produce, such as the European Union, Hong Kong, Saudi Arabia and the United Arab Emirates, have maintained their bans for the Brazilian companies affected.

Overall, however, Brazil appears to have shrugged off the scandal in the short-term, according to the latest trade figures. Statistics released by Brazil’s commerce and industry ministry (MDIC), on 3 April show Latin America’s largest economy posted a trade surplus of US$7.14bn in March – its best figure on record since 1989. Exports were up US$20bn in March, or 20.1% compared to the same month in 2016. Imports were up US$12.9bn this year, an increase of 7.1% since March 2016. This is the third month in a row that Brazil has posted a surplus.

Exports of meat produce dipped temporarily when news of ‘Operation Weak Flesh’ broke on 17 March, but scarcely affected the overall trade balance for March. Exports for meat products dropped by US$13m from US$63m in the third week of March to US$50m in the fourth. During the month as a whole, however, exports for meat products remained strong and increased by 4.4% compared to March 2016.

Brazil’s commerce minister, Herlon Brandão, said these figures showed Brazil’s government had succeeded in restoring consumer confidence in one of the country’s most lucrative markets. “The worst is over now,” Brandão told news site Folha de São Paulo. The meatpacking scandal, in which some health and safety officials turned a blind eye to checking some products in exchange for bribes, “could have made exporters extremely cautious, but it did not have much of an impact, the government acted in time”, he said. “There was a shock after [‘Operation Weak Flesh’ went public] but we noted that the exports normalised and we finished the month with an increase in meat imports,” he added.

The automotive industry: a bright spot for the Brazilian economy

Aside from agriculture, another sector which boasted positive trade figures in March was the automotive industry. Sales of cars, buses and vehicles grew 5.5% this March compared to the same time last year, according to Brazilian automotive vendors association Fenabrave. They also grew by 39.4% compared to February last year. This is the first time Brazil’s automotive sector has grown since December 2014 (although sales were almost double then). The automotive industry was hit hard by Brazil’s economic downturn. Finance Minister Henrique Meirelles said its growth was a sign Brazil had recovered its “economic and political stability”.

• Meatpacking factory to restart operations

Brazil’s largest chicken exporter, BRF, will re-open its factory in the central state of Goiás this week. Police had forced the company to suspend its operations after BRF was named in corruption probe ‘Operation Weak Flesh’.

On 3 February, the Inter-American Institute for Agricultural Cooperation (IICA) announced its new Central American Programme for the Management of Coffee Leaf Rust (Procagica) in an attempt to solve the numerous problems facing the coffee sector in Central America. The agreement was made with the input of federation representatives, producers, associations and government institutions; and advised by the United Nations’ Food and Agriculture Organization (FAO). It involves the countries of the Central American Integration System (Sica): Belize, Costa Rica, the Dominican Republic (DR), El Salvador, Guatemala, Honduras, Nicaragua, and Panama.

Coffee leaf rust (CLR), a destructive fungal infection that affects coffee plantations, has long been the scourge of Central America’s coffee industry – one of the region’s economic pillars. The objective of the Procagica initiative is to address the challenges facing the coffee sector, such as low international market prices, climate change, aging plants, lack of access to investment, lack of labour resources, and the recent intensification of disease outbreaks. In a press release, the Costa Rica-based IICA said “[Sica countries] have joined forces to formulate a strategic plan that will give solutions to problems faced by the coffee sector.”

Perhaps most importantly, the Regional Coffee Leaf Rust Early Warning System (Sirat) will be implemented across the region and beyond, with the ten countries of the Cooperative Regional Programme for the Technological Development and Modernisation of Coffee Production (Promecafe) set to benefit: Costa Rica, the DR, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, and Peru. René León-Gómez, the executive secretary of the IICA/Promecafe project, said that, “each of the beneficiary countries has been making progress within their means, and Sirat took this progress as a starting point to develop our project further”.

Procagica will also offer a support network with 40 multidisciplinary specialists from a variety of institutions on hand to determine when an outbreak might be forthcoming. Through the system, producers will have direct access to tailored advice that can prevent falls in production, and León-Gómez confirmed that the experts will include technical specialists from the coffee sector as well as epidemiologists, meteorologists and sociologists. Procagica will also allow for the exchange of data and technical information to enable growers to make better decisions; and will seek to be a more reliable, efficient and personalised system which will consider the microclimate of the plantation and means of the individual grower and will receive financing from the Regional Fund for Agricultural Technologies (Fontagro). In the region administered by Promecafe, 34m 60 kg sacks of coffee beans are produced annually – about 25% of the arabica variety produced worldwide – and some 5m people in the region rely on the coffee trade, according to the institution’s own data.

The initiative will also be part-funded by the European Union. On 22 February, the secretary general of Sica, Vinicio Cerezo, met the head of the European Commission’s Rural Development, Food Security and Nutrition Unit, Leonard Mizzi, to discuss the importance of the coffee sector to Sica economies. Cerezo said his organisation was hoping that agreement would “go to the root of the problem to address structural issues such as migration, climate change and food security”. Mizzi underlined the commission’s interest in supporting the region’s small-scale producers and increase the involvement of international organisations in tackling the endemic problems in Central America’s coffee sector.

There has also been interest in protecting Central America’s coffee plantations from the international private sector. On 26 February, a trade mission comprised of eight delegates from the Taiwanese coffee industry, including roasters, importers and coffee shop owners, visited the region. The Taiwanese ambassador to Guatemala, John Lai, confirmed that talks were ongoing with the Central American Economic Integration Bank (BCIE) to approve a Q308.4m (US$40m) loan to invest in projects to combat coffee rust and other diseases. He said there would be a Q26.9m (US$3.5m) contribution from the Taiwanese government.

In Guatemala, the National Coffee Association (Anacafé) reported that since 2016, demand had grown 40% in Taiwan, 50m 60-kilogram sacks sold there in 2018 at a value of US$10.6m. The director of Taiwan’s Central American Trade Office (Cato), Jaime Chuang, explained that the younger generation in Taiwan prefer coffee to tea accounting for the rise in demand. According to Anacafé, there are 125,000 producers in Guatemala – 97% of whom are small traders – who exported 3.4m sacks of coffee in 2018. Anacafé data show that 193,200 hectares are affected by CLR, equivalent to 70% of the area of coffee plantations.

In Honduras, the country representative of the IICA, Franklin Marín, said that Progagica’s support in the region would lead to long- and short-term solutions being found. Asterio Reyes, the president of the Honduran Coffee Institute (Ihcafé), also highlighted the importance of dedicating efforts to building alternatives for the sector and urged Honduras to continue to work with other countries in the region. Furthering the link with private businesses, producers in 11 of Honduras’ administrative departments have been given solar drying equipment and other technical assistance as part of a transnational accord struck between confectionary conglomerate Nestlé and Honduran exporter, Cohonducafé relating back to a deal struck in 2014. Nestlé is the world’s single largest buyer of coffee, buying 850,000 tonnes of unroasted coffee – more than 18 million sacks – each year; about 2% of which comes from Central America

The president of CoHonducafé, Terence Fuschich, said that the agreement included the strengthening of growers’ technical capacities and would provide economic and educational development opportunities. The manager of the Honduran Coffee Institute (Ihcafé), Adilson Ávila, said that the market rate of between US$100 and US$105 does not even cover production costs for producers in Honduras. He said that in response to a CLR outbreak in 2012-2013, Ihcafé sent its 220 specialists around the country to teach growers how to combat the disease, but that the problem is no longer a lack of knowledge – rather a lack of resources.

As multilateral efforts continue to target CLR in an effort to eradicate it in Central America, the implementation of expert-led early warning and technical assistance systems is a boost to the fight to control the disease. With no shortage of interested parties and funding opportunities, it could be that a corner has been turned in coordinating the fight against CLR with the announcement of the Procagica initiative.

Coffee leaf rust (CLR)

Coffee leaf rust (CLR) is a disease caused by the Hemileia Vastatrix fungus which decimates coffee plantations. It particularly affects the superior arabica variety of the plant which is ubiquitous in Central America, and its destructive impact is amplified by the fact that the plant only bears fruit once a year. There is currently no cure for CLR, although some plantations have managed to reduce its impact by replanting infected crops with hybrid plants with stronger genetic resistance to the fungus. In 2012, a major increase in CLR incidence hit 10 Latin American and Caribbean countries causing coffee prices to rise, and an emergency summit in Guatemala in April 2013 determined that the epidemic was so devastating due to a lack of resources, the dismissal of early warning signs, ineffective fungicide application, lack of training, poor infrastructure, and conflicting advice. In some parts of Central America, growers have resorted to replacing arabica plants with the less-susceptible – yet inferior – robusta variety.

The United Nations Conference on Trade and Development (Unctad) has ranked Costa Rica first in Latin America and the Caribbean (LAC) for preparedness to support online shopping.

Costa Rica tops the regional ranking in the Unctad Business-to-Consumer (B2C) e-commerce Index 2020, released on 17 February, followed by Chile, Brazil, and the Dominican Republic. It is the only Central American nation in the regional top ten in the index, which gives a score out of 100 for four indicators: account ownership at a financial institution or mobile-money-service provider; the percentage of the population using the internet; a postal reliability index; and secure internet servers per million people.

According to the Unctad report, 68% of the Costa Rican population have an online money account and 86% use the internet. The country scored 63 for postal reliability and 59 for secure internet servers, giving an overall index value of 68.8. This is an increase of 3.7 points from the 2019 edition, enough to see the country rise six places in the global ranking of 152 nations to 56, up from 62.

Costa Rica scores above the LAC average on each of the four indicators. In the region as a whole, 53% of individuals have an online money account and 64% of the population use the internet; and on average LAC recorded a score of 29 for postal reliability and 50 for secure internet servers.

As regards the rest of Central America, Panama ranked 87, up from 90 in 2019. The country scores well for secure internet servers (61) but poorly on postal reliability (26). Honduras ranked 98, down from 96, with generally poor ratings boosted by a postal reliability score of 54. El Salvador ranked 106, down from 105, with only 30% of people with an online money account. Guatemala ranked 108, up from 113, scoring well on internet use (65%) but let down by a non-existent postal service which returned a score of zero. Nicaragua is bottom of Central America, ranking at 122, up from 124 in 2019. According to the Unctad report, Nicaragua also has a poor postal service, scoring two on that indicator.

As shown by these numbers, e-commerce infrastructure in Central America needs serious work. According to Unctad, large local online retailers are much less prevalent in the region, and 60%-90% of B2C e-commerce sales are cross-border shipments, predominantly from the US.

Costa Rica, which has been more politically stable and safer than the rest of Central American for years, has seen increasing e-commerce activity thanks in part to good telecommunications networks and smartphone penetration. The mobile phone penetration rate in Costa Rica was 169% in 2019 according to the latest figures from the telecommunications superintendence (Sutel). Costa Rica’s telecoms sector was liberalised in 2008, in line with legislation approved as part of the Dominican Republic-Central American Free Trade Agreement with the US (Cafta-DR). US multinational technology firm, Amazon, ships directly to Costa Rica, and Chinese online ecommerce platform, Wish.com, has also become a major player.

This process has been helped to a certain extent by regulatory reforms. In recent years Costa Rica has reformed its code of commerce, code of civil proceedings, and its procurement law in order to facilitate the development of e-commerce, according to Guillermo Varela, CEO at Asociación GS Uno Costa Rica, a local business association that works to drive innovation. However, Varela believes the aforementioned reforms are “insufficient”. He says that more changes are needed, highlighting that a digital e-commerce bill first proposed in 2013 has made no progress in the legislative assembly. The bill, which attempted to set out a legal and conceptual framework for e-commerce, was shelved in 2018, and two other bills have also failed to progress, said Varela.

Despite this, e-commerce continues to grow, and the coronavirus (Covid-19) pandemic boosted online sales. New initiatives are springing up to take advantage, including the introduction of an online marketplace called Dú at ‘Juan Santamaría’ airport in San José. The app, which launched on 22 February, allows passengers to place their order while queuing at check-in before collecting their items from pick-up zones or retailers.

Other new e-commerce platforms include Mawi, which allows workers in the informal economy to offer services such as house cleaning and carpentry; and Tenndo, which provides a platform for small and medium-size enterprise (SME) owners to maintain their own online shops.

Also indicative of this trend, on 25 February Amazon Web Services (AWS), an Amazon subsidiary, opened an office in Costa Rica, which aims to support the development of cloud computing. AWS will “invest in the local market by hiring highly trained engineers, network specialists, account managers, and other roles”, said the company in a statement, citing “growing customer demand, the broad pool of talent here, and the investment we are making to support cloud adoption in the country”.

The state-run Banco Nacional de Costa Rica (BNCR), the country’s largest commercial bank, has also moved to support e-commerce, announcing the suspension of monthly charges for the use of point-of-sale (POS) terminals on 27 January. The BNCR also says that it will work to promote the use of alternative payment systems, which are cheaper than traditional terminals, as part of efforts to support SMEs during the pandemic.

Improvement to internet infrastructure is needed, but the signs are encouraging. The length of fibre-optic cables in Costa Rica increased 146% from June 2019 to June 2020, according to a Sutel report published in February. The number of fibre-optic internet subscriptions has also increased 63% in that time, said Sutel. Federico Chacón, president of Sutel’s council, said Costa Rica needs to ensure that rural areas enjoy the same level of connectivity as urban areas. To do so Sutel has installed connections to 513 public squares throughout the country which now have free WiFi networks. “This means fibre optic internet services are also available in these communities”, Chacón said.

Work is also going on at a regional level in the shape of a new programme called ‘SMEs Online’ launched by the Central American integration system (Sica) in February. Business owners throughout the region stand to benefit from the scheme, which is supported by the US State Department and offers technical assistance to companies that want to develop e-commerce capabilities. The US$500,000 fund will provide grants worth a maximum US$3,000 to eligible firms. This could help more firms make use of the internet, and therefore boost Costa Rica’s Unctad index score for secure internet servers, which is “a proxy for online shops in the country,” according to the report.

The other key area for improvement is the reliability of the postal service, which is calculated using the coverage of home delivery service, delivery times, and how much of the population lives within a 20-minute walk or public transport journey from a post office. As a result, this score relies heavily on the development of infrastructure such as roads, which is a priority throughout Central America.

Expanded activity by Haiti's criminal gangs is adding to the country's economic problems, marked by rising food insecurity.

Addressing the United Nations (UN) Economic and Social Council (Ecosoc) in June, deputy secretary-general Amina Mohammed listed Haiti as one of the countries “of very high concern” among the world's major “hunger hotspots”.  Canada's representative at the UN, Bob Rae, said that the situation facing Haiti's population was worsening due to poor agricultural harvests, gang violence, and corruption. The Inter-American Development Bank (IDB) said it was working on a US$60m cash transfer programme to support vulnerable populations in Haiti and Honduras. Rose-May Guignard, representing NGOs active in the country, said that the gangs were disrupting market, educational, and health systems. As a result of gang violence, metropolitan areas were witnessing massive displacements of population.

Haiti’s economy has taken a severe battering over the last two years, suffering three major shocks. Starting in March 2020 the coronavirus (Covid-19) pandemic caused major harm. With up to 60% of the 11m-plus population displaying vaccine hesitancy, the virus continues to spread and cause damage. In July last year President Jovenel Moïse (2017-2021) was assassinated, ushering in a still unresolved political crisis. Haiti remains under a caretaker administration with high levels of political uncertainty. Then, in August 2021, a magnitude 7.2 earthquake hit Haiti, killing over 2,200 people, and causing an estimated US$1.6bn in losses (equivalent to 9.6% of GDP). Not surprisingly, GDP is estimated to have contracted for three fiscal years in succession: down by 1.7% in 2018/2019, by 3.3% in 2019/2020, and by 1.8% in 2020/2021. A further fall in 2021/2022 (the year to end-September 2022) is also expected.

These negative shocks came in what remains one of the poorest countries in the Western Hemisphere. Haitian per capital GDP stood at US$1,272 in 2020 on World Bank (WB) figures, compared with the Latin America and Caribbean regional average of US$7,243 in 2020. Meanwhile 59% of the population lives on less than US$2 a day while the majority of the population works in the informal sector. Half the country’s children do not attend school while the latest UN figures estimate that at least 4.5m people are forecast to need urgent food assistance this year.

In late June Haiti’s central bank (BRH) said that the quarter ending last March (second quarter of the 2021-2022 fiscal year) had been marked by rising international inflation and uncertainties over the war in Ukraine. The country’s twin deficits - on the domestic budget and on the current account - had worsened. Higher global commodity prices had raised import costs. Poor harvests and production bottlenecks had increased domestic inflation and weakened the currency. Annual inflation reached 26.7% in April, the highest in 19 years.

In the first five months of fiscal year 2022 (running to end-February) the trade deficit widened with exports of US$472.4m and imports of US$1.932bn. Government spending via the Treasury was G143.378bn (US$1.24bn), of which 40% was raised in taxes and 60% from borrowing, an unsustainable fiscal formula. The BRH said the economic outlook was “mixed”. Higher rainfall might boost agriculture and lift the economy but shortages of inputs such as fertilisers would have the opposite effect, deteriorating security conditions would hit production, increase imports, and weaken the currency.

A more dramatic commentary came from Wilhelm Lemke, president of local private sector group, Association des Industries d’Haïti (ADIH), who in June said that the Haitian government “is helplessly watching the decay of all public institutions. Everything is out of control.” He highlighted the government's “progressive loss of control” over parts of the country, a custom workers’ strike which had disrupted trade and triggered shortages, and a wave of kidnappings. He added that the government should take adequate measures to fight insecurity, to restore confidence among the population, “but also to allow businesses, which provide jobs, to ensure the continuity of their operations”. To date, gang wars are estimated to have displaced at least 17,000 people.

UN Special Representative for Haiti, Helen La Lime, explained the rising gang problem. She said kidnappings were running at an average of seven a day. Victims included schoolchildren and UN staff (one UN staff member had been killed in crossfire between rival gangs). “The pervasive and deepening sense of insecurity, exacerbated by the [national police’s] seeming inability to address the situation and the manifest impunity with which criminal acts are being committed, is dangerously fraying the rule of law,” she said.

The police force says that it has arrested hundreds of gang members and killed more than 120, but that with 12,800 officers in a country of over 11m it remains understaffed and under-resourced. La Lime said that gangs are creating a “state of terror” in Haiti, and she blamed the ongoing instability on what she called a “prolonged institutional vacuum.”

IMF approves SMP for Haiti

The International Monetary Fund (IMF) has approved a staff monitored programme (SMP) with the Haitian government. SMPs are informal agreements between national authorities and IMF staff to monitor the authorities’ economic programme. According to the IMF, the SMP – which does not include financial assistance – aims to help the government restore macroeconomic stability and lower inflation. It adds that the programme comprises “realistic measures suited to Haiti’s fragility and, if implemented, could pave the way to an upper credit tranche IMF-supported programme”. It notes that the authorities have committed to implementing a series of administrative measures, including measures to simplify the tax system, raise resources for productive spending, and reduce monetary financing of the fiscal deficit. 

Just under three months after his release from prison by means of a controversial humanitarian pardon, Peru’s former president Alberto Fujimori (1990-2000) gave a brief televised interview this week, his first public declarations since his release. Fujimori’s comments suggested that far from heading into a quiet retirement due to poor health he remains politically active. He removed any doubt that the nominally left-wing government led by President Dina Boluarte is being sustained by the right-wing Fuerza Popular (FP, Fujimoristas).

“The government of President Dina Boluarte will continue until 2026. At least Fuerza Popular and Fujimorismo have agreed as much,” Fujimori said in an interview with the conservative local television channel Willax. Fujimori said there was “no reason” to bring forward elections as demanded by protesters in anti-government demonstrations this time last year.

Boluarte accepted the ruling of the constitutional tribunal releasing Fujimori last December without demur despite it expressly contravening an order from the Inter-American Court of Human Rights (Corte IDH) in 2022 not to set him free unless he meet various requirements to warrant a pardon, including apologising to the victims of human rights abuses during his government and showing remorse for his actions, which he has never done [WR-23-49]. It has been apparent for a long time that the unpopular Boluarte is being sustained by a right-wing majority in congress spearheaded by Fujimorismo because she is too weak and dependent on it to challenge any legislative initiatives, prompting some to coin the term ‘Fujidinismo’ in reference to the marriage of convenience.

Boluarte has also retained a complicit silence in the face of repeated attempts by congress to dismiss the entire judicial council (JNJ), which has been condemned at home and abroad. The congressional subcommittee of constitutional accusations set in motion a fourth attempt to fire the seven JNJ magistrates on 16 February by voting in favour of a report calling for their dismissal drawn up by a legislator who had previously sought to impeach them.

• JNJ impeachment

The legislator who drew up the report calling for the JNJ to be impeached, Esdras Medina, also presented a previous motion for them to be dismissed last year. This, the president of the JNJ, Antonio de la Haza, said, should have disqualified Medina from having any role in the drafting of the report as he was clearly biased.

The protracted struggle between congress and the JNJ took a new twist on 20 February when one of the magistrates sitting on the body, Henry Ávila, announced his resignation. Ávila presented his resignation to the president of the JNJ, Humberto de la Haza, after a close adviser to Patricia Benavides, who was suspended by the JNJ as attorney general in late 2023 accused of corruption and collusion with members of congress, accused him of having sought ‘favours’ from the former justice minister, Félix Chero. Ávila vociferously denied any wrongdoing and dismissed the allegations made by Jaime Villanueva, who was arrested last November accused of influence peddling. Villanueva’s accusation against Ávila was just one of many in his scatter-gun plea-bargain testimony in the Benavides case, which has been widely leaked to the media.

Ávila, without producing any details, said the allegations related to an official visit he had made to meet Chero in May 2022. Ávila insisted there was nothing untoward about his visit and denounced Villanueva’s allegations as “notoriously false”, but he opted to step down to avoid any distractions and “in the interest of integrity, transparency, and the institutionality of the JNJ”. The risk, however, is that his resignation, despite his protestations to the contrary, is taken as an admission of guilt or, at best, an implicit recognition that something improper took place, and that it will be used to justify a prior determination by congress to impeach the whole JNJ. It is certainly likely to embolden congress in this intent.

Government backs down on Machu Picchu

The culture minister, Leslie Urteaga, announced on 17 February that the daily capacity at the Inca citadel Machu Picchu would be lifted by 36.5% from 4,100 people to 5,600 between 1 June and 15 October and certain public holidays. Urteaga’s announcement was another gesture to the local tourism sector, which caused the closure of the world-famous site for six days at the end of January by protesting against a government announcement that a private company, Joinnus, had been contracted to sell all of the entrance tickets online.

Protesters demanded that the government rescind the contract. Urteaga initially refused, saying that the government would not be blackmailed by a small number of people benefitting from the sale of entrance tickets on the black market, adding that a report by the comptroller general’s office had found that under the previous system of direct ticket sales some 80,000 tickets a year were unaccounted for, representing an annual revenue loss of PEN$7.5m (US$1.9m).

Urteaga subsequently backed down, announcing that tickets would be available on a digital platform run by a state not a private company, which would get off the ground by late March, while 1,000 tickets would be available for sale locally.

GUATEMALA | Condena histórica. El 2 de agosto una corte de “alto riesgo” en Ciudad Guatemala (así llamada debido a la amenaza que el acusado plantea para jueces y testigos) pronunció sentencias de cadena perpetua para los cuatro soldados de las fuerzas especiales acusados de participación en la masacre de Las Dos Erres en 1982, ocho días después de iniciarse el juicio [IL-11-30], y en medio de otros signos de una amplia campaña sobre la pasada impunidad militar. Saludadas por organizaciones internacionales de derechos humanos, la condena es la primera para una masacre perpetrada durante la guerra civil de 1960-1996.

PANAMA | Canal. Alberto Alemán Zubieta, el administrador de la Autoridad del Canal de Panamá (ACP) ha anunciado un presupuesto record de US$2,39bn para la ACP para el año fiscal 2012 (1 de octubre de 2011 hasta el 30 de setiembre de 2012), un incremento de US$292,6m sobre el presupuesto aprobado para el Año Financiero 2011(AF). El mes pasado Alemán pronosticó que el Canal batiría su propio record por tonelada embarcada a través del Canal y los peajes pagados este año, estimando que el tonelaje para el actual AF estaría entre 15m t y 20m t por encima de las 320m t que había presupuestado inicialmente. El record previo del Canal fue en 2007, antes de la crisis financiera global, cuando pudo manejar 312mt. Alemán dijo a los periodistas que él espera que el ingreso total del Canal exceda los US$2bn, que poco más del resultado del último año financiero.

Even by the exalted standards of President Hugo Chávez the televised state-of-the-nation address to congress on 13 January was of truly prodigious length. At nine-and-a-half hours long it eclipsed the longest speech ever delivered to congress. The length of the speech was far more important than the content, which was predictable, for it sent out a message to voters and to those who suspect that Chávez might be terminally ill, that he is up for the fight ahead of October’s presidential elections.

Ironically, Chávez began the speech promising to be brief. He said that long speeches made sense at the start of the revolution but that a six-hour speech was now “an abuse”. He did not clear up what he made of nine-hour speeches during his peroration. Chávez defended the government’s work in the health and oil sectors, housing and food production, and in combating drug-trafficking. He admitted failings in combating public insecurity, one of the major battlefronts on which the upcoming elections will be fought, and promised to launch a new ‘mission’ to tackle it, before straying on to Colombia’s armed conflict.

Chávez insisted that if he were needed he would be available to support peace accords in Colombia. “In truth I have never supported the Colombian guerrillas,” he said. Colombia’s president, Juan Manuel Santos, might have improved bilateral relations dramatically since succeeding Alvaro Uribe (2002-2010), but he is unlikely to be tempted to take the political risk of engaging Chávez’s services, whose ill-fated mediation efforts under Uribe in 2007 poisoned relations in the first place.

The day after Chávez’s offer to help in a negotiated peace the Colombian current affairs magazine Semana emblazoned the face of Venezuela’s newly appointed defence minister, Henry Rangel Silva, over the caption “El Amigo de Timochenko”, the leader of the Fuerzas Armadas Revolucionarias de Colombia (Farc). In a long opinion piece Semana cited Farc emails found on laptops seized by the army to argue that Rangel was a good friend of Timochenko and Chávez’s liaison with the Farc. It concluded that by appointing Rangel as defence minister Chávez was “throwing down the gauntlet” to Santos, who recently expressed his confidence that Chávez would arrest Timochenko if he was found on Venezuelan soil.

Perhaps the most remarkable part of the whole speech, however, was the impromptu response Chávez gave to Deputy María Corina Machado, who is competing in the presidential primary elections of the opposition Mesa de la Unidad Democrática (MUD) on 12 February. Machado, in an interjection of just 15 seconds deep into the eighth hour of his speech, accused Chávez of being “a liar and a thief”, referring to insecurity, food shortages and expropriations. Caught off guard, Chávez briefly lost his composure and said “You called me a thief in front of the country”. Fifteen months ago Chávez said that Machado, “that good-looking bourgeois lady”, would be his preferred rival in the presidential elections. Now, resorting to his favourite idiom “eagles do not hunt flies”, he said she was not worthy to engage him in debate until she won the MUD primary.

The official news networks went after Machado in the days after the speech, indirectly boosting her profile ahead of the primaries and possibly lifting her support for her temerity in confronting Chávez. Polls suggest that the favourite is Henrique Capriles Radonski, the governor of Miranda. Capriles has stressed that if he were to win election, he would make combating poverty a priority, along with better education and healthcare and more job creation, as well as improving management of state resources. “I don’t make promises, I get things done. I don’t spend five hours talking on the television,” he said.

• Miami consulate

President Chávez also announced the closure of the Venezuelan consulate in Miami on 13 January after the expulsion of the country’s consul general, Livia Acosta, by the US last week, amid allegations that she discussed the possibility of a cyberattack against the US [WR-12-02]. Venezuela’s opposition argued that the closure of the consulate had electoral repercussions because it was the main voting centre outside of the country, serving some 200,000 Venezuelan residents (predominantly anti-Chavistas) in the surrounding states. They will now have to travel to Houston, New York or Chicago in order to cast their ballots.