LatAm Daily Briefing: Argentina’s Creditors Bemoan Lack of Progress; Bolsonaro Loses Third Education Minister; Aeromexico Files

1 July: Find out what's been happening in Latin America with our latest news update.

1 July: Find out what's been happening in Latin America with our latest news update.

Argentina’s creditors are pressuring the government to move forward on debt talks after negotiations stalled. Two of the groups of creditors, the Ad Hoc and Exchange bondholder groups, said they have had no meaningful discussions with Argentine authorities since June 17th, according to a joint statement cited by local media. The groups say they are willing to engage constructively to reach a consensual agreement the country and its creditors can support. Argentina defaulted on its $65 billion debt payments in May and has since been in talks to restructure the agreement, and which have been extended until July 24th. “The lack of serious engagement from the Argentine authorities is deeply concerning, given that time is of the essence and all parties should be focused on avoiding the devastating legal and economic costs of a prolonged default,” according to the creditors’ statement.

Brazil’s Education Minister Carlos Decotelli has resigned after just five days in the post following questions about the veracity of his qualifications. Decotelli, who was the first black minister appointed to right-wing President Jair Bolsonaro’s cabinet, has been accused of not completing doctorate studies and plagiarism in his master’s degree thesis. Decotelli, who had yet to be sworn in, told the Folha de S. Paulo newspaper on Tuesday that he would not accept the post. Decotelli, who has been a professor at Brazil’s naval academy, and who was involved in Bolsonaro’s election campaign and transition team, was the government’s third education minister since Bolsonaro’s term began in January 2019.

Chile has slashed government salaries, with cuts ranging from 1-25%, and which affect 693 officials, including President Sebastián Piñera, whose salary will be cut by 10%, while 155 congress members, 43 senators and 24 ministers received a 25% pay cut. The cuts had been proposed in parliament since 2014, with lawmakers calling for cuts of up to 50%, and could be extended to the salaries of more public servants, according to local media, with the planned savings in expenditure to be channeled toward aiding the country’s fight against the Covid-19 pandemic. Chile remains under lockdown to stem the spread of the virus, and has so far reported a death toll of 5,688, with more than 279,000 confirmed cases.

The mayor of Colombia’s capital Bogotá has decided against imposing a second lockdown in the city. Claudia López had said in recent days that if bed occupancy in the city’s hospitals’ intensive care units increased she would re-impose confinement measures in a bid to stem Covid-19 contagion. López met with the country’s Health Minister Fernando Ruiz on Tuesday to evaluate the situation and announced that there would not be another lockdown, despite her earlier calls on President Iván Duque to slow down the country’s economic reopening. Colombia’s death toll from the virus currently stands at  3,334, with more than 97,000 confirmed cases.

Mexico’s Aeromexico has filed for Chapter 11 bankruptcy in the US, the latest Latin American airline to run into financial ruin as a result of the Covid-19 pandemic, following Colombia’s Avianca and Chile-based regional carrier LATAM Airlines, both of which have also filed for restructuring. Aeromexico said on Tuesday that it had applied for Chapter 11 restructuring in order to continue flying. "We are committed to taking the necessary measures so that we can operate effectively in this new landscape and be well prepared for a successful future when the Covid-19 pandemic is behind us," CEO Andrés Conesa said. The airline had already grounded part of its fleet in response to the slump in demand, and in March announced it would only be operating cargo flights for the first time in its history.

Peru’s mining and hydrocarbons output shrank by 45.7% year-on-year in May, the third straight monthly drop, the government said on Wednesday, as the industries are impacted by the lockdown and slump in demand amid the Covid-19 pandemic. Peru is the world’s second-largest producer of copper, silver and zinc, and the mining sector is a major driver of the country’s economy. The national statistics agency INEI said copper output in May fell by 42.2% compared with the same month of 2019, while gold production declined by 65.1%, zinc by 75.7% and silver by 65.8%. Other industries to suffer a major contraction in May were fishing, which declined by 46.99%, while cement consumption contracted by 65.05% as the construction sector also suffered the impact of the lockdown. 


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