Latin America News
LAST UPDATE: June 26, 2025
Brazil central bank sees need to reassess scope of subsidies in economy
The Central Bank’s monetary policy director Nilton David noted on June 25 that Brazil needs to “reassess the scope of subsidies” because extensive subsidization is weakening the effectiveness of monetary policy (bloomberg.com, marketscreener.com).
Insight
The statement suggests monetary authorities are growing concerned that targeted subsidies are diluting interest-rate policy, signaling a possible shift toward addressing fiscal distortions to improve macroeconomic control.
Brazil’s Green‑Energy Industry Is Falling Victim to Its Own Success
Brazil’s booming wind and solar sector is grappling with supply-chain delays, high borrowing costs, and insufficient transmission infrastructure that threaten clean-energy growth .
Insight
Despite alignment with climate ambitions, the green sector is stalling under its own scale — financial strains and infrastructure bottlenecks risk undermining Brazil’s renewable transition momentum.
Brazil’s May current account deficit smaller than expected, but up from last year
Brazil recorded a current account deficit of $2.93 bn in May—slightly narrower than economists expected—though it remains wider than a year earlier .
Insight
The mild improvement suggests stabilizing external balance, but persistent deficits emphasize the need to boost exports or attract inward investment to support the currency and external resilience.
Argentina posts $5.19 bln first-quarter current account deficit
Argentina’s current account showed a deficit of $5.19 billion in Q1 2025, driven by strong import growth—inflated by weak peso and rising domestic demand—despite export resilience (reuters.com, tradingeconomics.com).
Insight
The widening deficit reflects escalating external pressures tied to domestic demand recovery and currency weakness. Managing this through export diversification, capital inflows, or reserve support will be critical for economic stability.
IMF wild child Argentina seeks waiver on FX reserves misses – and will probably get it
Argentina obtained a waiver from the IMF after missing foreign exchange reserve targets by $500 million–$1 billion under its $20 billion program. Strong fiscal reforms under President Milei likely secured the IMF’s leniency (facebook.com, reuters.com).
Insight
The waiver underscores the IMF’s support for ongoing reforms, balancing fiscal consolidation with reserve accumulation challenges—an essential measure to maintain investor confidence.
Paraguay Central Bank Keeps Benchmark Rate Unchanged at 6%
Paraguay’s central bank held its prime interest rate steady at 6%, noting that inflation expectations remain well-anchored .
Insight
The pause signifies confidence in price stability, suggesting monetary policy is effectively calibrated to current macroeconomic conditions and external uncertainties.
Carney Says Canada Met With European Suppliers Amid F‑35 Review
Prime Minister Mark Carney confirmed discussions with European defense suppliers for fighter jets and submarines as part of Canada’s review of its C$19 billion F‑35 deal. The review is expected to conclude by end of summer 2025 (reuters.com).
Insight
Canada is diversifying its defense procurement away from the U.S., signaling a pivot to European partnerships and reinforcing sovereignty in strategic defense decisions.
