Argentina, IMF Strike New Debt Deal; Peru’s Interior Minister Resigns

Bloomberg Línea — Argentina has reached a new agreement with the International Monetary Fund regarding the repayment of the country’s more than $40-billion debt, payments on which were due this week. The full terms of the agreement were not disclosed, but are dependent on the government sustaining the country’s economic growth.

Peru’s Interior Minister Avelino Guillén has resigned, representing another blow to President Pedro Castillo, who has seen multiple changes to his cabinet since taking office in July 2021. Guillén is the third interior minister to abandon the cabinet, while other departures have included prime minister Guido Bellido, who left the post in October.

Following is a roundup of Friday’s news from Bloomberg Línea and Bloomberg reporters across Latin America.

Argentina

• Argentina’s President Alberto Fernández confirmed on Friday that Argentina has reached a new understanding with the International Monetary Fund (IMF) for repayment of the country’s debt that exceeds $40 billion, and remarked that the new agreement stipulates “sustaining the economic recovery”. Economy Minister Martín Guzmán said that there will be a “gradual but decisive reduction of monetary assistance”, while a primary fiscal deficit of 2.5% for 2022 was set. IMF staff also said Argentina aims to reduce energy subsidies, without providing further details.

Brazil

• The cost of oil does not have to be linked to the international market, former president Luiz Inácio Lula da Silva said Friday, and who is leading opinion polls for October’s presidential elections, in an interview with Radio Liberal. Lula is calling for the country to build more oil refineries to lessen its dependence on importing refined products.
• The country’s B3 stock exchange released the ranking of public companies with the best ESG (Environmental, Social and Governance) scores in Brazil.

Colombia

• The Board of the central bank (Banco de la República) surprised the market and raised interest rates by 100 basis points to 4%. Upward inflation pressures and the economic rebound were some of the reasons cited for the increase. Colombia’s tax authorities announced that they will start “auditing” people who carry out transactions in cryptocurrencies, while the country’s financial watchdog authorized the second takeover bid launched by Grupo Gilinski for Grupo Sura.

Mexico

• Mexico’s public finances moved into deficit in 2021, as budget revenues were exceeded by public spending; however, the federal government achieved a reduction in debt at the end of last year. The Finance Ministry denied that Mexico’s economy is going through a process of stagflation or technical recession; however, it admitted that recovery will be limited in 2022.
• América Móvil’s (AMXL) quest to obtain a license to offer pay TV service is pitching it into competition with its former partner, US giant AT&T (T).

Panama

• The Chamber of Commerce, Industries and Agriculture of Panama has called for the agreement reached between Canadian company First Quantum Minerals (TSX) and the Panamanian government on the increase of royalty payments not be used for political benefit.

Peru

• Avelino Guillén resigned as Interior Minister after President Pedro Castillo failed to support him in a dispute with the commander of the National Police. Guillén is the third interior minister to leave the post since Castillo took office in July 2021, and one of several ministers to have abandoned the cabinet, including Castillo’s first prime minister Guido Bellido, who resigned in October.

• Environment Minister Rubén Ramírez said that, as of January 28, the oil spill off Peru’s coast amounts to a total of 11,900 barrels, and for which the government is seeking the payment of damages from Spanish company Repsol.

This is how the region’s markets closed on Friday, January 28: