Regional Pulse: 1 November 2022

Southern Pulse’s weekly review of need-to-know events curated for people who work in Latin America.

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Key developments









Refinancing deal struck with Paris Club creditors

On 28 October 2022, Economy Minister, Sergio Massa, announced that the country had renegotiated more than USD2 billion in payments owed to Paris Club creditors. The deal extends payment deadlines and lowers the current annual interest rate. Massa celebrated the announcement, touting the government’s plan to seek financial credibility on the international stage.

Fitch Ratings downgrades country’s credit rating

On 26 October 2022, US-based financial services company Fitch Ratings downgraded the country’s credit score rating to CCC- from CCC. Analysts point to external-liquidity problems and an unstable macroeconomic situation. Nevertheless, some policies enacted by Economy Minister Sergio Massa have been applauded by Fitch, such as slashing government subsidies and reducing fiscal spending.

Government in talks with Bolivia and Chile over lithium pricing

On 24 October 2022, journalists with Ámbito Financiero reported that Foreign Minister Santiago Cafiero is leading negotiations with his Bolivian and Chilean counterparts to establish a reference price for lithium. The talks also aim to create a good practices manual regarding environmental issues. Argentina, Chile, and Bolivia are estimated to hold more than 50% of known worldwide lithium reserves.

Hedge funds demand USD635 million in damages

On 24 October 2022, four hedge funds began legal proceedings against the country in London’s High Court, demanding damages worth USD635 million. The funds claim bond payments linked to GDP were manipulated during the Cristina Fernández de Kirchner administration to save millions of dollars. Argentina has dismissed the allegations, arguing no country would deliberately underestimate its GDP figures.


Lula elected by slim margin

On 30 October 2022, the Superior Electoral Court (TSE) declared Luiz Inácio Lula da Silva winner of the presidential elections by a very narrow margin of 50.9% over President Jair Bolsonaro, who got 49.1% of the vote. This represents a difference of just over 2 million votes. President Jair Bolsonaro has not conceded defeat when our Regional Pulse went for publication. The leaders of both houses of Congress have congratulated Lula. So have multiple many foreign leaders, such as President Joe Biden (USA), President Alberto Fernández (Argentina), and President Emmanuel Macron (France).

Putin says election result will not affect bilateral relations

On 27 October 2022, Russian president Vladmir Putin said he had good relations both with President Jair Bolsonaro and President-elect Luiz Inácio Lula da Silva, and expects the bilateral relationship will remain unchanged. Brazil, like many other countries in Latin America, is dependent on Russian fertilizer for the agricultural sector. Russia is also an important source of refined petroleum and natural gas for the region.

Informal unemployment on the rise

On 26 October 2022, the Labor Ministry announced that, while unemployment rate fell to 8.7% September 2022, the number in formal employment fell by 15% in 2022 when compared to 2021. This suggests that while total unemployment is falling, the quality of employment is decreasing.


New security law sees 25 lumber theft-related arrests in one month

On 25 October 2022, the La Araucanía regional attorney general said 25 people had been captured under a new security law meant to tackle lumber theft during the first month since its approval. The recent arrest of three businessmen have reportedly yielded insights on how lumber thieves use their know-how, technical capabilities, and legitimate contracts to facilitate the crime from illegally occupied areas with lumber potential. The new law allows police to use special investigative tools and increases the sentences for lumber theft and its associated crimes, such as forging permits.

Chile only LatAm country to enter recession in 2023, IMF reports

On 20 October 2022, the IMF said Chile would be the only economy in the region to shrink in the coming year. According to IMF predictions, GDP will contract by 1% next year. It already faces the third highest inflation rate (11.25%) behind Brazil and Argentina. Decreased public spending and mounting political uncertainty after a negative vote on a new constitution were also cited as reasons for an economic downturn.


Lawmakers vote to include FARC dissidents in “Total Peace” plan

On 26 October 2022, the House of Representatives rejected a proposal to block FARC dissidents who later rejected the 2016 peace accords from taking part in the new government’s “Total Peace” negotiations. The FARC, once the country’s largest guerrilla, demobilized over 13,000 members under the 2016 peace accords, but three commanders abandoned the peace process three years later and returned to man the Segunda Marquetalia, a 1,200-strong armed group. The law must still be debated in both chambers for negotiations to formally begin.

Petro makes O&G and pension concessions to pass tax bill

On 25 October 2022, President Gustavo Petro announced that, after a second debate in congress, his tax reform would not tax people with high-value pensions and that taxes on the hydrocarbon industry would be determined by international prices. The concessions, which are seen by analysts as significant, are to ensure the tax plan can move forward in congress, where it needs to clear two more debates.

US business groups say tax bill violates bilateral FTA

On 25 October 2022, multiple US business groups, the Chamber of Commerce, and international commerce associations sent a letter to the Colombian Ambassador in the US and US Secretary of Treasury voicing their disapproval of the proposed government tax reform. The letter argues that components of the tax plan violate the Free Trade Agreement signed by the two nations and place US companies that do business in Colombia at a disadvantage. The letter asks officials to do what they can to prevent the tax reform from being approved in its current draft.


Narco violence on the rise in Esmeraldas

On 28 October 2022, El Comercio newspaper reported that the northern province of Esmeraldas had registered a record number of murders in the first eight months of 2022. The 326 reported murders were double the number of the killings recorded in all of 2021. The deaths are the result of turf wars between narco-gangs which are increasingly using the area as a drug corridor.

Energy and Mines Minister resigns amid corruption allegations

On 28 October 2022, Energy Minister Xavier Vera resigned after allegations of bribery. The resignation follows calls from both the opposition and some government politicians for an investigation into Vera’s dealings. According to the National Prosecutor’s office, Vera received USD150,000 for appointing a former subordinate to a position in his former ministry. The resignation comes at a time when President Guillermo Lasso is looking to double oil production and increase mining concessions to ease the economic fallout caused by widespread civil unrest last June.

Quito residents petition Electoral Court for mining referendum

On 24 October 2022, residents from the capital Quito delivered a petition with hundreds of thousands of signatures to the Electoral Court seeking a referendum on six mining blocks in the Choco Andino forest in Pichincha province over biodiversity concerns. President Guillermo Lasso wants to increase mining production to boost the economy by an extra USD3 billion this year. The referendum would ask voters if the new concessions should be suspended. The 12 existing mining concessions in the region would remain operational.


CJNG murder prospective MORENA gubanatorial candidate during lunch

On 27 October 2022, MORENA party councilmember and potential gubernatorial candidate for Jalisco, Salvador Llamas, was murdered by Cártel Jalisco Nueva Generación members he had met for lunch. At least eight men partcipated in the murder in Zapopan, Jalisco.

US attorneys link former defense minister to the CDS

On 26 October 2022, US attorneys uncovered evidence linking Genaro García Luna, Security Secretary from 2006 to 2012, with the Cártel de Sinaloa’s cocaine trafficking operations. The evidence includes receipts of millions of dollars paid to him through shell companies and incriminating pictures. Luna will be tried in New York for drug trafficking and receiving bribes from the crime group.

Academics criticize electoral reform bill

On 26 October 2022, a group of 75 national and international academics and experts on electoral reform sent a letter to Congress and various state organs warning that a proposed electoral reform bill would weaken democracy and favor the sitting government. The bill calls for reductions in public campaign funding, and a smaller Congress and other spaces of representation. There are also concerns it would abolish or weaken the independence of electoral institutions. The bill in question is currently under discussion in the lower house.


Mining helps Peru maintain region’s second highest credit rating

On 26 October 2022, credit ratings agency S&P Global maintained Peru’s BBB credit score — the second highest in Latin America after Chile. The country’s GDP to debt ratio is 30%, far below the 50% threshold for an investment grade rating. Contributing to its stable credit score is the mining sector which S&P forecasts to inject over USD9 billion into the economy over the medium term. The development will be welcome news for embattled President Pedro Castillo who faces multiple corruption investigations and a hostile legislature.

Health Minister to be investigated for corruption scheme

On 26 October 2022, the General Prosecutor’s Office started an investigation into Health Minister Jorge Lopez for allegedly diverting public funds to his ex-wife Dervy Apaza Meza. State prosecutors claim that Lopez used Ministry staff to make several deposits of PEN100,000 (USD25,000).

Most voters think Castillo is corrupt, but should stay in office

On 24 October 2022, Ipsos Perú released a poll which found that while 65% of voters believe President Pedro Castillo has participated in corruption, 56% think Congress should let him stay in office until 2026 through a mediated agreement. The same poll also suggested that 68% of Peruvians who were aware of an ongoing investigation by the General Prosecutor’s Office into Castillo’s dealing think the accusations are valid and should be investigated.



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