Hello, and welcome back to the Latin America Weekly newsletter! In this issue: markets show concern about nationalization talks in Peru; Lasso plans sweeping reforms in Ecuador; on his way out, Piñera hopes for massive deficit reduction.
Nationalization talks put Peruvian government credibility in check
Only a few days after Peruvian President Pedro Castillo pledged support to private investments, the head of his cabinet announced a plan to renegotiate the government’s contract with the Camisea energy consortium, which operates Peru’s largest gas field, or expropriate it altogether. Markets have always been jittery about Mr. Castillo, and the move left them spooked.
Mixed messages. Elected under a left-wing platform which included promises to nationalize gas and oil reserves, once in office Mr. Castillo has shown his will to appease investors. But a potential nationalization plan raises questions about the president’s grip over his own administration and his commitment to moderation.
What happened? Cabinet chief Guido Bellido and Energy Minister Ivan Merino personally presented the renegotiation request to representatives of Camisea’s operators Pluspetro after Mr. Bellido said the company should pay higher taxes or face the nationalization of its assets.
- The administration reportedly wants to increase tax collection by 5 points,...