LatinNews Daily - 06 August 2020 |
Main Briefing |
COLOMBIA: Uribe arrest shakes political foundations |
On 5 August, Colombia’s President Iván Duque responded to the house arrest of former president, Álvaro Uribe (2002-2010), by proposing a programme of reform to correct “failures” in the judicial system. Analysis: The debate over judicial reform in Colombia is long-running, but the timing of this latest proposal, the day after the arrest of Duque’s political mentor and key ally Uribe, has seen Duque and his government accused of posing a threat to judicial independence. Uribe, a sitting senator, remains one of the most influential (and divisive) figures in Colombian politics, and his preventative detention – announced by the supreme court (CSJ) on 4 August – sent shockwaves through the country. The ramifications for the Duque government are significant, and it can be expected to do whatever possible to clear Uribe’s name; while this will bolster support among loyal ‘uribistas’, a fierce reaction can be expected from the former president’s many critics.
Looking Ahead: The political impact of Uribe’s arrest is undeniable – he leads CD in congress, and plays a key role in uniting the party. More broadly, his critics hope that this arrest could pave the way for charges relating to alleged human rights abuses committed during his time in power – Duque, who has faced similar (albeit lesser) allegations, thus has more at stake than just his loyalty to Uribe. |
Andean |
In brief: Bolivia’s GDP growth slowed in Q1 |
* Bolivia’s national statistics institute (INE) has released data on GDP growth for the first quarter of 2020, according to which the country’s economy grew by 0.6% year-on-year, the worst quarterly performance since 2001. INE acting director, Rubén Aguilar, noted that this compares favourably with the rest of Latin America, with many countries registering GDP contractions in the first quarter, in light of a crash in global oil prices and the onset of the coronavirus (Covid-19) pandemic. However, Bolivia is expected to feel the impact of both shocks more strongly in the second quarter, after INE’s economic activity index (Igae), a monthly indicator of GDP, recorded a 5.6% decline between March and April, and a 7.9% decline between April and May. According to the most recent projection by the United Nations Economic Commission for Latin America and the Caribbean (Eclac), Bolivia’s economy could contract by 5.2% in 2020 as a whole. |
Brazil |
BRAZIL: STF orders gov’t to protect indigenous peoples from Covid-19 |
On 5 August, Brazil’s supreme court (STF) voted unanimously to maintain a ruling which orders that the federal government take further action to protect the country’s indigenous peoples from the coronavirus (Covid-19). Analysis: This is a remonstrance to the federal government led by President Jair Bolsonaro, whose widely criticised response to the coronavirus pandemic in general has been deemed particularly deficient where the country’s indigenous population is concerned. The ruling also sets an important judicial precedent for Brazil’s indigenous peoples, as it is the first time that a petition directly filed with the court by indigenous representatives, represented by an indigenous lawyer, has been accepted.
Looking Ahead: With the STF due to discuss and vote on a number of resolutions which, like this one, challenge the federal government’s actions and positions, this latest ruling could contribute to reviving tensions between Brazil’s highest court and the Bolsonaro executive. |
In brief: Ninth consecutive cut to Brazil’s interest rate |
* The monetary policy committee (Copom) in Brazil’s central bank (BCB) has cut the benchmark interest rate (Selic) by 25 basis points, from 2.25% to 2%. This expected cut brings the Selic to its ninth consecutive record low. The Copom evoked signs of a “partial recovery” of the Brazilian economy, while highlighting the still “challenging” global outlook for emerging economies, amid the economic crisis caused by the coronavirus (Covid-19) pandemic. The Copom has signalled that it will likely now interrupt this cycle of rate cuts, noting that the space for using monetary policy is increasingly small, but did not discard gradually decreasing the Selic again in the future, depending on “the perception of the fiscal trajectory as well as new information that [would] change the Copom’s current assessment on prospective inflation”. |
Central America & Caribbean |
GUYANA: Ali unveils cabinet |
On 5 August Guyana’s new president, Irfaan Ali, swore-in 19 members of his cabinet.
Looking Ahead: Ali called for efficiency and transparency from his cabinet ministers and, pointedly, spoke of the need for constitutional and electoral reform, potentially thorny issues with the now-opposition Apnu-AFC still adamant that it was denied victory by anomalies and irregularities. |
In brief: Import ban threatens to produce milk shortage in Panama |
* Panama’s food security agency, Autoridad Panameña de Seguridad de Alimentos (Aupsa), has confirmed that it has banned 26 Costa Rican dairy producers from exporting products to Panama because they did not hand in the required documents on time to renew their permits. The ban includes cooperative Dos Pinos, which owns Panamanian dairy brand Productos Nevada. The general manager of Productos Nevada, Andrés Solís, has warned that “restricting the entry of dairy products from Costa Rica puts their supply [in Panama] at risk in times of a pandemic when access to food is vital”. Solís explained that Panama has a higher per capita consumption of dairy products in comparison to other Central American countries and its domestic milk production cannot satisfy demand with the country having to import 33% of its total milk consumption. |
Mexico |
MEXICO: More signs of discontent inside gov’t |
On 5 August, audio recordings in which Mexico’s environment minister, Víctor Manuel Toledo, complains about the lack of a clear government plan and “serious contradictions” in government policies appeared in the Mexican media. Analysis: Toledo’s remarks reinforce the notion that there is growing discontent inside the government led by President Andrés Manuel López Obrador over its overall policy line, and that there are serious disagreements within the ministerial cabinet. Coming just two weeks after the resignation of López Obrador’s communications & transport minister over his differences with the government’s actions, Toledo’s complaints suggest that the division inside the López Obrador administration is deepening, which could undermine the government’s ability to achieve any of its declared objectives.
Looking Ahead: President López Obrador has yet to comment on the recordings but the speculation is that they may prompt Toledo’s departure and potentially a wider cabinet reshuffle. |
In brief: Unemployment rate rises in Mexico |
* Mexico’s national statistics institute (Inegi) has announced that the unemployment rate in Mexico rose to 5.5% in June, up from 4.2% in May and from the 3.6% observed in June 2019. This meant that 2.8m economically active people were out of work in June, an increase of 901,000 from the previous month. However, Inegi added that 48.3m economically active people were currently in work, an increase of 4.8m compared with the previous month. Unemployment has been rising as a result of the fall in economic activity due to the coronavirus (Covid-19) pandemic, which has led to the loss of thousands of jobs. But Inegi notes that following the lifting of some of the Covid-19 containment measures, economic activity began picking up in June and this has allowed some people to return to work. |
Southern Cone |
ARGENTINA: Local debt-restructuring bill approved by landslide |
On 4 August, Argentina’s chamber of deputies gave final approval to a bill for the restructuring of the US dollar-denominated sovereign debt issued under domestic law. Analysis: The vote came after Argentina confirmed it had reached a much-celebrated accord with private bondholders over the restructuring of some US$66bn of debt issued under international law. The broad cross-party support for the bill yesterday appears to dispel any doubts over whether the foreign-law debt restructuring agreement will be approved once it is put to the legislature. It likewise bodes well for congressional backing for the outcome of the upcoming debt negotiations with the International Monetary Fund (IMF), although such negotiations will typically revive historical tensions between the IMF and the more hard-line members of the ruling Partido Justicialista (PJ, Peronists).
Looking Ahead: Argentina has set a deadline of 24 August to formalise the agreement with international bondholders. The agreement will then have to be approved by the legislature. Following this process, Argentina will turn its sights to reprofiling its US$44bn debt with the IMF. |
In brief: Uruguay’s inflation slows in July |
* Uruguay’s national statistics institute (INE) has released the latest figures for the consumer price index (IPC), according to which annual inflation reached 10.13% in July. The IPC registered a monthly variation of 0.55%. This signals a slow-down in inflation after 10.36% inflation in June and a peak of 11.05% in May, which was in part attributed to a price agreement reached in May on a number of products in the basic basket of goods, due to expire next week. Inflation remains well outside the central bank’s (BCU) 3%-7% target range. |