LATIN AMERICA ADVISOR a DAILY PUBLICATION of the DIALOGUE Friday, July 30, 2021
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LATIN AMERICA ADVISOR A DAILY PUBLICATION OF THE DIALOGUE www.thedialogue.org Friday, July 30, 2021 BOARD OF ADVISORS FEATURED Q&A TODAY’S NEWS Diego Arria Director, Columbus Group POLITICAL Devry Boughner Vorwerk Will Colombia’s Biden to Discuss CEO, DevryBV Sustainable Strategies Joyce Chang Protests With Global Head of Research, JPMorgan Chase & Co. Revised Tax Plan Cuban-Americans Paula Cifuentes U.S. President Joe Biden is to Director of Economic & Fiscal Affairs, host Cuban-Americans today Latin America & Canada, Win Approval? at the White House to discuss Philip Morris International historic protests that broke out in Marlene Fernández Corporate Vice President for the Caribbean nation earlier this Government Relations, month. Arcos Dorados (McDonald’s) Page 2 Peter Hakim President Emeritus, Inter-American Dialogue BUSINESS Donna Hrinak Senior VP, Corporate Affairs, TotalEnergies, Royal Caribbean Group Equinor Exit Jon E. Huenemann Council Member, Venezuela Venture GLG Inc. TotalEnergies and Equinor have James R. Jones decided to exit their Petrocedeño Chairman, Colombian President Iván Duque’s government this month proposed a revised tax reform. The Monarch Global Strategies government withdrew an earlier version in May after it sparked violent protests. // File Photo: joint venture in Venezuela. State Colombian Government. oil company PDVSA will now own Craig A. Kelly 100 percent of the venture. Senior Director, Americas Colombian President Iván Duque on July 20 presented Int’l Gov’t Relations, Exxon Mobil Page 2 Barbara Kotschwar lawmakers with a nearly $4 billion tax reform bill, a more Executive Director, Visa Economic modest proposal than a plan his government presented in Empowerment Institute POLITICAL Q April, which sparked weeks of deadly protests and nation- John Maisto Peru’s Castillo Director, U.S. Education wide strikes. How much of a chance does the new plan have at winning Finance Group approval in Congress, and how might lawmakers revise it? Does the Names Far-Leftist Nicolás Mariscal Chairman, public support the plan, and what chance is there that protests will again as Prime Minister Grupo Marhnos derail it? To what extent would Duque’s new plan address Colombia’s New Peruvian President Pedro Thomas F. McLarty III Castillo swore in Guido Bellido fiscal problems, and would its passage help Colombia to regain its Chairman, as his prime minister. The ap- McLarty Associates investment-grade status, which it lost in early July? pointment of Bellido, a far-leftist, Beatrice Rangel quashed some expectations that Director, Castillo might seek to govern from AMLA Consulting LLC Richard Francis, director of Latin American sovereigns at Jaana Remes closer to the center. Partner, Fitch Ratings: “Colombia’s revised tax reform proposal is con- Page 2 McKinsey Global Institute sistent with Fitch’s assumptions at our most recent sovereign Ernesto Revilla Head of Latin American rating review on July 1, when we downgraded Colombia to Economics, Citi A ‘BB+’/Stable. The updated proposal’s 1.2 percent of GDP target is about Gustavo Roosen President, half that of the April proposal, and the corporate income tax measures IESA essentially amount to unwinding some cuts and deductions introduced Andrés Rozental three years ago. Furthermore, a large part of the adjustment depends on President, Rozental & Asociados tax administration and expenditure control measures, which are uncertain Shelly Shetty as to timing and size. The government also announced the expansion of Managing Director, Sovereigns Fitch Ratings certain pandemic support measures though the end of 2022, including the Solidarity Income program and employment subsidies. Therefore, we fore- cast a large 6.9 percent of GDP deficit next year, with downside risks if tax administration does not deliver envisaged revenue benefits, if the new proposals are watered down, or the government is unable to divest assets Bellido // File Photo: Facebook Page of Guido Bellido. Continued on page 3 COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 1 LATIN AMERICA ADVISOR Friday, July 30, 2021 POLITICAL NEWS ers of the song “Patria y Vida,” which became NEWS BRIEFS an anthem for protesters this month, will Peru’s Castillo reportedly be at the meeting. The White House Thousands Take to Streets has consulted several Cuban-American leaders in Guatemala Following Names Far-Leftist and members of Congress since the protests, which were harshly repressed, swept through Prosecutor’s Firing as Prime Minister the country. Democrats in Florida, which swung Thousands of protesters took to the streets for Republicans by in large in the 2020 U.S. and blocked major highways in Guatemala New Peruvian President Pedro Castillo on election, have been urging their party leaders to on Thursday to demand the resignation of Thursday swore in Guido Bellido, a fellow embrace the protests against Cuba’s commu- President Alejandro Giammattei and his far-leftist, as his prime minister, quashing nist regime, CNN reported. In related news, attorney general, Consuelo Porras, Prensa Libre hopes by moderates that Castillo would govern Biden on Thursday picked Cuban-American reported. Pressure has been building domes- from closer to the center, Reuters reported. Frank Mora as his nominee for U.S. ambassa- tically and abroad since Porras fired anti-cor- Castillo also swore in most of his cabinet, but dor to the Organization of American States, the ruption special prosecutor Juan Francisco he did not name a finance minister. Bellido is Miami Herald reported. Mora, who previously Sandoval on July 23. The United States this under investigated for alleged “apology for ter- served as a deputy assistant secretary of de- week said it had “lost confidence” in Porras. rorism,” which is a crime in the Andean nation. fense for the Western Hemisphere, would play Giammattei expressed his concern Thursday In an interview with local media in April, he a key role in garnering international support for that a suspension in U.S. cooperation would be defended members of the Maoist Shining Path U.S. policy in Cuba, as well as other sensitive “counterproductive” to fighting organized crime rebel group, which killed tens of thousands of areas such as Nicaragua and Venezuela. and corruption, the Associated Press reported. people in the 1980s and 1990s, The Guardian reported. The cabinet swearing-in ceremony on Thursday night began more than two hours BUSINESS NEWS late, and the person expected to be named Brazilian Officials finance minister, leftist economist Pedro Begin Mass Vaccination Francke, left the venue just before it started, TotalEnergies, Program in a Rio Favela Reuters reported. Francke’s departure at the Equinor Exit Joint Health authorities in Brazil on Thursday began last minute raised questions about whether a novel mass immunization program in a large he had rejected the job just as he was about Venture in Venezuela poor neighborhood, or favela, of Rio de Janeiro to take office. The incomplete cabinet that in a bid to control and monitor the spread Castillo swore in included several other far-left Paris-based oil producer TotalEnergies and of Covid-19, the Associated Press reported. figures and only two women, The Guardian Norway’s Equinor have decided to exit their Researchers leading the effort say they are reported. [Editor’s note: See Q&A on Peru’s joint venture in Venezuela, Bloomberg News not aware of another program elsewhere in the finances including comments by Francke in the reported Thursday. Venezuelan state oil world that has specifically focused on slums. Feb. 17 issue of the Advisor.] company PDVSA will now own 100 percent Although more than 1.5 million people live in of the Petrocedeño venture, which produces Rio’s favelas, research of this type is usually extra-heavy crude oil from the Orinoco Belt in done in hospitals and health clinics that do not Biden to Discuss Venezuela, transports it and transforms it into exist there for the most part. Protests With light crude oil. According to a statement from TotalEnergies, the transaction was carried out Cuban-Americans for a “symbolic amount in exchange of a broad indemnity in relation to the past and future Banco Santander Chile U.S. President Joe Biden will host Cuban-Amer- participation of TotalEnergies in Petrocedeño.” Reports $253 Mn in Profit ican political leaders, social activists and The deal will result in the recognition of an Banco Santander Chile on Thursday reported artists at the White House today to discuss exceptional capital loss of $1.38 billion in the $253.4 million in net income for the second historic national protests organized in Cuba on financial statements of TotalEnergies. Arnaud quarter, the Associated Press reported. The July 11, NBC News reported. Biden’s foreign Breuillac, the president for exploration and bank said it had earnings of 54 cents per share policy team is reportedly weighing new sanc- production at TotalEnergies, said the sale is for the quarter. The bank also posted revenue tions on Cuba’s government, as well as options in line with a strategy of “focusing new oil of $935.6 million for the quarter. Its shares for providing Internet access to the island’s investments on low carbon intensity projects, have risen approximately 2 percent since the population. Yotuel Romero, one of the perform- which does not correspond to extra-heavy oil beginning of this year. COPYRIGHT © 2021, INTER-AMERICAN DIALOGUE PAGE 2 LATIN AMERICA ADVISOR Friday, July 30, 2021 development projects in the Orinoco Belt.” FEATURED Q&A / Continued from page 1 Although Total, as the company was formerly known, once was a major player in Venezuela, as planned (estimated at 0.6 percent of GDP also boost inflation if companies pass along last year less than 0.5 percent of the compa- next year) in an election year. We expect higher costs to their customers. Lastly, a ny’s combined oil and gas production came debt to rise to 64 percent of GDP in 2022 structural reform to expand the individual from the Andean country.