While the US presidential election in November could have significant implications for the future of the country, market-watchers in Latin America are also trying to gauge what the implications are for the region if Trump returns to the White House next year. “The extent of the impact will depend on the policies he is ultimately able to implement, but we do know right off the bat, even if he doesn’t really act on anything, his rhetoric is going to be aggressive, especially against Me

As China grapples with its most severe deflation in almost 30 years and the nominal rate of growth enters secular decline, a radical rethink of monetary policy is underway. Quantitative easing appears the point of destination as the country battles the liquidity trap and the risk of balance sheet recession. “The GDP deflator, a measure of the price level across the whole economy, has fallen for five consecutive quarters, declining by 0.7% on an annual basis in the second quarter. This is t

Many bond investors face a dilemma. They need to conform to cautious fund mandates that might limit exposure to credit risk while also wanting to satisfy the growing momentum for investment to be channelled towards sustainability. And not just ‘sustainability’ in a general sense but to specific projects where they can say ‘look, we funded this directly’. It is a dilemma that the World Bank is addressing with its outcome bonds. “The outcome bond structure came about

With the US Federal Reserve finally cutting its interest rate in September for the first time in four years, the path to lower rates in Latin America might seem a done deal for central bankers across the region, particularly as they seek to boost lacklustre economic growth. The reality, however, is more complicated. On the same day the Fed reduced its benchmark rate by half a percentage point to 4.75%–5%, Brazil’s central bank raised its benchmark Selic rate by 25bp to 10.75%, while

Every sovereign restructuring deal has its own unique aspects, but the recent cases of Sri Lanka, Suriname, Ukraine and Zambia share a common feature – the use of state-contingent debt instruments as a catalyst to a successful outcome. While the use of SCDIs in sovereign restructurings is seen as a welcome innovation, they are not a recent development. Known also as value recovery instruments, they cover a group of well-established structures, from catastrophe bonds to inflation-linked pap

When Riad Salameh, the former head of Lebanon’s central bank was arrested in September on charges of embezzling up to US$42m of public funds, demonstrators took to the streets in celebration. Salameh, the former head of the Banque de Liban, is accused of concealing massive misappropriation of funds from the central bank through creative accounting and by offering interest rates up to 20%, which consistently attracted new capital. In 2019, a run on the county's banks brought the years-long

Pakistan has already secured more IMF bailouts than any other country, and the fund's board is imminently expected to approve a US$7bn 37-month extended fund facility. This follows the release of a US$1.1bn tranche in April, which completed a US$3bn stand-by arrangement signed in July 2023. The IMF bailouts have been a financial lifeline for the country, saving it from defaulting on its international debt (its last default was in 1999). However, experts say a vicious cycle of debt accumulation h

Sub-Saharan Africa's economy picked up momentum this year, with growth forecast to reach 3.8% in 2024 from 3.4% in 2023, according to the IMF. It could even surpass 4% next year. Yet, many countries in the region are stuck in a debt quagmire with little sign of escape. The African Development Bank estimates that Africa’s total external debt increased to US$1.15trn by the end of 2023 from US$1.12trn in 2022. With global interest rates at their highest level in decades and multiple bond debt