Regional Pulse: 5 July 2022
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Our weekly review of need-to-know events curated by the Southern Pulse team for people who work in Latin America. Looking for something more tailored to your needs? Let’s chat.
Key developments
ARGENTINA
- Tensions escalate over diesel and fertilizer shortages
- Government imposes new USD exchange restrictions
BRAZIL
- Citizen relief package edges closer to approval
- States challenge the federal government over tax cuts
CHILE
- Tax reform proposes higher capital gains and income tax
- New public safety plan announced
COLOMBIA
- Petro woos business community with Central Bank pick
- Interest rates rise as inflation tops 9.2%
- More than 450,000 dead due to armed conflict, reports Truth Commission
ECUADOR
- Government suspends talks with protestors after soldier killed
- Lasso avoids impeachment by eight votes
MEXICO
- Government completes massive oil refinery project in Tabasco
- Ebrard favorite to replace López Obrador in 2024 election
PERU
- President Castillo forced to resign from his own party
- More than 30 trucker unions begin indefinite strike
ARGENTINA
Tensions escalate over diesel and fertilizer shortages
On 29 June 2022, the four largest rural associations announced a 24-hour long nationwide halt of agricultural exports for 13 July 2022 over diesel and fertilizer shortages. A statement released by the associations calls for better access to diesel and fertilizer to avoid the complete paralysis of the agricultural sector; fewer “damaging” state interventions; improved macroeconomic stability; and reduced government spending.
Government imposes new USD exchange restrictions
On 28 June 2022, Economy Minister Martín Guzmán said companies seeking to import non-strategic and luxury goods will no longer be able to obtain USD at the official exchange rate from the Central Bank. The measure is meant to protect USD to pay for the import of natural gas. National spending on gas imports has gone from USD800 million in June 2021 to USD2 billion in June 2022 due to rising hydrocarbon prices.
BRAZIL
Citizen relief package edges closer to approval
On 30 June 2022, the Senate approved a major aid package meant to relieve citizens struggling from rising prices. The package, promoted heavily by President Jair Bolsonaro, includes BRL1,000 (USD192) in support for self-employed truckers; a 50% increase to the social welfare program Auxilio Brasil; an increase in gas vouchers; financial assistance for taxi drivers, and more funding for an existing food security program. The lower house will now vote on the measure, which has been criticized by opposition elements as electioneering ahead of the presidential vote in October.
States challenge the federal government over tax cuts
On 28 June 2022, 11 states and Brazil’s federal district filed a lawsuit against the federal government over a 17% cap imposed on state taxes on gasoline, electricity, telecommunications, and public transportation approved by Congress. Minister of the Supreme Federal Court André Mendonça had imposed an injunction to enforce the tax cuts after failed negotiations between the states and the federal government. Now governors have appealed to the Supreme Court to overturn the injunction and reopen negotiations.
CHILE
Tax reform proposes higher capital gains and income tax
On 1 July 2022, the government unveiled a long-awaited tax reform which increases income tax on the top 3% of earners and raises capital gains tax from 15% to 22%. The reform also includes a new mining royalty for large companies that produce more than 50,000 metric tons of copper. The Boric administration hopes the reform will bring the equivalent of 4.1% of GDP in tax revenue and has said it will use the funds to finance social programs.
New public safety plan announced
On 30 June 2022, President Gabriel Boric announced a new Public Safety and Crime Prevention National Plan designed to reduce rising violence and tackle organized crime. The plan contains 33 measures, such as tougher gun and border control, investment in new investigative techniques, and the creation of a Public Safety Ministry.
COLOMBIA
Petro woos business community with Central Bank pick
On 30 June 2022, President-elect Gustavo Petro announced former Central Bank president José Antonio Ocampo as his Finance Minister after market jitters saw the national stock exchange fall by 5.4% following last week’s vote. Ocampo has been finance minister before as well as agriculture minister, Central Bank president, and UN Secretary General for Economics and Social Affairs. His appointment has been well received by the Colombian business community and parties from both the left and right.
Interest rate rises as inflation tops 9.2%
On 30 June 2022, the Central Bank increased interest rates from 6% to 7.5% to combat inflation of 9.2%. Basic goods like meat, fruit, and eggs have seen even higher price increases of around 35% since 2021. The hike is the largest in the Bank’s modern history.
More than 450,000 dead due to armed conflict reports Truth Commission
On 28 June 2022, the national Truth Commission concluded 450,666 people were murdered, 121,768 were dissapeared, 50,770 were kidnapped, 16,238 children and teenagers were forcibly recruited, and 8 million people were forcibly displaced during the 1986–2016 armed conflic . The Commission is a product of the 2016 Peace Accord and was tasked with compiling the most robust and extensive account of the conflict. The Commission believes the numbers could be twice as high due to the massive underreporting of crimes during the period. It also found right-wing paramilitary groups were responsible for most of the crimes except for forced recruitment, which was largely a guerrilla practice.
ECUADOR
Government suspends talks with protestors after soldier killed
On 28 June 2022, President Guillermo Lasso announced talks with the powerful indigenous confederation CONAIE were on hold after an attack on military personnel guarding a fuel convoy left a soldier dead. The incident occured in the eastern Shushufindi canton and reportedly involved more than 100 individuals. Nationwide protests have been occurring across the country since 13 June.
Lasso avoids impeachment by eight votes
On 28 June 2022, former president Rafael Correa’s UNES party failed to get the votes needed to impeach President Guillermo Lasso. Eighty-four lawmakers voted in favor of the measure, which was eight short of the 92 needed. Backing from Partido Social Cristiano (PSC), Izquierda Democrática (ID) and Bancada del Acuerdo Nacional (BAN) proved critical for Lasso.
MEXICO
Government completes massive oil refinery project in Tabasco
On 1 July, 2022, President Andrés Manuel López Obrador inaugurated the Olmeca oil refinery in the Dos Bocas port of Tabasco. The refinery, one of the López Obrador administration’s signature projects, can process 340,000 gallons of crude oil per day and is the first refinery to be built in Mexico for 43 years. The president has billed its completion as a step towards energy sovereignty.
Ebard favorite to replace López Obrador in 2024 election
On 27 June, 2022, an El Financiero poll for the 2024 presidential elections found Foreign Affairs Minister Marcelo Ebrard was respondents’ top pick to lead the MORENA party into the contest, with 34% support. Mexico City government head Claudia Sheinbaum trailed with 18%, followed by Senator Ricardo Monreal with 12%. The poll also found MORENA led the opposition Va por México coalition by 10%, with 48% of vote intention.
PERU
President Castillo forced to resign from his own party
On 30 June 2022, President Pedro Castillo resigned from Perú Libre — the party which brought him to power — after its executive committee told him to leave or face expulsion proceedings. The committee accused Castillo of fracturing the party in Congress and failing to honor his campaign policies. Vladimir Cerrón, Perú Libre’s secretary general and a former ally of Castillo, first published the statement calling for Castillo to resign on his Twitter account on 29 June.
More than 30 trucker unions begin indefinite strike
On 27 June 2022, 31 heavy goods transport unions announced an indefinite strike over rising operation costs. Union bosses have promised the stoppage will be peaceful and roads will not be blocked. Union workers want increased government support, including lower taxes, lower highway toll fees and the introduction of fuel subsidies. Negotiations with the government continue.
