Tuesday, 3 February 2009

List of Policy Actions by Latin Governments to Stave Off Crisis

The following is a list of anti-crisis policy actions announced by Latin American countries, as put out by BNP Paribas SA economists this morning. We added some details too.

-- Brazil: Last month, Banco Central do Brasil announced that it would tap $20 billion of international reserves to help more than 4,000 companies roll over maturing foreign debt. More than $60 billion of corporate debts come due by the end of the year. The BCB continued to sell dollars in the spot market while sold $700 million with an agreement to buy them back (repo lines.) Also, the BCB rolled over almost the totality of the short $10.2bn exposure on currency swaps that came due on Feb 02.

-- Colombia: The nation was the first in Latin America to cut interest rates to fend off the impact of the global recession. Banco de la República cut interest rates again in January, this time by half a percentage point, the second such cut in the cycle; more rate cuts lay ahead, with a number of bank directors having pushed for a bigger move. A weakening of the peso led the Banrep to auction off $180 million in dollar call options.

-- Argentina: The government completed the local tranche of the Guaranteed Loans swap auction securing an almost complete participation rate. The government started a similar swap round with
foreigners yesterday and speculation is that the Fernández administration will afterwards move onto the holdout situation. The government also declared a state of emergency for the agricultural sector, made up primarily of tax deferments.

-- Mexico: Peso weakness led the CB to sell foreign exchange through auctions last week. There is growing pressure for the authorities to announce new measures to tackle the crisis.

-- Peru: The government began using $1.4 billion of planned stimulus package moneys. The package includes investments in infrastructure and tax breaks for exporters. The Ministry of Finance approved a $400 million
increase to the budget to help finance the program.

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