In Colombia, President Petro’s healthcare reform unveiled this week reinforces our concerns about a worsening public debt trajectory and more interventionist policymaking, and caused the peso to fall sharply. The only encouraging news is that the Q4 GDP figures provide signs that the economy is starting to rebalance, which should help to narrow the current account deficit and provide some support to the currency later this year. Elsewhere, Brazil’s government appears to be bringing forward plans to introduce a new fiscal rule. But the finance minister will have his work cut out convincing investors that the new rule isn’t aimed primarily at providing more fiscal headroom.
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