Cartagena’s Post-Summit Tourist Travails
The Americas Summit in Colombia concluded without commercial or diplomatic breakthroughs as notoriety focused on US Secret Service nocturnal leisure activity in the popular vacation spot with other regional destinations also under the microscope for their own event risks. Host President Santos reaffirmed direct and portfolio investment overtures as the central bank paused while warning of possible credit overheating and reserving the right to take new anti-appreciation currency measures. Following the meeting he promptly denounced Argentina’s YPF seizure as the opposite of his administration’s welcome as Chile’s Codelco considers cross-border mining ties and oil production reaches fresh records. However in cracking down against former paramilitaries while pursuing rapprochement with FARC guerillas and Venezuelan counterpart Chavez, he may be breaking with his predecessor’s hard security stance embraced by the conservative business community at home and abroad that have been traditional allies. Although no change was agreed there on including Cuba and ending Washington’s trade boycott, he also called existing practices toward the communist bastion “unacceptable.” Colombian financial executives attending hailed the “positive atmosphere” but noted leaders’ preoccupation with their own political and economic futures once more frustrating hemispheric solidarity despite minor accords on energy and broadband and academic cooperation.
The talks proceeded in the wake of a harsh IMF review on Jamaica as its new government tries to resurrect the standby accord which narrowly skirted debt default. GDP growth is minimal even with better visitor numbers, while inflation is over 5 percent, the fiscal deficit is 6 percent of GDP and the current account gap is twice that proportion. Remittances are up from North America and Europe but reserves dipped below $2 billion with multilateral lender repayment and oil import costs. Banks that endorsed a domestic maturity extension as part of the original structure have hinted at renegotiation as balance sheets are squeezed, and external bonds have been avoided on the prospect they too could be restructured. That outcome will definitely be repeated in Belize after the results of March elections where Premier Barrow got another term on a platform to reduce the stepped-up coupon load of the so-called “superbond.” Prices rallied on his desire for an “amicable” process as tourism which accounts for one-third of output and jobs was steady. The economy should expand 3 percent and the budget deficit is modest given the expected higher interest bill under a revised formula. In the Dominican Republic hospitality inflows increased 5 percent as the incumbent party may hang on to the presidency despite IMF program non-compliance and the chronic power crisis. As an active EMBI component, holders favor it over Costa Rica where the Chinchilla team planned a market return but was repelled on prerequisite tax reform as sharks circled.
