Mexico unveils a realist fiscal package for 2016

2015 ◽  
Keyword(s):  
Economic Growth ◽  
Oil Prices ◽  
Economic Uncertainty ◽  
International Capital ◽  
Content Type ◽  
International Capital Markets ◽  
Approval Ratings ◽  
Budget Proposal ◽  
The Government ◽  
Spending Cuts

Significance President Enrique Pena Nieto's government will maintain its policy of continuous but relatively mild fiscal tightening, following the 2016 budget proposal submitted to Congress on September 8. The fiscal deficit should peak in 2015 at 3.5% of GDP, and despite the plunge in oil prices and meagre economic growth, is expected to fall to 3.0% of GDP next year. Impacts Amid the economic uncertainty of Latin America, the Mexican economy will continue to perform relatively well. Any unexpected fiscal blows, such as a further plunge in oil prices, will be confronted with spending cuts rather than tax increases. The government should have no problems issuing debt in international capital markets, but Pemex's borrowing costs may increase. Meagre economic growth during 2015-16 could damage Pena Nieto's already low public approval ratings.

Pemex downgrades hit AMLO’s economic vision for Mexico

2019 ◽  
Keyword(s):  
Private Sector ◽  
Federal Government ◽  
Capital Markets ◽  
Oil Prices ◽  
International Capital ◽  
Content Type ◽  
International Capital Markets ◽  
The Government ◽  
The Impact ◽  
Death Knell

Subject Pemex downgrades Significance Ratings agency Fitch on June 6 downgraded the bonds issued by state-owned oil firm Pemex to BB+ from BBB-, pushing the rating into ‘speculative grade’ or ‘junk’ territory. The move came a day after Fitch downgraded the bonds of the federal government by one notch, to BBB from BBB+, citing the impact of Pemex’s financial prospects upon those of the government. Moody’s shifted its outlook for the government’s debt from stable to negative but maintained its A3 rating. Impacts The possibility of further downgrades will be a permanent shadow on the government’s economic actions at least until 2020. Any downgrading would have an impact on the borrowing costs of Mexican private sector companies in international capital markets. An abrupt fall in oil prices could be a death knell for Pemex, and would deal a significant blow to the exchequer.

RUFO expiration will not end Argentina debt lawsuits

2015 ◽  
Keyword(s):  
Central Bank ◽  
Capital Markets ◽  
International Capital ◽  
Content Type ◽  
International Capital Markets ◽  
Debt Markets ◽  
Growth Prospects ◽  
The Government ◽  
Severe Shortage

Significance Debt markets have failed to pressure Argentina to end the impasse with holdouts, with the government arguing that it could not offer them new terms without offering similar concessions to holders of restructured debt. With elections scheduled for October, the current government is likely to kick the problem to its successor, leaving Argentina facing continued litigation in US and UK courts. Impacts The Central Bank has effectively managed drawdowns of dollar reserves, helping the government to maintain its hard line against holdouts. While this policy persists, the country will remain locked out of international capital markets. The severe shortage of dollars will continue, and will continue to dampen growth prospects until resolved.

IMF lending will prod Ukraine to sustain reforms

2017 ◽  
Keyword(s):  
Capital Markets ◽  
Armed Conflict ◽  
Government Support ◽  
Political Crisis ◽  
The Political ◽  
International Capital ◽  
Content Type ◽  
International Capital Markets ◽  
The Third ◽  
The Government

Significance After releasing 1 billion dollars in April, the IMF is urging Ukraine to implement land and pension reforms to make it eligible for further lending tranches. The government is finding it hard to pursue controversial changes opposed by many voters and taken up as causes by the political opposition. Gontareva's resignation reflects a lack of government support and is a setback for the reformist camp. Impacts The 'economic war' emerging alongside armed conflict in the east will dent prospects for growth and reform. Failure to secure further IMF financing could accelerate the planned return to international capital markets, perhaps in the third quarter. Attempts to push through reforms such as land sales may lead to increased political strife but not a full-blown political crisis.

Ecuador unlikely to scrap dollarisation

2015 ◽  
Keyword(s):  
Economic Growth ◽  
Public Debt ◽  
Oil Prices ◽  
The State ◽  
Content Type ◽  
Severe Strain ◽  
The Future ◽  
The Government ◽  
The Right ◽  
Oil Revenues

Subject The future of dollarisation in a context of low oil prices. Significance Oil revenues have underpinned the popularity of President Rafael Correa's government by enabling spending on welfare, infrastructure and development that has boosted economic growth. The collapse of world oil prices has placed the dollar-denominated economy under severe strain and raised doubts about the future of dollarisation in Ecuador. Impacts The fiscal challenges the government is facing will provide the opposition with an opportunity to strengthen in 2015. The right will play on concerns over the management of the economy, the scale of public debt and the size of the state. The left will attack the government for failing to reduce Ecuador's reliance on oil and undertake wider and deeper reforms.

Mexican fiscal orthodoxy to be maintained amid crisis

2020 ◽  
Keyword(s):  
Capital Markets ◽  
Public Debt ◽  
Public Spending ◽  
Country Risk ◽  
Economic Recovery ◽  
International Capital ◽  
Content Type ◽  
International Capital Markets ◽  
The Cost ◽  
Spending Cuts

Significance Public finances have not so far deteriorated as dramatically as they might have done, considering the economic contraction caused by the COVID-19 pandemic. This is explained partly by public spending cuts and one-off revenues that will not be repeated next year. Impacts Fiscal orthodoxy will not be rewarded by international capital markets, as anti-investment moves have hit confidence. Perceptions of country risk will continue to worsen, pushing up the cost of refinancing public debt. A slow post-pandemic economic recovery and lingering unemployment could weigh on the government’s popularity.

Economic downturn may be on the horizon in Ecuador

2019 ◽  
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Oil Prices ◽  
Import Demand ◽  
Export Growth ◽  
Economic Downturn ◽  
Short Term ◽  
Content Type ◽  
The Government ◽  
Spending Cuts

Subject Economic challenges. Significance In the first quarter, Ecuador’s economy grew at its weakest pace since the 2016 recession. The government is facing significant challenges in implementing a recently agreed IMF programme, while President Lenin Moreno’s popularity has plummeted following unpopular, but arguably necessary, spending cuts. Impacts Dollar appreciation and a tightening of global financing conditions would weaken Ecuador’s competitiveness. Short-term, the current account deficit will narrow, as rising oil prices support export growth and the slowdown weighs on import demand. Moreno’s diminishing popularity will exacerbate uncertainty around implementation of the IMF programme.

Mexican government to reinforce fiscal tightening

2016 ◽  
Keyword(s):  
Capital Markets ◽  
Fiscal Deficit ◽  
International Capital ◽  
Budget Cuts ◽  
Content Type ◽  
International Capital Markets ◽  
Fiscal Adjustment ◽  
Mexican Government ◽  
The Government ◽  
Primary Surplus

Significance A substantial fiscal tightening is being proposed, with the government seeking to reduce its fiscal deficit significantly and attain its first primary surplus since 2008. Impacts Heavy budget cuts will increase Pena Nieto's unpopularity. Pena Nieto is unlikely to achieve the close working relationship with Meade that he had with Videgaray. The fiscal adjustment will be tested when the government goes to the international capital markets to issue debt from January.

Trump fear colours Mexican monetary tightening

2016 ◽  
Keyword(s):  
Economic Growth ◽  
Fiscal Policy ◽  
Interest Rate ◽  
Interest Rates ◽  
Negative Impact ◽  
Content Type ◽  
Approval Ratings ◽  
President Elect ◽  
Spending Cuts ◽  
Negative Shock

Significance It is the highest level recorded since April 2009. Given the negative shock that US President-elect Donald Trump's November 8 victory caused for Mexico, a sharper interest rate rise had been widely expected. Impacts The reduced economic growth expected for 2017 should have a negative impact on the president's already low approval ratings. More expensive credit should hit consumption only moderately, as interest rates remain quite low by historical standards. If fiscal policy tightening accompanies the monetary move, it will be implemented through spending cuts rather than tax increases.

Japan GDP growth will rely on exports and wage rises

2017 ◽  
Keyword(s):  
Economic Growth ◽  
Government Spending ◽  
Labour Force ◽  
Oil Prices ◽  
Household Consumption ◽  
Sales Tax ◽  
Gdp Growth ◽  
Content Type ◽  
The Government ◽  
Will Force

Significance Foreign trade accounted for almost the entire increase, more than making up for declines in household consumption and government spending. Impacts The government will claim credit for growth, but voters will see this as theoretical unless incomes rise faster. Strong GDP growth will make it hard to argue against raising the sales tax as scheduled in 2019. Economic growth and a shrinking labour force will force employers to raise compensation eventually. Japan is vulnerable externally if oil prices rise further or the Fed hikes rates too fast.

Portugal faces emerging structural challenges

2019 ◽  
Keyword(s):  
Economic Growth ◽  
Budget Deficit ◽  
Right Wing ◽  
Economic Uncertainty ◽  
Environmental Groups ◽  
Content Type ◽  
Social Democratic ◽  
Deficit Reduction ◽  
The Government ◽  
The Right

Subject Outlook for Portugal. Significance Following four years of stable economic growth and budget deficit reduction, the Socialists will likely be re-elected as the largest party but again face the prospect of ruling without a majority. Impacts Spanish political and economic uncertainty will increase the attractiveness of Portuguese debt. The right-wing Social Democratic Party's inability to recover support could lead to radicalisation within the party. The government will push ahead with plans to build a second airport in Lisbon despite environmental groups' opposition.

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