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International Reserves Replacement and Expansion Program
CHILE - In Brief 13 Jan 2021
In an unexpected decision, the Central Bank of Chile announced today the purchase of US$ 12 billion in the spot market with the goal of increasing international reserves to 18% of GDP (the highest figure since 2003). The Central Bank plans to buy US$ 40 million per day over a period of 15 months....

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​Minfin is back as an FX buyer
RUSSIA ECONOMICS - In Brief 13 Jan 2021 1 response
Today, the Finance Ministry announced that it resumes purchasing of the hard currency on the open market according to the “fiscal rule”. From Jan 15 till Feb 4 it will spend R7.1 bln daily for this purpose. To remind, the rule was working in the opposite direction for the last 8 months, since Apr...

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Russia's gold reserves worth more than its USD holdings
RUSSIA / FSU POLITICS - In Brief 12 Jan 2021
On January 11 the Russian Central Bank (CBR) published statistics showing how its gold reserves have appreciated in value. The report details the situation 6 months ago.In June 2020 Russia had USD 128.5 billion in gold. That was 23% of the country's international reserves. These gold reserves wer...

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Lower than expected deficit in 2020 results in excess fiscal financing
ISRAEL - In Brief 12 Jan 2021
The final print for the fiscal deficit in 2020 was 160.3bn ILS, or an estimated 11.7% in terms of GDP. The Ministry of Finance currently expects only a modest contraction in GDP of 3.3% in 2020 (The Bank of Israel expects -3.7%). The main reason for the sharp increase in the fiscal deficit (from ...

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Politics: The fate of 4T is riding on Campaign 2021
MEXICO - Report 11 Jan 2021
President López Obrador’s 2021 political agenda will have a clear "before and after" straddling the June 6 elections. Until that date his main and perhaps only priority will be to pull off another historical victory at the polls. At a bare minimum that means retaining control over the lower chamb...

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Bolsonaro's statements create new controversies and other weekly topics
BRAZIL POLITICS - Report 11 Jan 2021
There are expectations around the possibility of Anvisa's authorizing the emergency of use of CoronaVac. Some legislators are continuing to work for an extraordinary congressional session during the recess. Parties may take sides in the presidential succession races in the House and Senate. Presi...

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A perplexing number on the December cash budget deficit
HUNGARY - In Brief 11 Jan 2021
No doubt, the Finance Ministry cares to keep analysts busy, which is no reason for a complaint, of course.The monthly cash deficit of the central government for December has just been reported at HUF2251bn, an annualized 57.8% of GDP. No mistake, the figure is correct, and it is definitely an unp...

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The macro economy in 2021
INDIA - Report 11 Jan 2021
The 2021 budget announcement will come on February 1. In this note, we review the overall macroeconomic situation. While vaccines will help reduce fear, India is at the late stage of the epidemic through the onset of herd immunity. Household consumption remains below pre-pandemic levels. I...

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Jack Ma, the Party and US-China Relations
CHINA ADVISORY - Report 11 Jan 2021
There have been a number of key political events in China that will have significant impact on the economy, the financial system, and the international investment environment. These include: 1) The rise of the Party in the economy; 2) The postponement of the Ant Group IPO and the subsequent i...

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The BoI expects growth of 6.3% this year, assuming rapid vaccination
ISRAEL - Report 11 Jan 2021
The BoI central forecast sees a rapid recovery following inoculation, with growth reaching 6.3% this year and 5.8% in 2022. Under this scenario, the Governor expects a reassessment of QE in the summer months. The fiscal deficit reached 11.5% in 2020, below initial expectations, on the back of str...

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Economics: Banxico Law reform initiative poses major risk
MEXICO - Report 11 Jan 2021
When the governing Morena party’s Senate leader proposed, and in short order passed in December reforms to the law governing Banco de México the reaction was swift. Private sector analysts, deputy governors at the central bank, the Mexican Bankers Association (ABM), international ratings agencies...

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Kyrgyzstan elects president
RUSSIA / FSU POLITICS - In Brief 10 Jan 2021
On January 10 it was announced that Sadyr Japarov has been returned to office. He secured almost 80% of the vote. His nearest competitor polled a measly 7%. On the same day the country held a referendum on expanding presidential prerogatives. The expansion of presidential power won by 89% of the ...

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The BoI expects growth of 6.3% this year, assuming rapid vaccination
ISRAEL - In Brief 10 Jan 2021
HighlightsThe fiscal deficit reached 11.5% GDP in 2020, below expectations.A few months ago, the expectations were for 13%-14% GDP.We have been consistently more optimistic, stressing two drivers: the high-tech service sector and the upside from lack of travel abroad on private consumption. Tax r...

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Reform hopes, harsh realities
TURKEY - Report 10 Jan 2021
Turkish sources herald that the long-advertised “reform package”, including a slew of measures to improve investment environment, could be unveiled by President Erdogan by the end of January. The contents leaked to the press thus far suggest it is going to be a big flop. Yet, let’s stay optimisti...

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German state trying to circumvent Nord Stream 2 sanctions
RUSSIA / FSU POLITICS - In Brief 10 Jan 2021
On January 6 a German state vowed to expedite Nord Stream 2 by using a climate foundation. Mecklenburg West Pomerania will shield companies building the pipeline. The pipeline will come ashore in that state.A foundation to fund ecological projects will be used. The pipeline will be defined as tec...