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On October 9, despite the widespread rejection of the international community, Turkish President Receptor Erdogan announced the start of a military operation against Kurdish forces in north-east Syria. The name of the offensive is "peace spring". According to Erdogan, the goal is to create a "security zone" that separates the Turkish border from Kurdish positions.
Turkey launched its long-planned attack just a few hours after Donald Trump, president of the US, announced the decision to pull US troops out of northeastern Syria, leaving his allies on his own to fight Kurds, which Ankara considers a terrorist threat.
The decision received strong criticism from Republican lawmakers and members of his own military. On Monday, October 14, Trump spoke to Turkish president, Recep Tayyip Erdoğan, to demand an immediate ceasefire in Syria while announcing a series of retaliatory measures against Ankara.
On October 18, US Vice President Mike Pence, after a trip to Turkey, announced a five-day ceasefire, during which a meeting will be held between Vladimir Putin (Russian president who supports the Syrian government) and President Recep Erdogan. The terms of the agreement defined a safe zone and requested Kurdish forces withdraw. However, the real deal has not yet been reached. This "truce" is to set the table for the real negotiations in Sochi, where Moscow and Ankara will have to agree on the terms.
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. The deal involves a haircut of 26.3% over the sum of principal amount, past due and accrued interest as of October 1, 2019.
Eligible securities include the BARBAD 7.8 2019, 7.25 2021, 7.00 2022, and 6.625 2035 bonds, as well as a floating rate loan with final maturity in 2019. These bonds will be exchanged for a bond with 6.5% fixed coupon bond with final maturity in October 1, 2029, amortizable in 10 equal semi-annual installments beginning on April 2025.
Continue ReadingOn October 12, country’s electoral authority (JCE) announced the official candidates elected in the simultaneous primaries held on October 6 by the Dominican Liberation Party (PLD) and the Modern Revolutionary Party (PRM).
As we indicated in our previous report "Divide and conquer", despite fraud allegations raised by Leonel Fernández against PLD pre-candidate Gonzalo Castillo and current President Danilo Medina (also of PLD), the JCE did not change the results. Gonzalo Castillo was announced as the PLD official candidate with 48.7% of votes, while Luis Abinader is the official PRM candidate with 74.1%.
However, since October 7, protests by Leonel Fernández's supporters continued at JCE headquarters. On Monday, October 14, the electoral board accepted the request to conduct a forensic audit of the automated voting system. The audit date has not yet been set.
Continue ReadingOn October 16, the International Monetary Fund (IMF) revised downward the projection of Kenyan economic growth to 5.6% from 5.8% April’s projection. This new estimate is 70 basis points lower than the 6.3% growth recorded in 2018 and differs from the 6.0% growth projection published in September by the Ministry of Finance.
The IMF cited the current trade war between United States and China and Global manufacturing downturn, as the main reason behind the growth forecast cut. By 2020, the IMF expects economic growth to accelerate to 6.0%, after the agricultural sector, fundamental to the country's economy, recovers from the negative effects of the shorter rainy season delay in the first quarter of 2019 (1Q2019).
Continue ReadingThe current president of Sri Lanka, Maithripala Sirisena, said on October 7 that he will not run in the next presidential elections to be held on November 16. 35 candidates presented their candidacies, with Gotabaya Rajapaksa being the front-runner. The number of presidential candidates is a record, the previous top was 22 in 2010 election.
Sirisena chose not to face Rajapaksa in the presidential race, which isn’t surprising due to the breach of the promises he made at the beginning of his term.
Among the candidates are two Buddhist monks, four Muslim people, two Tamils and a woman. It is probable that in the coming elections the main ethnic groups such as the Tamils and the Muslims will make votes of protest.
Tamils are displeased that Sirisena’s government failed to deliver on promised power-sharing arrangements and answers to families whose relatives went missing in the civil war. While Muslims are unhappy that the government failed to stop the persecution of Muslims after the Easter Sunday bombings.
Continue ReadingOn October 15, the country held presidential, provincial and legislative elections. Mozambique’s electoral commission has not yet released official results, however unofficial results point to sweeping victories for the ruling Frelimo party and President Filipe Nyusi.
An election monitoring organization called Sala da Paz estimates Nyusi won 71% of the vote over 21% for Ossufo Momade, leader of the Renamo opposition party. Additionally, Frelimo looks set to dominate the parliamentary elections and may win most of the 10 provincial governor positions, according to the civic group, the Center for Public Integrity. However, Renamo candidate is the favourite to win the governorship in Nampula, the most populated province in the country.
Continue ReadingIn a State of the Nation Address to Parliament on October 15, President João Lourenço gave a balance of his two years in office.
Lourenço highlighted that the country has been reducing its financing needs, going from a fiscal deficit in 2017 to a 2.2% of GDP surplus in 2018 and 1H19 ended with a surplus of approximately 1.3% of GDP. However, in 2019 the share of debt service over total fiscal expenses amounted 51%. Regarding public debt, the president promised to reduce the debt-to-GDP ratio from 90% to 60% by 2022.
The president said that after three year of contractions, the country will return to growth, driven by the non-oil sector and despite the slowdown in oil output. Lourenço stated that Angola’s economic crisis started in 2014 and it got worse, not just because of lower oil prices, but because of the disadvantageous oil-backed debt agreements, which have reduced the net income of the national treasury.
At the end of the session, National Assembly Speaker, Fernando da Piedade Dias dos Santos, expressed the parliament's support for the president in the reforms ahead.
Continue ReadingOn October 10, the presidential cabinet resumed discussions over the 2020 budget. Communications Minister Jamal Jarrah said the cabinet will send the 2020 budget to the parliament by October 22 at the latest, in accordance with the provisions of the constitution. Jarrah said they are working on the electricity plan, which aims to cover Lebanon’s electric generation deficit of approximately 1,500 megawatts by 2020, which contributes between USD 1.5 bn and USD 2 bn to the budget deficit.
Continue ReadingThis Friday, October 18, the Financial Action Task Force (FATF) will decide on whether to keep or remove Pakistan from the gray list or if it will be included with Iran and North Korea in the blacklist.
A delegation sent to China where the FATF meeting will be held, headed by the Minister of Economic Affairs, Hammad Azhar, said Pakistan has made positive progress on 20 of 27 points.
However, on October 7, the Asia Pacific Group (APG), an organization associated with FATF, published a report that reviews Pakistan's progress in financing terrorism and money laundering. The report notes that Pakistan has only implemented one of the 40 recommendations that the organization has established, 35 measures were partially met and 4 were breached.
The APG indicated in the report that it is likely that Pakistan will be at least ratified in the gray list, although the final decision will be taken by the FATF.
Continue ReadingOn October 7, took place the first discussion of the 2020 draft budget in the Legislative Assembly. This is the first budget presented by Nayib Bukele administration. The Ministry of Finance submitted the 2020 draft budget on September 30, the last day on which it could do so, because the Constitution[1] sets a minimum of three months before the beginning of the fiscal year to deliver the draft to the Assembly. The 2020 budget proposal have an estimated inflation of 1% and real GDP growth at 2.5%, along with fiscal expenses of USD 6.43 bn, a reduction of 4.2% compared to 2019 budget. The government projects revenues of USD 5.47 mn, 4.9% more than the previous year.
[1] Article 167 ordinal 3 of the Constitution of El Salvador.
On October 13 took place in Santa Fe the first presidential debate for the next October 27 elections. In this debate the six presidential candidates faced each other: incumbent president, Mauricio Macri (Juntos por el Cambio); the Kirchnerist Alberto Fernández (Frente de Todos); former Minister of Economy Roberto Lavagna (Consenso Federal); the deputy Nicolás del Caño (Frente de la Izquierda), the economist José Luis Espert (Unite por la Libertad y la Dignidad) and the ex-military Juan José Gómez Centurión (Frente Nos).
The debate focused on four topics: international relations; economics and finance; human rights; diversity, gender, and education.
On the second topic, economics and finance, neither Macri nor Fernández gave much detail of their plans. The rest of the candidates did comment on their strategies regarding the future of the country's economy. Fernández began by saying that the Macri’s administration left 5 million new poor. To which Macri replied: “I am surprised that Alberto Fernández says that I destroyed the economy when very recently he said that former President Cristina Kirchner destroyed it; He said worse things, that the former president shut the economy, left it without international reserves, increased poverty and hid it; let's tell the truth."
The second debate will be held on October 20 in Buenos Aires, one week before the election.
Continue ReadingAfter eleven days of protests, Lenín Moreno’s administration caved in on protesters’ demands and agreed to repeal Decree 883, which eliminated subsidies on low-octane gasoline and diesel. The decree will be replaced by a new piece of legislation to be drafted by a commission incorporating representatives from the government and indigenous leadership (CONAIE). Nonetheless, fuel prices will be reverted until the new decree is finalized.
Few details on the new decree’s contents have been made available, but early statements point towards a focalization of the subsidies. We regard the temporary reversal of fuel prices as a negative sign, and view protracted negotiations on compensatory measures as a risk to fiscal consolidation in the short term. Furthermore, we believe that the Moreno administration will likely have to review fiscal target under the IMF program, and may also need to conjure new ideas if it intends to meet them.
A more precise assessment will have to wait until further details on the new decree are made available.
Continue ReadingOn October 10, Prime Minister Oleksiy Honcharuk said that a delegation will travel to Washington next week to continue negotiations with the International Monetary Fund (IMF) on a new financing agreement. Previously, an IMF mission visited Ukraine between September 12 and 26 to hold discussions for the 2019 Article IV consultation. The mission also initiated discussions on a new program that could be supported under the IMF’s Extended Fund Facility (EFF).
Some sectors expressed that the nationalization of Privatbank was one of the reasons why a financing agreement with the IMF was not reached. Currently, the Ukrainian government faces a lawsuit from former Privatbank shareholders (Ihor Kolomoisky and Hennadiy Boholiubov) who argue that the nationalization of the mayor commercial bank of the country was made illegally.
Privatbank is Ukraine’s largest lender and was nationalized in 2016 by the Petro Poroshenko administration due to a USD 5.5 bn fraud scandal and the insolvency crisis generated by it. The takeover was well received by national and international community at the moment.
Continue ReadingOn September 27, Finance Minister Bwalya Ng'andu presented the 2020 national budget. The 2020 budget targets a 3% growth, an inflation between 6%-8% range and an increase in gross international reserves to a 2.5 months of imports coverage from the current 1.7 months. Also, it includes measures to tackle the fiscal deficit that has recorded the country in recent years.
The government expects to reduce the fiscal deficit to 5.5% from the projected 6.5% for 2019, reduce domestic debt and increase domestic income to 22% of GDP. However, the latter raised doubts in parliament due to a high proportion of “exceptional income” included.
On the other hand, the government has decided not to carry out the proposal to replace the value added tax (VAT) with a sales tax after receiving strong opposition from the private sector. The mining sector had warned that if this tax were replaced, it could cost more than 20,000 jobs. This measure had been delayed three times this year and its implementation was proposed by January 2020.
Continue ReadingThe government is trying to recover up to USD 62 bin of international oil companies, using a ruling from the Supreme Court in 2018 which enables it to increase its share of income from production-sharing contracts. According to a document prepared by the attorney-general’s office and the Justice Ministry, the energy companies did not meet the requirement of the 1993 contract law, which specifies that the state should receive a greater share of revenue when the price of oil exceeds USD 20 per barrel (USD/bl).
Continue ReadingOn October 2, President Lenín Moreno announced a series of economic measures designed to support compliance with IMF agreement fiscal targets without requiring an increase to the VAT rate. The announcement included an elimination of the subsidy to low octane ("extra") and diesel fuels, labor market flexibilization and cuts to public workers benefits.
The cut to subsidies was the measure that generated the most backlash. As the government withdrew the subsidy, consumer prices for diesel rose 110.2% while extra fuel rose 24.3%, precipitating anti-austerity protests, which began on October 3 and have quickly devolved into a full-blown political crisis in the country[1], which forced Moreno to temporarily relocate the seat of his government from Quito to the right-wing stronghold of Guayaquil.
While the protests began as a national strike by the transportation unions, who relented rather quickly in their demands to withdraw the subsidy cuts, the events devolved into violence as numerous other anti-austerity groups joined in. Indigenous group CONAIE, in particular, continues pressing on the subject of subsidies, which they regard as a necessary precondition for dialogue.
Furthermore, basic sentiment in the country appears to justify the idea that the protests are an organic event. Local pollster Cedatos September data shows approval of his government at 19.8%, down from 31.1% at the beginning of the year, 68.6% one year before, and 77.0% at the peak of his popularity in August 2017.
Continue ReadingOn October 4, the Panoro Energy ASA oil company and operator BW energy reported that exploration drilling has finished on the Hibiscus Updip prospect and results exceeded expectations. Hibiscus Updip prospect is located in the Dussafu offshore field, on the southwest coast of Gabon. In the initial explorations carried out at August-end, it was believed that this well had an estimated 12 million barrels capacity. A new sidetrack drilling has indicated that 40 to 50 million barrels could be recovered.
The BW Energy drilling rig will soon be mobilized for the Tortue field, southeast of the Hibiscus Updip prospect, to drill the first of four new oil wells in the field. This field is expected to produce its first barrels by the first half of 2020. The Tortue field has probable and proven gross reserves of 66.3 million barrels.
Finally, according to figures published by the Ministry of Economy, Gabon exported 21.5 million barrels in the first quarter of 2019 (239tbd), an increase of 23.9% over the same period last year. This increase would be explained by "the entry into production, earlier than expected, of the Simba field operated by the Perenco Company and the absence of operational failures."
Continue ReadingOn October 7, Springfield Exploration and Production Limited (SEP) began drilling in deep waters off the coast of Ghana. The company hired the Stena Forth charter to drill two wells in the area called West Cape Three Points Block 2 (WCTP2). The block host an important oil and gas potential. WCTP2 is exceptionally well located between the fields Jubilee (total proven reserves are around 370 million barrels) and Sankofa (204 million barrels) and is immediately north of the Hess' Pecan, Hickory, Almond, Paradise and Beech discoveries.
Continue ReadingFrom September 30 to October 4, a national dialogue was held. It was convened by the government to resolve the armed crisis between separatist forces in the English-speaking regions of Cameroon (northwest and southwest of the country) and the government’s armed forces. A participation of more than 1000 delegates attending was estimated. Among the main agreements are special status for both Anglophone regions, the election of local governors and change of the country name to its former United Republic of Cameroon.
In addition, the Paul Biya administration decided to declare amnesty to Maurice Kamto, a main opposition leader, who led a series of public manifestations after affirming that a fraud had been committed in last year's presidential elections. He was waiting for a hearing in a military court scheduled for October 8 facing charges of rebellion and incitement to insurrection. With Kamto, 333 more prisoners were released.
Despite the advances reported by the government, the dialogue raises doubt in the population. These are explained by the refusal of the separatist forces to participate. In order to participate in a dialogue with the government, they demanded that it would be necessary the mediation of a foreign country, the withdrawal of the official armed forces from the English-speaking areas and the release of their political leaders.
Continue ReadingSuriname's economy is highly dependent on commodities exports. Suriname is recovering from a period of recession between 2015 and 2016, this recession was the product of the end of alumina production in the country due to natural decline. Suriname has compensated for loss of alumina by increasing gold production. For this reason, GDP growth increased from -3.4% in 2015 to -5.9% in 2016, after which it recovered to 1.8% and 2.6% in 2017 and 2018, respectively.
During 2019, gold prices have increased significantly. In September, it closed at USD 1,472 per oz., a cumulative increase of 14.8% so far this year and 23.5% year-on-year. In the first two quarters of the year, gold exports also increased.
The internal conflicts affected production in the third quarter. One of the country's main mines, Rosebel, temporarily suspended its activities due to violent conflicts between illegal miners and the police. Due to this closure, the company reduced its production projections for the rest of the year.
Emfi Securities' economic growth forecast for 2019 is 1.9%, a slight deceleration compared to last year's figure, mainly explained by the decline in gold production and exports in real terms. The increase in gold prices will continue to positively affect exports. We estimate that, in nominal terms, the price effect offset the fall in production.
On October 3, Reuters reported that IAMGOLD Corp partially suspended its operations at its Rosebel gold mine after a group of illegal miners blockaded operations. “The company stopped work and removed equipment and personnel from the mine’s southern pits” said Reuters report. Later, the company denied the news saying that there was no blockade at Rosebel and the ramp-up of the activities at its southern pits continues.
On September 28, the World Bank approved two loans to Suriname’s government for a total amount of USD 58 mn for the development of competitiveness and diversification of the economy. The project seeks improving the administrative framework of the primary industry, supporting small and medium enterprises in emerging industries and improving the business climate.
On October 4, oil and gas producer Columbus Energy Resources PLC said it has agreed a production sharing agreement with Suriname state-owned company, Staatsolie, at an onshore block (Weg Naar Zee block.) The project area spans some 900 km2 and includes both discovered resources and remaining exploration potential. It is host to some 24 mn barrels of discovered.
Continue ReadingSuriname's economy is highly dependent on commodities exports. Suriname is recovering from a period of recession between 2015 and 2016, this recession was the product of the end of alumina production in the country due to natural decline. Suriname has compensated for loss of alumina by increasing gold production. For this reason, GDP growth increased from -3.4% in 2015 to -5.9% in 2016, after which it recovered to 1.8% and 2.6% in 2017 and 2018, respectively.
During 2019, gold prices have increased significantly. In September, it closed at USD 1,472 per oz., a cumulative increase of 14.8% so far this year and 23.5% year-on-year. In the first two quarters of the year, gold exports also increased.
The internal conflicts affected production in the third quarter. One of the country's main mines, Rosebel, temporarily suspended its activities due to violent conflicts between illegal miners and the police. Due to this closure, the company reduced its production projections for the rest of the year.
Emfi Securities' economic growth forecast for 2019 is 1.9%, a slight deceleration compared to last year's figure, mainly explained by the decline in gold production and exports in real terms. The increase in gold prices will continue to positively affect exports. We estimate that, in nominal terms, the price effect offset the fall in production.
On October 3, Reuters reported that IAMGOLD Corp partially suspended its operations at its Rosebel gold mine after a group of illegal miners blockaded operations. “The company stopped work and removed equipment and personnel from the mine’s southern pits” said Reuters report. Later, the company denied the news saying that there was no blockade at Rosebel and the ramp-up of activities at its southern pits continues.
On September 28, the World Bank approved two loans to Suriname’s government for a total amount of USD 58 mn, assigned for the development of competitiveness and diversification of the economy. The project seeks improving the administrative framework of primary industries, supporting emerging small and medium enterprises and improving the business climate.
On October 4, oil and gas producer Columbus Energy Resources PLC said it has agreed a production sharing agreement with Suriname state-owned company, Staatsolie, at an onshore block (Weg Naar Zee block.) The project area spans some 900 km2 and includes both discovered resources and remaining exploration potential. It is host to some 24 mn barrels of discovered oil.
Continue ReadingThe Caribbean country fights against climate change. On September 22, Grenada and a group of fourteen countries committed to increase its greenhouse gas emission reduction targets by the beginning of 2020 and to present a joint plan to achieve zero net emissions by 2050.
In turn, on September 30, Foreign Minister Peter David signed the Escazú Agreement. The agreement was approved in March 2018 and seeks to ensure access to information, citizen participation and access to justice in environmental matters. After the signatures the minister said: "Our foremost goal must be to aggressively pursue policies and strategies that will help us to mitigate the effects of some of these challenges."
On the other hand, on September 26, Indian Prime Minister Narendra Modi announced that his country will grant a USD 150 mn credit line to CARICOM member countries for climate-related projects, such as renewable and solar energy. In addition, each country will receive USD 1 mn to be used in development projects.
Continue ReadingThe main meteorological research institute of the region (CIMH), reported on October 1st that, although there is less likelihood of a short-term drought, there are greater chances that a long-term drought will occur by year-end.
Previously, on September 19, the government held a press conference with the Agriculture Ministry, the Banking Association and the Central Bank. The effect of drought not only directly affects the performance of national crops but will also affect the availability of food, so the price of food will increase. So far, these climatic conditions have damaged rice, corn, and citrus fruits crops along with livestock.
The president of the Banking Association of Belize, Sandra Bedran, highlighted the impact on agricultural sector and that although emergency supplies - such as seeds and fertilizers - will be distributed to farmers, the plants are slow-growing. "The price of food will increase, whether we like it or not," said Bedran.
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