Political Risk Latin America Blog @PolRiskLatam

China wants a piece of Uruguay

Posted in News and Articles, Political Risk by politicalrisklatam on June 9, 2011

by Jude Webber for Financial Times – Beyond Brics, June 9th, 2011.

Government officials on official visits are usually required by protocol to talk of taking bilateral relations to a higher level.

But when Xi Jinping, China’s vice president, uttered the words during a visit to Uruguay, it smacked of the latest chapter in China’s concerted campaign to boost ties with the region’s big agricultural, energy and mineral providers.

China has poured millions into the region and is actively eyeing strategic opportunities, as the FT and beyondbrics have highlighted in the past. Is it now Uruguay’s turn?

Gerardo Penadés, a senator, said the vice president had invited Uruguayan companies to set up shop in China and “mentioned the possibility” of China’s development bank establishing itself in China, according to this story in El País newspaperChina’s ICBC has already been reported to be eyeing the Argentine assets of its partner, Standard Bank. (continue reading… )


Uruguay considers China a ‘strategic partner’ and supports a Beijing-Mercosur trade accord

Posted in News and Articles, Political Risk by politicalrisklatam on June 8, 2011

by Merco Press News, June 8th, 2011.

Uruguay sees China as a ‘strategic partner’ and has kept good relations with Beijing since the two countries forged diplomatic ties in 1988, said Uruguayan Foreign Affairs minister Luis Almagro, a former ambassador to China from 2007-2009. Almagro made the statement as Chinese Vice-President Xi Jinping begun his official visit to Uruguay. 

The Uruguayan official revealed that the administration of President Jose Mujica would support an initiative for the regional Mercosur customs union to reach a trade agreement with China, “although complicated and has not yet been considered or proposed by any member, it would be very positive for both sides”

Uruguay considers Xi’s visit as one of the most important foreign policy events of the year that will help boost bilateral trade, investments and facilitate agreements on cultural and political issues, Almagro said, who revealed that President Mujica is scheduled to travel to China in 2012.

Economic relations between China and Uruguay have experienced a sustained expansion in the last few years, said Almagro pointing out that Chinese corporations have strong investments in the telecommunications and automobile sectors of Uruguay.(continue reading… )

Uruguay closer to investment grade

Posted in News and Articles, Political Risk by politicalrisklatam on June 1, 2011

by Jude Webber for Financial Times – Beyond Brics, June 1st, 2011.

As Uruguay moves towards coveted investment grade, it has notched up another success – a clamorous return to the Samurai bond market in Japan, its first such issue since 2007. The issue, which raised just shy of $500m and wraps up this year’s financing needs, was 2.2 times subscribed, says Benito Berber, an analyst at Nomura, which co-managed the sale.

The 2021 bond priced at par with a coupon of 1.64 per cent, yielding Yen Libor plus 43 basis points – at the tight end of the 42-48 basis point guidance range.

This issue was guaranteed by Japan’s JBIC development bank – a requirement Uruguay hopes to shed in future issues. This bond was bought by city and public banks, insurance companies, and regional banks and was managed by Daiwa as well as Nomura.

Azucena Arbeleche, head of debt management at the finance ministry in Montevideo, sees Uruguay now scouting for opportunities to manage liability and a swap of dollar-denominated debt into local currency instruments. (continue reading… )

Uruguay admits to IMF concern over inflation, but rejects capital flow controls

Posted in News and Articles, Political Risk by politicalrisklatam on April 19, 2011

by Merco Press News, April 19th, 2011.

“Challenges to the Uruguayan economy continue to be considerable, particularly in the current world economic situation which is generating a high dose of uncertainty and specifically a significant increase in inflationary pressures”.

The statement on the Uruguayan chapter was done by Chile’s central bank president Jose De Gregorio, the country that holds the ‘chair’ of the committee shared by Argentina, Bolivia, Paraguay, Peru and Uruguay. Each country chapter is prepared by each of the delegations.

In the report Uruguayan authorities mention that to combat inflationary pressures last March 23, the Monetary Policy Rate was increased above market expectations from 6.5% to 7.5% and the Economy ministry has reiterated its commitment to accompany those efforts in the “fiscal field”. (continue reading… )

Uruguay: The Components of Its Success

Posted in News and Articles, Political Risk by politicalrisklatam on March 31, 2011

by Janie Hulse Najenson for Americas Quarterly Online, March 29th, 2011.

Just a decade ago, most Latin American governments looked to the United States and Europe as examples of how to improve governance, foster sustainable economic growth and institute more just societies. But today, there are some countries in Latin America that serve as case studies worth following—one of which is Uruguay. It may be the size of Washington State and have one of the smallest populations in the region (3.3 million), but it should be truly commended for its developmental progress in recent years.

Although dwarfed by the neighboring economies of Brazil and Argentina, Uruguayans overall have a better standard of living. Uruguay’s annual per-capita income is estimated at roughly $14,000—higher than that of Brazil and Argentina. Physical security is better, too, as evidenced by known cases of families moving from Buenos Aires to Montevideo in search of a safer environment. Recent regional rankings on tourism reflect Uruguay as a desirable destination. According to the 2010 Latin Business Chronicle’s Tourism Index, Uruguay is Latin America’s tourism champion. The country receives more than 2 million tourists a year, an amount equaling roughly 60 percent of its population.

Years of economic growth and state policy promoting technology usage by citizens, government and business has made the Uruguayans some of the most tech-savvy in the region. In May 2008, former president Tabaré Vázquez (2005-10) launched a government program called La Agenda Digital Uruguay 2008-10 (Uruguay Digital Agenda 2008-10) that worked toward the consolidation of all of Uruguay’s information technology programs. Its main objective was to create a more inclusive and democratic society. It gave high priority to Plan Ceibal, known in English as One Laptop per Child, which is responsible for distributing low-cost laptops to all public primary-school students and teachers. This open-source initiative has been so successful that it was extended to secondary schools, and inspired another project to make available affordable “triple play” (Internet, phone, and television) services to low-income families. By November 2010, Uruguay’s investment agency Uruguay XXI reported that the government had distributed 380,000 laptops, trained 18,000 teachers, created 280 free Wi-Fi areas in Montevideo and gave 220,000 families their first computer. (continue reading… )

Seven Latam countries on track to have credit ratings upgraded

Posted in News and Articles, Political Risk by politicalrisklatam on February 25, 2011

by Merco Press News, February 25th, 2011.

Seven countries in Latin America are on track to have their ratings upgraded in the short term, as the region’s credit cycle remains supported by healthy economic growth and greater policy stability, Fitch Ratings said on Thursday.

Countries such as Brazil, Colombia, the Dominican Republic, Panama, Peru, Suriname, and Uruguay all have a positive rating outlook from Fitch, although it’s not clear which of them could be upgraded this year, the agency said in a report.

“Fitch expects sovereign credit trends to remain positive in Latin America in 2011,” Fitch’s analysts Shelly Shetty and Erich Arispe said in the report.

The upgrade of Chile’s foreign-currency ratings to A-plus earlier this month was an early sign of that positive trend, they added.

Latin America’s credit cycle is underpinned by continued growth dynamism in most of the region, which is expected to grow 4.1% this year, down from an estimated 5.6% in 2010, Fitch said.

Risks to Fitch’s positive outlook come mostly from abroad, with possible weakness in U.S. and Chinese external demand. Lower commodity prices resulting from lower growth in the world’s largest economies could derail improvements in fiscal and external indicators of Latin American countries, Fitch said. (continue reading… )

Uruguay and India explore wind energy cooperation

Posted in News and Articles, Political Risk by politicalrisklatam on February 24, 2011

by Merco Press News, February 24th, 2011.

A high level delegation from Uruguay is exploring the possibility of forging cooperation with India in the wind power sector. Led by Uruguayan Vice President Danilo Astori, the delegation visited Wednesday the plant of RRB Energy Ltd (RRBEL) in Chennai (formally Madras).

‘We are witnessing an increased demand for wind power in our country. However, it cannot be met without the help and co-operation of a sound technical partner. There is vast scope for co-operation between Uruguay and India in the field of renewable energy’ Uruguay’s Minister for Industry, Energy and Mines Roberto Kriemerman told reporters.

‘This is further aided by the agreement on trade preferences between Mercosur countries and India,’ he added. The Uruguay delegation was in Chennai as part of its seven-day visit to India.

In Delhi Thursday, Astori will hold formal discussions with Indian Vice President Mohammad Hamid Ansari, and also meet Lok Sabha Speaker Meira Kumar, followed by an important business seminar Friday. (continue reading… )

Ambitious Uruguayan trade and investment incursion to India

Posted in News and Articles, Political Risk by politicalrisklatam on February 21, 2011

by Merco Press News, February 19th, 2011.

Considered one of the most ambitious trade and investment incursions to Asia, a delegation of Uruguayan business people headed by Vice-president Danilo Astori begins Saturday a seven-day official visit to India.

“In Uruguay we attach great importance to the visit. It is ground breaking and a great challenge. The most significant bilateral visit in the last twelve years” Uruguay’s Ambassador to India Cesar Ferrer is quoted by India’s news agency.

“During the visit we expect to sign an agreement on double taxation and another for cooperation in renewable energy”, added Ambassador Ferrer.

Astori and the 60-member strong delegation arrive in Mumbai late Saturday from where they will travel to Chennai, before concluding in Delhi.

Last Wednesday in Montevideo, Astori with Indian Ambassador R. Viswanathan released a postal stamp on Rabindranath Tagore to mark the 150th birth anniversary of the Nobel laureate.

The delegation includes Minister of Industry, Energy and Mining, Roberto Kreimerman, senior government officials and heads of business chambers. (continue reading… )

Brazil consolidates defence and military links with Argentina and Uruguay

Posted in News and Articles, Political Risk by politicalrisklatam on February 14, 2011

by MercoPress News, February 14th, 2011.

Brazilian Defence minister Nelson Jobim begins this week a tour of neighbouring Mercosur partners where he is scheduled to sign a statement underlining the strategic relation with Argentina, and further on Uruguay’s interest in military cooperation and equipment.

According to Argentine sources the joint declaration reaffirms the “importance of the strategic relation between both countries” and is the continuation of what was agreed during the recent presidential summit of Dilma Rousseff with Cristina Fernandez de Kirchner in Buenos Aires.

Following talks with Argentine minister Arturo Puricelli, Jobim will visit the Tandanor and the CINAR shipyard complex, to see various naval workshops. One in particular will be that of Admiral Storni, where they currently run construction of the centre.

In Uruguay the former magistrate and brainchild of Unasur defence council will be meeting his counterpart Luis Rosadilla and later President Jose Mujica. Uruguay is interested in signing agreements with Brazil for the financing and purchase of defence equipment as well as a review of the current defence cooperation agreement. (continue reading… )

Drought stricken-Uruguay praises Argentina’s “formidable gesture”

Posted in News and Articles, Political Risk by politicalrisklatam on December 28, 2010

by Merco Press News, December 27th, 2010.

President Jose Mujica described as a “formidable gesture” the Argentine government’s decision to facilitate the export of grains and fodder to Uruguay which in under an “agriculture emergency” because of a severe drought that threatens much of the cattle to the north of the country.

“We want to make a public acknowledgement to the Argentine government for this formidable gesture, for which it had no obligation”, said Mujica during his daily radio program “The president speaks”.

“Argentina is ready to supply us with thousands of tons of grains and food for cattle suffering the consequences of the drought”, said Mujica.

To facilitate the dispatch of grains and fodder for thousands of head of cattle, the government of President Cristina Fernandez de Kirchner “will be making a fiscal sacrifice, which is a great solidarity gesture” explained the Uruguayan president in direct reference to the controversial Argentine export taxes that will not be applied to sales to Uruguay. (continue reading… )