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2019 was a quite difficult year for the Angolan economy. Although the country reached a three-year Extended Fund Facility agreement with IMF on December 7, 2018, which indeed has provided some impetus to a reform-minded Government, Angola still faces a deteriorated external environment.
Nevertheless, the authorities under João Lourenço administration show committed to the goals set under the arrangement by making some necessary reforms. The president João Lourenço presented a balance of his two years in office on October 15, in a State of the Nation address to parliament. The president said that after three years of contractions, the country will return to growth, driven by the non-oil sector and despite the slowdown in oil output.
Angola's public debt will increase (the IMF estimates that the 2019 debt-to-GDP ratio will be 111%), to which the budget poses a greater non-oil revenue mobilization through VAT and the removal of exemptions for the personal income tax among with the subsidy reform in order to reduce the ratio to be at 75% for 2024.
In Emfi Securities we estimate that GDP contracted by 0.3% in 2019, but given the authorities’ progress for increasing investments (we projected a 3.7% increase) and for moderate progress in non-oil activities, in 2020 we estimate that the economy will recover and grow by 1.2%. On the other hand, we project inflation in 2020 to be 15.3%, driven by the increase in gasoline prices and an estimated depreciation of kwanza of 23%.
Isabel Dos Santos, daughter of the former president José Eduardo Dos Santos, is accused of divert fund from the state-oil company Sonangol for her benefit during her time as head of Sonangol between 2016-17. This is to a report made by the International Consortium of Investigative Journalists after gaining access to more than 715,000 official documents, known as Luanda Leaks. The government already announced that they will do everything in order to take Dos Santos into justice. Isabel Dos Santos, who has been living outside Angola for the past two years, has a net worth of about USD 2 bn, according to Bloomberg.
Osvaldo Joao, state secretary for finance and treasury, said that public debt likely to fall to 65% of GDP “by around 2024”, compared with initial forecast of 2021-22, due to “external dynamics”. These factors include weak economic growth, oil price variations. However, the IMF is aware of the situation and continues to approve disbursement under the current USD 3.7 bn program. Finance Minister, Vera Daves, forecast Angolan debt rising to 97% of GDP at end-2019.
BP BP.L signed an agreement with Angola aimed at acquiring oil further exploration rights, state news agency Angop reported, the latest in a flurry of agreements between oil majors and Africa's second biggest exporter. The deal with country's petroleum regulator ANPG defines the terms for a risk-sharing contract on offshore oil block 18/15 and was signed on the sidelines of the UK-Africa Investment Summit on Monday. BP is already a partner in ongoing production in Block 18, called the Greater Plutonio development.
Continue ReadingPDVSA’s oil output has been declining steadily since 2009 due to a combination of factors such as the loss of skilled workers - with workers systematically quitting the company, the fast drop of production in mature fields, structural disinvestment and mismanagement, the lack of equipment, obstacles for exporting oil, port congestion and, more recently, financial sanctions. However, the pace of the decline accelerated after US sanctioned PDVSA, which barred Venezuelan oil exports from its major market: the US.
Since November oil production and exports recovered, when Indian refiner Reliance and Spanish Repsol, increased their crude purchases in exchange of refined products, which allowed PDVSA to drain its inventories and increase production.
Based on the current futures oil prices, we expect the average price for Venezuela’s oil basket to remain near current levels. Nevertheless, because of the average decline in production and exports, we expect the value of oil exports to decline from USD 14.1 bn in 2019 to USD 11.9 bn in 2020. This implies that it will prove difficult for the economy to avoid further import cuts in 2020.
The opposition leader, Juan Guaidó, who is banned from leaving Venezuela traveled to Colombia during the weekend to meet with Duque and Pompeo. On January 19, Guaidó was received with official honors by President Iván Duque, according to images transmitted by the Colombian presidency. Through his Twitter, Duque said that at the meeting they shared advances in attention to migrants based in Colombia, and stressed the importance of restoring democracy in Venezuela.
Today, the opposition leader was at the Hemispheric Summit against Terrorism, where he held a meeting with the Secretary of State of the United States, Mike Pompeo. As part of his tour of Europe, it was learned that Guaidó will travel to Brussels to meet with Josep Borrell (representative of the European Union), and then go to Madrid, where he will be received by the Minister of Foreign Affairs. In addition, it was learned that Guaidó will attend the annual meeting of the World Economic Forum in Davos, Switzerland.
In an interview with Washington Post published on January 18, Nicolas Maduro said he is calling to start direct negotiations with U.S President, Donald Trump. Maduro said former national security adviser John Bolton and Elliot Abrams, the state department’s special envoy for Venezuela, had given President Donald Trump bad advice.
Continue ReadingLebanon's Prime Minister Hassan Diab, elected on December 19 -almost two months after Saad Hariri's resignation- is in the process of forming a cabinet. In the recent history of Lebanon, government formation takes between 6 and 9 months. However, the economic crisis and the social outbreak that the country is experiencing makes necessary a rapid formation of a new government.
Demonstrators, who have been in the streets for 3 months, demand that a technocratic government be formed without the inclusion of the political elites that currently govern. Diab proposed the formation of an 18-member technocrat cabinet in the first weeks of January. However, the political parties that supported his election as Prime Minister, Hezbollah and the allies, disagree and want politicians to also integrate the new cabinet.
We think that It is more likely to form a technopolitical government because we do not believe that the parties completely give up their quotas of power, especially the Christian party of Aoun and the Shiites, Hezbollah and Amal. For a government like this to last, protesters should give in to the idea of a strictly technocratic cabinet. For this, it would be important to include the Sunni party of Saad Hariri, who previously refused to participate, because most of the protesters are Sunni.
The Emfi Securities scenario contemplates that the government only takes measures to adjust spending and income without restructuring debt or devaluing the exchange rate. These measures would not alleviate the economic crisis in the short term. Similarly, if political leaders delay in choosing cabinet formation, this stalemate will continue.
On January 16, caretaker Finance Minister Ali Hassan Khalil announced that Lebanon is on the brink of forming a new government. Speaking to reporters after a meeting between Prime Minister Hassan Diab and Speaker Nabih Berri, Khalil said the new cabinet would be comprised of 18 specialist ministers. "Today I think that we have progressed to a very big extent and we can say that we are on the doorstep of forming a new government," said Khalil.
Today, Britain's finance ministry on said it had added Lebanon's entire Hezbollah movement to its list of terrorist groups subject to asset freezing. The ministry previously only targeted the Shiite organisation's military wing but has now listed the whole group after the government designated it a terrorist organisation last March. The change requires any individual or institution in Britain with accounts or financial services connected to Hezbollah to suspend them or face prosecution.
Today, Sheikh Ali Daamoush, A senior Hezbollah official warned that Lebanon could fall into chaos and “complete collapse” unless a new government is formed. “Losing the opportunity to form a government now means that the country is headed into chaos, disorder and total collapse,” Daamoush warned.
Today, a person taking part in negotiations for the government formation told The Associated Press that “there are some problems” they are trying to solve. He said some political groups are insisting the government be made up of 24 ministers to have more representation, while Diab is insisting on 18.
Continue ReadingIn the fiscal scenario that would prevail in 2020 with Fernández's economic program, we expect that the primary fiscal deficit would be 0.87% of GDP, which is an improvement compared to the primary deficit of the Tax reform scenario mentioned earlier (-1.58%).
The fiscal measures implemented in December, especially tax hikes and the return of distortive taxes such as the “tourist dollar” are policies applied during Cristina Fernández de Kirchner’s administration. Although they can temporarily reduce the primary fiscal gap, they have a negative impact on exports and long-term economic growth.
The suspension of the Fiscal Pact will cause the provinces to receive higher revenues from the capital gains tax and bank check tax (impuesto del cheque), which could improve the fiscal balance by 2020. Although the provinces do not seem to face solvency problems, they experience liquidity problems to meet their debt commitments.
During the third quarter of 2019, Argentina's real GDP contracted 1.7% year-on-year, explained by the drop in private consumption of 4.9%, which is the component of aggregate demand with the greatest weight. The inflationary acceleration experienced during this quarter, driven by the uncertainty generated by the result of the primary elections (PASO) and the depreciation of the Argentine peso, resulted in a fall in real wages, which ultimately had a negative impact on private consumption.
Chubut province plans to reprofile its USD 855 mn debt in a plan that seeks lower coupon and a four-year suspension on principal payments for its USD bonds due 2026, according to Debtwire citing comments by Chubut's Finance Minister on January 15. The Province has already started talks with bondholders. And it plans to cut expenses, open a voluntary retirement plan for public sector employees, freeze hiring for 4 years, reduce political jobs by 15%, and raise taxes to increase collection by 50% in four years.
On Sunday, IMF’s Western Hemisphere Director Alejandro Werner said that formal talks will begin at the end of January when the Fund mission will travel to Argentina. Werner mentioned that Argentina officials have expressed an intention to restructure Fund payments due in 2022 and 2023 in the context of a program.
Governor Axel Kicillof announced that he could not pay the amortization and interests (USD 275 mn) scheduled for January 26 and urged creditors to accept a deferral until May.
Inflation closed 2019 at 53.8%, one of the highest levels in three decades. In December, Consumer price index increased 3.7% from 4.3% in November. The groups of food and non-alcoholic beverages, alcoholic beverages and tobacco, clothing and footwear and education registered marked deaccelerations, which more than offset a notable increasing in prices for housing and utilities and communication.
Continue ReadingOn February 21 of last year, Moreno announced that Ecuador had reached a USD 4.2 bn staff-level agreement with the IMF and, on March 11, the Executive Board of the IMF officially approved the Extended Fund Facility (EFF) arrangement with the country.
IMF assistance fell short and the government chose to carry out liability management to repurchase the 2020 bonds in June. Similarly, on September 24, Ecuador tapped the markets again with a 5 and 10-year bond issue for USD 2 bn. With these operations, the government exceeded the amount established in the 2019 budget for financing through bonds, which was at USD 1,750 mn, closing the year at USD 4,125 mn instead.
It wasn't until October 1 that President Moreno announced the elimination of gasoline and diesel subsidies as part of a broader package of economic reforms. However, the announcement was followed by nearly two weeks of widespread protests, curfew and halt of activities, provoked by the removal of diesel and gasoline subsidies.
After a long rally in the National Assembly, the government submitted a revised tax law to the Assembly on December 9. It aims to raise over USD 500 mn, according to the estimates of the Ministry of Finance, below the USD 750mn of the previous emergency economic package.
In the coming months, we expect the submission of the organic budget code, central bank code and a labor reform. With these remaining reforms, Ecuador would be closer to the commitments made to the IMF; however, for 2020 we expect that Moreno will have a slow approach in this.
The World Bank presented its Global Economic Outlook report on January 8, 2020. The multilateral estimates that in 2019 the GDP of Ecuador had a decrease of 0.3%. The multilateral also projects that during 2020 the Ecuadorian economy will recover and grow 0.2%.
The National Court of Justice informed on Wednesday, January 8, 2020 that the Court of Judgment of the Sobornos case, in which former President Rafael Correa is accused, is composed of judges Iván León, Marco Rodríguez and Iván Saquicela. The Court indicated that between León, Rodríguez and Saquicela it will be decided who will conduct the trial, as the main judge. After this draw is made and the magistrates "has knowledge of the Sobornos case" the date and time will be indicated for the trial hearings.
The president of Ecuador, Lenín Moreno, during an interview with various media outlets, indicated that the goal of targeting fuel subsidies is maintained, said that "there are estimates that it is the month of February, March or April". The president also pointed out that diesel could enter this focus, but that the results of all the tests and studies being done in this regard should be awaited.
Continue ReadingAxel Kicillof’s government released early on Tuesday a public statement calling for BUENOS 10.875 2021 (BUENOS 21O) bondholders to voluntarily agree on a 96-day delay on the amortization, which would be pushed from January 26 to May 1.
The delay proposal released early on Tuesday sent the bonds tumbling to 59.25 (3.89 cents on the dollar down from the previous day’s close). It also prompted falls in the Argentina sovereign bonds (on average 0.46 down) and on the rest of BUENOS bonds (0.98 down).
Current pricing on the BUENOS 21O bond still implies a non-trivial probability of the amortization being carried out. We estimate this implied probability at 59%, down from 67% on Monday.
We see the probability of the province coming through with the payment as closer to 30% than 58%, implying that we would be buyers of the bond at a price closer to 50.
Continue ReadingIn 2019 the country began registering a moderation in the economic activity, going from a growth of 6.3% in the last quarter of 2018 (7% in the whole year) to 3.7% in the second quarter of 2019 (2Q19), the first result below its potential in 6 quarters. Up to November, the economic activity has expanded 4.9% and we expect to close the year at the same level, mainly driven by an 5.3% expansion in the domestic demand and 4.3% in private consumption.
We are optimistic about the Dominican Republic’s economic performance in 2020. We expect the growth to be around 5.5%, as the tourism sector stabilizes. This year’s performance will be also driven by a more favorable external outlook, an expansionary fiscal policy in the context of the presidential elections and a favorable monetary policy.
The major downside risks are, on the domestic front, uncertainty ahead of the 2020 presidential elections that could led to more cautious investment environment and deceleration of the domestic demand, and, externally, a higher than expected slowdown of the global economy that could weaken exports, tourism and remittances receipts, affecting economic activity and fiscal income.
After local newspaper El Día reported last week about a USD 2,000 limit in foreign currency purchases, the Central Bank stated that there is no shortage of foreign currency in the country. However, the institution admitted that the FX market is under pressure due to international geopolitical uncertainty and the risk of a slowdown in the global economy growth. Despite the rumors, the exchange rate has remained stable, with an accumulated depreciation of 0.01% since the beginning of the year.
The Central Electoral Board (JCE) presented an updated calendar with administrative, logistical and electoral training activities leading to the municipal elections scheduled for February 16. From January 13 to 16, the JCE will be conducting internal tests in the Automated Voting equipment that will be used in 17 municipalities and in the Federal District.
Consumer prices rose 0.20% in December 2019 against the previous month. With this result, 2019 inflation closed at 3.66%, below the medium point of the target range set in the Monetary Program (4.0%±1.0%). The result was mainly driven by increases of Food and Non-Alcoholic Beverages (7.13%) and Alcoholic Beverages and Tobacco (7.26%).
President Danilo Medina called the Senate and the Chamber of Deputies to meet within 30 days, starting on January 15, to discuss the various bills that are currently under consideration. Among these are those on public-private partnerships, as well as one meant to modify the surcharge for late payments to the Social Security System (SDSS), among others.
Continue ReadingThe existence of two dueling legislative boards is an escalation of the internal conflict, limiting Guaidó maneuvering space since he is unable to enter the National Assembly (AN). The event could translate into an increase in internal pressure through the revival of civil protest, but we see it as highly unlikely.
On the external side, we don’t believe this chaotic bet to stop Guaidó reelection by using security forces, and appointing an alternative AN board, was an attempt to gain legitimacy in a broad sense. Instead, it appears geared to please the Maduro regime’s main international ally: Russia.
It seems like, contrary to the 2019 situation, when the opposition and Guaidó had the leading voice in the political front and the Maduro regime reacted to it, early 2020 will be characterized by a role reversal, in the sense that the Maduro regime will enjoy the initiative. The Parra board’s main role will be to play according to Maduro’s de facto government convenience, both in the economic and political fronts.
Guaidó still enjoys the support of the international community and, particularly, of the US. In this regard, Elliot Abrams, US envoy for Venezuela, said today that Washington was looking into additional sanctions to put pressure on the Venezuelan government. However, in our view, at this point the US has limited viable options to increase international pressure, besides a more aggressive use of secondary sanctions, which we see as unlikely. It thus appears that Guaidó has limited options going forward, and Maduro has now the upper hand.
Continue ReadingThe 2015 restructuring put the public debt onto a sustainable trajectory. Debt relief by private sector creditors during the 2016-2020 period was a total of USD 8 mn. With the fiscal adjustment provided in the ECF program of 8.5% of GDP, the debt-to-GDP ratio decreased from its peak of 104% in 2013 to 80% in 2016.
Grenada remains in external public debt distress according to the IMF because it has USD 19 mn (1.6% of GDP) in unresolved arrears to official bilateral creditors. Nevertheless, debt is on a sustainable path, the country almost reached its IMF target of debt-to-GDP ratio (60% of GDP) two years before the year set by the Fund. Fiscal consolidation, robust economic growth and the 2015 debt restructuring have paved the way for debt sustainability.
On October 18, the government of Mia Mottley and the Barbados External Creditor Committee issued a joint statement announcing an agreement on the restructuring of the country’s USD-denominated debt, with a face amount of USD 708 mn (13.5% of GDP).
The restructuring agreement implied a haircut of 25.2% on principals amount and accrued interest. Broadly speaking, the government postponed scheduled short-term principal payments (from 2018 to 2022) to the medium term (2025 to 2029), which represents a more sustainable debt path.
Taking into account the effect of external debt restructuring, we estimate that the gross public debt to GDP ratio reaches 121.1% in December 2019, which represents a decrease of 3.1 pp over June 2019 (124.2% of GDP). The reason why the debt-to-GDP ratio has not decreased to a lesser extent in the middle of a successful restructuring and significant fiscal adjustments is that Barbados maintains poor economic performance.
Adverse court rulings, progressive weakening of the financial system and the passage of three hurricanes between 2007 and 2016, slowed GDP growth and widened the current account. As a consequence, Belize has carried out three debt restructurings: on 2006-07, 2012-13 and 2016-17.
The last restructuring carried out in 2016-2017 effectively brought liquidity relief to the country, although the Debt to GDP ratio remained almost unchanged as there was no nominal haircut. The difference with respect to the two previous restructurings was the execution of measures aimed at greater fiscal consolidation – at that time the goal was to reach a primary surplus of 2% of GDP, a feat that was accomplished in 2018 – however, in order to reduce the debt stock, the primary surplus must be higher.
Until now, the government has been working on bills to improve the medium and long-term fiscal figures. In broad terms, Dean Barrow seems committed to keeping a sustainable fiscal and debt path and has the majority within the Senate on his favor.
However, given the Superbond’s performance, investors seem to be skeptical regarding both the sustainability of the current economic performance and the willingness of the government to adopt fiscal measures. The country is widely exposed to external risks, and its high Debt to GDP ratio level makes it fragile and in a delicate position to face an unexpected economic downturn.
Continue ReadingAdverse court rulings, progressive weakening of the financial system and the passage of three hurricanes between 2007 and 2016, slowed GDP growth and widened the current account. As a consequence, Belize has carried out three debt restructurings: on 2006-07, 2012-13 and 2016-17.
The last restructuring carried out in 2016-2017 effectively brought liquidity relief to the country, although the Debt to GDP ratio remained almost unchanged as there was no nominal haircut. The difference with respect to the two previous restructurings was the execution of measures aimed at greater fiscal consolidation – at that time the goal was to reach a primary surplus of 2% of GDP, a feat that was accomplished in 2018 – however, in order to reduce the debt stock, the primary surplus must be higher.
Until now, the government has been working on bills to improve the medium and long-term fiscal figures. In broad terms, Dean Barrow seems committed to keeping a sustainable fiscal and debt path and has the majority within the Senate on his favor.
However, given the Superbond’s performance, investors seem to be skeptical regarding both the sustainability of the current economic performance and the willingness of the government to adopt fiscal measures. The country is widely exposed to external risks, and its high Debt to GDP ratio level makes it fragile and in a delicate position to face an unexpected economic downturn.
On October 18, the government of Mia Mottley and the Barbados External Creditor Committee issued a joint statement announcing an agreement on the restructuring of the country’s USD-denominated debt, with a face amount of USD 708 mn (13.5% of GDP).
The restructuring agreement implied a haircut of 25.2% on principals amount and accrued interest. Broadly speaking, the government postponed scheduled short-term principal payments (from 2018 to 2022) to the medium term (2025 to 2029), which represents a more sustainable debt path.
Taking into account the effect of external debt restructuring, we estimate that the gross public debt to GDP ratio reaches 121.1% in December 2019, which represents a decrease of 3.1 pp over June 2019 (124.2% of GDP). The reason why the debt-to-GDP ratio has not decreased to a lesser extent in the middle of a successful restructuring and significant fiscal adjustments is that Barbados maintains poor economic performance.
The 2015 restructuring put the public debt onto a sustainable trajectory. Debt relief by private sector creditors during the 2016-2020 period was a total of USD 8 mn. With the fiscal adjustment provided in the ECF program of 8.5% of GDP, the debt-to-GDP ratio decreased from its peak of 104% in 2013 to 80% in 2016.
Grenada remains in external public debt distress according to the IMF because it has USD 19 mn (1.6% of GDP) in unresolved arrears to official bilateral creditors. Nevertheless, debt is on a sustainable path, the country almost reached its IMF target of debt-to-GDP ratio (60% of GDP) two years before the year set by the Fund. Fiscal consolidation, robust economic growth and the 2015 debt restructuring have paved the way for debt sustainability.
Continue ReadingOn October 18, the government of Mia Mottley and the Barbados External Creditor Committee issued a joint statement announcing an agreement on the restructuring of the country’s USD-denominated debt, with a face amount of USD 708 mn (13.5% of GDP).
The restructuring agreement implied a haircut of 25.2% on principals amount and accrued interest. Broadly speaking, the government postponed scheduled short-term principal payments (from 2018 to 2022) to the medium term (2025 to 2029), which represents a more sustainable debt path.
Taking into account the effect of external debt restructuring, we estimate that the gross public debt to GDP ratio reaches 121.1% in December 2019, which represents a decrease of 3.1 pp over June 2019 (124.2% of GDP). The reason why the debt-to-GDP ratio has not decreased to a lesser extent in the middle of a successful restructuring and significant fiscal adjustments is that Barbados maintains poor economic performance.
Adverse court rulings, progressive weakening of the financial system and the passage of three hurricanes between 2007 and 2016, slowed GDP growth and widened the current account. As a consequence, Belize has carried out three debt restructurings: on 2006-07, 2012-13 and 2016-17.
The last restructuring carried out in 2016-2017 effectively brought liquidity relief to the country, although the Debt to GDP ratio remained almost unchanged as there was no nominal haircut. The difference with respect to the two previous restructurings was the execution of measures aimed at greater fiscal consolidation – at that time the goal was to reach a primary surplus of 2% of GDP, a feat that was accomplished in 2018 – however, in order to reduce the debt stock, the primary surplus must be higher.
Until now, the government has been working on bills to improve the medium and long-term fiscal figures. In broad terms, Dean Barrow seems committed to keeping a sustainable fiscal and debt path and has the majority within the Senate on his favor.
However, given the Superbond’s performance, investors seem to be skeptical regarding both the sustainability of the current economic performance and the willingness of the government to adopt fiscal measures. The country is widely exposed to external risks, and its high Debt to GDP ratio level makes it fragile and in a delicate position to face an unexpected economic downturn.
The 2015 restructuring put the public debt onto a sustainable trajectory. Debt relief by private sector creditors during the 2016-2020 period was a total of USD 8 mn. With the fiscal adjustment provided in the ECF program of 8.5% of GDP, the debt-to-GDP ratio decreased from its peak of 104% in 2013 to 80% in 2016.
Grenada remains in external public debt distress according to the IMF because it has USD 19 mn (1.6% of GDP) in unresolved arrears to official bilateral creditors. Nevertheless, debt is on a sustainable path, the country almost reached its IMF target of debt-to-GDP ratio (60% of GDP) two years before the year set by the Fund. Fiscal consolidation, robust economic growth and the 2015 debt restructuring have paved the way for debt sustainability.
Continue ReadingOn December 16, the opposition-controlled National Assembly approved a reform to its internal debate regulation that will allow representatives in exile to vote in the January 5 National Assembly board of director’s election, which is set to pick the assembly’s president for 2020.
The approval of this modification seems to be Guaidó's way of ensuring its ratification in January, due to the uncertainty raised by the “scorpion operation” and the intensification of political persecution in the last weeks, which put the opposition majority in the parlament at risk.
In our baseline scenario, which we assign an 80% probability of occurrence, Guaidó would achieve at least the 88 votes of the traditional parties in January 5, above the 81 required according to the current quorum.
Guaidó will ahave to deal with a weaker opposition coalition in 2020. We think that current developments in the National Assembly are pointing towards the formation of a growing “third way”, integrated by discontent opposition representatives, independents of uncertain affiliations and former members of Chavismo that might be inclined to seek consensual solutions with the Maduro regime.
Continue ReadingAt the end of the afternoon of December 17, the Plenary of the National Assembly did not obtain the votes required to ratify the 17 observations that had been made to the 2020 Budget draft, so the new version sent by the president, Lenín Moreno, on December 8, enters into force automatically by operation of Law.
The Plenary required 91 votes to approve the motion of Esteban Albornoz, president of the Economic Development Commission, who proposed to approve the document sent by Moreno but keeping the 17 observations that the Legislature had made. The proposal only obtained 65 votes in favor, while 27 negatives and 27 abstentions.
After a break, the plenary session proceeded with the discussion of the Law of Tax Simplification, which ended with the final approval needed to get into force by January 2020.
Continue ReadingToday, Finance Minister Martín Guzmán announced a set of fiscal adjustments regarding taxes, tariffs and pensions. Broadly speaking, the economic project aims to eliminate the fiscal measures of Macri’s administration included in the 2017 tax reform and the fiscal pact between provinces.
Market reaction to the economic announcements was slightly positive. Argentinian bonds were up around 1 ½ % after the press conference. The ARGENT 6.875 2021 bond traded at 50.8, up from 49.0 yesterday.
Yesterday, Axel Kicillof’s Province of Buenos Aires performed a coupon payment for over USD 40 mn on its BUENOS 7.875 2027 bond.
Continue ReadingOn December 10, Egypt’s Central Bank published the inflation print for November. The inflation rate accelerated for the first time in five months, increasing by 3.6%, which gives the bank little reason to reverse a cycle of monetary easing. In October, the inflation rate slowed to its lowest level in more than nine years.
Despite the acceleration, inflation was lower than expected according to the authorities, and remains below the target range of 9%, +/- 3 pp, by the end of 2020.
The central bank has reduced rates four times this year, reflecting confidence that authorities have brought inflation under control which seems to be confirmed by the decrease of 2.1% of core inflation in November. Thought, the central bank will likely keep interest rates unchanged at its December 26 meeting, waiting for inflation to have an additional boost in December given seasonal factors.
Continue ReadingThe IMF has not set up a date for its Executive Board to approve the Extended Facility Fund (EFF) agreement reached with Ukraine, IMF spokesman Gerry Rice stated on Thursday. The effectiveness of the arrangement will be conditional on the implementation of a set of actions by Zelenskiy administration.
President Zelenskiy must choose between supporting the IMF reforms or backing the ex-owner of PrivatBank Kolomoisky. The IMF and the NBU have emphasized the importance of maintaining reforms in the banking system. Zelenskiy is accused of having relations with Kolomoisky. Investors should be attentive to the hearing that will be held on December 19 on the case of nationalization of PrivatBank in a Kyiv's court.
Continue ReadingOn Wednesday night, the Minister of Economy Martin Guzmán presented the macroeconomic guidelines that will be implemented by Fernández’s government.
Guzman's speech showed his inclination towards an interventionist public sector. On the positive side, he emphasized the need for fiscal, monetary and debt policy consistency, but did not give greater details. In yesterday's conference, Guzmán leaned more towards President Fernandez vision, of seeking a new agreement with the IMF without further disbursements. Debt talks with investors and the IMF will begin soon as announced by the minister.
Continue ReadingSeveral analysts suggest that Bolivia's good economic performance is subject to natural gas exports to other countries in the region, among which Brazil and Argentina stand out, and will soon increase hydrocarbon shipments to Peru. However, the outlook for Bolivian gas could be about to change.
The contracts with the main clients of Bolivia, Brazil and Argentina, are being renegotiated at a time when both have promised to increase their own production, and also enjoy extensive coastline that allow them to access a growing global market that demands liquefied natural gas.
The turmoil comes at a time when Bolivia's public debt has reached record levels as we mentioned previously, and the October elections are pressuring the president, Evo Morales, a senior leader in South America.
Through the latest ECLAC report, the sustained increase in gross external debt can be verified: in 2013 the debt amounted to USD 8,078 million, while for the period mentioned in 2018 it was already located at USD 12,799 million, an increase of 58%. While Chile raised its debt by 24% in the same period of time.
Continue ReadingPanama and the People's Republic of China established diplomatic relations on June 12, 2017. To date, both countries have signed more than 40 agreements focused on health, education, culture, science, technology and others.
The fifth round of FTA negotiations could take place in March, as indicated by the Minister of Commerce and Industries, Néstor González. He also said that the negotiations will take the time that will be necessary because of the transparent way in which the agreements are taking place.
Given the level of its exports, it is convenient for Panama to have the Asian country as a new recipient of its products. Similarly, China is also interested in boosting its international trade, after recording the largest drop in its exports in two years.
Continue Reading