LatAm Daily News Roundup: May 27th

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

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

Argentine bonds rose strongly on Tuesday amid optimism that a restructuring deal being brokered with creditors to resolve the country’s sovereign debt crisis could be in reach. However, rating agencies downgraded the country following its ninth default last week. Over-the-counter bonds rose 3.8%, while country risk tightened 243 basis points to 2,535 over US Treasury bonds, amid hopes negotiations to restructure Argentina’s $65 billion debt would be quick. Argentina and its creditors are in talks to reach a deal before an already pushed-back deadline of June 2nd.

Brazil’s federal police has opened an investigation into the governor of Rio de Janeiro Wilson Witzel amid allegations of embezzlement. Witzel is a political opponent of President Jair Bolsonaro and the investigation has raised concerns that it was instigated by Bolsonaro, according to local media reports. Police searched Witzel’s official residence and seized the governor's cell phone and computer in an operation approved by the supreme court. Witzel is accused of embezzling funds destined to fight the coronavirus, from which the death toll in Brazil had risen to 24,746 on Wednesday, with more than 395,000 confirmed cases.

Chilean President Sebastián Piñera has moved to implement austerity measures within the government, announcing a new law that trims remunerations and salaries for parliamentarians, as well as for the president, ministers, mayors, governors and other government officials. The amount of the cuts will be decided by a council of civil servants, set up to avoid conflicts of interest among congress members, and which will have 30 days to announce its decision. “Reform is fair and necessary, which will improve our democracy,” President Piñera tweeted when announcing the impending cuts.

Colombia’s government is using the Covid-19 pandemic as a pretext to avoid implementing the measures agreed in the peace talks between the former government and guerrilla organization FARC. According to Laura Gil, a Colombian political analyst, President Iván Duque’s exclusion of former FARC commanders from politics is a violation of the peace agreements, while killings of demobilized combatants and human rights defenders have risen during the quarantine. Meanwhile, plans to restart fumigation of illicit crops, discouraged by the deal, are moving forward, and money allocated to peace programs is being used to promote the president, Gil writes in The Washington Post, arguing that the pandemic should not be used to “strengthen the disease of war”.

Mexico’s economic indicators point to “devastation,” according to a report by analysts at Citibanamex. The country is facing a slump in economic activity not seen since 2009, following the subprime crisis in the US the previous year. Electricity demand is expected to fall 15% this year, in contrast to an average annual increase of 2%, while hotel occupation is currently 4%, with the tourism industry traditionally one of Mexico’s major sources of revenues. Citibanamex analysts predict a 9% drop in Mexico’s GDP this year, while the central bank is predicting the loss of some 1.4 million jobs this year.

The Panamerican Health Organization (PAHO) has expressed concern about the spread of Covid-19 in South America, particularly in Peru, Chile and Brazil. “In South America, we are particularly concerned that the number of new cases reported last week in Brazil was the highest for a seven-day period, since the outbreak began,” said Carissa Etienne, PAHO director. “Both Peru and Chile are also reporting a high incidence, a sign that transmission is still accelerating in these countries.” With some 730,000 cases out of five million globally, and more than 39,500 deaths so far, Latin America has outpaced Europe and the US in the number of daily infections. The region is now the epicenter of the pandemic, Etienne said, and called on countries to keep up their fight to curb the spread of infections. “For most countries in the Americas, now is not the time to relax restrictions or scale back preventive strategies,” she said.


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