Cuba’s Spectator Sport Exhibition
A year and a half after the thaw in bilateral relations, US President Obama heads to Cuba for the first top-level visit since the World War II era, where a baseball game between national teams will feature as a highlight. Before the trip, bilateral travel and banking restrictions were further tweaked, but the lame-duck administration will not push to lift the 55-year embargo before its term expires despite congressional bills proposed toward that goal. Government and company sponsors have organized hundreds of trade missions to Havana and small agricultural deals, previously allowed with the Helms-Burton law, were signed, but big phone, technology and tourism projects have yet to materialize. Prices of defaulted external debt, which cannot be traded by US investors, have risen with additional European debt relief, but plateaued with the lack of major business and international financial institution follow-through to modernize dilapidated infrastructure in particular. Mission participants have rarely been allowed access to top Communist Party decision-makers and complain that unwieldy state bureaucracy and control remain intact since the opening, with no specific timetable for abolition of the artificial dollar conversion system. The rapprochement with Washington has also triggered a sudden professional exodus north as Cubans fear they will no longer automatically be granted asylum if claiming refugee status. The Inter-American Development Bank in addition reported only a 5 percent remittance increase for the region in 2015, which has been a vital lifeline for the balance of payments and household consumption.
Dedicated Caribbean-Central American fund managers have been preoccupied with elections in neighboring Jamaica, as the opposition Labor Party won by one seat in the historically-close contest. New Prime Minister Holness is unlikely to jeopardize the recent sovereign ratings upgrade and IMF program, which has exceeded fiscal targets after the previous one derailed. The budget may roughly balance this year with a 7.5 percent of GDP primary surplus, as the trade gap also shrank 15 percent on oil price reduction. Remittances and tourism are up slightly, and with continued multilateral disbursements reserves should climb above $2.5 billion. The stock exchange after topping the MSCI frontier category in 2015 has stayed mostly positive, and the Labor government could extend support with privatizations and a tougher law and order stance. However doubts linger on its campaign platform promising mass tax exemption and 250,000 fresh jobs, which vanquished Prime Minister Simpson called a “con.” Political observers believe the race, despite competing economic approaches, mostly turned on age preference for the overwhelmingly young population, with 30 years difference between the candidates.
Guatemala, after watershed upheaval which ousted the president and vice-president to face corruption charges and brought a professional comedian to power, has attracted attention with a 20 percent remittance surge coupled with low public debt for a “BB” country. El Salvador’s bonds have also improved with the dollar losing strength to release export and fiscal pressure, but its debt/GDP ratio is 65 percent and economic growth remains lackluster at 2 percent. However US development assistance, which was to expand under an initiative led by Vice President Biden, may be threatened by continued local corruption allegations on display that can team with drug and gang crime.
