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LATAM PULSE

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This week, in Brazil, calls for President Jair Bolsonaro’s impeachment are increasing; upcoming congressional leadership votes will determine whether a formal impeachment process ensues. Meanwhile, another debt swap is causing controversy in Argentina, this time involving state-run energy company Yacimientos Petroliferos Fiscales (YPF). Mexico should diversify its vaccine supplies this week as supply bottlenecks continue to hamper deliveries. Cuba continues to advance its own vaccine trials. Ecuador is counting down to the first round of the 7 February presidential election. Finally, in Chile, two more presidential candidates could be confirmed by the end of the week.

Brazil

This week will see whether President Jair Bolsonaro’s significant increase in rejection (from 32% to 40% in one month) will have an effect on the ongoing race for House Speaker and Senate Chairman in Congress to be decided on 1 February. The mishandling of the Covid-19 pandemic and the increase in deaths in northern states due to a scarcity of oxygen supplies have reawakened calls for impeachment. Motorcade rallies took place over the weekend in more than 20 state capitals calling for the president’s ouster. The congressional elections in a week’s time have thus become all the more important since they may determine the feasibility of an impeachment process. On the judicial front, prosecutors have also prepared formal charges against the president for prevarication during the pandemic but Head Prosecutor Augusto Aras, an ally of the president, may refuse to forward them to the House for authorization to investigate further.

Argentina

Yacimientos Petroliferos Fiscales (YPF) will be under the spotlight in the coming days amid the company’s proposed USD 6.2bn bond restructuring; credit ratings agency Fitch has said the swap proposal meets its criteria for a distressed exchange. Not only is there strong resistance to the proposal among bondholders, but the confirmation last week that YPF’s chairman Guillermo Nielsen is leaving the company is the cause of wider consternation. Neilsen is not only a pragmatist, but he also has extensive experience in debt restructurings. His replacement, Pablo Gonzalez, is a close ally of powerful VP Cristina Fernandez (CFK); his appointment therefore marks CFK’s growing political reach and suggests that the priority at YPF over most of this year will be to keep fuel prices as low as possible ahead of the October mid-terms.

Mexico

A first batch of 400,000 doses of the Sputnik V vaccine is expected to arrive this week. In parallel, regulatory approval for the Russian vaccine and the Chinese CanSino vaccine is expected imminently. The importance of Sputnik V in Mexico’s vaccine roll-out has increased since Pfizer announced a delay in deliveries as it upscales production at its Belgian plant; after today, 25 January, when the planned delivery will be half the original amount, the next Pfizer delivery will not take place until 15 February. Although President Andres Manuel Lopez Obrador (AMLO) – who is self-isolating after testing positive for Covid-19 – on 23 January announced that state governments and the private sector would be authorized to pursue their own vaccine acquisitions, in practice these will take time to materialize.

Cuba

Around 900 people will receive a second dose of the Soberana 02 coronavirus vaccine on 28 January as part of the ongoing trial process for the most advanced of the four separate vaccines under development in Cuba. The plan is to widen the vaccine application to some 150,000 people for the phase III stage and to broaden the trials to Iran because, according to the island’s Finlay Vaccine Institute (IFV), “clinical trials in a high incidence country” are necessary. In addition to Soberana 02, Cuba is also developing vaccines going by the names of Soberana 01, Mambisa, and Abdala. Cuba has an unusually developed biotech sector, with a notable success in its vaccine for the treatment of hepatitis B. A successful vaccine could represent a significant commercial and soft power opportunity, particularly if smaller and/or developing countries struggle to access other vaccines.

Ecuador

The government has said that it will send the Central Bank (BCE) reform bill (known as Comyf) to the National Assembly before the end of January. The reform, which would strengthen the BCE’s autonomy and governance, is seen as crucial by the International Monetary Fund (IMF), not just to strengthen dollarization but also to embed the IMF program ahead of the highly uncertain presidential and legislative elections, the first round of which takes place in under two weeks. The leftist Andres Arauz, who was handpicked by former president Rafael Correa to run for the new Union for Hope (UNES) coalition, reiterated last week that he would not comply with IMF conditions if he is elected. In a sign that Arauz will exploit the BCE debate for electoral purposes, the candidate also said that he would borrow from the Central Bank if elected.

Chile

The Evopoli party – which is a member of the governing Chile Vamos (CV) coalition – wants Finance Minister Ignacio Briones as its presidential candidate. Briones could be confirmed as soon as 30 January, which would oblige President Sebastian Pinera to appoint the third finance minister of his presidency. Arduous discussions over a long-stalled pension reform proposal could suffer collateral damage if Briones leaves the cabinet. If he is nominated, Briones faces intense competition from his CV rivals in an eventual coalition primary. In parallel, the opposition Socialist Party (PS) is expected to unveil Paula Narvaez as its presidential candidate on 28 January; Narvaez has come from virtually nowhere to represent the center-left’s best hope in the November/December elections.

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LATAM PULSE

This week, in Brazil, calls for President Jair Bolsonaro’s impeachment are increasing; upcoming congressional leadership votes will determine whether a formal impeachment process ensues.