LatinNews Daily - 02 July 2020 |
Main Briefing |
URUGUAY: Key figure leaves gov’t |
On 1 July Uruguay’s foreign minister, Ernesto Talvi, announced his resignation. Analysis: Talvi is a key political figure in the ‘multicolour coalition’ government led by President Luis Alberto Lacalle Pou. Although he had earlier in June mooted his departure before the end of the year, Talvi’s sudden decision to resign a day ahead of Uruguay assuming the pro-tempore presidency of the Southern Common Market (Mercosur) has been interpreted as a sign of internal divisions within the multicolour coalition. Should Talvi now withdraw his political support for the government, this could create governability problems for Lacalle Pou.
Looking Ahead: Following Talvi’s departure from the cabinet, there are questions over whether the PC will continue to wholly support the Lacalle Pou government in congress. Without the PC’s full support, the Lacalle Pou executive could struggle to advance its legislative agenda. |
Andean |
BOLIVIA: MAS denounces electoral exclusion efforts |
On 1 July, Bolivia’s Movimiento al Socialismo (MAS) opposition party issued a statement accusing the interim government of seeking to exclude MAS presidential candidate, Luis Arce, from competing in the upcoming general election. Analysis: Before the election was suspended in response to the coronavirus (Covid-19) pandemic, the MAS had repeatedly accused the interim government led by Jeanine Áñez (herself a presidential candidate) of using judicial persecution as a strategy to exclude MAS candidates, including Arce. Ongoing judicial processes have also been suspended during the pandemic, but with the election date rescheduled for 6 September (despite Áñez’s resistance), the interim government has appealed for these cases to be reopened, and filed a new corruption complaint against Arce. Tensions are still high following the resolution of the election date debate, and any genuine attempt to exclude Arce from the electoral process would unquestionably lead to renewed protests.
Looking Ahead: The statement also called on MAS-aligned social organisations and indigenous groups “to remain vigilant in the face of these attempts to suppress our rights”, seemingly raising the threat of renewed protests if Arce is excluded from the presidential contest. |
In brief: Q1 decline bodes poorly for Ecuador |
* Ecuador’s central bank (BCE) has reported that the country’s economy contracted by 2.4% year-on-year in the first quarter of 2020. The BCE attributed this decline primarily to reduced investment (reporting a 6% fall in gross fixed capital formation) and public consumption (down by 0.6%). These results suggest that Ecuador’s economic difficulties preceded the coronavirus (Covid-19) pandemic, the impact of which only began to be fully felt in March, at the end of the quarter. The quarterly economic contraction, despite being the largest recorded since President Lenín Moreno took office in 2017, is likely to be just the tip of the iceberg; the all-important oil sector, which has been hit particularly hard in recent months, even reported 1.9% year-on-year growth in the first quarter. The BCE currently anticipates that the economy will contract by up to 9.6% in 2020. |
Brazil |
BRAZIL: Congress votes to postpone municipal elections |
On 1 July, Brazil’s federal chamber of deputies held two rounds of voting, in which it approved a constitutional amendment (PEC) for the postponement of the country’s municipal elections, previously due to be held in October this year. Analysis: The possibility of delaying this year’s municipal elections due to the coronavirus (Covid-19) pandemic had largely been rejected by Brazil’s political representatives in the early days of the pandemic. But as the local Covid-19 outbreak has relentlessly worsened, effectively paralysing campaigning, which would have been expected to (unofficially) begin in May, and raising concerns over the public health implications of holding country-wide elections in October, political and electoral authorities have come round to the necessity of delaying the elections, and succeeded in reaching a broad consensus to achieve this.
Looking Ahead: A PEC does not require presidential sanction, and congress is expected to promulgate the amendment today (2 July), after which the supreme electoral court (TSE) will update the electoral calendar. |
In brief: Falling imports drive trade surplus in Brazil |
* Brazil has recorded its highest trade surplus for the month of June since the historical series began in 1989, as a strong US dollar and the economic crisis caused by the coronavirus (Covid-19) pandemic have led to a particularly sharp fall in imports. Brazil’s trade balance saw a positive result of US$7.46bn in June, with the value of exports totalling US$17.91bn (down 12% on June 2019), while imports totalled US$10.45bn (down 27.4% on June 2019). The economy ministry has now revised its trade projections for 2020, expecting the overall trade balance this year to be lower than was forecast in April (US$349.6bn, down from US$353bn), but now forecasting a higher surplus, of US$55.4bn (up from US$46.6bn in the previous forecast). |
Central America & Caribbean |
COSTA RICA: Gov’t forced to reintroduce restrictions |
On 1 July Costa Rica’s health minister, Daniel Salas, announced that due to a surge in coronavirus (Covid-19) cases, restrictions would be re-imposed in the greater San José metropolitan area. Analysis: With the government led by President Carlos Alvarado due to announce the details of these restrictions today (2 July), the announcement regarding San José, the largest urban agglomeration in the country, came as a record 294 new Covid-19 cases were registered in the previous 24 hours, bringing the country’s total to 3,753 cases, with 17 fatalities. This exceeded the previous daily record of 190 cases, set the day before. President Alvarado said this was the first time the government had to re-impose restrictions since it began easing lockdown measures at the start of May. The difficulties facing the Costa Rican government attracted particular attention given that the country has previously received plaudits from figures such as United Nations resident coordinator in Costa Rica Alice Shackleford and World Health Organization (WHO) representative María Dolores Pérez-Rosales for its handling of the pandemic.
Looking Ahead: President Alvarado said that the new restrictions would take effect tomorrow (3 July), and last “at least” a week. |
In brief: El Salvador registers poor GDP growth in Q1 |
* El Salvador’s central bank (BCR) has announced that the country’s GDP grew by 0.8% year-on-year in the first quarter of 2020, attributing this growth to stability in the financial sector, as lockdown measures to counter the spread of coronavirus (Covid-19) caused contractions in most other sectors. The BCR also announced that it is forecasting that El Salvador’s GDP will contract by a total of between 6.5%-8.5% in 2020, down from the 2%-4% decline forecast in April. |
Mexico |
MEXICO: Criticisms and concerns over Covid-19 persist |
On 1 July, healthcare workers staged a protest in front of the headquarters of Mexico’s social security institute (IMSS) in Mexico City, continuing to demand better working conditions amid the coronavirus (Covid-19) emergency. Analysis: Workers in Mexico’s public healthcare sector have been protesting over the authorities’ response to the pandemic and notably demanding more personal protective equipment (PPE) since the beginning of the outbreak in the country. That this remains an issue almost four months on belies the claims made by President Andrés Manuel López Obrador’s government that its strategy to combat the coronavirus has been satisfactory and successful.
Looking Ahead: Whether it was optimism on Mexico’s economic outlook, assurances that the worst of the pandemic has passed or the assertion that his government’s security policy has delivered results, López Obrador’s claims in his speech rang hollow – portending the growing criticism that his government is likely to continue facing on many fronts. |
In brief: Remittances to Mexico up in first five months of 2020 |
* Mexico’s central bank (Banxico) has released new figures which show that remittance inflows to Mexico totalled US$15.5bn in the first five months of 2020. This represents an increase of 10.4% compared with the same period in 2019, despite the effects of the coronavirus (Covid-19) pandemic. The figures show that the highest level of remittances so far this year was registered in March, with inflows totalling US$4bn. |
Southern Cone |
In brief: S&P cuts seven further Argentine bonds to ‘default’ |
* International credit ratings agency Standard & Poor’s (S&P) has downgraded seven Argentine US dollar-denominated bonds to ‘D’ (default) due to missed interest payments, in the midst of rising tensions in the country’s debt-restructuring negotiations with foreign bondholders. In a statement, S&P specified that at the end of June, Argentina failed to meet interest payments of approximately US$837m on four Argentine-law bonds, and of approximately US$582m on three foreign-law bonds. S&P noted that it already downgraded similar bonds to ‘D’ following missed payments on 22 May, and stated that all such D-ratings will remain in place pending the conclusion of the debt talks. S&P added that it expects Argentina to meet an impending Japanese-law yen-denominated bond repayment, as this is not part of the ongoing negotiations. |