LatinNews Daily - 25 November 2021 |
Main Briefing |
HAITI: Henry swears in new government |
On 24 November Haiti’s Prime Minister Ariel Henry swore in a new 18-member cabinet, which includes eight new appointments. Analysis: Henry took over Haiti’s leadership following the July assassination of President Jovenel Moïse (2017-2021) which plunged the country into further crisis. His unveiling of the new cabinet is the fruit of intense negotiations with members of the radical opposition Secteur Démocratique et Populaire (SDP) and other opposition parties, and follows an agreement announced in September with these groups to establish a transitional government. With the country facing a multifaceted security and political crisis – most recently evidenced by the gangs’ recent blockading of fuel supplies over demands for Henry to resign, the challenges facing the new government are enormous. As well as addressing the security situation, another key task is that of staging long overdue elections to elect Moïse’s successor (Moïse’s presidential term, according to the US and international community, ends on 7 February 2022, although the opposition maintains that it ended in February this year), as well as a referendum on a new constitution.
Looking Ahead: Addressing the security crisis remains an immediate priority for the new government. This has made headlines following the kidnapping of 17 North American missionaries on 16 October, two of whom were released on 21 November. Also indicative of the worsening security situation, on 10 November the US embassy urged its citizens to leave Haiti and the following day the Canadian government announced that it was temporarily withdrawing non-essential Canadian employees as well as family members of Canadian embassy staff from Haiti. |
Andean |
COLOMBIA: Duque ‘not notified’ of US plans to remove Farc from terror list |
On 24 November, Colombia’s President Iván Duque said he was not formally notified of plans from US President Joe Biden to remove the Fuerzas Armadas Revolucionarias de Colombia (Farc) guerrilla group from the US State Department’s list of foreign terrorist organisations. Analysis: Removing the Farc from the US list of terrorist organisations is seen by many as a necessary step towards reintegrating former combatants into civilian life. However, any de-listing would likely incite opposition from members of President Duque’s hardline administration, which has been critical of the 2016 peace agreement, and may also trigger right-wing pushback in the US.
Looking Ahead: Removing the Farc from the terror blacklist would not require the authorisation of the US congress, and is the prerogative of US Secretary of State Antony Blinken. |
In brief: Colombia’s Ecopetrol to invest US$1.3bn in natural gas by 2023 |
* Colombia’s state oil company Ecopetrol has announced that it will invest US$1.3bn in natural gas exploration by 2023, both in its gas fields in Colombia and abroad. An Ecopetrol statement said that these exploration projects will take place in “the foothills of the plains [that cover much of central and eastern Colombia], the Colombian Caribbean, the Permian basin [in the US], Brazil, and in pilot projects for comprehensive research on unconventional deposits.” The statement added that eight wells have been drilled so far in 2021, and that 2022 will see “unprecedented activity” with the drilling of a further 15 wells. |
Brazil |
BRAZIL: Warnings over illegal gold rush in Amazonas |
On 24 November, Brazil’s federal public prosecutor’s office (MPF) called upon a number of public agencies, including the army, the institute for the environmental protection of the Amazon (Ipaam), and the federal environmental regulator (Ibama), to work together to halt an illegal gold rush currently underway on the Madureira River, one of the Amazon River’s largest tributaries. Analysis: Hundreds of dredging rafts have converged around the community of Rosarinho in the municipality of Autazes, Amazonas state, in the last fortnight following rumours that gold had been found in the area. The scale of this illegal gold rush and the authorities’ failure to act to contain it are testimony to the permissive atmosphere currently surrounding environmental crimes in the Amazon.
Looking Ahead: If no action is taken before the dredging rafts move on to their next mining spot, it will serve as further confirmation that the Bolsonaro government says one thing in international fora and does another at home where the environmental protection of the Amazon is concerned. |
In brief: Consumer confidence down in Brazil |
* The Instituto Brasileiro de Economia (Ibre) at the Fundação Getúlio Vargas (FGV) university has released the latest figures from its index for consumer confidence (ICC), which show that consumer confidence has slumped in Brazil in November. The ICC fell 1.4 points compared with October to 74.9 points, its lowest level since April when the country was suffering a severe wave of coronavirus (Covid-19) infections. Confidence in both the current situation and future outlook has fallen. “Consumer confidence has gone back to showing negative results. Despite the advance of vaccination, its favourable consequences in reducing cases and deaths, and the flexibilisation of restrictive measures [against Covid-19], the increase of economic uncertainty in the face of high inflation, restrictive monetary policy, and higher indebtedness of low-income families means the situation remains uncomfortable and the outlook is still full of threats”, Viviane Seda Bittencourt, coordinator of surveys at the FGV’s Ibre, explains. |
Central America & Caribbean |
In brief: El Salvador’s bitcoin bond casts more doubts over relations with IMF |
* The recent announcement by El Salvador’s President Nayib Bukele’s of a cryptocurrency bitcoin-related US dollar bond issuance “informally confirms a break from the International Monetary Fund (IMF) with an alternative, uncertain funding/growth model” according to a note circulated in the media to clients by Siobhan Morden, head of Latin America fixed income strategy at Amherst Pierpont, a US-based independent global fixed income specialised broker-dealer. The research note follows other concerns regarding the future of El Salvador’s relations with the IMF, stemming from the country’s adoption of the cryptocurrency in September. On 22 November the IMF released a concluding statement following an Article IV mission which is clear that El Salvador should not use bitcoin as legal tender. It states “Given Bitcoin’s high price volatility, its use as a legal tender entails significant risks to consumer protection, financial integrity, and financial stability. Its use also gives rise to fiscal contingent liabilities. Because of those risks, Bitcoin should not be used as a legal tender.” The Bukele government has sought discussions with the IMF over an economic reform programme that could be supported by an IMF financial arrangement to address the impact of the coronavirus (Covid-19) pandemic. The IMF expects El Salvador’s GDP to rise 10% in 2021 and public debt to reach about 85% of GDP by end-2021, having increased during the pandemic by 14 percentage points of GDP. |
Mexico |
MEXICO: López Obrador names new pick to head up Banxico |
On 24 November Mexico’s President Andrés Manuel López Obrador announced that he will nominate Victoria Rodríguez Ceja, a deputy finance minister, to be the next president of Mexico’s central bank (Banxico). Analysis: Rodríguez’s nomination was unexpected, and markets instantly recoiled amid uncertainty over Mexico's monetary policy at a time when inflation is at its highest level in 20 years. With Rodríguez lacking significant experience in monetary policy, the concern is that she could bend to López Obrador’s will and jeopardise Mexico’s economic recovery from the coronavirus (Covid-19) pandemic.
Looking Ahead: Rodríguez’s appointment will require the approval of a majority of the senate, which is dominated by the ruling Movimiento Regeneración Nacional (Morena). |
In brief: Inflation surges in Mexico |
* Mexico’s national statistics institute (Inegi) has released new figures which show that the country’s consumer price index (CPI) rose 0.69% in the first two weeks of November compared with the previous two weeks, pushing the annual inflation rate to 7.05%. Inegi director Julio Santaella tweeted that this was the highest since April 2001. Earlier this month Mexico’s central bank (Banxico) raised its benchmark interest rate by 25 basis points to 5.00%, following increases of the same amount in September, August and June. Banxico said in a report that the decision was taken in response to inflationary pressures, after Mexico registered annual inflation of 6.24% in October, well above Banxico’s 3% +/-1 inflation target range for 2021. |
Southern Cone |
PARAGUAY: ‘Progress’ in Itaipú talks but no breakthrough on pricing |
On 24 November Paraguay’s President Mario Abdo Benítez discussed electricity tariffs for energy produced by the jointly owned Itaipú hydroelectric complex, during a meeting with his Brazilian counterpart, Jair Bolsonaro, in Brasília. Analysis The jointly owned Itaipú Binacional remains one of the world’s largest hydroelectric power stations (on some days it generates more electricity than China’s Three Gorges dam). Paraguay wants to maintain the price for the surplus Itaipú electricity it sells to Brazil at US$54 per kilowatt hour (KwH), while Brazil wants the price to be reduced. After their meeting the two heads of state said that talks had “advanced” but gave no further details
Looking Ahead: Paraguay’s request to hold the electricity tariff at US$54 for next year will need to be resolved by the two governments during December. A further Abdo Benítez-Bolsonaro meeting is scheduled for 13 December. |
In brief: Argentina hails surge in trade surplus |
* Argentina’s national statistics institute (Indec) has released new figures which show that the country’s exports totalled US$6.8bn in October, up 46.5% year-on-year, while imports totalled US$5.25bn, up 31% on October 2020. This leaves a trade surplus of US$1.6bn, up 138% on the amount registered in October 2020. In the first ten months of 2021, Argentina’s exports totalled US$18.3bn, up 39.1% on the same period in 2020, while imports grew 49.1% to total US$16.86bn. |