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Our country risk team provides a snapshot of the events shaping
country risk in August.
Anniversary of the People's Liberation Army in mainland
China: 1 August
Shifting Mekong trade relations: 1 and 12
August
Venezuela's election candidates: 10
August
Israel's disputed budget talks: 15 August
Ecuador's debt restructuring deadline: 15
August
African Development Bank's annual general
meeting: 25-27 August
Israel's disputed budget talks
Israel's government coalition has agreed 15
August as the deadline for passing a two-year budget. If
it is not passed, the government will be dismissed and new
elections scheduled. A budget that does not increase financial
support for those affected by the COVID-19 virus pandemic is likely
to cause protests demanding the government's resignation, with
unemployment having risen from 4% in March to 21% in July. Prime
Minister Benjamin Netanyahu is advocating for only a one-year
budget covering the 2020-21 fiscal year. However, his coalition
partner Benny Gantz is unlikely to approve this, as it would enable
Netanyahu to call elections over the subsequent 2021 budget
approval process - and therefore avoid ceding the premiership to
Gantz in November 2021, as per the coalition government's current
agreement. Even if Gantz concedes, the government is still likely
to collapse before mid-2021 due to extensive policy agreements.
Although Netanyahu's approval ratings fell from 74% in May to 46%
in July, the most recent local polls indicate that his Likud party
will remain the largest party capable of leading a majority
coalition without Gantz. Consequently, Netanyahu is unlikely to
approve a two-year budget before the deadline.
Indicators to watch
Netanyahu continuing to support only a one-year budget covering
the 2020-21 fiscal year would decrease the likelihood of
elections.
Increased participation in anti-government protests, including
support from centrist and right-wing politicians, would indicate
declining support for Netanyahu and the Likud party.
AfDB's annual general meeting
The 2020 Annual Meetings of the African Development Bank (AfDB)
will take place from 25-27 August in Abidjan, Côte
d'Ivoire. Topics for discussion will include leadership succession
and governance reforms at the AfDB, as well as the implementation
of the African Continental Free Trade Area (AfCFTA). The AfDB in
June appointed former Irish president Mary Robinson to chair a
high-panel group tasked with reviewing the report of the AfDB's
Ethics Committee, which cleared the bank's president Akinwumi
Adesina over misconduct and corruption allegations, which he
denied. Adesina, a former Nigerian cabinet minister, is the sole
candidate running for another five-year term at the bank's meeting.
The investigations indicate growing rivalry between multilateral
and bilateral lenders seeking to play an increasingly influential
development financing role in Africa. Separately, implementation of
the AfCFTA was originally scheduled to commence on 1 July, but has
been tentatively postponed to January 2021 due to the COVID-19
virus pandemic.
Indicators to watch
Lack of agreement on the AfCFTA start date, with countries such
as Nigeria advocating for a delay of up to one year.
Lack of agreement on an AfDB presidential candidate following
the release of the Robinson Committee report, possibly implicating
Adesina. Potential replacement candidates include Ngozi
Okonjo-Iweala, Trevor Manuel, and Tidjane Thiam.
Other events to watch in August
Trinidad and Tobago's election, 10 August.
Although both main parties broadly agree on the need to invest in
infrastructure and attract foreign investment, an opposition
victory would likely result in changes to the tax code and further
investment in green energy projects.
Côte d'Ivoire's ruling party nominates presidential
election candidate, before 31 August. Comments from senior
officials in the ruling Rally of Houphouëtists for Democracy and
Peace (Rassemblement des Houphouëtistes pour la Démocratie et la
Paix: RHDP) party indicate that incumbent President Alassane
Ouattara will seek a third term at the 31 October poll, after the
death on 8 July of his intended successor Amadou Gon
Coulibaly.
Posted 27 July 2020 by Chris Suckling, Ph.D., Principal Analyst, Economics & Country Risk, IHS Markit
