BRASILIA, Dec 30 (Reuters) - Brazil's slowing economic growth next year should help control a recent spurt in inflation, Finance Minister Guido Mantega said on Thursday.
Rising prices in Latin America's biggest economy present one of the most difficult policy challenges for President-elect Dilma Rousseff when she takes office on Jan. 1.
"Inflation is showing signs of easing," Mantega told reporters, adding that a recent surge in prices was due to a temporary blip in food costs.
He added that recent gains in the Brazilian real BRBY, which closed 2010 at its strongest in over two months on Thursday, were also atypical due to end-of-year trading.
"This question will be dealt with from January by the next government, probably (via) measures in the trade sector," Mantega said.
Inflation in Brazil quickened at its fastest pace in more than five years in November, driven by a surge in food and beverage prices, data showed earlier this month.
At 5.63 percent, the 12-month inflation rate also came in dangerously close to the upper limit of the government's target of 4.5 percent, plus or minus 2 percentage points.
But the incoming government is reluctant to deal with the problem by raising the country's already high interest rates for fear of attracting even more speculative hot money.
TRADE MEASURES
Rousseff plans targeted tariff increases and tax breaks as a way of addressing the strong currency, sources close to the incoming government told Reuters this week.
But the government has not decided to lift the existing income tax exemption foreigners enjoy on local bond holdings, Mantega said. The measure had been put forward by analysts in recent days as one possible way to deal with the strong currency.
The real has gained over 12 percent since the end of May, putting huge pressure on local companies that are struggling to sell their products abroad and compete with a flood of cheap imports.
The end of the year would have been an ideal time to reintroduce the income tax on bond holdings since it would be enacted immediately, said Christopher Garman, director for Latin America at political risk consultants Eurasia Group in Washington.
But this does not mean the new government will not introduce other measures to curb currency-boosting inflows such as raising the tax on foreign bond purchases, he said.
"They're going to do a bit of everything and incremental capital controls is one of them," he said.
Source: www.reuters.com
Thursday, December 30, 2010
Wednesday, December 29, 2010
Anger mounts over gas price hike in Bolivia
(CNN) -- Police in Bolivia used tear gas to disperse hundreds of protesters who took to the streets protesting a hike on the price of fuels Monday.
The price of gasoline has risen 73 percent while diesel fuel rose at least 80 percent.
The unions representing the public transit workers called for an indefinite national strike in protest which was partially successful Monday.
Bolivian President Evo Morales defended the increase, saying it was needed partly because of Bolivian fuel being sold illegally to other countries, the state-run news agency ABI reported.
The government had frozen the price of gasoline and diesel for six years and subsidized the cost -- making the fuel a lot cheaper than in neighboring countries.
As a result, trafficking in fuels made it a very profitable business, said Vice President Alvaro Garcia Lenero.
"The profit margin is so great that anybody who sells 10 liters of gasoline in Brazil or Peru makes enough money to live a week or two. Only 10 liters! That can't be. That can't be," he said.
The government estimates that Bolivia loses as much as $150 million a year in fuel sold outside the country.
But the "Gasolinazo," as the hike is being called, could be a big challenge to Morales who has enjoyed public support for his populist policies. Many are now questioning his commitment to the people.
"Why did he lie? His ministers said the price wouldn't go up a single peso and now this," said Marta Zurita, a homemaker in the capital Bolivia. "How can we move forward? This is bad, very bad."
Many fear the price increase won't be limited to fuel.
Taxi drivers raised their fares by as much as a 100% even though the government warned them not to go higher than 25%.
The drivers' union agreed to continue negotiations with the government Tuesday to reach an agreement on the new rates.
Others rushed to local markets to buy groceries fearing prices will soon go up.
Retiree Mary Ortuno said she wishes she could go shopping with a government official to see how much they could afford using only her income.
By Gustavo Valdes
Source: CNN
http://edition.cnn.com
The price of gasoline has risen 73 percent while diesel fuel rose at least 80 percent.
The unions representing the public transit workers called for an indefinite national strike in protest which was partially successful Monday.
Bolivian President Evo Morales defended the increase, saying it was needed partly because of Bolivian fuel being sold illegally to other countries, the state-run news agency ABI reported.
The government had frozen the price of gasoline and diesel for six years and subsidized the cost -- making the fuel a lot cheaper than in neighboring countries.
As a result, trafficking in fuels made it a very profitable business, said Vice President Alvaro Garcia Lenero.
"The profit margin is so great that anybody who sells 10 liters of gasoline in Brazil or Peru makes enough money to live a week or two. Only 10 liters! That can't be. That can't be," he said.
The government estimates that Bolivia loses as much as $150 million a year in fuel sold outside the country.
But the "Gasolinazo," as the hike is being called, could be a big challenge to Morales who has enjoyed public support for his populist policies. Many are now questioning his commitment to the people.
"Why did he lie? His ministers said the price wouldn't go up a single peso and now this," said Marta Zurita, a homemaker in the capital Bolivia. "How can we move forward? This is bad, very bad."
Many fear the price increase won't be limited to fuel.
Taxi drivers raised their fares by as much as a 100% even though the government warned them not to go higher than 25%.
The drivers' union agreed to continue negotiations with the government Tuesday to reach an agreement on the new rates.
Others rushed to local markets to buy groceries fearing prices will soon go up.
Retiree Mary Ortuno said she wishes she could go shopping with a government official to see how much they could afford using only her income.
By Gustavo Valdes
Source: CNN
http://edition.cnn.com
Tuesday, December 28, 2010
Deeper canals help boost Brazil's commodities throughput
Brazil's sea port capacity will rise significantly in 2011 as dredging work advances, a senior port official told Reuters, relieving a major bottleneck hampering trade with the booming Latin American economy. Brazil generates more than 40% of its export revenue from a vast range of commodities, both agricultural produce and minerals but its ports have been choking up more frequently as its red hot economy puts strain on its infrastructure.
A national program that began in 2007 to scoop 79 million tonnes of muck from the beds of access canals and berths at 18 ports at a cost of 1.6 billion reais ($942 million) is to be mostly completed by mid-2011.
"We will have 30% more capacity than at the start of the program," said Fabrizio Pierdomenico, secretary of planning and port development and a former director at Santos port. He said the increase in capacity would vary by port.
"Instead of working with two 60,000-tonne ships, you can use one 120,000-tonne ship. You gain in efficiency and add capacity to the port," he said, adding commodities producers could be assured they would benefit from cost savings. "It's as if you are adding more berths," he said.
A second phase of the dredging program starting in 2011 will extend the deepening along secondary canals that branch off from main access routes, and extend dredging to other ports. It will cost 1 billion reais and take four years.
The shortcomings of Brazil's ports were never more visible than in mid-2010 when ships queued for as long as a month to load sugar. Though a one-off coincidence of high demand and wet weather halted loading, faster turnarounds and access for larger ships could have lessened its severity. The top two sugar ports in Brazil, Santos and Paranagua, should complete their dredging work by the end of June and the end December 2011, respectively.
Brazil's national center for navigation, Centronave, says the country's ports are among the most costly in the world and says from January to September, ships spent a combined total of eight years waiting to load and unload. The inadequate depth of canals means some ships can only operate partially loaded at Brazil's ports as they would otherwise run aground if carrying a full cargo.
Brazil is also the world's top exporter of iron ore but the country's top producer of the steel ingredient, Vale, ships through its own privately run ports.
ROAD, RAIL PROBLEMS REMAIN
The largest and most costly project, the dredging of a 17-km (10.6-mile) canal at the port of Rio Grande in the southern state of Rio Grande do Sul was completed in July and enabled a Panamax vessel to berth there for the first time in November.
Ports in the south of the country will need regular maintenance dredging, once or twice a year, as sediment tends to build up faster there, Pierdomenico said. Ports in the north and northeast can go two or three years without maintenance. Mud dredged from the ports is shipped out to sea and dumped at locations approved by the environmental regulator and where currents are present to disperse it evenly over the sea bed.
Pierdomenico said once the problem of waterway access has been resolved, other bottlenecks are likely to become more prominent.
"When you remove this blockage others will appear. Ports will have to deal with the problem of access roads and railways to get there and the shortening of queues," Pierdomenico said.
Investments from the same infrastructure program funding the dredging, known as the Accelerated Growth Program (PAC), will also pay for the construction of two railways, one descending from the north and the running east and west. They will interlink with several existing smaller rail networks.
Pierdomenico, speaking to Reuters in an interview at the headquarters of the port secretariat, specially set up in 2007 to tackle port bottlenecks, said further efficiency gains would come from a "paper-free port" program to cut bureaucracy.
Some 900 documents are needed to process each ship passing through the country's ports but a computerized system was being developed to automatically distribute details to each state authority according to their requirements.
Another system that would track containers on their road or rail journey to the port is also planned and would enable their check-in procedure to begin prior to their arrival, Pierdomenico said.
He said that for the duration of the dredging works, archeologists were present at each site to be able to recover objects of historical value were any to be uncovered. Divers had also scoured the waterways at ports in the state of Bahia where Portuguese colonists first discovered Brazil after their ship was blown off course on their way to Asia.
Pierdomenico said the dredging had so far yielded only old tyres, anchors and parts of ships but nothing of historical value. "Thank God," he laughed. "Otherwise we might have to stop everything."
Source: www.independent.co.uk
A national program that began in 2007 to scoop 79 million tonnes of muck from the beds of access canals and berths at 18 ports at a cost of 1.6 billion reais ($942 million) is to be mostly completed by mid-2011.
"We will have 30% more capacity than at the start of the program," said Fabrizio Pierdomenico, secretary of planning and port development and a former director at Santos port. He said the increase in capacity would vary by port.
"Instead of working with two 60,000-tonne ships, you can use one 120,000-tonne ship. You gain in efficiency and add capacity to the port," he said, adding commodities producers could be assured they would benefit from cost savings. "It's as if you are adding more berths," he said.
A second phase of the dredging program starting in 2011 will extend the deepening along secondary canals that branch off from main access routes, and extend dredging to other ports. It will cost 1 billion reais and take four years.
The shortcomings of Brazil's ports were never more visible than in mid-2010 when ships queued for as long as a month to load sugar. Though a one-off coincidence of high demand and wet weather halted loading, faster turnarounds and access for larger ships could have lessened its severity. The top two sugar ports in Brazil, Santos and Paranagua, should complete their dredging work by the end of June and the end December 2011, respectively.
Brazil's national center for navigation, Centronave, says the country's ports are among the most costly in the world and says from January to September, ships spent a combined total of eight years waiting to load and unload. The inadequate depth of canals means some ships can only operate partially loaded at Brazil's ports as they would otherwise run aground if carrying a full cargo.
Brazil is also the world's top exporter of iron ore but the country's top producer of the steel ingredient, Vale, ships through its own privately run ports.
ROAD, RAIL PROBLEMS REMAIN
The largest and most costly project, the dredging of a 17-km (10.6-mile) canal at the port of Rio Grande in the southern state of Rio Grande do Sul was completed in July and enabled a Panamax vessel to berth there for the first time in November.
Ports in the south of the country will need regular maintenance dredging, once or twice a year, as sediment tends to build up faster there, Pierdomenico said. Ports in the north and northeast can go two or three years without maintenance. Mud dredged from the ports is shipped out to sea and dumped at locations approved by the environmental regulator and where currents are present to disperse it evenly over the sea bed.
Pierdomenico said once the problem of waterway access has been resolved, other bottlenecks are likely to become more prominent.
"When you remove this blockage others will appear. Ports will have to deal with the problem of access roads and railways to get there and the shortening of queues," Pierdomenico said.
Investments from the same infrastructure program funding the dredging, known as the Accelerated Growth Program (PAC), will also pay for the construction of two railways, one descending from the north and the running east and west. They will interlink with several existing smaller rail networks.
Pierdomenico, speaking to Reuters in an interview at the headquarters of the port secretariat, specially set up in 2007 to tackle port bottlenecks, said further efficiency gains would come from a "paper-free port" program to cut bureaucracy.
Some 900 documents are needed to process each ship passing through the country's ports but a computerized system was being developed to automatically distribute details to each state authority according to their requirements.
Another system that would track containers on their road or rail journey to the port is also planned and would enable their check-in procedure to begin prior to their arrival, Pierdomenico said.
He said that for the duration of the dredging works, archeologists were present at each site to be able to recover objects of historical value were any to be uncovered. Divers had also scoured the waterways at ports in the state of Bahia where Portuguese colonists first discovered Brazil after their ship was blown off course on their way to Asia.
Pierdomenico said the dredging had so far yielded only old tyres, anchors and parts of ships but nothing of historical value. "Thank God," he laughed. "Otherwise we might have to stop everything."
Source: www.independent.co.uk
Monday, December 27, 2010
Peru finance minister predicts 9 pct growth for 2011
Finance Minister Ismael Benavides said Peru's economy will grow as much as nine percent by the end of this year on the back of strong GDP expansion in recent months.
"I would like nine percent and evidently there are indicators of this high growth, especially in October, November and December," he said.
In an interview with TV Peru on Monday, he said positive indicators included cement production and electricity consumption levels, which will lead to a higher-than-expected GDP growth this year.
"This is a strong recovery from last year's slowdown and puts Peru on the path of growth so as to reduce poverty and improve the people's income and livelihood," Benavides said.
The minister added that there was room for more growth in Peru, but warned, however, of future "bottlenecks" to expansion, including a shortage of "human capital" such as technically qualified professionals, poverty levels and infrastructure shortages. Benavides said Peru needed to prepare to grow at rates of more than 7% to overcome these problems.
Earlier this month Benavides said he believed Peru's GDP in 2010 could grow between 8.7% and 9%.
According to the Latin American Consensus Forecast, the Peruvian economy will expand by 8.5% this year and 6% in 2011, up from prior estimates of 7.9 percent and 5.8%, respectively.
Source: Living in Peru
http://www.livinginperu.com
"I would like nine percent and evidently there are indicators of this high growth, especially in October, November and December," he said.
In an interview with TV Peru on Monday, he said positive indicators included cement production and electricity consumption levels, which will lead to a higher-than-expected GDP growth this year.
"This is a strong recovery from last year's slowdown and puts Peru on the path of growth so as to reduce poverty and improve the people's income and livelihood," Benavides said.
The minister added that there was room for more growth in Peru, but warned, however, of future "bottlenecks" to expansion, including a shortage of "human capital" such as technically qualified professionals, poverty levels and infrastructure shortages. Benavides said Peru needed to prepare to grow at rates of more than 7% to overcome these problems.
Earlier this month Benavides said he believed Peru's GDP in 2010 could grow between 8.7% and 9%.
According to the Latin American Consensus Forecast, the Peruvian economy will expand by 8.5% this year and 6% in 2011, up from prior estimates of 7.9 percent and 5.8%, respectively.
Source: Living in Peru
http://www.livinginperu.com
Friday, December 24, 2010
Top Taiwan Planner Calls for Capital Controls as Currency Threatens Growth
Taiwan should consider a package of capital controls if it wants to curb currency swings driven by speculative fund inflows, the island’s chief economic planner Christina Liu said.
“We should actually discuss and talk about a capital control package if we really want to have capital controls,” Liu said yesterday in an interview in Taipei. “If no countries impose them, that will be best. But if some economies start to impose capital controls, then those who don’t will suffer the most. So we have to figure out some kind of capital control, too.”
Officials from Asia to Latin America have sought to curtail inflows drawn by higher growth rates to limit currency gains threatening exports. Taiwan last month restricted foreign investment in government debt, and the central bank aims to halve speculative money in the island’s financial markets.
“We don’t want to be the target for speculators, forced to appreciate more than the fundamentals,” said Liu, head of the Council for Economic Planning and Development and a former presidential adviser. The central bank so far “doesn’t discuss” the issue of capital controls with other ministries, “so I don’t know what’s in their mind,” she said.
The Taiwan dollar has risen 5.5 percent over the past three months against its U.S. counterpart, the most in Asia, according to data compiled by Bloomberg. It traded at NT$29.830 as of 2:01 p.m. local time.
Export Sales
Further increases risk crimping export competitiveness at firms such as Taiwan Semiconductor Manufacturing Co., the world’s largest custom manufacturer of chips, in an economy where exports are equivalent to two-thirds of gross domestic product.
The U.S. Federal Reserve’s plan to inject $600 billion into the world’s largest economy is spurring investment into Asia, Liu said. “A lot of it is speculative funds,” she said.
The island in November said it will restrict offshore funds to investing no more than 30 percent of their portfolios into domestic government bonds and money-market products.
Governor Perng Fai-nan said Nov. 29 that the central bank wants to halve so-called hot money flows to Taiwan to NT$150 billion ($5.03 billion). He also said no decision had yet been made on whether to levy a fee on deposits by foreigners at banks on the island.
The central bank has bought the U.S. dollar in late trading almost every day for the past eight months to shield exporters, traders said this month. They declined to be identified as the monetary authority doesn’t publicly disclose such details.
Currency Stability
Taiwanese exporters seeking exchange-rate stability should hedge currency risk, as the fact that some companies might struggle doesn’t mean the government should restrain the local dollar over the long term, Liu said. They should also target Asian consumers, not just European and U.S. ones, she said.
Asian economies from Thailand to South Korea have taken steps this year to curb currency gains. Thailand is ending a 15 percent tax exemption on income from domestic bonds held by overseas buyers.
South Korea has tightened oversight of foreign-currency derivatives and backed the revival of taxes on overseas investors in treasury and central bank bonds. It also aims to apply a levy on foreign-exchange borrowings by banks to guard against sudden capital outflows.
Aligned in Asia
It’s “extremely important” that Taiwan is “in line with other Asian economies and other Asian currencies,” said Liu, who was economic adviser to President Ma Ying-jeou from 2008 to 2010.
Taiwan dollar appreciation can be seen as a “healthy development” as long as it reflects the economy’s performance and is comparable with other Asian currencies, she said.
Recent reports signaled Taiwan’s economy is weathering the increase in its currency. Industrial production rose for the 15th straight month in November, while the unemployment rate fell to a two-year low.
The island’s GDP is set to grow 9.32 percent this year, one of the world’s fastest rates, according to International Monetary Fund data. Domestic demand and closer economic links with China have been contributing to the expansion, Liu said.
All 11 economists in Bloomberg News survey expect the central bank to raise the benchmark interest rate by 0.125 percentage point to 1.625 percent at its next quarterly interest-rate policy meeting on Dec. 30, following two increases of the same amount in each of June and September.
Source: BLOOMBERG
http://www.bloomberg.com
“We should actually discuss and talk about a capital control package if we really want to have capital controls,” Liu said yesterday in an interview in Taipei. “If no countries impose them, that will be best. But if some economies start to impose capital controls, then those who don’t will suffer the most. So we have to figure out some kind of capital control, too.”
Officials from Asia to Latin America have sought to curtail inflows drawn by higher growth rates to limit currency gains threatening exports. Taiwan last month restricted foreign investment in government debt, and the central bank aims to halve speculative money in the island’s financial markets.
“We don’t want to be the target for speculators, forced to appreciate more than the fundamentals,” said Liu, head of the Council for Economic Planning and Development and a former presidential adviser. The central bank so far “doesn’t discuss” the issue of capital controls with other ministries, “so I don’t know what’s in their mind,” she said.
The Taiwan dollar has risen 5.5 percent over the past three months against its U.S. counterpart, the most in Asia, according to data compiled by Bloomberg. It traded at NT$29.830 as of 2:01 p.m. local time.
Export Sales
Further increases risk crimping export competitiveness at firms such as Taiwan Semiconductor Manufacturing Co., the world’s largest custom manufacturer of chips, in an economy where exports are equivalent to two-thirds of gross domestic product.
The U.S. Federal Reserve’s plan to inject $600 billion into the world’s largest economy is spurring investment into Asia, Liu said. “A lot of it is speculative funds,” she said.
The island in November said it will restrict offshore funds to investing no more than 30 percent of their portfolios into domestic government bonds and money-market products.
Governor Perng Fai-nan said Nov. 29 that the central bank wants to halve so-called hot money flows to Taiwan to NT$150 billion ($5.03 billion). He also said no decision had yet been made on whether to levy a fee on deposits by foreigners at banks on the island.
The central bank has bought the U.S. dollar in late trading almost every day for the past eight months to shield exporters, traders said this month. They declined to be identified as the monetary authority doesn’t publicly disclose such details.
Currency Stability
Taiwanese exporters seeking exchange-rate stability should hedge currency risk, as the fact that some companies might struggle doesn’t mean the government should restrain the local dollar over the long term, Liu said. They should also target Asian consumers, not just European and U.S. ones, she said.
Asian economies from Thailand to South Korea have taken steps this year to curb currency gains. Thailand is ending a 15 percent tax exemption on income from domestic bonds held by overseas buyers.
South Korea has tightened oversight of foreign-currency derivatives and backed the revival of taxes on overseas investors in treasury and central bank bonds. It also aims to apply a levy on foreign-exchange borrowings by banks to guard against sudden capital outflows.
Aligned in Asia
It’s “extremely important” that Taiwan is “in line with other Asian economies and other Asian currencies,” said Liu, who was economic adviser to President Ma Ying-jeou from 2008 to 2010.
Taiwan dollar appreciation can be seen as a “healthy development” as long as it reflects the economy’s performance and is comparable with other Asian currencies, she said.
Recent reports signaled Taiwan’s economy is weathering the increase in its currency. Industrial production rose for the 15th straight month in November, while the unemployment rate fell to a two-year low.
The island’s GDP is set to grow 9.32 percent this year, one of the world’s fastest rates, according to International Monetary Fund data. Domestic demand and closer economic links with China have been contributing to the expansion, Liu said.
All 11 economists in Bloomberg News survey expect the central bank to raise the benchmark interest rate by 0.125 percentage point to 1.625 percent at its next quarterly interest-rate policy meeting on Dec. 30, following two increases of the same amount in each of June and September.
Source: BLOOMBERG
http://www.bloomberg.com
Thursday, December 23, 2010
Latin Americans need port policies
Port Strategy reports that the head of the UN's Economic Commission for Latin America and the Caribbean, Ricardo Sanchez, has said that Latin American governments need to "redefine their port policies" as a means of integrating coastal ports with the region's industrial and production sectors.
The head of the UN's Economic Commission for Latin America and the Caribbean, Ricardo Sanchez, has said that Latin American governments need to redefine their port policies as a means of integrating coastal ports with the region's industrial and production sectors.
He believes that many governments are less focussed on ports as they are no longer seen as key objectives for economic policy.
Mr Sanchez pointed out that some countries no longer have port policies, while others are only just beginning to develop them.
However, he singled out Brazil as a good example for other countries in the region to follow, given that the government set up the Port Secretariat (SEP) in 2007 thereby giving more weight to the industry.
Source: http://www.sandandgravel.com
The head of the UN's Economic Commission for Latin America and the Caribbean, Ricardo Sanchez, has said that Latin American governments need to redefine their port policies as a means of integrating coastal ports with the region's industrial and production sectors.
He believes that many governments are less focussed on ports as they are no longer seen as key objectives for economic policy.
Mr Sanchez pointed out that some countries no longer have port policies, while others are only just beginning to develop them.
However, he singled out Brazil as a good example for other countries in the region to follow, given that the government set up the Port Secretariat (SEP) in 2007 thereby giving more weight to the industry.
Source: http://www.sandandgravel.com
Wednesday, December 22, 2010
Looking to Latin America in 2011
A star economic region offering lessons for developed countries, a magnet for Asian investment and trade, and home to thriving democracies—Latin America would hardly have drawn such descriptions a few decades ago. But 2010 marked a standout year for the region, which outpaced the average growth rate of the global economy and continued forging trans-Pacific ties. Still, fears about organized crime continue to grow as countries in the region consider how they can work together to boost public safety. AS/COA Online takes a look at some of the top issues that will affect the region in 2011.
Latin America as a rising economic star. Once considered an economic basket case, Latin America turned around its financial fortunes. The region is expected to post 6 percent GDP growth for 2010. Global economic woes could draw that figure down to 4.2 percent in 2011, according to a report by the UN Economic Commission for Latin America and the Caribbean. Still, Latin America’s growth rate could outstrip the global average for the next seven years. This good news has some eyes turning to Latin America for instruction. A Financial Times article suggests the region offers lessons for the EU, weighed down by debt in southern Europe and Ireland, “to avoid a lost decade.”
Growing ties with Asia. As COA Vice President Eric Farnsworth recently wrote for The Huffington Post, “China, the primary purchaser of Latin American commodities, has emerged as a significant new regional player.” The region is rich in resources, with countries such as Argentina, Brazil, and Venezuela drawing billions in Chinese investment dollars. Ecuador is already predicting that it will be one of Beijing’s top investment destinations next year. But deeper links with China are just part of the picture at a time when Asia and Latin America are both growing rapidly. The exchange of goods across the Pacific will likely grow thanks to an increasing number of trade deals. Peru recently signed accords between both Japan and South Korea, while Chile inked one with Malaysia and started negotiations with Thailand. The possibility of eliminating tariffs through the Trans-Pacific Partnership would build on such pacts as well.
Crime to remain a top issue. The choice of “citizen security” as the theme at the next OAS General Assembly underlines ongoing regional concern about public safety and crime in the Americas. Recent events—such as Guatemala’s declaration of a state of siege in one of its northern provinces troubled by drug gangs, or Rio police quelling gang violence in one of the city’s favelas—demonstrate that the issue transcends geography. This month, Mexico reached a grim benchmark in its war on drugs when the number of drug-war-related deaths since January 2007 hit 30,000. Some Latin American leaders have already advocated a shift toward decriminalization and treating drug abuse as a health issue as a way to fight gangs and trafficking. Other observers have called for increasing hemispheric cooperation to tackle organized crime.
Upcoming elections. A new Latinobarómetro poll shows that support for democracy continues to grow in Latin America. Voters in several countries will head to the polls next year. Here are elections to watch:
* Presidential: Haiti (Second Round – January 2011), Peru (April 2011), Guatemala (August 2011), Argentina (October 2011), Nicaragua (November 2011)
* Legislative: Haiti (Second Round – January 2011), Peru (April 2011), Guatemala (August 2011), Nicaragua (November 2011)
* Gubernatorial: Several Mexican states will hold elections throughout 2011, including in the State of Mexico.
Learn more:
* “After a Good Year in Latin Americas, Some Predictions for 2011,” Eric Farnsworth, PODER Hispanic, December 11, 2010.
* “Latin America’s New Presidents,” an AS/COA Online news analysis that takes a look at the new presidents of Brazil, Chile, Colombia, and Brazil.
* The GE Foundation awarded the Americas Society a grant that will include funding for Chinese natural resource investments and comparison of Asian and Latin American strategies for transportation integration.
* Summary of AS/COA’s 7th Annual Predictors Forum: Economic, Financial, and Trade Predictions for 2011.
* Annual report by UN Economic Commission for Latin America and the Caribbean covers 2010 growth and offers forecasts for 2011.
* Reuters Factbox on “political risks to watch” in the region in 2011.
Source: Americas-society
http://as.americas-society.org
Latin America as a rising economic star. Once considered an economic basket case, Latin America turned around its financial fortunes. The region is expected to post 6 percent GDP growth for 2010. Global economic woes could draw that figure down to 4.2 percent in 2011, according to a report by the UN Economic Commission for Latin America and the Caribbean. Still, Latin America’s growth rate could outstrip the global average for the next seven years. This good news has some eyes turning to Latin America for instruction. A Financial Times article suggests the region offers lessons for the EU, weighed down by debt in southern Europe and Ireland, “to avoid a lost decade.”
Growing ties with Asia. As COA Vice President Eric Farnsworth recently wrote for The Huffington Post, “China, the primary purchaser of Latin American commodities, has emerged as a significant new regional player.” The region is rich in resources, with countries such as Argentina, Brazil, and Venezuela drawing billions in Chinese investment dollars. Ecuador is already predicting that it will be one of Beijing’s top investment destinations next year. But deeper links with China are just part of the picture at a time when Asia and Latin America are both growing rapidly. The exchange of goods across the Pacific will likely grow thanks to an increasing number of trade deals. Peru recently signed accords between both Japan and South Korea, while Chile inked one with Malaysia and started negotiations with Thailand. The possibility of eliminating tariffs through the Trans-Pacific Partnership would build on such pacts as well.
Crime to remain a top issue. The choice of “citizen security” as the theme at the next OAS General Assembly underlines ongoing regional concern about public safety and crime in the Americas. Recent events—such as Guatemala’s declaration of a state of siege in one of its northern provinces troubled by drug gangs, or Rio police quelling gang violence in one of the city’s favelas—demonstrate that the issue transcends geography. This month, Mexico reached a grim benchmark in its war on drugs when the number of drug-war-related deaths since January 2007 hit 30,000. Some Latin American leaders have already advocated a shift toward decriminalization and treating drug abuse as a health issue as a way to fight gangs and trafficking. Other observers have called for increasing hemispheric cooperation to tackle organized crime.
Upcoming elections. A new Latinobarómetro poll shows that support for democracy continues to grow in Latin America. Voters in several countries will head to the polls next year. Here are elections to watch:
* Presidential: Haiti (Second Round – January 2011), Peru (April 2011), Guatemala (August 2011), Argentina (October 2011), Nicaragua (November 2011)
* Legislative: Haiti (Second Round – January 2011), Peru (April 2011), Guatemala (August 2011), Nicaragua (November 2011)
* Gubernatorial: Several Mexican states will hold elections throughout 2011, including in the State of Mexico.
Learn more:
* “After a Good Year in Latin Americas, Some Predictions for 2011,” Eric Farnsworth, PODER Hispanic, December 11, 2010.
* “Latin America’s New Presidents,” an AS/COA Online news analysis that takes a look at the new presidents of Brazil, Chile, Colombia, and Brazil.
* The GE Foundation awarded the Americas Society a grant that will include funding for Chinese natural resource investments and comparison of Asian and Latin American strategies for transportation integration.
* Summary of AS/COA’s 7th Annual Predictors Forum: Economic, Financial, and Trade Predictions for 2011.
* Annual report by UN Economic Commission for Latin America and the Caribbean covers 2010 growth and offers forecasts for 2011.
* Reuters Factbox on “political risks to watch” in the region in 2011.
Source: Americas-society
http://as.americas-society.org
Tuesday, December 21, 2010
Argentina Should Surpass 5 Million Broadband Connections at Its Bicentenary
BUENOS AIRES, Argentina – Cisco has announced the results of the Cisco® Broadband Barometer’s special edition for the Argentine bicentenary of 2010. The study reports a growth of 5.6 percent in fixed broadband connections, a 41.1 percent growth in the mobile data subscribers segment, and a 10.6 percent growth in total broadband connections in Argentina from December 2009 to May 2010. During that period 492,000 new fixed broadband connections were added, reaching a penetration of 10.7 percent and keeping the country in second place in Latin America for a second consecutive year.
Latin American economies are in different development phases, but according to a recent report of the World Economic Forum, they all face the challenge of global competitiveness. The challenge for governments is to take advantage of the strategic role that networks and connectivity can play to propel economic development and increase productivity.
A report of the World Bank, titled “Information and Communications for Development, 2009: Extending Reach and Increasing Impact,” analyzes the effects of information and communications technology in the economic growth of developing countries. The report finds that an increase of 10 percent in high-speed Internet connections corresponds to an increase of 1.3 percent in economic growth.
The report also shows that broadband connectivity is essential for the ICT services market, as it generates employment for young people, increases productivity and exports, and promotes social inclusion. The report explains that developing countries currently exploit less than 15 percent of the potential worldwide market for the ICT services sector.
In order to make broadband access universal, investments must be made in ICT. In Argentina a study made by the consultant Global Insight last September shows that the investment in ICT in the period 2007-2009 was 1.1 percent of the gross domestic product. The study concluded that both public and private investments must be made to stimulate the development of technologies in Latin America. This will enable Latin American countries to better support a growth of 50 percent in network traffic in the region. Network traffic is projected to grow 7.9 times by the end of 2014, according to the most recent Cisco Visual Networking Index report.
In Argentina, 50 percent of the fixed broadband connections have connection speeds of more than 1 megabit per second, but the quality and speed of broadband connections must be improved to help ensure a high-quality experience for users. Improvements are especially needed because of the predicted increase in network traffic, with video being the main source of Internet traffic.
Highlights of the Cisco Barometer for the Argentine Bicentenary:
More than three quarters (77 percent) of fixed broadband connections are concentrated in the Capital District of Buenos Aires, and almost a quarter (23 percent) are in the rest of the country. In spite of that, connections located outside the metropolitan area of Buenos Aires grew 9.5 percent due to a continuous improvement in the offers and coverage of service providers. Connections in the metropolitan area grew 3.8 percent.
The regions with the highest broadband penetrations are the city of Buenos Aires (Ciudad Autónoma de Buenos Aires) with 49.3 percent, Tierra del Fuego with 16.5 percent, San Luis with 16.4 percent, Santa Cruz with 15.8 percent and La Pampa with 14.5 percent.
Half of the broadband connections have speeds higher than 1 Mbps, although in 2009 and 2010 service providers focused their offers on speeds of more than 3 Mbps.
During December 2009 to May 2010 mobile broadband connections grew 26.7 percent, adding 921,493 connections in the Argentine market. Most of these connections are in the private and residential market segments.
Supporting Quotes:
Juan Pablo Estevez, regional director, Cisco Southern Cone
“Argentina has the second-highest level of broadband penetration in Latin America. According to the results of the Barometer Report, we can see how the demand of connectivity services continues to grow. Although the focus of the Cisco broadband Barometer is in broadband penetration, in the year of the bicentenary we will also focus in the quality of connections; this is a fundamental factor in preparing the networks for the technologies and applications of the future and in offering citizens a unique and profitable opportunity to increase their productivity and competitiveness.”
For more information:
Report Cisco Visual Networking Index
World Economic Forum report
World Bank report
About the Cisco Broadband Barometer
Cisco Broadband Barometer is a Cisco initiative to promote and encourage broadband connectivity in Latin America. It sets goals regarding the number of connections, establishes a periodical measurement of progress, publishes these results, and develops strategies with service providers and governments.
Currently, Cisco Barometer measures broadband growth in Argentina, Chile, Brazil, Colombia, Costa Rica, Venezuela, Peru and Uruguay.
About Cisco
Cisco, (NASDAQ: CSCO), is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Cisco celebrates 25 years of technological innovation, operating excellence and corporate social responsibility. Information about Cisco can be found at http://www.cisco.com. For ongoing news, please go to http://newsroom.cisco.com.
By Victoria Chelsea
Source: www.vadvert.co.uk
Latin American economies are in different development phases, but according to a recent report of the World Economic Forum, they all face the challenge of global competitiveness. The challenge for governments is to take advantage of the strategic role that networks and connectivity can play to propel economic development and increase productivity.
A report of the World Bank, titled “Information and Communications for Development, 2009: Extending Reach and Increasing Impact,” analyzes the effects of information and communications technology in the economic growth of developing countries. The report finds that an increase of 10 percent in high-speed Internet connections corresponds to an increase of 1.3 percent in economic growth.
The report also shows that broadband connectivity is essential for the ICT services market, as it generates employment for young people, increases productivity and exports, and promotes social inclusion. The report explains that developing countries currently exploit less than 15 percent of the potential worldwide market for the ICT services sector.
In order to make broadband access universal, investments must be made in ICT. In Argentina a study made by the consultant Global Insight last September shows that the investment in ICT in the period 2007-2009 was 1.1 percent of the gross domestic product. The study concluded that both public and private investments must be made to stimulate the development of technologies in Latin America. This will enable Latin American countries to better support a growth of 50 percent in network traffic in the region. Network traffic is projected to grow 7.9 times by the end of 2014, according to the most recent Cisco Visual Networking Index report.
In Argentina, 50 percent of the fixed broadband connections have connection speeds of more than 1 megabit per second, but the quality and speed of broadband connections must be improved to help ensure a high-quality experience for users. Improvements are especially needed because of the predicted increase in network traffic, with video being the main source of Internet traffic.
Highlights of the Cisco Barometer for the Argentine Bicentenary:
More than three quarters (77 percent) of fixed broadband connections are concentrated in the Capital District of Buenos Aires, and almost a quarter (23 percent) are in the rest of the country. In spite of that, connections located outside the metropolitan area of Buenos Aires grew 9.5 percent due to a continuous improvement in the offers and coverage of service providers. Connections in the metropolitan area grew 3.8 percent.
The regions with the highest broadband penetrations are the city of Buenos Aires (Ciudad Autónoma de Buenos Aires) with 49.3 percent, Tierra del Fuego with 16.5 percent, San Luis with 16.4 percent, Santa Cruz with 15.8 percent and La Pampa with 14.5 percent.
Half of the broadband connections have speeds higher than 1 Mbps, although in 2009 and 2010 service providers focused their offers on speeds of more than 3 Mbps.
During December 2009 to May 2010 mobile broadband connections grew 26.7 percent, adding 921,493 connections in the Argentine market. Most of these connections are in the private and residential market segments.
Supporting Quotes:
Juan Pablo Estevez, regional director, Cisco Southern Cone
“Argentina has the second-highest level of broadband penetration in Latin America. According to the results of the Barometer Report, we can see how the demand of connectivity services continues to grow. Although the focus of the Cisco broadband Barometer is in broadband penetration, in the year of the bicentenary we will also focus in the quality of connections; this is a fundamental factor in preparing the networks for the technologies and applications of the future and in offering citizens a unique and profitable opportunity to increase their productivity and competitiveness.”
For more information:
Report Cisco Visual Networking Index
World Economic Forum report
World Bank report
About the Cisco Broadband Barometer
Cisco Broadband Barometer is a Cisco initiative to promote and encourage broadband connectivity in Latin America. It sets goals regarding the number of connections, establishes a periodical measurement of progress, publishes these results, and develops strategies with service providers and governments.
Currently, Cisco Barometer measures broadband growth in Argentina, Chile, Brazil, Colombia, Costa Rica, Venezuela, Peru and Uruguay.
About Cisco
Cisco, (NASDAQ: CSCO), is the worldwide leader in networking that transforms how people connect, communicate and collaborate. Cisco celebrates 25 years of technological innovation, operating excellence and corporate social responsibility. Information about Cisco can be found at http://www.cisco.com. For ongoing news, please go to http://newsroom.cisco.com.
By Victoria Chelsea
Source: www.vadvert.co.uk
Monday, December 20, 2010
Dollar Bonds Trail Behind Latin American Peers on Spending: Brazil Credit
By Boris Korby and Camila Russo
Brazil is trailing all major Latin American countries in the dollar bond market this year for the first time since 1997 amid concern President-elect Dilma Rousseff will fail to slow spending growth.
The 8.4 percent return on Brazilian bonds this year is the lowest among the eight countries in the region tracked by JPMorgan Chase & Co.’s EMBI+ index. Argentine bonds gained 31 percent, the biggest advance in the region.
Rousseff’s plan to increase cash payments to the poor are helping fuel speculation she will continue the spending policies of President Luiz Inacio Lula da Silva, who boosted government expenditures by 27 percent in the first nine months of the year. The average yield on Brazilian dollar bonds jumped 88 basis points, or 0.88 percentage point, since Oct. 13 to a five-month high of 5.61 percent last week, according to JPMorgan.
“Dilma is untested,” said Michael Roche, an emerging- market strategist at MF Global Holdings Ltd., a New York-based broker. “You have to build a risk premium into the sovereign spread of the country until proven otherwise.”
The central bank raised interest rates this year by 200 basis points to slow inflation as government spending helped spark the fastest economic expansion in more than two decades. Consumer prices increased 5.63 percent in the 12 months through November, the fastest pace since February 2009.
Alexandre Tombini, Rousseff’s pick to head the central bank, will increase borrowing costs to 12.75 percent from 10.75 percent by the end of next year to curb inflation, trading in rates futures shows. Tombini, who has served on the central bank’s board since 2005, was confirmed by the senate last week.
Minimum Wage
Latin America’s biggest economy will grow 7.6 percent this year, according to a Dec. 10 central bank survey of about 100 economists.
Rousseff, who takes office Jan. 1, said last month she’s considering raising the monthly minimum wage to more than 700 reais ($409) by the end of her four-year term from 510 reais. The government’s budget proposal for 2011 increases the minimum wage to 540 reais a month, Worker’s Party Senator Serys Slhessarenko told reporters on Dec. 17 in Brasilia.
“A normal reaction, considering a new government is taking place, is to be concerned about how the new president will conduct the fiscal accounts,” Marcelo Saddi Castro, who oversees 18 billion reais as chief investment officer at SulAmerica Investimentos in Sao Paulo, said in a telephone interview. “The lower the minimum wage, the better the impact on the fiscal accounts.”
Budget Deficit
The budget deficit widened to the equivalent of 3.4 percent of gross domestic product in August, the biggest in five months, before narrowing to 2.4 percent of GDP in September, when the government reaped a revenue windfall from its sale of oil reserves to state-run Petroleo Brasileiro SA.
The Finance Ministry’s press office declined to comment.
Rousseff, who has said social programs and the investment Brazil needs would not be reduced, pledged on TV Record on Nov. 1 to control public spending because “the most important characteristic of a government in today’s world is not to spend what it can’t spend.”
“We’re getting conflicting statements, and her administration hasn’t done much to alleviate concerns over the policies going forward,” Vitali Meschoulam, a strategist at Morgan Stanley in New York, said in a telephone interview. “We still don’t know if they’re going to come out fiscally tighter or looser than the previous administration.”
U.S. Treasuries
Rising U.S. Treasury yields have deepened the slump in Brazilian dollar bonds in the past month, Meschoulam said.
The yield on the 10-year U.S. note touched 3.56 percent last week, the highest level since May 13, on speculation President Barack Obama’s decision to extend tax cuts enacted under his predecessor may bolster U.S. growth while worsening the nation’s budget deficit.
The extra yield investors demand to own Brazilian dollar bonds instead of U.S. Treasuries narrowed 2 basis points at 6:29 a.m. New York time to 197, according to JPMorgan.
The cost of protecting Brazilian bonds against default for five years fell 2 basis points to 113, according to CMA prices. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
The real rose 0.2 percent to 1.7108 per U.S. dollar.
Yields on Brazil’s interbank rate futures contract due in January 2012 rose 1 basis point to 11.86 percent.
BNDES
Finance Minister Guido Mantega, who will retain his post under Rousseff, said in November that Brazil plans to cut funding for its state development bank by 50 percent next year in an effort to bring down the world’s second-highest inflation- adjusted interest rates.
BNDES, as the lender is known, will hold an auction of local corporate bonds on Dec. 20 as part of a government plan to boost trading in the secondary market, according to a bank official who asked not to be named in accordance with policy.
The bank will auction bonds issued by Cia. De Bebidas das Americas, Tractebel Energia SA and Cia. Energetica de Minas Gerais, according to three investors who received an e-mail from the bank detailing the plan. The auction will take place between 11 a.m. and 11:30 a.m.
Brazil’s dollar bonds returned 11 percent last year, beating debt from Mexico, as Moody’s Investors Service raised the South American country to an investment-grade rating of Baa3. Brazil won its first investment-grade rating in April 2008, when Standard & Poor’s increased it to BBB-. Fitch Ratings matched the move a month later.
The yield on Brazil’s bonds touched 4.72 percent on Oct. 13, the lowest since JPMorgan began tracking the data in December 1997.
“You have a credit that was very tight and had outperformed in previous years as the good news on fundamentals already got priced in,” Meschoulam said. “So now Brazil has less of a chance of being upgraded than smaller credits in the region, and on a relative basis it looks less attractive.”
Source: Bloomberg
www.bloomberg.com
Brazil is trailing all major Latin American countries in the dollar bond market this year for the first time since 1997 amid concern President-elect Dilma Rousseff will fail to slow spending growth.
The 8.4 percent return on Brazilian bonds this year is the lowest among the eight countries in the region tracked by JPMorgan Chase & Co.’s EMBI+ index. Argentine bonds gained 31 percent, the biggest advance in the region.
Rousseff’s plan to increase cash payments to the poor are helping fuel speculation she will continue the spending policies of President Luiz Inacio Lula da Silva, who boosted government expenditures by 27 percent in the first nine months of the year. The average yield on Brazilian dollar bonds jumped 88 basis points, or 0.88 percentage point, since Oct. 13 to a five-month high of 5.61 percent last week, according to JPMorgan.
“Dilma is untested,” said Michael Roche, an emerging- market strategist at MF Global Holdings Ltd., a New York-based broker. “You have to build a risk premium into the sovereign spread of the country until proven otherwise.”
The central bank raised interest rates this year by 200 basis points to slow inflation as government spending helped spark the fastest economic expansion in more than two decades. Consumer prices increased 5.63 percent in the 12 months through November, the fastest pace since February 2009.
Alexandre Tombini, Rousseff’s pick to head the central bank, will increase borrowing costs to 12.75 percent from 10.75 percent by the end of next year to curb inflation, trading in rates futures shows. Tombini, who has served on the central bank’s board since 2005, was confirmed by the senate last week.
Minimum Wage
Latin America’s biggest economy will grow 7.6 percent this year, according to a Dec. 10 central bank survey of about 100 economists.
Rousseff, who takes office Jan. 1, said last month she’s considering raising the monthly minimum wage to more than 700 reais ($409) by the end of her four-year term from 510 reais. The government’s budget proposal for 2011 increases the minimum wage to 540 reais a month, Worker’s Party Senator Serys Slhessarenko told reporters on Dec. 17 in Brasilia.
“A normal reaction, considering a new government is taking place, is to be concerned about how the new president will conduct the fiscal accounts,” Marcelo Saddi Castro, who oversees 18 billion reais as chief investment officer at SulAmerica Investimentos in Sao Paulo, said in a telephone interview. “The lower the minimum wage, the better the impact on the fiscal accounts.”
Budget Deficit
The budget deficit widened to the equivalent of 3.4 percent of gross domestic product in August, the biggest in five months, before narrowing to 2.4 percent of GDP in September, when the government reaped a revenue windfall from its sale of oil reserves to state-run Petroleo Brasileiro SA.
The Finance Ministry’s press office declined to comment.
Rousseff, who has said social programs and the investment Brazil needs would not be reduced, pledged on TV Record on Nov. 1 to control public spending because “the most important characteristic of a government in today’s world is not to spend what it can’t spend.”
“We’re getting conflicting statements, and her administration hasn’t done much to alleviate concerns over the policies going forward,” Vitali Meschoulam, a strategist at Morgan Stanley in New York, said in a telephone interview. “We still don’t know if they’re going to come out fiscally tighter or looser than the previous administration.”
U.S. Treasuries
Rising U.S. Treasury yields have deepened the slump in Brazilian dollar bonds in the past month, Meschoulam said.
The yield on the 10-year U.S. note touched 3.56 percent last week, the highest level since May 13, on speculation President Barack Obama’s decision to extend tax cuts enacted under his predecessor may bolster U.S. growth while worsening the nation’s budget deficit.
The extra yield investors demand to own Brazilian dollar bonds instead of U.S. Treasuries narrowed 2 basis points at 6:29 a.m. New York time to 197, according to JPMorgan.
The cost of protecting Brazilian bonds against default for five years fell 2 basis points to 113, according to CMA prices. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
The real rose 0.2 percent to 1.7108 per U.S. dollar.
Yields on Brazil’s interbank rate futures contract due in January 2012 rose 1 basis point to 11.86 percent.
BNDES
Finance Minister Guido Mantega, who will retain his post under Rousseff, said in November that Brazil plans to cut funding for its state development bank by 50 percent next year in an effort to bring down the world’s second-highest inflation- adjusted interest rates.
BNDES, as the lender is known, will hold an auction of local corporate bonds on Dec. 20 as part of a government plan to boost trading in the secondary market, according to a bank official who asked not to be named in accordance with policy.
The bank will auction bonds issued by Cia. De Bebidas das Americas, Tractebel Energia SA and Cia. Energetica de Minas Gerais, according to three investors who received an e-mail from the bank detailing the plan. The auction will take place between 11 a.m. and 11:30 a.m.
Brazil’s dollar bonds returned 11 percent last year, beating debt from Mexico, as Moody’s Investors Service raised the South American country to an investment-grade rating of Baa3. Brazil won its first investment-grade rating in April 2008, when Standard & Poor’s increased it to BBB-. Fitch Ratings matched the move a month later.
The yield on Brazil’s bonds touched 4.72 percent on Oct. 13, the lowest since JPMorgan began tracking the data in December 1997.
“You have a credit that was very tight and had outperformed in previous years as the good news on fundamentals already got priced in,” Meschoulam said. “So now Brazil has less of a chance of being upgraded than smaller credits in the region, and on a relative basis it looks less attractive.”
Source: Bloomberg
www.bloomberg.com
Thursday, December 16, 2010
Bill Clinton backs Haiti reconstruction
Former US President Bill Clinton has urged reconstruction in Haiti to continue, despite the country's current political crisis.
During a one-day visit to the country, he said he was confident that thousands made homeless by January's earthquake would be rehoused next year.
The UN envoy said he supported plans for international observers to oversee a review of recent disputed election.
He also visited a clinic treating victims of Haiti's cholera epidemic.
More than 2,400 people are now known to have died in the outbreak.
Mr Clinton's visit follows some calls for direct US aid to Haiti to be stopped until its political crisis is resolved.
The 28 November election was widely denounced, leading to violent protests and political stalemate ahead of a run-off in January.
US Secretary of State Hillary Clinton - Mr Clinton's wife - has said there is US "frustration" over a lack of a co-ordinated response from Haiti's government.
But Mr Clinton, asked in Port-au-Prince whether suspending aid was justified, replied: "In my opinion, nothing has yet happened which justifies that."
'Pace increasing'
He said he shared the frustration of those who through reconstruction was too slow, but added: "I think they will see a big increase in the pace of movement next year."
He said hundreds of thousands of Haitians would be moved out of the camps next year and into permanent housing.
Mr Clinton also backed plans by Haiti's electoral council to re-count tally sheets under international observation and hold a more-transparent January run-off.
"I don't have a candidate - my candidate is the reconstruction process," he said.
"I want the people to feel good about this and to trust the outcome so that we have peace and order and that encourages the donors to keep investing in Haiti's future."
During a one-day visit to the country, he said he was confident that thousands made homeless by January's earthquake would be rehoused next year.
The UN envoy said he supported plans for international observers to oversee a review of recent disputed election.
He also visited a clinic treating victims of Haiti's cholera epidemic.
More than 2,400 people are now known to have died in the outbreak.
Mr Clinton's visit follows some calls for direct US aid to Haiti to be stopped until its political crisis is resolved.
The 28 November election was widely denounced, leading to violent protests and political stalemate ahead of a run-off in January.
US Secretary of State Hillary Clinton - Mr Clinton's wife - has said there is US "frustration" over a lack of a co-ordinated response from Haiti's government.
But Mr Clinton, asked in Port-au-Prince whether suspending aid was justified, replied: "In my opinion, nothing has yet happened which justifies that."
'Pace increasing'
He said he shared the frustration of those who through reconstruction was too slow, but added: "I think they will see a big increase in the pace of movement next year."
He said hundreds of thousands of Haitians would be moved out of the camps next year and into permanent housing.
Mr Clinton also backed plans by Haiti's electoral council to re-count tally sheets under international observation and hold a more-transparent January run-off.
"I don't have a candidate - my candidate is the reconstruction process," he said.
"I want the people to feel good about this and to trust the outcome so that we have peace and order and that encourages the donors to keep investing in Haiti's future."
Saturday, November 20, 2010
Argentina: Cronyism and Corruption Are Killing Economic Freedom – by James Roberts
Argentina’s ranking in The Wall Street Journal/Heritage Foundation’s Index of Economic Freedom—now 135th out of the 179 countries ranked in the Index—has declined steadily in the seven years since President Cristina Fernández de Kirchner and her husband, former President Nestor Kirchner, took power. It is by far the lowest ranked G-20 nation. Recently Charles Krauthammer neatly summarized why: Argentina is “a chronically unstable, endemically corrupt polity with a rich history of dictatorship, economic mismanagement and the occasional political lunacy.”[1]
The relentless drop in Argentina’s Index rank is due to, among other things, the Kirchners’ statist policies as well as their failure to protect private property and to fight against corruption. Meanwhile, the performance of market-friendly, democratic Peru, Colombia (the most improved country regionally in the 2010 Index), and long-time economic freedom leader in Latin America Chile proves that South American governments can—through the correct mix of policies favoring private property, rule of law, and market-based, democratic institutions—deliver true economic and political freedom to their citizens.
Argentina’s Economic Freedom: Corroded by Pervasive Cronyism
A closer look at Argentina’s scores on the 10 indicators in the Index reveals exactly how and why, under the rule of the Kirchners, Argentina has suffered a decline in prosperity and economic freedom.
* Business freedom. Argentina’s burdensome regulatory environment is inconsistent and lacks transparency. Recent moves to nationalize unprofitable businesses represented by powerful unions in the Kirchners’ coalition (e.g., Aerolineas Argentinas and Telecom Italia Argentina) have sent strong signals to private-sector companies that their inefficient but unionized competitors will be unfairly (and unwillingly) subsidized by Argentina’s taxpayers.
* Trade freedom. Import/export bans, controls and taxes, restrictions on trade in services, higher tariffs, reference pricing, licensing provisions, subsidies, restrictions on ports of entry, domestic preference in government procurement, and issues involving enforcement of intellectual property rights—all for special interests and cronies—have added to the cost of trade.
* Fiscal freedom. Argentina has relatively high tax rates, and they will have to go higher unless the wildly irresponsible spending by the Kirchners can be brought under control.
* Government spending. The Kirchners’ economic stewardship has been dismal. Although highly indebted and facing declining commodity prices, the Kirchners have imposed unsustainable levels of government spending. To help finance this spending spree, in the fall of 2008 the Kirchner government seized $30 billion in 401(k)-type private pension accounts belonging to individual argentine citizens.[2]
* Monetary freedom. Although the Kirchners manipulate official government statistics to hide the true rate, private estimates show inflation in Argentina to be spiraling out of control. In 2010 it soared to more than 20 percent, raising fears of a return to the bad old days of 1980s-style hyper-inflation.[3] In trying to contain the rate of inflation, the Kirchner government has subsidized or price-controlled electricity, water, retail-level gas distribution, urban transport, and local telephone services. It also pressures companies to artificially hold down prices and wages.
* Investment freedom. The Kirchners manipulate foreign exchange rates and restrict capital flows to artificially pump up the economy. Corruption, weak institutions, and uncertain creditor, contract, and property rights are also serious deterrents to investment.
* Financial freedom. Argentina’s largest bank (Banco de la Nación) is state-owned and is the only financial institution operating in some parts of the country. International banks that have returned since the 2001 default have not recovered their former prominence, and capital controls remain in place. Overall, financial freedom in Argentina remains constrained by government influence, political interference with an inefficient judiciary that hinders foreign investment, and other official and informal obstructions to due process.
* Property rights. The executive branch influences Argentina’s judiciary; the courts are notoriously slow, inefficient, secretive, and corrupt. Many foreign investors must resort to international arbitration. Government manipulation of inflation statistics has caused foreign and domestic bondholders to lose billions in interest payments on their rightful property.
* Freedom from corruption. The entire political economy of Argentina is blighted by the Kirchners’ brand of “crony capitalism”—one of the most corrosive and hardest-to-eradicate forms of corruption. Foreign investors complain about widespread government and private-sector corruption as well as pervasive demands by government officials for bribes. Money laundering, trafficking in narcotics and contraband, and tax evasion plague the financial system. Furthermore, the U.S. State Department’s 2009 Investment Climate Statement for Argentina notes that the corruption is so endemic and deep-rooted that U.S. businesses (which are subject to the U.S. Foreign Corrupt Practices Act) frequently complain that “their adherence to the letter of the tax and regulatory codes at times places them at a competitive disadvantage.”[4]
* Labor freedom. Inflexible labor regulations hinder job creation and productivity growth. According to the World Bank’s 2010 “Doing Business” survey, terminating an employee in Argentina costs, on average, 95 weeks of wages, a rate significantly above the Latin American average of 54 weeks and more than three times the OECD average of 26 weeks.[5] Additionally, labor unions, a major component of the Kirchners’ Peronist Party governing coalition, enjoy access to an extensive patronage system supported by massive government subsidies.
Argentina Must Reform
The Index rankings of neighboring Peru, Colombia, and Chile prove that Argentina can also enjoy prosperity and economic freedom—if reforms are instituted.
The table below illustrates these diverging performances. Chile has scored highest throughout the period, while Colombia’s score has improved steadily, reflecting the tough economic reform measures implemented by President Alvaro Uribe over the past half decade. In contrast, Argentina and all three “Bolivarian ALBA” countries in the Andes have registered a progressively downward trend in their scores.
Recommendations
Although economically freer countries in the Western Hemisphere (e.g., the U.S., Canada, Chile, Mexico, and others) cannot do much to influence Argentina’s government to adopt market-friendly reforms, they should take advantage of every opportunity to do so, at the very least as an encouragement to reformers within the country. The U.S. in particular should take the lead in this effort. Specifically, the Obama Administration and the U.S. Congress should:
* Encourage the Kirchners to turn from their fiscally reckless statist approach before they completely destroy Argentina’s economic freedom and return to the core principles of The Heritage Foundation’s Index of Economic Freedom: limited government and private-sector-led prosperity built upon a foundation of private property rights that are impartially protected by transparent judicial institutions.
* Instruct the U.S. Trade Representative to open negotiations with the Kirchner government on a U.S.–Argentina “Trade and Investment Framework Agreement (TIFA) to provide a strategic framework and principles for dialogue on trade and investment issues.”[6] The TIFA could lead to an eventual free trade agreement and a strengthening of Argentina’s institutions.
* Instruct the U.S. Ambassador to the Organization of American States to propose a resolution condemning Argentina’s destructive economic and political policies toward international financial institutions (e.g., the International Monetary Fund).
* Encourage Argentina to respect international laws and institutions in light of its continuing failure to reschedule all of the sovereign debt from the 2001 default.
* To further this step, President Obama should ask the U.S. Executive Director at the Inter-American Development Bank (IADB) to request that the IADB fund programs to modernize Argentina’s government structures to improve democratic governance, make the judiciary more transparent and efficient, and institutionalize the fight against corruption.
These steps, while by no means an immediate panacea, will begin correcting some of the Kirchner government’s most egregious economic missteps and move Argentina in the direction of renewed economic freedom.
[1]Charles Krauthammer, “Disrespecting Foreign Allies,” Real Clear Politics, April 2, 2010, at http://www.realclearpolitics.com/articles/2010/04/02/slapping_friends_105025.html(April 2, 2010).
[2]Matt Moffett, “Argentina Makes Grab for Pensions Amid Crisis,” The Wall Street Journal, October 22, 2008, at http://online.wsj.com/article/SB122460155879054331.html(April 14, 2010).
[3]Gary S. Becker, “Deficit Spending Got Argentina into This Mess,” Business Week, February 11, 2002, athttp://home.uchicago.edu/~gbecker/Businessweek/BW/2002/02_11_2002.pdf (April 14, 2010).
[4]U.S. Department of State, Bureau of Economic, Energy and Business Affairs, “2009 Investment Climate Statement—Argentina,” athttp://www.state.gov/e/eeb/rls/othr/ics/2009/117861.htm (April 9, 2010).
[5]Doing Business 2010, Argentina, at http://www.doingbusiness.org/ExploreEconomies/?economyid=9 (April 9, 2010).
[6]U.S. Trade Representative, “Trade and Investment Framework Agreements,” athttp://www.ustr.gov/trade-agreements/trade-investment-framework-agreements (April 15, 2010)
James M. Roberts is Research Fellow for Economic Freedom and Growth in the Center for International Trade and Economics at The Heritage Foundation.
Source: Heritage Foundation
www.hacer.org
The relentless drop in Argentina’s Index rank is due to, among other things, the Kirchners’ statist policies as well as their failure to protect private property and to fight against corruption. Meanwhile, the performance of market-friendly, democratic Peru, Colombia (the most improved country regionally in the 2010 Index), and long-time economic freedom leader in Latin America Chile proves that South American governments can—through the correct mix of policies favoring private property, rule of law, and market-based, democratic institutions—deliver true economic and political freedom to their citizens.
Argentina’s Economic Freedom: Corroded by Pervasive Cronyism
A closer look at Argentina’s scores on the 10 indicators in the Index reveals exactly how and why, under the rule of the Kirchners, Argentina has suffered a decline in prosperity and economic freedom.
* Business freedom. Argentina’s burdensome regulatory environment is inconsistent and lacks transparency. Recent moves to nationalize unprofitable businesses represented by powerful unions in the Kirchners’ coalition (e.g., Aerolineas Argentinas and Telecom Italia Argentina) have sent strong signals to private-sector companies that their inefficient but unionized competitors will be unfairly (and unwillingly) subsidized by Argentina’s taxpayers.
* Trade freedom. Import/export bans, controls and taxes, restrictions on trade in services, higher tariffs, reference pricing, licensing provisions, subsidies, restrictions on ports of entry, domestic preference in government procurement, and issues involving enforcement of intellectual property rights—all for special interests and cronies—have added to the cost of trade.
* Fiscal freedom. Argentina has relatively high tax rates, and they will have to go higher unless the wildly irresponsible spending by the Kirchners can be brought under control.
* Government spending. The Kirchners’ economic stewardship has been dismal. Although highly indebted and facing declining commodity prices, the Kirchners have imposed unsustainable levels of government spending. To help finance this spending spree, in the fall of 2008 the Kirchner government seized $30 billion in 401(k)-type private pension accounts belonging to individual argentine citizens.[2]
* Monetary freedom. Although the Kirchners manipulate official government statistics to hide the true rate, private estimates show inflation in Argentina to be spiraling out of control. In 2010 it soared to more than 20 percent, raising fears of a return to the bad old days of 1980s-style hyper-inflation.[3] In trying to contain the rate of inflation, the Kirchner government has subsidized or price-controlled electricity, water, retail-level gas distribution, urban transport, and local telephone services. It also pressures companies to artificially hold down prices and wages.
* Investment freedom. The Kirchners manipulate foreign exchange rates and restrict capital flows to artificially pump up the economy. Corruption, weak institutions, and uncertain creditor, contract, and property rights are also serious deterrents to investment.
* Financial freedom. Argentina’s largest bank (Banco de la Nación) is state-owned and is the only financial institution operating in some parts of the country. International banks that have returned since the 2001 default have not recovered their former prominence, and capital controls remain in place. Overall, financial freedom in Argentina remains constrained by government influence, political interference with an inefficient judiciary that hinders foreign investment, and other official and informal obstructions to due process.
* Property rights. The executive branch influences Argentina’s judiciary; the courts are notoriously slow, inefficient, secretive, and corrupt. Many foreign investors must resort to international arbitration. Government manipulation of inflation statistics has caused foreign and domestic bondholders to lose billions in interest payments on their rightful property.
* Freedom from corruption. The entire political economy of Argentina is blighted by the Kirchners’ brand of “crony capitalism”—one of the most corrosive and hardest-to-eradicate forms of corruption. Foreign investors complain about widespread government and private-sector corruption as well as pervasive demands by government officials for bribes. Money laundering, trafficking in narcotics and contraband, and tax evasion plague the financial system. Furthermore, the U.S. State Department’s 2009 Investment Climate Statement for Argentina notes that the corruption is so endemic and deep-rooted that U.S. businesses (which are subject to the U.S. Foreign Corrupt Practices Act) frequently complain that “their adherence to the letter of the tax and regulatory codes at times places them at a competitive disadvantage.”[4]
* Labor freedom. Inflexible labor regulations hinder job creation and productivity growth. According to the World Bank’s 2010 “Doing Business” survey, terminating an employee in Argentina costs, on average, 95 weeks of wages, a rate significantly above the Latin American average of 54 weeks and more than three times the OECD average of 26 weeks.[5] Additionally, labor unions, a major component of the Kirchners’ Peronist Party governing coalition, enjoy access to an extensive patronage system supported by massive government subsidies.
Argentina Must Reform
The Index rankings of neighboring Peru, Colombia, and Chile prove that Argentina can also enjoy prosperity and economic freedom—if reforms are instituted.
The table below illustrates these diverging performances. Chile has scored highest throughout the period, while Colombia’s score has improved steadily, reflecting the tough economic reform measures implemented by President Alvaro Uribe over the past half decade. In contrast, Argentina and all three “Bolivarian ALBA” countries in the Andes have registered a progressively downward trend in their scores.
Recommendations
Although economically freer countries in the Western Hemisphere (e.g., the U.S., Canada, Chile, Mexico, and others) cannot do much to influence Argentina’s government to adopt market-friendly reforms, they should take advantage of every opportunity to do so, at the very least as an encouragement to reformers within the country. The U.S. in particular should take the lead in this effort. Specifically, the Obama Administration and the U.S. Congress should:
* Encourage the Kirchners to turn from their fiscally reckless statist approach before they completely destroy Argentina’s economic freedom and return to the core principles of The Heritage Foundation’s Index of Economic Freedom: limited government and private-sector-led prosperity built upon a foundation of private property rights that are impartially protected by transparent judicial institutions.
* Instruct the U.S. Trade Representative to open negotiations with the Kirchner government on a U.S.–Argentina “Trade and Investment Framework Agreement (TIFA) to provide a strategic framework and principles for dialogue on trade and investment issues.”[6] The TIFA could lead to an eventual free trade agreement and a strengthening of Argentina’s institutions.
* Instruct the U.S. Ambassador to the Organization of American States to propose a resolution condemning Argentina’s destructive economic and political policies toward international financial institutions (e.g., the International Monetary Fund).
* Encourage Argentina to respect international laws and institutions in light of its continuing failure to reschedule all of the sovereign debt from the 2001 default.
* To further this step, President Obama should ask the U.S. Executive Director at the Inter-American Development Bank (IADB) to request that the IADB fund programs to modernize Argentina’s government structures to improve democratic governance, make the judiciary more transparent and efficient, and institutionalize the fight against corruption.
These steps, while by no means an immediate panacea, will begin correcting some of the Kirchner government’s most egregious economic missteps and move Argentina in the direction of renewed economic freedom.
[1]Charles Krauthammer, “Disrespecting Foreign Allies,” Real Clear Politics, April 2, 2010, at http://www.realclearpolitics.com/articles/2010/04/02/slapping_friends_105025.html(April 2, 2010).
[2]Matt Moffett, “Argentina Makes Grab for Pensions Amid Crisis,” The Wall Street Journal, October 22, 2008, at http://online.wsj.com/article/SB122460155879054331.html(April 14, 2010).
[3]Gary S. Becker, “Deficit Spending Got Argentina into This Mess,” Business Week, February 11, 2002, athttp://home.uchicago.edu/~gbecker/Businessweek/BW/2002/02_11_2002.pdf (April 14, 2010).
[4]U.S. Department of State, Bureau of Economic, Energy and Business Affairs, “2009 Investment Climate Statement—Argentina,” athttp://www.state.gov/e/eeb/rls/othr/ics/2009/117861.htm (April 9, 2010).
[5]Doing Business 2010, Argentina, at http://www.doingbusiness.org/ExploreEconomies/?economyid=9 (April 9, 2010).
[6]U.S. Trade Representative, “Trade and Investment Framework Agreements,” athttp://www.ustr.gov/trade-agreements/trade-investment-framework-agreements (April 15, 2010)
James M. Roberts is Research Fellow for Economic Freedom and Growth in the Center for International Trade and Economics at The Heritage Foundation.
Source: Heritage Foundation
www.hacer.org
Friday, November 19, 2010
Congress should discuss privatized distribution - NEMA director - Mexico
Mexico's congress should consider the privatization of power distribution both to free up resources for state power company CFE and to provide lower consumer power rates, Gustavo Dominguez, the director of electrical manufacturing industry trade association NEMA Mexico, told BNamericas.
Transmission and distribution in Mexico's grid (SEN) is controlled exclusively by CFE. The distribution network is made up of 48,941km of sub-transmission lines and 648,765km of distribution lines, according to the company's website.
Though privatizing distribution would not be politically feasible at this time, Dominguez said lawmakers should begin the "large technical and political discussion" while, in the meantime, CFE goes about adopting smart grid technologies.
CFE could also ultimately withhold strategic areas for exclusively public distribution, while opening the sector elsewhere to private firms.
"It is something that should be done in the short term," Dominguez said.
Source: www.bnamericas.com
Transmission and distribution in Mexico's grid (SEN) is controlled exclusively by CFE. The distribution network is made up of 48,941km of sub-transmission lines and 648,765km of distribution lines, according to the company's website.
Though privatizing distribution would not be politically feasible at this time, Dominguez said lawmakers should begin the "large technical and political discussion" while, in the meantime, CFE goes about adopting smart grid technologies.
CFE could also ultimately withhold strategic areas for exclusively public distribution, while opening the sector elsewhere to private firms.
"It is something that should be done in the short term," Dominguez said.
Source: www.bnamericas.com
Thursday, November 18, 2010
Fidel says happy with direction of Cuba
HAVANA – Fidel Castro says he is happy with the direction Cuba is taking under the leadership of his brother Raul, his most explicit remarks to date about the sweeping economic changes the country is undergoing.
"I'm content, because the country is moving forward despite all the challenges," the bearded revolutionary icon told Cuban students in comments carried by the official Communist Party newspaper Granma and broadcast on Cuban television Thursday.
The elder Castro stepped down in 2006 due to a serious illness that almost killed him. He re-emerged from four years of seclusion in July, but has rarely spoken about Cuban current events, preferring to use his appearances to warn of what he fears is a looming nuclear war pitting the United States and Israel against Iran.
Castro, 84, remains head of the Communist Party, though in his remarks to the students he gave the impression he had delegated many of his official duties to others when he became ill.
When one student began to ask about a key upcoming economic gathering that would in theory be led by Castro as first secretary of the Communist Party, the former president politely brushed the question aside, telling the students he was not meeting with them in his capacity as party chief.
By way of explanation, Castro then immediately said of his 2006 illness: "I got sick and I did what I had to do: delegate my duties. I cannot do something if I am not in a condition to dedicate all my time to it."
Castro described himself as a "soldier of ideas" and said that he "did not hesitate for a minute to relinquish my duties," an apparent reference to his decision to step down as president.
He left unclear how much of a role he continues to play in the day-to-day running of the party. The Communist Party's official website lists Fidel as first secretary and Raul as second secretary.
Part of the meeting with the students was carried on national television Wednesday, but Castro's comments about his brother and his decision to delegate official duties were not broadcast until Thursday.
In the initial broadcast, Castro read word-for-word from a long speech he gave to students in 2005 that he said continued to be relevant today.
In that speech, he spoke of the need to control corruption and the black market, and warned that the revolution could fail from within if leaders did not make the correct decisions.
Since taking over — first temporarily, then permanently — in 2006, Raul Castro has warned his countrymen that the state can no longer afford to pay idle workers and must cut many subsidies Cubans have come to expect.
In September, the government announced that it was laying off 500,000 workers — or one-tenth of its labor force — while allowing many to work for themselves in an expanded private sector.
Raul Castro called a Party Congress for April in which the government is expected to map out details of Cuba's economic future.
A separate Communist Party gathering, called a Party Conference, is also to be held at some point in 2011, and there is speculation Fidel Castro might use one of the occasions to step down as head of the Communist Party.
Source: www.news.yahoo.com
"I'm content, because the country is moving forward despite all the challenges," the bearded revolutionary icon told Cuban students in comments carried by the official Communist Party newspaper Granma and broadcast on Cuban television Thursday.
The elder Castro stepped down in 2006 due to a serious illness that almost killed him. He re-emerged from four years of seclusion in July, but has rarely spoken about Cuban current events, preferring to use his appearances to warn of what he fears is a looming nuclear war pitting the United States and Israel against Iran.
Castro, 84, remains head of the Communist Party, though in his remarks to the students he gave the impression he had delegated many of his official duties to others when he became ill.
When one student began to ask about a key upcoming economic gathering that would in theory be led by Castro as first secretary of the Communist Party, the former president politely brushed the question aside, telling the students he was not meeting with them in his capacity as party chief.
By way of explanation, Castro then immediately said of his 2006 illness: "I got sick and I did what I had to do: delegate my duties. I cannot do something if I am not in a condition to dedicate all my time to it."
Castro described himself as a "soldier of ideas" and said that he "did not hesitate for a minute to relinquish my duties," an apparent reference to his decision to step down as president.
He left unclear how much of a role he continues to play in the day-to-day running of the party. The Communist Party's official website lists Fidel as first secretary and Raul as second secretary.
Part of the meeting with the students was carried on national television Wednesday, but Castro's comments about his brother and his decision to delegate official duties were not broadcast until Thursday.
In the initial broadcast, Castro read word-for-word from a long speech he gave to students in 2005 that he said continued to be relevant today.
In that speech, he spoke of the need to control corruption and the black market, and warned that the revolution could fail from within if leaders did not make the correct decisions.
Since taking over — first temporarily, then permanently — in 2006, Raul Castro has warned his countrymen that the state can no longer afford to pay idle workers and must cut many subsidies Cubans have come to expect.
In September, the government announced that it was laying off 500,000 workers — or one-tenth of its labor force — while allowing many to work for themselves in an expanded private sector.
Raul Castro called a Party Congress for April in which the government is expected to map out details of Cuba's economic future.
A separate Communist Party gathering, called a Party Conference, is also to be held at some point in 2011, and there is speculation Fidel Castro might use one of the occasions to step down as head of the Communist Party.
Source: www.news.yahoo.com
Wednesday, November 17, 2010
Argentine lawmaker socks colleague in budget spat
BUENOS AIRES, Argentina – A lawmaker in Argentina apparently has taken the phrase "bare-knuckle politics" to heart.
A budget spat erupted into fisticuffs Wednesday when opposition legislator Graciela Camano punched fellow lawmaker Carlos Kunkel in the mouth.
Two television news channels broadcast the melee live as Camano got out of her chair to confront Kunkel during a session of the Upper House's constitutional affairs commission.
The two exchanged words, Kunkel gestured with his arms and Camano socked him then left the chamber.
"Under no circumstances will I allow Kunkel or anyone else to lack respect," Camano said later. "He wore me out because I have been putting up with him all year long. He kept shouting without making a single proposal."
She declined to reveal what Kunkel said, but added: "He is always attacking me."
Kunkel, a close ally of President Cristina Fernandez, did not immediately comment. Under congressional rules, he can file a complaint that could lead to possible sanctions against Camano.
Congress has been especially tense recently, with opposition lawmakers saying Fernandez's government is exerting tremendous pressure on them to vote for the 2011 budget.
Source: www.news.yahoo.com
A budget spat erupted into fisticuffs Wednesday when opposition legislator Graciela Camano punched fellow lawmaker Carlos Kunkel in the mouth.
Two television news channels broadcast the melee live as Camano got out of her chair to confront Kunkel during a session of the Upper House's constitutional affairs commission.
The two exchanged words, Kunkel gestured with his arms and Camano socked him then left the chamber.
"Under no circumstances will I allow Kunkel or anyone else to lack respect," Camano said later. "He wore me out because I have been putting up with him all year long. He kept shouting without making a single proposal."
She declined to reveal what Kunkel said, but added: "He is always attacking me."
Kunkel, a close ally of President Cristina Fernandez, did not immediately comment. Under congressional rules, he can file a complaint that could lead to possible sanctions against Camano.
Congress has been especially tense recently, with opposition lawmakers saying Fernandez's government is exerting tremendous pressure on them to vote for the 2011 budget.
Source: www.news.yahoo.com
Tuesday, November 16, 2010
International Reserves, Private Deposits and the Argentine Peso
Overview: In addition to existing controls on foreign currency transactions, such as the US$2 million-per-month foreign currency purchasing limit, Argentina’s authorities have established additional restrictions with the stated intention of reducing money laundering and tax evasion. The main features are twofold: First, annual purchases above US$250,000 will require the buyer to provide proof of personal income (or balance sheet in the case of a firm) to verify that this is compatible with the amount to be puchased. Second, purchases above US$20,000 per month will have to be made via check or wire transfer, not in cash. This way, there will be a record of all the money declared.
* RGE View (Sep 17, 2010): Argentina’s Economy Minister Amado Boudou presented the 2011 budget bill to Congress based on a 4.3% economic growth, 8.4% inflation, a primary surplus of 2.46% of GDP and Argentinean peso fluctuating at a range of US$4-US$4.15. The economic growth forecast, however, falls short of a 6% growth expected by the finance ministry. Lower forecast growth in the budget enables the government to spend additional revenues derived from “extraordinary” growth. The bill also includes a plan to use approximately US$7.5 billion of international reserves to pay debt in 2011 (US$6.6 billion in 2010), replicating what the government did at the beginning of 2010. This will allow the government to increase spending, an important issue amid the run-up to the presidential election in October 2011. The government expects to increase primary spending by 17% next year, reaching almost 23% of GDP. In RGE’s view, the 2011 budget bill assumptions are somewhat misleading. Taping on central bank reserves will likely keep robust spending in place ahead of the election, while containing a severe damage to the primary fiscal surplus. Analysis RGE Bertrand Delgado, Juan Lorenzo Maldonado and Maria Paula Carvajal Sep 17, 2010 Intervention is Back
Argentine Peso
* On June 28, 2010, Adelmo Gabbi, the president of Argentina's stock exchange, announced a proposal to revise the country's capital control measures. The proposal suggests eliminating the requirement that foreign investors deposit 30% of any money they bring into the country with the central bank for one year, a policy that resulted in Argentina being demoted to “frontier” status by index provider MSCI Barra in May 2009. The proposal suggests instead keeping investors’ money in the country for a fixed amount of time by imposing a tax on investors who take their money out before the end of that period. This measure would only be applied to the shares of companies traded exclusively in Argentina. News Wall Street Journal Jun 28, 2010 UPDATE: Argentina's Bourse Wants To Ease Capital Controls News Wall Street Journal Jun 28, 2010 CORRECT:Argentina Stock Exchange Wants To Modify Capital Controls
* Argentina's Economy Minister Amado Boudou has denied the government has any plan to revise capital controls. Many analysts don’t expect the government to change the terms of capital controls since they are used to manage the local exchange rate, unless the government thinks the resulting rise in foreign investment would offset the money withdrawn by Argentines. News Wall Street Journal Matthew Cowley and Dow Jones Newswires Jul 19, 2010 UPDATE: Argentina Minister Denies Plan To Ease Capital Controls
* According to Argentine daily Ambito Financiero, by the end of the month President Cristina Fernandez de Kushner is expected to announce plans to ease capital controls by removing the requirement that investors deposit 30% of their money in the central bank for one year. Instead, investors will probably be required to maintain their investments for at least one year. News Bloomberg Drew Benson Jul 19, 2010 Argentina to Ease 2005 Capital Controls as Soon as This Month, Ambito Says
* The Argentine central bank announced that peso-denominated certificates of deposit rose 3.7% m/m in June to approximately US$30 billion, as Argentine investors bet against a likely fall in the currency. Barclays and UBS forecast the peso weakening to 4.3 and 4.5, respectively, by the end of the year. Expectations for a lower exchange are not totally backed by the behavior of the Argentine public, who in the last 16 months have been betting more on peso-denominated certificates of deposit. News Business Week Drew Benson Jul 19, 2010 Argentines Buck UBS Peso Forecast as Deposits Surge
* Adelmo Gabbi, head of the Buenos Aires Stock Exchange, Bolsa de Comercio, demanded the elimination of capital controls as a first step to attract more foreign capital after Argentina’s successful swap of debt. It seems that stock and derivatives exchanges are pushing the government to lift capital controls in order to boost volumes by opening the market to high-speed traders. News Financial Times Jude Webber Jul 18, 2010 Argentine bourse seeks to open doors to HFT
* According to La Nacion newspaper, Argentina's government is considering softening a restriction on investment flows as a way to rejoin an important international stock index. The restriction, which makes investors who want to buy Argentine financial assets deposit 30% of any money they bring into the country with the central bank for one year, may be eased for investments in shares of Argentine companies that don't have any shares listed overseas. News Wall Street Journal Jun 18, 2010 Argentina May Soften Capital Control On Financial Assets
* Argentina’s new foreign currency controls had a marginal impact in formal operations but in the parallel informal market the U.S. dollar surpassed four pesos, due to strong demand. The reduced impact on daily operations was expected since the measures are targeted mainly to control money laundering. On parallel, this measure will help government to have more information about corporations and their transactions. The parallel dollar is expected to converge towards formal market in the short run. The new rules limit US dollars or equivalent, cash sales to US$20,000. If they exceed US$250,000, a proof of assets and/or earnings must be provided to support the operation. News MercoPress. Jun 09, 2010 US dollar breaks through the 4 pesos barrier in Buenos Aires informal market
* According to reports in local newspapers El Clarin and La Nacion, rules made by Argentina's central bank, the tax agency AFIP and the anti-money laundering agency UIF designed to limit money laundering and tax evasion are suspected of having the ulterior motive of restricting the flow of U.S. dollars out of the country. The government has been keen to use the surplus of dollars flowing into Argentina as a buffer to protect the local economy from international financial turmoil. News Wall Street Journal Matthew Cowley and Dow Jones Newswires Jun 07, 2010 Argentina May Tighten Foreign Exchange Rules - Report
International Reserves
* On August 5, Argentina recovered its foreign currency reserves to US$50.036 billion after paying capital and interest on the Boden 2012 dollar-denominated bonds. The central bank followed the payout with dollar purchases on local currency markets to rebuild the reserves. Without this intervention, the rising inflow of export earnings would push the currency higher. The central bank also might increase the minimum reserve requirement for banks. News iMarkets News Charles Newbery Aug 09, 2010 LatamWatch: Argentina to Build Reserves, Buying Dlrs to Slow FX Appreciation, Infl
* Argentina’s central bank is selling debt to companies of up to ARP150 million (US$38 million) in central bank notes (Lesbacs) due up to at least three months at an ARP800 million auction. As stated by Carola Sandy from Credit Suisse Group, this is a strategy to drain cash from the financial system and to reduce inflation after dollar purchases pushed international reserves to a record US$51 billion. News Bloomberg Drew Benson Jul 27, 2010 Argentina's Record Reserves Get Companies an Invite to Weekly Debt Sales
* Argentina’s Ministry of Economy announced that international reserves exceeded US$50 billion, boosted by an intervention by the central bank in a record purchase of US$262 million and by an increase in agricultural exports. News MercoPress. Jul 10, 2010 Argentine agro-exports help boost international reserves to over 50 billion USD
* Argentina's central bank bought $262 million worth of U.S. dollars, in part to prevent the peso to fluctuate drastically. These fears came after exporters brought dollars to the economy by selling grain and oilseed products. A central bank official stated that: "This is an absolute record since the opening of the currency market in 2002." According to the official, international reserves have surpassed US$50 billion. News WSJ Taos Turner Jul 09, 2010 Argentina Stocks Up; Ctrl Bank Buys Record $262M In Forex Mkt
* The Argentine government intended to swap Boden 2012 bonds in order to push back debt payments, but it had to suspend these plans as a consequence of adverse market conditions. Therefore, the government will most likely use more central bank reserves to make debt payments. According to the Congressional Budget Committee, the country has already used $2.37 billion of these reserves to pay down foreign debt due this year. News WSJ Shane Romig Jul 08, 2010 Argentina Stocks, Bonds Rally On Wall Street, Crude-Oil Gains
* The central bank resumed accumulating international reserves in September, adding US$2.9 billion to US$47.7 billion by the end of 2009 (17% of GDP). Despite this, in RGE’s view, Congress will likely restrict the amount of reserves the central bank can transfer to the treasury and perhaps who the government can pay; the government will most likely be able to pay multilaterals. Analysis RGE Bertrand Delgado Jan 30, 2010 Argentina: Q1 2010 Outlook
Private Deposits
* According to Mercopress, approximately 16 out of 40 investment banks are leaving Argentina after the Central Bank tightened the requirements that ban the banks from “attracting Argentine deposits to send overseas to wealth funds.”
Source: www.roubini.com
* RGE View (Sep 17, 2010): Argentina’s Economy Minister Amado Boudou presented the 2011 budget bill to Congress based on a 4.3% economic growth, 8.4% inflation, a primary surplus of 2.46% of GDP and Argentinean peso fluctuating at a range of US$4-US$4.15. The economic growth forecast, however, falls short of a 6% growth expected by the finance ministry. Lower forecast growth in the budget enables the government to spend additional revenues derived from “extraordinary” growth. The bill also includes a plan to use approximately US$7.5 billion of international reserves to pay debt in 2011 (US$6.6 billion in 2010), replicating what the government did at the beginning of 2010. This will allow the government to increase spending, an important issue amid the run-up to the presidential election in October 2011. The government expects to increase primary spending by 17% next year, reaching almost 23% of GDP. In RGE’s view, the 2011 budget bill assumptions are somewhat misleading. Taping on central bank reserves will likely keep robust spending in place ahead of the election, while containing a severe damage to the primary fiscal surplus. Analysis RGE Bertrand Delgado, Juan Lorenzo Maldonado and Maria Paula Carvajal Sep 17, 2010 Intervention is Back
Argentine Peso
* On June 28, 2010, Adelmo Gabbi, the president of Argentina's stock exchange, announced a proposal to revise the country's capital control measures. The proposal suggests eliminating the requirement that foreign investors deposit 30% of any money they bring into the country with the central bank for one year, a policy that resulted in Argentina being demoted to “frontier” status by index provider MSCI Barra in May 2009. The proposal suggests instead keeping investors’ money in the country for a fixed amount of time by imposing a tax on investors who take their money out before the end of that period. This measure would only be applied to the shares of companies traded exclusively in Argentina. News Wall Street Journal Jun 28, 2010 UPDATE: Argentina's Bourse Wants To Ease Capital Controls News Wall Street Journal Jun 28, 2010 CORRECT:Argentina Stock Exchange Wants To Modify Capital Controls
* Argentina's Economy Minister Amado Boudou has denied the government has any plan to revise capital controls. Many analysts don’t expect the government to change the terms of capital controls since they are used to manage the local exchange rate, unless the government thinks the resulting rise in foreign investment would offset the money withdrawn by Argentines. News Wall Street Journal Matthew Cowley and Dow Jones Newswires Jul 19, 2010 UPDATE: Argentina Minister Denies Plan To Ease Capital Controls
* According to Argentine daily Ambito Financiero, by the end of the month President Cristina Fernandez de Kushner is expected to announce plans to ease capital controls by removing the requirement that investors deposit 30% of their money in the central bank for one year. Instead, investors will probably be required to maintain their investments for at least one year. News Bloomberg Drew Benson Jul 19, 2010 Argentina to Ease 2005 Capital Controls as Soon as This Month, Ambito Says
* The Argentine central bank announced that peso-denominated certificates of deposit rose 3.7% m/m in June to approximately US$30 billion, as Argentine investors bet against a likely fall in the currency. Barclays and UBS forecast the peso weakening to 4.3 and 4.5, respectively, by the end of the year. Expectations for a lower exchange are not totally backed by the behavior of the Argentine public, who in the last 16 months have been betting more on peso-denominated certificates of deposit. News Business Week Drew Benson Jul 19, 2010 Argentines Buck UBS Peso Forecast as Deposits Surge
* Adelmo Gabbi, head of the Buenos Aires Stock Exchange, Bolsa de Comercio, demanded the elimination of capital controls as a first step to attract more foreign capital after Argentina’s successful swap of debt. It seems that stock and derivatives exchanges are pushing the government to lift capital controls in order to boost volumes by opening the market to high-speed traders. News Financial Times Jude Webber Jul 18, 2010 Argentine bourse seeks to open doors to HFT
* According to La Nacion newspaper, Argentina's government is considering softening a restriction on investment flows as a way to rejoin an important international stock index. The restriction, which makes investors who want to buy Argentine financial assets deposit 30% of any money they bring into the country with the central bank for one year, may be eased for investments in shares of Argentine companies that don't have any shares listed overseas. News Wall Street Journal Jun 18, 2010 Argentina May Soften Capital Control On Financial Assets
* Argentina’s new foreign currency controls had a marginal impact in formal operations but in the parallel informal market the U.S. dollar surpassed four pesos, due to strong demand. The reduced impact on daily operations was expected since the measures are targeted mainly to control money laundering. On parallel, this measure will help government to have more information about corporations and their transactions. The parallel dollar is expected to converge towards formal market in the short run. The new rules limit US dollars or equivalent, cash sales to US$20,000. If they exceed US$250,000, a proof of assets and/or earnings must be provided to support the operation. News MercoPress. Jun 09, 2010 US dollar breaks through the 4 pesos barrier in Buenos Aires informal market
* According to reports in local newspapers El Clarin and La Nacion, rules made by Argentina's central bank, the tax agency AFIP and the anti-money laundering agency UIF designed to limit money laundering and tax evasion are suspected of having the ulterior motive of restricting the flow of U.S. dollars out of the country. The government has been keen to use the surplus of dollars flowing into Argentina as a buffer to protect the local economy from international financial turmoil. News Wall Street Journal Matthew Cowley and Dow Jones Newswires Jun 07, 2010 Argentina May Tighten Foreign Exchange Rules - Report
International Reserves
* On August 5, Argentina recovered its foreign currency reserves to US$50.036 billion after paying capital and interest on the Boden 2012 dollar-denominated bonds. The central bank followed the payout with dollar purchases on local currency markets to rebuild the reserves. Without this intervention, the rising inflow of export earnings would push the currency higher. The central bank also might increase the minimum reserve requirement for banks. News iMarkets News Charles Newbery Aug 09, 2010 LatamWatch: Argentina to Build Reserves, Buying Dlrs to Slow FX Appreciation, Infl
* Argentina’s central bank is selling debt to companies of up to ARP150 million (US$38 million) in central bank notes (Lesbacs) due up to at least three months at an ARP800 million auction. As stated by Carola Sandy from Credit Suisse Group, this is a strategy to drain cash from the financial system and to reduce inflation after dollar purchases pushed international reserves to a record US$51 billion. News Bloomberg Drew Benson Jul 27, 2010 Argentina's Record Reserves Get Companies an Invite to Weekly Debt Sales
* Argentina’s Ministry of Economy announced that international reserves exceeded US$50 billion, boosted by an intervention by the central bank in a record purchase of US$262 million and by an increase in agricultural exports. News MercoPress. Jul 10, 2010 Argentine agro-exports help boost international reserves to over 50 billion USD
* Argentina's central bank bought $262 million worth of U.S. dollars, in part to prevent the peso to fluctuate drastically. These fears came after exporters brought dollars to the economy by selling grain and oilseed products. A central bank official stated that: "This is an absolute record since the opening of the currency market in 2002." According to the official, international reserves have surpassed US$50 billion. News WSJ Taos Turner Jul 09, 2010 Argentina Stocks Up; Ctrl Bank Buys Record $262M In Forex Mkt
* The Argentine government intended to swap Boden 2012 bonds in order to push back debt payments, but it had to suspend these plans as a consequence of adverse market conditions. Therefore, the government will most likely use more central bank reserves to make debt payments. According to the Congressional Budget Committee, the country has already used $2.37 billion of these reserves to pay down foreign debt due this year. News WSJ Shane Romig Jul 08, 2010 Argentina Stocks, Bonds Rally On Wall Street, Crude-Oil Gains
* The central bank resumed accumulating international reserves in September, adding US$2.9 billion to US$47.7 billion by the end of 2009 (17% of GDP). Despite this, in RGE’s view, Congress will likely restrict the amount of reserves the central bank can transfer to the treasury and perhaps who the government can pay; the government will most likely be able to pay multilaterals. Analysis RGE Bertrand Delgado Jan 30, 2010 Argentina: Q1 2010 Outlook
Private Deposits
* According to Mercopress, approximately 16 out of 40 investment banks are leaving Argentina after the Central Bank tightened the requirements that ban the banks from “attracting Argentine deposits to send overseas to wealth funds.”
Source: www.roubini.com
Monday, November 15, 2010
PM plans trade-boosting Brazil visit in 2011
LONDON (AFP) – Prime Minister David Cameron said Monday he hopes to visit Brazil and Russia next year as part of a broader mission to boost his country's global economic standing.
"Next year I plan to visit Brazil and Russia," the leader said at a speech to business figures in London.
"There are some who say that Britain is embarked on an inevitable path of decline. I want to take this argument head on. Britain remains a great economic power."
Cameron has targeted developing countries as the lynchpin of Britain's future foreign trade policy and has recently completed business-boosting visits to China and India as-well as attending the G20 summit in Seoul.
"We must link our economy up with the fastest growing parts of the world, placing our commercial interests at the heart of our foreign policy," Cameron said."
However, the British leader also expressed commitment to older friends.
"We will continue to build on our special relationship with America," he added.
"It is not just special, it is crucial - because it is based on solid practical foundations such as our cooperation on defence, counter-terrorism and intelligence."
Russia remains an untapped market for Britain, but the two countries are at loggerheads over Russia's refusal to extradite the main suspect in the London murder of Kremlin critic Alexander Litvinenko in 2006.
British Foreign Secretary William Hague said "serious differences" existed between the two countries after meeting with Russian President Dmitry Medvedev in Moscow last month.
Source: www.news.yahoo.com
"Next year I plan to visit Brazil and Russia," the leader said at a speech to business figures in London.
"There are some who say that Britain is embarked on an inevitable path of decline. I want to take this argument head on. Britain remains a great economic power."
Cameron has targeted developing countries as the lynchpin of Britain's future foreign trade policy and has recently completed business-boosting visits to China and India as-well as attending the G20 summit in Seoul.
"We must link our economy up with the fastest growing parts of the world, placing our commercial interests at the heart of our foreign policy," Cameron said."
However, the British leader also expressed commitment to older friends.
"We will continue to build on our special relationship with America," he added.
"It is not just special, it is crucial - because it is based on solid practical foundations such as our cooperation on defence, counter-terrorism and intelligence."
Russia remains an untapped market for Britain, but the two countries are at loggerheads over Russia's refusal to extradite the main suspect in the London murder of Kremlin critic Alexander Litvinenko in 2006.
British Foreign Secretary William Hague said "serious differences" existed between the two countries after meeting with Russian President Dmitry Medvedev in Moscow last month.
Source: www.news.yahoo.com
Sunday, November 14, 2010
Health precautions for La Oroya residents still valid - AIDA - Peru
Peru's government needs to properly implement precautionary health measures for residents in La Oroya, where Lima-based Doe Run Peru's polymetallic smelter is located, Astrid Puentes, co-director of the Interamerican Association for Environmental Defense (AIDA), told BNamericas.
In 2007, following a petition submitted by AIDA, the Inter-American Commission on Human Rights (IACHR) asked the Peruvian government to take precautionary measures for more than 60 La Oroya residents. The inhabitants suffer from health problems believed to be caused by air, soil and water contamination from the metallurgical complex.
The measures included the provision of adequate medical treatment and specialized medical tests and diagnoses for the beneficiaries.
During a hearing this March, AIDA presented evidence that the government had not fully complied with the measures, while authorities said that they have met the demands of the commission and asked for the case to be closed.
"We proved with independent experts that there were many things that they had not complied with, so the commission has maintained the measures. They are still valid," Puentes said, adding: "The government is still in the process of complying."
"One of the problems is that the government is giving general medical examinations and what we need are specialized tests for people, because it is not a regular situation," Puentes said.
ONGOING CONTAMINATION
The metallurgical complex in La Oroya was built in 1922 by the Cerro de Pasco Corporation and nationalized in 1971. Doe Run Peru acquired it in 1997 in a privatization process that included an environmental cleanup agreement called PAMA.
The complex includes smelters and refineries that process copper, lead, zinc and silver concentrates, as well as several byproducts. The plant is known for having caused serious lead contamination around La Oroya.
Doe Run Peru suspended operations at the smelter last year when it ran into financial difficulties as a result of the global economic crisis without completing the PAMA cleanup.
As a result, residents are still exposed to contamination. "Because lead is everywhere, people are still exposed," Puentes said. "Contamination is still going on because the city has not been cleaned up."
Doe Run Peru is an affiliate of the New York-based Renco Group. The company is currently undergoing proceedings at competition regulator Indecopi that will result in it being restructured or liquidated.
Source: www.bnamericas.com
In 2007, following a petition submitted by AIDA, the Inter-American Commission on Human Rights (IACHR) asked the Peruvian government to take precautionary measures for more than 60 La Oroya residents. The inhabitants suffer from health problems believed to be caused by air, soil and water contamination from the metallurgical complex.
The measures included the provision of adequate medical treatment and specialized medical tests and diagnoses for the beneficiaries.
During a hearing this March, AIDA presented evidence that the government had not fully complied with the measures, while authorities said that they have met the demands of the commission and asked for the case to be closed.
"We proved with independent experts that there were many things that they had not complied with, so the commission has maintained the measures. They are still valid," Puentes said, adding: "The government is still in the process of complying."
"One of the problems is that the government is giving general medical examinations and what we need are specialized tests for people, because it is not a regular situation," Puentes said.
ONGOING CONTAMINATION
The metallurgical complex in La Oroya was built in 1922 by the Cerro de Pasco Corporation and nationalized in 1971. Doe Run Peru acquired it in 1997 in a privatization process that included an environmental cleanup agreement called PAMA.
The complex includes smelters and refineries that process copper, lead, zinc and silver concentrates, as well as several byproducts. The plant is known for having caused serious lead contamination around La Oroya.
Doe Run Peru suspended operations at the smelter last year when it ran into financial difficulties as a result of the global economic crisis without completing the PAMA cleanup.
As a result, residents are still exposed to contamination. "Because lead is everywhere, people are still exposed," Puentes said. "Contamination is still going on because the city has not been cleaned up."
Doe Run Peru is an affiliate of the New York-based Renco Group. The company is currently undergoing proceedings at competition regulator Indecopi that will result in it being restructured or liquidated.
Source: www.bnamericas.com
Saturday, November 13, 2010
Venezuelan police arrest 33 people in metro protest
By Will Grant BBC News
Police have arrested 33 people during protests on the metro system in the Venezuelan capital, Caracas.
They said they were protesting about the poor service of the underground network, which commuter groups say has deteriorated rapidly in recent months.
Police said the passengers prevented a train from leaving a station, and accused them of sabotage.
Last month, the government appointed a new head of the metro system to try to tackle the network's problems.
The arrests were the culmination of several weeks of growing anger among commuters in Caracas over the state of the metro system.
A lawyer acting for the protesters said they were simply angry at having to wait around 40 minutes for a train, only to be told that they could not board the one which eventually arrived.
The police say members of the public refused to let the train leave the station, holding up services on other lines.
The transport ministry accused the protesters of sabotage - something their lawyer has denied.
As the police arrived in numbers at the station in the west of the capital, the protests turned ugly and the arrests were made.
High volume
The metro system in the Venezuelan capital was once the envy of Latin America.
However in recent months it seems to have reached saturation point.
Long delays are a daily problem and many trains, escalators and lines are in need of urgent maintenance.
President Hugo Chavez recently appointed a new head of the metro system, which carries some 1.3m commuters a day - the second highest volume in Latin America.
The system was only designed to carry around 600,000 passengers a day.
Source: BBC
www.bbc.co.uk
Police have arrested 33 people during protests on the metro system in the Venezuelan capital, Caracas.
They said they were protesting about the poor service of the underground network, which commuter groups say has deteriorated rapidly in recent months.
Police said the passengers prevented a train from leaving a station, and accused them of sabotage.
Last month, the government appointed a new head of the metro system to try to tackle the network's problems.
The arrests were the culmination of several weeks of growing anger among commuters in Caracas over the state of the metro system.
A lawyer acting for the protesters said they were simply angry at having to wait around 40 minutes for a train, only to be told that they could not board the one which eventually arrived.
The police say members of the public refused to let the train leave the station, holding up services on other lines.
The transport ministry accused the protesters of sabotage - something their lawyer has denied.
As the police arrived in numbers at the station in the west of the capital, the protests turned ugly and the arrests were made.
High volume
The metro system in the Venezuelan capital was once the envy of Latin America.
However in recent months it seems to have reached saturation point.
Long delays are a daily problem and many trains, escalators and lines are in need of urgent maintenance.
President Hugo Chavez recently appointed a new head of the metro system, which carries some 1.3m commuters a day - the second highest volume in Latin America.
The system was only designed to carry around 600,000 passengers a day.
Source: BBC
www.bbc.co.uk
Friday, November 12, 2010
Argentina / China Economic Tango: Railways, Soy, Oil
Argentina and China signed a deal for Beijing to invest $10 billion in the South American nation's railways during a visit by the Argentine president to Beijing,but there was no sign of progress in a dispute over soy imports.
The agreements announced during the visit by President Cristina Fernandez earlier this month come as Beijing expands its role in Latin America through investments in oil and other industries and closer financial ties with the region's governments.
The railway deals include a $2.5 billion project to upgrade the rail system of Argentina's capital, Buenos Aires, Chinese news reports said.
They said projects would include the purchase of Chinese railway technology.
China is promoting exports of railway equipment and is trying to develop its own high-speed rail technology.
A Chinese railway official said in March that state-owned companies are building high-speed lines in Venezuela and Turkey.
There was no sign of progress in a dispute over China's ban on imports of Argentine soy, a key export for Fernandez's nation.
The Chinese government played down the ban, calling it a normal trade dispute.
The soy dispute is the most pressing issue for Fernandez, who was on the first trip to China by an Argentine president since 2004.
Others deals announced during the visit earlier this month included
a memorandum of cooperation state-owned China Petroleum & Chemical Corp., also known as Sinopec, and state-owned Energia Argentina SA, or Enersa.
No details were released.
There was no word on a possible Chinese purchase of BP plc's stake in Argentina's Pan American Energy, an oil and gas producer.
News reports say BP might sell its 60 percent share to state-owned China National Offshore Oil Corp.,
which owns 20 percent of Pan American and wants to expand abroad.
Argentine exports of soy oil to China totaled $1.4 billion last year,
accounting for a sizable chunk of two-way trade that strongly favored Beijing.
China imposed the soy ban April 1, after saying it found shipments containing excessive levels of hexane, a potentially cancerous chemical used in soy processing.
The restrictions also came after Argentina last year imposed antidumping measures on some Chinese goods.
China has denied the soy ban is a retaliatory measure, while Argentina has said its soy products are not contaminated.
When asked during the visit by reporters about the soy dispute, according to this article in the New York Times,
a Chinese Foreign Ministry spokesman called Argentina an important partner in Latin America and said the problem should be resolved.
''Regarding the import of soybean oil to China, it's just a normal problem that comes with the development of trade and economic relations,'' said the spokesman, Qin Gang.
''I believe as long as the two countries follow the spirit of cooperation and mutual benefit and through friendly consultation, a proper resolution will be found.''
Source: www.economywatch.com
The agreements announced during the visit by President Cristina Fernandez earlier this month come as Beijing expands its role in Latin America through investments in oil and other industries and closer financial ties with the region's governments.
The railway deals include a $2.5 billion project to upgrade the rail system of Argentina's capital, Buenos Aires, Chinese news reports said.
They said projects would include the purchase of Chinese railway technology.
China is promoting exports of railway equipment and is trying to develop its own high-speed rail technology.
A Chinese railway official said in March that state-owned companies are building high-speed lines in Venezuela and Turkey.
There was no sign of progress in a dispute over China's ban on imports of Argentine soy, a key export for Fernandez's nation.
The Chinese government played down the ban, calling it a normal trade dispute.
The soy dispute is the most pressing issue for Fernandez, who was on the first trip to China by an Argentine president since 2004.
Others deals announced during the visit earlier this month included
a memorandum of cooperation state-owned China Petroleum & Chemical Corp., also known as Sinopec, and state-owned Energia Argentina SA, or Enersa.
No details were released.
There was no word on a possible Chinese purchase of BP plc's stake in Argentina's Pan American Energy, an oil and gas producer.
News reports say BP might sell its 60 percent share to state-owned China National Offshore Oil Corp.,
which owns 20 percent of Pan American and wants to expand abroad.
Argentine exports of soy oil to China totaled $1.4 billion last year,
accounting for a sizable chunk of two-way trade that strongly favored Beijing.
China imposed the soy ban April 1, after saying it found shipments containing excessive levels of hexane, a potentially cancerous chemical used in soy processing.
The restrictions also came after Argentina last year imposed antidumping measures on some Chinese goods.
China has denied the soy ban is a retaliatory measure, while Argentina has said its soy products are not contaminated.
When asked during the visit by reporters about the soy dispute, according to this article in the New York Times,
a Chinese Foreign Ministry spokesman called Argentina an important partner in Latin America and said the problem should be resolved.
''Regarding the import of soybean oil to China, it's just a normal problem that comes with the development of trade and economic relations,'' said the spokesman, Qin Gang.
''I believe as long as the two countries follow the spirit of cooperation and mutual benefit and through friendly consultation, a proper resolution will be found.''
Source: www.economywatch.com
Thursday, November 11, 2010
SMEs representing fastest growing business for SAP unit - Central America, Mexico
SMEs have represented the fastest growing segment so far this year for the Mexico and Central American division of SAP (NYSE: SAP), the division's director general, Diego Dzodan, told BNamericas.
SAP Mexico and Central America currently boasts a client base of 3,200 companies, 70% of which are SMEs, according to Dzodan. BNamericas previously reported that the division started off 2010 with 3,000 clients and was expecting to increase that figure by 20% during the course of the year.
"Among SMEs, the biggest trend that we are seeing is the standardization of back office processes," he said. "There is a big focus on ERPs."
In the upcoming quarters, the division will continue to recruit new channel partners to target the SME segment, Dzodan said, adding that SAP is aware that the availability of financing can also make or break deals.
Meanwhile, the SAP unit is seeing very few large-scale ERP projects among large enterprises, but rather technology projects focused on specific areas.
Dzodan noted that, for example, manufacturing companies in Mexico are increasing their technology investments to improve logistics, while energy companies are looking to strengthen both the commercial and operational sides.
SAP Mexico and Central America's priorities include reinforcing the company's global strategy of offering solutions through traditional implementations, mobile devices and also cloud computing, according to Dzodan, who assumed his role last month.
Still, the executive acknowledged that cloud computing up-take so far in his division has been "marginal."
"Cloud computing is still not an area that has significant volume. It's very marginal," he said. "There is more of a conceptual interest than a concrete interest in projects."
Cloud computing provides value for specific components of a company's IT set-up, rather than "taking something out of the heart of a company and then putting it on the cloud," Dzodan said.
SAP Latin America saw software and related services revenues jump 21% year-over-year during the third quarter. Globally, the company saw profits jump 12% to reach 501mn euros (currently US$684mn), while revenues rose 20% to reach 3.0bn euros.
Source: Business News Americas
www.bnamericas.com
By Matthew Malinowski / Business News Americas
SAP Mexico and Central America currently boasts a client base of 3,200 companies, 70% of which are SMEs, according to Dzodan. BNamericas previously reported that the division started off 2010 with 3,000 clients and was expecting to increase that figure by 20% during the course of the year.
"Among SMEs, the biggest trend that we are seeing is the standardization of back office processes," he said. "There is a big focus on ERPs."
In the upcoming quarters, the division will continue to recruit new channel partners to target the SME segment, Dzodan said, adding that SAP is aware that the availability of financing can also make or break deals.
Meanwhile, the SAP unit is seeing very few large-scale ERP projects among large enterprises, but rather technology projects focused on specific areas.
Dzodan noted that, for example, manufacturing companies in Mexico are increasing their technology investments to improve logistics, while energy companies are looking to strengthen both the commercial and operational sides.
SAP Mexico and Central America's priorities include reinforcing the company's global strategy of offering solutions through traditional implementations, mobile devices and also cloud computing, according to Dzodan, who assumed his role last month.
Still, the executive acknowledged that cloud computing up-take so far in his division has been "marginal."
"Cloud computing is still not an area that has significant volume. It's very marginal," he said. "There is more of a conceptual interest than a concrete interest in projects."
Cloud computing provides value for specific components of a company's IT set-up, rather than "taking something out of the heart of a company and then putting it on the cloud," Dzodan said.
SAP Latin America saw software and related services revenues jump 21% year-over-year during the third quarter. Globally, the company saw profits jump 12% to reach 501mn euros (currently US$684mn), while revenues rose 20% to reach 3.0bn euros.
Source: Business News Americas
www.bnamericas.com
By Matthew Malinowski / Business News Americas
Saturday, October 30, 2010
Brazil finds massive oil field
A newly-tapped oil field off the coast of Brazil could contain up to 15 billion barrels of oil, officials say.
Brazil's national petroleum agency said the Libra field most probably held around 8 billion barrels.
That matches the size of the giant Tupi oil field, whose discovery in 2007 drew attention to Brazil's potential as a major oil producer.
If the 15 billion barrel figure were confirmed it would double Brazil's known oil reserves.
It would also be the biggest oil field discovered in the Americas since 1976, when Mexico found the giant Cantarell field in the Gulf of Mexico.
The Libra exploratory well is located 183km (114 miles) offshore from Rio de Janeiro.
"The volume of recoverable oil belonging to the nation could vary from 3.7 billion to 15 billion barrels, with the most likely estimate being 7.9 billion barrels," the national petroleum agency (ANP) said in a statement.
Brazil has discovered billions of barrels of oil in the last few years, mostly in deep, pre salt fields off its south-eastern coast.
The discoveries should make Brazil one of the world's top 10 oil producers.
Outgoing President Luiz Inacio Lula da Silva has said future oil revenues will be used to eradicate poverty and invest in education and technology.
In September the Brazilian oil company Petrobras, which is partly owned by the state, raised $70bn (£44.7bn) to develop the new fields in the world's largest ever public share offering.
Brazil's national petroleum agency said the Libra field most probably held around 8 billion barrels.
That matches the size of the giant Tupi oil field, whose discovery in 2007 drew attention to Brazil's potential as a major oil producer.
If the 15 billion barrel figure were confirmed it would double Brazil's known oil reserves.
It would also be the biggest oil field discovered in the Americas since 1976, when Mexico found the giant Cantarell field in the Gulf of Mexico.
The Libra exploratory well is located 183km (114 miles) offshore from Rio de Janeiro.
"The volume of recoverable oil belonging to the nation could vary from 3.7 billion to 15 billion barrels, with the most likely estimate being 7.9 billion barrels," the national petroleum agency (ANP) said in a statement.
Brazil has discovered billions of barrels of oil in the last few years, mostly in deep, pre salt fields off its south-eastern coast.
The discoveries should make Brazil one of the world's top 10 oil producers.
Outgoing President Luiz Inacio Lula da Silva has said future oil revenues will be used to eradicate poverty and invest in education and technology.
In September the Brazilian oil company Petrobras, which is partly owned by the state, raised $70bn (£44.7bn) to develop the new fields in the world's largest ever public share offering.
Monday, October 25, 2010
Popular sees room for expanding margins on deposit side - Puerto Rico
Puerto Rico's Popular (Nasdaq: BPOP) believes there is a possibility to expand margins on the deposit side, given low current interest rates and the effects of the recent industry consolidation experienced in the island, chairman and CEO Richard Carrion told a conference call.
Popular's net interest margin increased to 4.49% in 3Q10 from 3.21% in the previous quarter, boosted by a continued reduction in the cost of deposits.
"We are focused on reducing the cost of deposits, and they have clearly been coming down following the three [recent bank] closings [by US financial regulators]. There is still some pressure in Puerto Rico, as some banks shift from brokered deposits to client-generated local deposits," Carrion said.
Last April, Popular as well as Canada's Scotiabank (NYSE: BNS) and Puerto Rico's Oriental Financial Group (NYSE: OFG) purchased Westernbank, R-G Premier Bank and Eurobank respectively in an auction held by the Federal Deposit Insurance Corporation (FDIC).
"There has been an effort by other banks to try to capitalize on that and take clients away, and everybody's waiting for that dust to settle. I do expect deposit costs to continue to decrease given the level of interest rates we are seeing," Carrion said.
The sale of a 51% stake in its processing business EVERTEC to asset manager Apollo Management allowed Popular to post a US$495mn net profit in 3Q10 - the first after eight straight quarters of losses.
Excluding that one-time gain, Popular booked a US$36mn quarterly loss, 71% less than in 3Q09 and also better than the US$55.8mn loss posted in the previous quarter.
Popular is the leading banking institution by both assets and deposits in Puerto Rico and ranks 33rd by assets among US banks.
Source: www.bnamericas.com
Popular's net interest margin increased to 4.49% in 3Q10 from 3.21% in the previous quarter, boosted by a continued reduction in the cost of deposits.
"We are focused on reducing the cost of deposits, and they have clearly been coming down following the three [recent bank] closings [by US financial regulators]. There is still some pressure in Puerto Rico, as some banks shift from brokered deposits to client-generated local deposits," Carrion said.
Last April, Popular as well as Canada's Scotiabank (NYSE: BNS) and Puerto Rico's Oriental Financial Group (NYSE: OFG) purchased Westernbank, R-G Premier Bank and Eurobank respectively in an auction held by the Federal Deposit Insurance Corporation (FDIC).
"There has been an effort by other banks to try to capitalize on that and take clients away, and everybody's waiting for that dust to settle. I do expect deposit costs to continue to decrease given the level of interest rates we are seeing," Carrion said.
The sale of a 51% stake in its processing business EVERTEC to asset manager Apollo Management allowed Popular to post a US$495mn net profit in 3Q10 - the first after eight straight quarters of losses.
Excluding that one-time gain, Popular booked a US$36mn quarterly loss, 71% less than in 3Q09 and also better than the US$55.8mn loss posted in the previous quarter.
Popular is the leading banking institution by both assets and deposits in Puerto Rico and ranks 33rd by assets among US banks.
Source: www.bnamericas.com
Cosan posts preliminary US$4.7bn quarterly revenue, up 32% - Brazil
Brazilian sugar and ethanol major Cosan (NYSE: CZZ) has posted second fiscal quarter net revenue of 4.7bn reais (US$2.75bn), a 32% jump over the year-ago period.
Cosan's second fiscal quarter runs from July through September.
Of that amount, 1.75bn reais came from Cosan's sugar and ethanol business, up 45% on the year, the company said in a statement. The fuel and lubricants unit contributed 2.8bn reais to revenue, a 26% year-on-year gain.
Ethanol sales in the three-month period totaled 639Ml, up 42% from the same period last year.
All figures are preliminary and Cosan's final balance sheet is due for release on November 10.
Meanwhile, Moody's raised its corporate family rating on Cosan to Ba2 from Ba3.
The move completes a review started in March after Cosan and Shell (NYSE: RDS-B) announced the creation of a US$12bn JV in the ethanol and fuel distribution businesses.
Moody's also assigned a Ba2 rating to a proposed Cosan perpetual bond issue worth US$300mn.
The same bonds were rated BB by Standard & Poor's and Fitch.
The bonds will be issued by Cosan subsidiary Cosan Overseas Limited.
Source: www.bnamericas.com
Cosan's second fiscal quarter runs from July through September.
Of that amount, 1.75bn reais came from Cosan's sugar and ethanol business, up 45% on the year, the company said in a statement. The fuel and lubricants unit contributed 2.8bn reais to revenue, a 26% year-on-year gain.
Ethanol sales in the three-month period totaled 639Ml, up 42% from the same period last year.
All figures are preliminary and Cosan's final balance sheet is due for release on November 10.
Meanwhile, Moody's raised its corporate family rating on Cosan to Ba2 from Ba3.
The move completes a review started in March after Cosan and Shell (NYSE: RDS-B) announced the creation of a US$12bn JV in the ethanol and fuel distribution businesses.
Moody's also assigned a Ba2 rating to a proposed Cosan perpetual bond issue worth US$300mn.
The same bonds were rated BB by Standard & Poor's and Fitch.
The bonds will be issued by Cosan subsidiary Cosan Overseas Limited.
Source: www.bnamericas.com
Brasil Ecodiesel Falls the Most in 8 Months on Maeda Agroindustrial Talks
Brasil Ecodiesel Industria e Comercio de Biocombustiveis e Oleos Vegetais SA, Brazil’s biggest biodiesel maker, fell the most in almost eight months after saying it is in talks to combine assets with farm group Maeda SA Agroindustrial SA.
Brasil Ecodiesel fell 8 percent, leading losses on the Bovespa index, to 1.15 reais at 2:32 p.m. New York time in Sao Paulo trading. Shares slumped 10.4 percent earlier today, the biggest loss since March 5.
The company, based in Rio de Janeiro, said it may conclude the deal by Dec. 31. The company said Maeda’s shareholders may receive one Brasil Ecodiesel share for every 3.6395 shares they own.
“Investors were disappointed by the implicit share price of the accord,” Victor Martins, an analyst with Sao Paulo-based Planner Corretora de Valores, said today in a phone interview. He estimates the implicit share price of the deal would be 88 centavos. He cut his rating to “neutral” from “buy” after the statement was released.
Source: www.bloomberg.com
Brasil Ecodiesel fell 8 percent, leading losses on the Bovespa index, to 1.15 reais at 2:32 p.m. New York time in Sao Paulo trading. Shares slumped 10.4 percent earlier today, the biggest loss since March 5.
The company, based in Rio de Janeiro, said it may conclude the deal by Dec. 31. The company said Maeda’s shareholders may receive one Brasil Ecodiesel share for every 3.6395 shares they own.
“Investors were disappointed by the implicit share price of the accord,” Victor Martins, an analyst with Sao Paulo-based Planner Corretora de Valores, said today in a phone interview. He estimates the implicit share price of the deal would be 88 centavos. He cut his rating to “neutral” from “buy” after the statement was released.
Source: www.bloomberg.com
Brazil May Take More Currency Measures If Needed, Anthero Meirelles Says
Brazil may adopt additional measures to curb foreign capital inflows if steps already taken aren’t effective, central bank Director Anthero Meirelles said.
“Other measures may be taken, but first we need to carefully observe what happens,” Meirelles said in an interview while attending a Uruguayan central bank event in Montevideo.
“It’s difficult to announce in advance another measure because the process is very dynamic,” said Meirelles. “We need to observe the result of the measures already taken and watch the evolution of the global discussion over the current moment of great liquidity and large international capital flows.”
Meirelles, the director of administration at the central bank, said Brazil is “very optimistic” about steps taken by the Group of 20 over the weekend to produce stronger, more balanced global economic growth.
Source: www.bloomberg.com
“Other measures may be taken, but first we need to carefully observe what happens,” Meirelles said in an interview while attending a Uruguayan central bank event in Montevideo.
“It’s difficult to announce in advance another measure because the process is very dynamic,” said Meirelles. “We need to observe the result of the measures already taken and watch the evolution of the global discussion over the current moment of great liquidity and large international capital flows.”
Meirelles, the director of administration at the central bank, said Brazil is “very optimistic” about steps taken by the Group of 20 over the weekend to produce stronger, more balanced global economic growth.
Source: www.bloomberg.com
Pensioners From Chile to Colombia Buy Overseas Real Bonds: Brazil Credit
By Gabrielle Coppola and Ye Xie
When bankers at Deutsche Bank AG and Barclays Plc were piecing together orders last week for Brazil’s first real-linked international bond sale in three years, they discovered a new source of demand: Latin American pension funds.
“We had never seen these investors in global local currency deals,” said Dennis Eisele, a director in New York at Deutsche Bank, the biggest underwriter this year of overseas bond sales by Latin American issuers. He said investors from the region including Colombia, Peru and Chile made up a “substantial” amount of the almost 3.5 billion reais ($2.06 billion) of orders. “That’s great demand,” he said.
Brazil sold 1.1 billion reais of bonds due in 2028 to yield 8.85 percent, at least 200 basis points, or 2 percentage points, above local-currency debt yields from the five other investment- grade countries in Latin America.
Real-denominated bonds sold overseas, typically bought by investors in the U.S., Europe and Japan looking for alternatives to near-zero benchmark rates in their countries, are beginning to lure Latin American pension funds seeking to invest assets abroad. Pension fund assets have risen more than 80 percent in Chile, Peru and Colombia since 2005, buoyed in part by surging commodity exports and quickening economic growth.
Chilean pension fund investments have risen to $138 billion from $72 billion in 2005 while those held by funds in Colombia jumped to $49.7 billion from $20.1 billion, according to regulators in those countries. Peruvian pension fund assets climbed to $28.8 billion from $11.6 billion in 2005.
Credit Growth
Assets managed by the 100 largest U.S. public pension funds, by comparison, have declined 3.7 percent since 2005 to $2.35 trillion, according to the U.S. Census Bureau.
“It’s a combination of the Brazilian credit and the growth of the pension fund system in Latin America,” Fabianna Del Canto, who works on the emerging-markets bond syndicate at Barclays in London, said in a telephone interview.
Brazil’s economic expansion, on pace to be the fastest in more than two decades, has attracted funds forced to look outside their borders for longer-dated assets, according to Barclays, which ranks 10th in Latin American bond underwriting this year, according to data compiled by Bloomberg.
In Chile, where the 2.75 percent benchmark lending rate is 800 basis points below Brazil’s 10.75 percent target rate, foreign investment accounts for 46 percent of pension fund assets, up from 29 percent in 2005. In Peru, where the key lending rate is 3 percent, foreign assets have risen to 26 percent of pension fund holdings from 9.5 percent in September 2005, according to data compiled by regulators.
‘Attractive’ Yields
“Brazil is a very good sovereign bond and the spread it has over U.S. Treasuries right now is attractive for the levels of risk,” said Gonzalo Camargo, who oversees $6.8 billion in Lima at AFP Horizonte, Peru’s third-largest pension fund. “The yield and carry the bonds pay is very attractive and we’re diversifying our portfolio.”
Camargo declined to say whether he participated in the Brazilian debt offering.
Porvenir, Colombia’s biggest pension fund, said in an e- mail response to questions that it’s considering buying emerging-market local-currency bonds. Porvenir declined to comment on whether it participated in Brazil’s bond sale. Alejandro Perez-Reyes, head of investments at Prima AFP, Peru’s largest pension fund, didn’t return a telephone call seeking comment. Chile’s pension funds aren’t allowed to comment on their holdings.
‘Testament’
The pension fund demand is “a testament to Brazil’s improved macro fundamentals and the yield dynamics offered by Brazilian asset prices at this point,” said Aryam Vazquez, an emerging-markets economist at Wells Fargo & Co. in New York.
Brazil’s economy, Latin America’s largest, will expand 7.5 percent this year, compared with 2.6 percent for the U.S., 1.7 percent in the 16-nation euro zone, and an average of 7.1 percent for developing nations, according to International Monetary Fund forecasts.
While Brazil earned investment-grade ratings from Moody’s Investors Service, Standard & Poor’s and Fitch Ratings in the past two years, the country’s ranking is still too low for Mexican pension funds to be allowed to invest in its bonds.
Mexican Funds
Mexican funds can only buy international bonds rated at least A-, or four levels above junk, according to government regulator Consar. Brazilian debt has the lowest investment-grade ranking, or BBB- at S&P and Fitch and Baa3 at Moody’s.
The extra yield investors demand to own Brazilian government dollar bonds instead of Treasuries fell 1 basis point to 182 at 10:07 a.m. in New York, according to JPMorgan Chase & Co. indexes.
The yield on Brazil’s interest-rate futures contract due in January 2012 rose 1 basis point to 11.37 percent.
The cost of protecting Brazilian debt against non-payment for five years with credit-default swaps rose 3 basis points last week to 99 basis points, according to data compiled by CMA DataVision. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
Real Declines
The real strengthened 0.2 percent to 1.7021 per dollar today. It has lost 1.7 percent since the government raised a tax on foreigners’ local fixed-income purchases for the second time this month to stem the rally and shore up exports.
Brazil issued the real-linked international bonds three days after the Oct. 18 tax increase to 6 percent. Treasury Secretary Arno Augustin said in an Oct. 21 interview that the government plans to sell more bonds denominated in reais overseas this year as part of its efforts to curb gains in the currency. Buyers of the international real-linked securities, which settle in U.S. dollars and are subject to New York law, don’t pay the tax.
The real has advanced 108 percent since President Luiz Inacio Lula da Silva took office in 2003, buoyed in part by the world’s second-highest inflation-adjusted interest rates, after Croatia, according to data compiled by Bloomberg.
In February 2007, Brazil first issued the real-linked bonds due in 2028 with a coupon of 10.25 percent. The yield declined to 8.6 percent on Oct. 14, the lowest since June 2007, as record-low yields in the U.S. and Europe fueled demand for emerging-market debt.
Real-denominated bonds have returned 21 percent annually in dollar-based terms in the past four years, compared with 10 percent on Chilean peso debt, 13 percent on local Peru notes and 19 percent on Colombian securities, according to JPMorgan.
“Local pension funds are getting inflows, positive returns, they’re looking for diversification,” said Alberto Ramos, senior economist at Goldman Sachs Group Inc. in New York.
Source: www.bloomberg.com
When bankers at Deutsche Bank AG and Barclays Plc were piecing together orders last week for Brazil’s first real-linked international bond sale in three years, they discovered a new source of demand: Latin American pension funds.
“We had never seen these investors in global local currency deals,” said Dennis Eisele, a director in New York at Deutsche Bank, the biggest underwriter this year of overseas bond sales by Latin American issuers. He said investors from the region including Colombia, Peru and Chile made up a “substantial” amount of the almost 3.5 billion reais ($2.06 billion) of orders. “That’s great demand,” he said.
Brazil sold 1.1 billion reais of bonds due in 2028 to yield 8.85 percent, at least 200 basis points, or 2 percentage points, above local-currency debt yields from the five other investment- grade countries in Latin America.
Real-denominated bonds sold overseas, typically bought by investors in the U.S., Europe and Japan looking for alternatives to near-zero benchmark rates in their countries, are beginning to lure Latin American pension funds seeking to invest assets abroad. Pension fund assets have risen more than 80 percent in Chile, Peru and Colombia since 2005, buoyed in part by surging commodity exports and quickening economic growth.
Chilean pension fund investments have risen to $138 billion from $72 billion in 2005 while those held by funds in Colombia jumped to $49.7 billion from $20.1 billion, according to regulators in those countries. Peruvian pension fund assets climbed to $28.8 billion from $11.6 billion in 2005.
Credit Growth
Assets managed by the 100 largest U.S. public pension funds, by comparison, have declined 3.7 percent since 2005 to $2.35 trillion, according to the U.S. Census Bureau.
“It’s a combination of the Brazilian credit and the growth of the pension fund system in Latin America,” Fabianna Del Canto, who works on the emerging-markets bond syndicate at Barclays in London, said in a telephone interview.
Brazil’s economic expansion, on pace to be the fastest in more than two decades, has attracted funds forced to look outside their borders for longer-dated assets, according to Barclays, which ranks 10th in Latin American bond underwriting this year, according to data compiled by Bloomberg.
In Chile, where the 2.75 percent benchmark lending rate is 800 basis points below Brazil’s 10.75 percent target rate, foreign investment accounts for 46 percent of pension fund assets, up from 29 percent in 2005. In Peru, where the key lending rate is 3 percent, foreign assets have risen to 26 percent of pension fund holdings from 9.5 percent in September 2005, according to data compiled by regulators.
‘Attractive’ Yields
“Brazil is a very good sovereign bond and the spread it has over U.S. Treasuries right now is attractive for the levels of risk,” said Gonzalo Camargo, who oversees $6.8 billion in Lima at AFP Horizonte, Peru’s third-largest pension fund. “The yield and carry the bonds pay is very attractive and we’re diversifying our portfolio.”
Camargo declined to say whether he participated in the Brazilian debt offering.
Porvenir, Colombia’s biggest pension fund, said in an e- mail response to questions that it’s considering buying emerging-market local-currency bonds. Porvenir declined to comment on whether it participated in Brazil’s bond sale. Alejandro Perez-Reyes, head of investments at Prima AFP, Peru’s largest pension fund, didn’t return a telephone call seeking comment. Chile’s pension funds aren’t allowed to comment on their holdings.
‘Testament’
The pension fund demand is “a testament to Brazil’s improved macro fundamentals and the yield dynamics offered by Brazilian asset prices at this point,” said Aryam Vazquez, an emerging-markets economist at Wells Fargo & Co. in New York.
Brazil’s economy, Latin America’s largest, will expand 7.5 percent this year, compared with 2.6 percent for the U.S., 1.7 percent in the 16-nation euro zone, and an average of 7.1 percent for developing nations, according to International Monetary Fund forecasts.
While Brazil earned investment-grade ratings from Moody’s Investors Service, Standard & Poor’s and Fitch Ratings in the past two years, the country’s ranking is still too low for Mexican pension funds to be allowed to invest in its bonds.
Mexican Funds
Mexican funds can only buy international bonds rated at least A-, or four levels above junk, according to government regulator Consar. Brazilian debt has the lowest investment-grade ranking, or BBB- at S&P and Fitch and Baa3 at Moody’s.
The extra yield investors demand to own Brazilian government dollar bonds instead of Treasuries fell 1 basis point to 182 at 10:07 a.m. in New York, according to JPMorgan Chase & Co. indexes.
The yield on Brazil’s interest-rate futures contract due in January 2012 rose 1 basis point to 11.37 percent.
The cost of protecting Brazilian debt against non-payment for five years with credit-default swaps rose 3 basis points last week to 99 basis points, according to data compiled by CMA DataVision. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.
Real Declines
The real strengthened 0.2 percent to 1.7021 per dollar today. It has lost 1.7 percent since the government raised a tax on foreigners’ local fixed-income purchases for the second time this month to stem the rally and shore up exports.
Brazil issued the real-linked international bonds three days after the Oct. 18 tax increase to 6 percent. Treasury Secretary Arno Augustin said in an Oct. 21 interview that the government plans to sell more bonds denominated in reais overseas this year as part of its efforts to curb gains in the currency. Buyers of the international real-linked securities, which settle in U.S. dollars and are subject to New York law, don’t pay the tax.
The real has advanced 108 percent since President Luiz Inacio Lula da Silva took office in 2003, buoyed in part by the world’s second-highest inflation-adjusted interest rates, after Croatia, according to data compiled by Bloomberg.
In February 2007, Brazil first issued the real-linked bonds due in 2028 with a coupon of 10.25 percent. The yield declined to 8.6 percent on Oct. 14, the lowest since June 2007, as record-low yields in the U.S. and Europe fueled demand for emerging-market debt.
Real-denominated bonds have returned 21 percent annually in dollar-based terms in the past four years, compared with 10 percent on Chilean peso debt, 13 percent on local Peru notes and 19 percent on Colombian securities, according to JPMorgan.
“Local pension funds are getting inflows, positive returns, they’re looking for diversification,” said Alberto Ramos, senior economist at Goldman Sachs Group Inc. in New York.
Source: www.bloomberg.com
Brazil's richest man builds huge port
São João da Barra, Brazil (CNN) -- Dangling above the South Atlantic, construction workers brave wind and waves to erect a vast 10-berth port terminal off the Brazilian coast.
Nicknamed the "highway to China," the $2.7 billion port will be one of the biggest in the world when completed in 2012.
Eike Batista, a mining mogul and Brazil's richest man, dreamed up the idea for the Acu Superport because he was fed up with the delays in getting iron ore from his mines onto ships bound for China.
"Land your cargo at a port and if it's a container, it may stay there for 30 to 60 days," Batista told CNN in an interview.
He ended up building a port and industrial complex that will be bigger than Manhattan and already is luring foreign and domestic investments.
"Brazil is a gigantic opportunity to arbitrage inefficiencies," he said.
Brazilian President Luiz Inacio Lula da Silva has visited the complex and so have a number of Chinese officials and business leaders.
LLX, Batista's logistics firm, ferries visitors out to the terminal in a helicopter, flying 400 kilometers (249 miles) north of Rio de Janeiro along the sparsely populated coast.
A cement causeway juts 3 kilometers (1.8 miles) into the ocean. It will boast a four-lane highway, pipelines and conveyer belts to move iron ore, soybeans and oil onto waiting ships, feeding China's insatiable appetite for raw materials.
Back in his office overlooking Rio's scenic Sugar Loaf Mountain, Batista insists the project is more than a pipeline to China.
"This is a story about connecting Brazil to the world. Because for the last 20 years, why haven't German companies or European or American companies come to Brazil?" he asks. "Very bad logistics."
Brazil's clogged roads and ports add billions of dollars to the cost of production every year. Analysts say improving the country's infrastructure will be one of the main challenges facing Lula da Silva's successor. Brazilians will elect a new president in a runoff vote October 31.
"This year the economy's growing at about 7 percent," Batista said. "The reason why we cannot eventually keep it up is because of bottlenecks. But bottlenecks are opportunities."
He says the Acu Superport has turned into a two-way highway, also attracting investment from China and other countries.
China's Wuhan Iron and Steel Co. agreed to sink $5 billion into a steel factory.
A cement factory, energy plant and oil treatment unit are also in the works.
And if all goes as planned, workers here eventually will put their stamp on a new all-Brazilian car company aimed at the country's booming domestic market.
"China has come up with its own brand of cars, so has India. Why not Brazil?" Batista asked.
By Shasta Darlington, CNN
Source: CNN
www.cnn.com
Nicknamed the "highway to China," the $2.7 billion port will be one of the biggest in the world when completed in 2012.
Eike Batista, a mining mogul and Brazil's richest man, dreamed up the idea for the Acu Superport because he was fed up with the delays in getting iron ore from his mines onto ships bound for China.
"Land your cargo at a port and if it's a container, it may stay there for 30 to 60 days," Batista told CNN in an interview.
He ended up building a port and industrial complex that will be bigger than Manhattan and already is luring foreign and domestic investments.
"Brazil is a gigantic opportunity to arbitrage inefficiencies," he said.
Brazilian President Luiz Inacio Lula da Silva has visited the complex and so have a number of Chinese officials and business leaders.
LLX, Batista's logistics firm, ferries visitors out to the terminal in a helicopter, flying 400 kilometers (249 miles) north of Rio de Janeiro along the sparsely populated coast.
A cement causeway juts 3 kilometers (1.8 miles) into the ocean. It will boast a four-lane highway, pipelines and conveyer belts to move iron ore, soybeans and oil onto waiting ships, feeding China's insatiable appetite for raw materials.
Back in his office overlooking Rio's scenic Sugar Loaf Mountain, Batista insists the project is more than a pipeline to China.
"This is a story about connecting Brazil to the world. Because for the last 20 years, why haven't German companies or European or American companies come to Brazil?" he asks. "Very bad logistics."
Brazil's clogged roads and ports add billions of dollars to the cost of production every year. Analysts say improving the country's infrastructure will be one of the main challenges facing Lula da Silva's successor. Brazilians will elect a new president in a runoff vote October 31.
"This year the economy's growing at about 7 percent," Batista said. "The reason why we cannot eventually keep it up is because of bottlenecks. But bottlenecks are opportunities."
He says the Acu Superport has turned into a two-way highway, also attracting investment from China and other countries.
China's Wuhan Iron and Steel Co. agreed to sink $5 billion into a steel factory.
A cement factory, energy plant and oil treatment unit are also in the works.
And if all goes as planned, workers here eventually will put their stamp on a new all-Brazilian car company aimed at the country's booming domestic market.
"China has come up with its own brand of cars, so has India. Why not Brazil?" Batista asked.
By Shasta Darlington, CNN
Source: CNN
www.cnn.com
Wednesday, October 20, 2010
Banorte, Ixe sign tentative merger agreement, push geographic, client gains - Mexico
Mexican financial groups Banorte and Ixe have signed a tentative agreement to merge, pending due diligence, the companies said in a joint press release that pushed the potential benefits of the deal in terms of their respective geographic operations and client bases.
The two groups have been in talks over M&A possibilities since the beginning of the month. Together, the new company would become the third largest financial group in Mexico by assets and credit portfolio, displacing Santander Mexico.
Ixe and Banorte remained vague on the details of the deal, saying that the non-binding agreement could "result in a merger, or the design of some integration mechanism that allows [the companies] to create greater value jointly."
The agreement allows for an "exclusivity period to conclude the negotiations" and carry out due diligence.
The release noted that a merger of the two companies would create a powerful financial company by combining Banorte's large branch network in the northern part of the country with Ixe's "significant presence" in Mexico City.
The release said the banks will also complement each other in terms of market segments, as Banorte is a broad-based retail bank while Ixe focuses mainly on high-end and corporate clients.
GOOD DEAL?
As of the end of August, Grupo Financiero Banorte's flagship bank had the third largest credit portfolio in the Mexican market, with 232bn pesos (US$18.7bn), behind Banamex (343bn pesos) and BBVA Bancomer (546bn pesos).
Ixe's flagship bank was in tenth place with a portfolio worth 28.5bn pesos.
Analysts have commented that a merger with Ixe would be a positive move for Banorte since the financial group has a very healthy credit portfolio and is trading below Banorte's price-to-book ratio on the Mexican stock exchange BMV.
However, Ixe has struggled with profitability as of late, with an ROE of around 1%. Bank executives chalk this up to a heavy round of investment in recent years to grow the group's branch network and portfolios.
Banorte has been searching for acquisitions for some time now, buying a private sector pension manager from Ixe last year and flirting with troubled non-bank mortgage lender Hipotecaria Su Casita.
Banorte is the largest Mexican-controlled financial group in a market dominated by multinationals.
Source: www.bnamericas.com
The two groups have been in talks over M&A possibilities since the beginning of the month. Together, the new company would become the third largest financial group in Mexico by assets and credit portfolio, displacing Santander Mexico.
Ixe and Banorte remained vague on the details of the deal, saying that the non-binding agreement could "result in a merger, or the design of some integration mechanism that allows [the companies] to create greater value jointly."
The agreement allows for an "exclusivity period to conclude the negotiations" and carry out due diligence.
The release noted that a merger of the two companies would create a powerful financial company by combining Banorte's large branch network in the northern part of the country with Ixe's "significant presence" in Mexico City.
The release said the banks will also complement each other in terms of market segments, as Banorte is a broad-based retail bank while Ixe focuses mainly on high-end and corporate clients.
GOOD DEAL?
As of the end of August, Grupo Financiero Banorte's flagship bank had the third largest credit portfolio in the Mexican market, with 232bn pesos (US$18.7bn), behind Banamex (343bn pesos) and BBVA Bancomer (546bn pesos).
Ixe's flagship bank was in tenth place with a portfolio worth 28.5bn pesos.
Analysts have commented that a merger with Ixe would be a positive move for Banorte since the financial group has a very healthy credit portfolio and is trading below Banorte's price-to-book ratio on the Mexican stock exchange BMV.
However, Ixe has struggled with profitability as of late, with an ROE of around 1%. Bank executives chalk this up to a heavy round of investment in recent years to grow the group's branch network and portfolios.
Banorte has been searching for acquisitions for some time now, buying a private sector pension manager from Ixe last year and flirting with troubled non-bank mortgage lender Hipotecaria Su Casita.
Banorte is the largest Mexican-controlled financial group in a market dominated by multinationals.
Source: www.bnamericas.com
Tuesday, October 19, 2010
Bank credit keeps setting records ahead of new regulatory, monetary measures - Peru
By Peter Krupa / Business News Americas
Ahead of moves by regulators to slow things down, Peruvian bank credit has continued to make records, rising to the highest level in history through the end of September.
The banking sector's credit portfolio rose 20.7% year-on-year through the end of the third quarter to the equivalent of US$37.0bn, according to numbers released by local banking association Asbanc.
The strong 12-month growth in bank lending was made up of steady month-to-month growth that has accelerated into the year. Credit growth from end-August to end-September came in at 1.92%, similar to monthly growth levels seen since roughly October 2009.
"The strong performance of lending is based on the high levels of growth seen in the country's economy," Asbanc said in a press release on the numbers.
POLICY TO PRESSURE LENDING GROWTH?
The strong lending growth in August took place in the context of a series of counter-cyclical and monetary measures by regulators that may yet affect the speed of bank lending growth.
Peruvian central bank BCRP has moved several times this year to raise the minimum reserve requirement, but the most recent move to hike it by 50 basis points to 9% took place toward the beginning of this month.
Likewise, banking regulator SBS announced just this month that steady GDP growth above 5% had triggered counter-cyclical reserve provision requirements, which would force banks to put aside more funds to cover the future risks of that heated growth.
Authorities say neither measure is directly intended to put pressure on lending growth, with the first measure looking to ease the sol's appreciation and the second measure being simply a rainy day policy that regulators say will not have a significant effect on balance sheets.
Adding to that, the BCRP surprised the market by deciding last week to leave its target rate at 3%. Market observers see that dovishness continuing through the end of the year, leaving open the possibility of a continued high rate of credit growth pressured from the demand side into 2011.
Ahead of moves by regulators to slow things down, Peruvian bank credit has continued to make records, rising to the highest level in history through the end of September.
The banking sector's credit portfolio rose 20.7% year-on-year through the end of the third quarter to the equivalent of US$37.0bn, according to numbers released by local banking association Asbanc.
The strong 12-month growth in bank lending was made up of steady month-to-month growth that has accelerated into the year. Credit growth from end-August to end-September came in at 1.92%, similar to monthly growth levels seen since roughly October 2009.
"The strong performance of lending is based on the high levels of growth seen in the country's economy," Asbanc said in a press release on the numbers.
POLICY TO PRESSURE LENDING GROWTH?
The strong lending growth in August took place in the context of a series of counter-cyclical and monetary measures by regulators that may yet affect the speed of bank lending growth.
Peruvian central bank BCRP has moved several times this year to raise the minimum reserve requirement, but the most recent move to hike it by 50 basis points to 9% took place toward the beginning of this month.
Likewise, banking regulator SBS announced just this month that steady GDP growth above 5% had triggered counter-cyclical reserve provision requirements, which would force banks to put aside more funds to cover the future risks of that heated growth.
Authorities say neither measure is directly intended to put pressure on lending growth, with the first measure looking to ease the sol's appreciation and the second measure being simply a rainy day policy that regulators say will not have a significant effect on balance sheets.
Adding to that, the BCRP surprised the market by deciding last week to leave its target rate at 3%. Market observers see that dovishness continuing through the end of the year, leaving open the possibility of a continued high rate of credit growth pressured from the demand side into 2011.
Friday, October 15, 2010
Russia to help Venezuela build nuclear power station
Moscow, Russia (CNN) -- Russia and Venezuela signed an agreement Friday calling for Russia to build a nuclear power station in the South American nation.
Russian President Dmitry Medvedev and Venezuelan President Hugo Chavez formally signed the deal here after reaching an agreement in April.
It's the latest example of increasingly close cooperation between the two nations on matters of energy, trade and defense -- a relationship that has raised eyebrows in the United States.
"I don't know who might wince from this news," Medvedev said at a news conference. "The president (Chavez) said that there are countries which may have different feelings about it. But I'd like to say that our intentions are absolutely pure and open."
Venezuela is on the path toward developing nuclear, solar and wind energy, which are trends "of high interest to the entire world," Chavez said, according to the state-run Venezuelan News Agency.
Medvedev said Russia sees atomic energy cooperation as one of its international priorities and that it builds nuclear power stations around the world.
In addition to helping Venezuela build the nuclear power station, Russia will build a research reactor to produce isotopes for peaceful industries and medicine, according to the text of the agreement.
Russia and Venezuela have increased their cooperation on a number of fronts in recent years. Last year, Russia approved $2.2 billion in credit to Venezuela to finance the purchase of 92 Soviet-era T-72 tanks and short-range missiles; Venezuela also planned to buy an anti-aircraft weapons system with a range of 185 miles (300 km).
Chavez defended the arms purchase.
"We are not going to attack anyone," Chaves said then. "Those are only defense instruments because we are going to defend the nation from any threat, from wherever it comes."
Yet the deal raised concerns in the United States, where a State Department spokesman said that Venezuela's desire to increase its arsenal poses a "serious challenge to stability in the Western Hemisphere." This year, however, State Department spokesman Philip Crowley said Venezuela's ambition to increase its arsenal, while suspicious, is an issue "between Venezuela and Russia."
"We don't care. ... Our primary concern is not if Venezuela wants to acquire ... this equipment," he said. "Our primary concern is that if Venezuela is going to increase its military hardware, we certainly don't want to see this hardware migrate into other parts of the hemisphere."
Chavez also met last year with Medvedev and Putin to negotiate and sign new oil and gas contracts between their countries. And in September 2009, Chavez announced while in Russia that Venezuela would recognize as independent republics the regions of Abkhazia and South Ossetia, becoming just the third country, after Russia and Nicaragua, to do so.
Russia generally has backed independence for the two regions. Nearby Georgia, which fought a war with Russia in 2008, opposes independence for the two regions.
By the CNN Wire Staff
Source: www.cnn.com
Russian President Dmitry Medvedev and Venezuelan President Hugo Chavez formally signed the deal here after reaching an agreement in April.
It's the latest example of increasingly close cooperation between the two nations on matters of energy, trade and defense -- a relationship that has raised eyebrows in the United States.
"I don't know who might wince from this news," Medvedev said at a news conference. "The president (Chavez) said that there are countries which may have different feelings about it. But I'd like to say that our intentions are absolutely pure and open."
Venezuela is on the path toward developing nuclear, solar and wind energy, which are trends "of high interest to the entire world," Chavez said, according to the state-run Venezuelan News Agency.
Medvedev said Russia sees atomic energy cooperation as one of its international priorities and that it builds nuclear power stations around the world.
In addition to helping Venezuela build the nuclear power station, Russia will build a research reactor to produce isotopes for peaceful industries and medicine, according to the text of the agreement.
Russia and Venezuela have increased their cooperation on a number of fronts in recent years. Last year, Russia approved $2.2 billion in credit to Venezuela to finance the purchase of 92 Soviet-era T-72 tanks and short-range missiles; Venezuela also planned to buy an anti-aircraft weapons system with a range of 185 miles (300 km).
Chavez defended the arms purchase.
"We are not going to attack anyone," Chaves said then. "Those are only defense instruments because we are going to defend the nation from any threat, from wherever it comes."
Yet the deal raised concerns in the United States, where a State Department spokesman said that Venezuela's desire to increase its arsenal poses a "serious challenge to stability in the Western Hemisphere." This year, however, State Department spokesman Philip Crowley said Venezuela's ambition to increase its arsenal, while suspicious, is an issue "between Venezuela and Russia."
"We don't care. ... Our primary concern is not if Venezuela wants to acquire ... this equipment," he said. "Our primary concern is that if Venezuela is going to increase its military hardware, we certainly don't want to see this hardware migrate into other parts of the hemisphere."
Chavez also met last year with Medvedev and Putin to negotiate and sign new oil and gas contracts between their countries. And in September 2009, Chavez announced while in Russia that Venezuela would recognize as independent republics the regions of Abkhazia and South Ossetia, becoming just the third country, after Russia and Nicaragua, to do so.
Russia generally has backed independence for the two regions. Nearby Georgia, which fought a war with Russia in 2008, opposes independence for the two regions.
By the CNN Wire Staff
Source: www.cnn.com
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