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COUNTRY INSIGHTS

The government announces measures to limit spending and stimulate the economy
BRAZIL POLITICS · Report · 24 May 2016

This morning the government announced a set of measures to limit the fiscal deficit and stimulate the economy. The two most complex measures (public spending ceilings and social security reform) will be adopted via constitutional amendments, which require 308 votes in the House and 49 in the Sena...

Economics: New Rules on Local Gov’t Finance
MEXICO · Report · 24 May 2016

President Enrique Peña Nieto signed the Law of Financial Discipline for States and Municipalities on April 27. The enactment and eventual application of this law constitute a major step forward by spelling out the very specific obligations that state and municipal governments must abide by in the...

Easing Cycle Continues, As Expected
TURKEY · Report · 24 May 2016

The Monetary Policy Committee (MPC) cut the O/N lending rate by another 50 bps to 9.5% (simple) today, in line with our and the majority of market players’ expectations. The other two rates – O/N borrowing and weekly-repo – were left unchanged (Graph 1).

Politics: Insecurity, Debt, Graft and Elections
MEXICO · Report · 24 May 2016

With two weeks left before the June 5 elections, campaigning has intensified and turned increasingly negative. Questions of economic growth, corruption, and security have consolidated as the top issues in the minds of potential voters and central themes of the campaigns. And security indicators h...

The Perfect Storm: The Panama Papers, The Waked Affair and The Economic Slowdown
PANAMA · Report · 23 May 2016

In our last report, we discussed the potential implications of the Panama Papers (part I of the Mossack & Fonseca documents leak). We argued that the expected slowdown of international legal services in Panama was equivalent to a “permanent demand shock to the service sector, that will affect the...

Congress votes on a new fiscal target
BRAZIL POLITICS · Report · 23 May 2016

Michel Temer gives a press conference to discuss the country’s fiscal situation. The new fiscal target, with the R$ 170.5 billion deficit, will be voted upon by Congress. Minister of Finance Henrique Meirelles will announce a series of measures to tackle the emergency and transmit a positive sign...

Recordings target a member of the economic team and increase pressure on Temer
BRAZIL POLITICS · Report · 23 May 2016

Today’s Folha de S. Paulo contains transcriptions of dialogue between Minister of Planning, Sen. Romero Jucá (PMDB-RR), and the former president of Transpetro, Sérgio Machado. The recordings suggest that a “change” in the government would result in a pact to “stop the bleeding” represented by the...

Forces Driving the Exchange Rate
BRAZIL ECONOMICS · Report · 23 May 2016

An increase in demand for Brazilian assets leads at the same time to a decline in the risk premiums (CDS quotations) and appreciation of the exchange rate. Both of these movements started occurring before the change of government, in light of the clear increase in the likelihood of impeachment, w...

The reign of Yildirim starts with great peril
TURKEY · In Brief · 23 May 2016

AKP’s unanimously elected chairman Mr. Binali Yildirim was appointed by 7 pm Sunday as PM-designate by president Erdogan. He is expected to unveil his Cabinet on Tuesday, the first task of which will be the introduction of a mini package of constitutional amendments to the Grand Assembly to allow...

Back to investment risk from Fitch Ratings - with a slightly odd timing
HUNGARY · In Brief · 21 May 2016

On Friday, May 20, Fitch Ratings upgraded the Hungarian sovereign's LT FX debt to BBB-/Stable from the previous BB+/Positive level. With this, a four-year period ended, during which Hungary had no investment risk category rating from any of the three leading agencies. Following this move, Moody's...

Relief comes from oil, not from China
VENEZUELA · Report · 21 May 2016

We update our foreign exchange cash flow forecast for 2016 bringing into the picture a slightly more positive outlook for oil prices and our reading of Minister Miguel Pérez Abad’s recent announcements on China, imports, and foreign exchange policy. Our deficit forecast remains almost unchanged a...

On Today's Vote and Tuesday's MPC
TURKEY · In Brief · 20 May 2016 · 3 responses

In a rather surprising development, the Turkish parliament voted today to lift the immunities of some 139 MPs from prosecution. (Click here and here for basic media coverage). Recall that the first round of voting was held on Tuesday, but the parliament had failed to pass the two proposed amendme...

Fiscal deficit reaches R$ 230 billion; Meirelles to announce a set of measures on Monday
BRAZIL POLITICS · Report · 20 May 2016

The deficit in the public accounts is expected to reach approximately R$ 230 billion this year, according to preliminary government data. The R$ 96 billion to which the previous administration admitted has been corrected to R$ 161 billion. The amount of R$ 15 to R$ 40 billion will be added to the...

​Who is afraid of Rodrigo Duterte? (4)
PHILIPPINES · In Brief · 19 May 2016

It is still difficult to listen to him for long. The curses and threats continue to roll off his tongue, his speeches remain stuck in a one-note anti-crime spiel, and his behavior suggests that he has yet to see himself other than a small town mayor. And he is not going to make it easy for the an...

The SARB Puts the Interest Rate Hike on Hold
SOUTH AFRICA · Report · 19 May 2016

Just as we had predicted, the South African Reserve Bank’s (SARB) Monetary Policy committee (MPC) paused its hiking of the baseline interest rate at its May 2016 meeting, which was also its third meeting in the current year. This was the first time the SARB did not raise the repurchase (repo) rat...

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