1. Bolivians Voted Against Evo’s Morales Electoral reform
Last year, Evo Morales issued a proposal that would allow him to run for president for a fourth term. The legislation was approved by a two-third majority in Congress last September. Some critics pointed that this measure would undermine Bolivian democracy in the long term. However, Morales’s popularity increased the odds for the reform to obtain public approval.
This week the measure was placed into a national referendum. Morales lost by a minimal margin: 51 percent opposed the measure against 49 percent. Polls showed that Bolivian youth opposed Morales, fearful he may get excessive power. Morales’ loss of support came amid rumors of political maneuvering. News sources revealed that Morales’ ex-girlfriend is an executive of a giant Chinese firm, that “received more than $500 million in government contracts.” These news leaked in referendum week and boosted public dissent.
Morales accepted the referendum results: “We will respect the results…It’s party of a democracy..The important thing is to salute the Bolivian people for their democratic will.”
2. Argentina Reached a Deal to pay $5 Billion to Hedge Funds
Argentina is almost ready to reenter the bond global market. The government is about to sign a deal to pay $5 billion dollars to four US hedge funds. Those hedge funds represent two-thirds of the holdout creditors who took Argentina to court in 2012. The agreement now seems feasible, even after Argentinian Finance minister had said that “the difficulty is that US creditors want to receive a level of interest that is unacceptable under any legal criteria”
After the deal is sealed, Argentinian congress has to overturn a law that forbids payments to US creditors.
Argentina was expelled from the world markets after it reneged on its $80 billion debt in 2001. Under Kirchner’s rule, the country remained practically isolated. But recently elected President Mauricio Macri promised that his main priority would be to fix Argentina’s financial mess. Macri’s efforts are about to pay off. Closing the litigation would be a greater step for Argentina.
3. Amid Rumors of Future Collapse, Venezuela Is Reassured On Paying Its Debts
Last year, Venezuela reduced imports in order to tighten its budget. Such actions caused food shortages, riots and public outcry, but allowed Venezuela to still keep paying its debts. A smart finance guy once told me: “countries can make all the economic mistakes in the world. But there is one mistake they must never make: stop paying its debts.”
Venezuela still follows that sacred dictum. Today, the country will pay $1.5 billion of its debt to foreign bondholders. Although it seems they are doing it out of fear rather than obligation. Failure to pay would make them lose control of PDVSA, their oil state giant. As we all know, almost 90% of Venezuela’s economy revolves around this single company.
Venezuelan officials met with international creditors to assured them Venezuela will continue to pay no matter what. Analyst indicate that debt payment is not a problem in the next months. Venezuela still has $2.5 billion, out of their $14 billion of international reserves. However, if oil prices remain low as expected, the country will inevitably default by October or November.
Maduro is focused on keeping Venezuela’s credit alive, with the hopes that China would rescue them later in the year.
An analyst from Greylock Capital management said: “We still think (Maduro) is motivated to keep servicing its debt because that’s the only way he can keep his crazy charade functioning”
4. Brazil’s Inflation Reaches a 12 year high, amid Increase in Unemployment
In mid-February, Brazil reached a 10 year record of high inflation, at 10.84%.
Although the Brazilian inflation target was set at 4.5%, for the last few years people were used to price increases below 6% a year. But alarm and discontent rose in 2015, when inflation escalated to double digits.
An increasing deficit forced President Dilma Rousseff to impose an austerity package in late 2015. After reduced benefits for housing and health care, the inflation has placed the middle class in a difficult spot. Supermarkets have been losing customers, as food prices increased over 15% last year. A number of businesses have also laid off many employees, and the Brazilian currency, the Reais, lost a third of its value against the dollar.
The government also increased taxes, a measure that boosted the prices of electronics, wine and other products. Analysts say the government has taken too long in tightening their budget. They believe the current situation is just the result of populist policies that heavily subsidized energy and oil prices for many years.
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XpatNation is a Social News and Lifestyle magazine, focusing on the insights and experiences of ex-patriots living in The United States.
XpatNation brings together the voices, thoughts, perceptions and experiences of the people of the world who have made the USA their home. Using their insight and unique understanding of the global world we live in to discuss culture, lifestyle, Geo politics and the day to day on-goings of this proud and powerful nation.