Latin America Corruption, Barrick Top DR Taxpayer, Argentine Default Blame   

LatAm corruption improves,  Barrick Gold top taxpayer in the Dominican Republic and the dumbest default in Argentina history?

BY LATINVEX STAFF

Latin America slightly improved in corruption the past year, according to a Latinvex analysis of the latest corruption perceptions Index from Transparency International.

Only two countries – Ecuador and Venezuela -- worsened their score, while ten others improved.

The Corruption Perceptions Index is based on expert opinions of public sector corruption. Countries’ scores can be helped by open government where the public can hold leaders to account, while a poor score is a sign of prevalent bribery, lack of punishment for corruption and public institutions that don’t respond to citizens’ needs.

Chile once again goes to the top, albeit with a shared first place with Uruguay (last year’s sole champion), while Costa Rica remains in third place in Latin America.

Chile and Uruguay still remain ahead of countries like Austria and France when it comes to transparency and rank just behind the United States.

Meanwhile, Costa Rica ranks ahead countries like Malaysia and the Czech Republic.

Brazil ranks as the fifth-best country in Latin America and its score improved – from 42 last year to 43 this year -- despite a recent corruption scandal that appears to grow every day.

Brazilian authorities in March started a probe – dubbed Operation Car Wash – into money laundering. That investigation led to the arrest of Paulo Roberto Costa, former director of refining and supply at Petrobras, who subsequently told investigators about the widespread corruption at the oil giant.  The scheme involved skimming some $3.9 billion from Petrobras contracts and sharing the proceeds with corrupt officials and legislators.  The relative high ranking of Brazil is likely due to that the data for the index is based in the past two years rather than just recent months.

Mexico ranks 11th – the same as last year – although its score improved slightly, from 34 to 35. That means it's considered slightly more corrupt than China but less than Argentina.

Haiti and Venezuela rank among the 13 worst countries in the world. The two even have more corruption that countries like Angola, Congo and Zimbabwe.

BARRICK GOLD TOP TAXPAYER IN THE DOMINICAN REPUBLIC

Canada-based Barrick Gold, the world’s largest gold producer, is significantly impacting the Dominican Republic, the 9th-largest economy in Latin America (after Ecuador and the top seven economies).

In addition to being the country’s largest foreign direct investor ever – with investments now totalling more than $5 billion – it is now also the top taxpayer in the Caribbean nation.

“No other company pays than we do and we pay in dollars,” Barrick said in a statement in connection with the release of a new video on its performance in the Dominican Republic this year.

The news comes as an earlier study from Dominican consultancy Analytica showed that Barrick – the largest exporter by far – was responsible for significantly boosting economic growth.

“Last year the economy grew by 4 percent,” Barrick says. “Our investments are responsible for 50 percent of that growth. …We are the reason behind the current financial stability.”

This year, the Dominican Republic will likely see an even higher growth rate, in large part thanks to the gold exports from Barrick. The Central Bank predicts a GDP increase of 6 percent this year. That will be Latin America’s highest rate (along with Panama, which will also see similar growth), according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).

Mining was the key driver of growth by far – expanding 24.1 percent during the first nine months this year, Central Bank governor Hector Valdes Albizu announced recently.  The second-highest growth was noted by the construction sector, which expanded by 10.7 percent.

Barrick’s gold mine, Barrick Pueblo Viejo, has now also become the largest gold mine in the Americas, the company says.  Barrick Pueblo Viejo is 60 percent owned by Barrick Gold and 40 percent by Canada-based Goldcorp, with Barrick responsible for operations.

DUMBEST DEFAULT IN ARGENTINE HISTORY?

Martin Kanenguiser, a journalist at Argentina daily newspaper La Nación, has written a new book called The dumbest default in Argentine history.

“He questions the inexorable logic of the July 2014 default – a misstep of gigantic proportions that could not have been averted even with the combined efforts of Barack Obama and Pope Francis,” comments Claudio Loser, an Argentina native who headed up the Western Hemisphere division at  the International Monetary Fund between 1994 and 2002.  “Kanenguiser correctly notes that the default didn’t begin with Judge Griesa’s ruling of 2012, or with the U.S. Supreme Court in 2014, but with the series of economic policy errors beginning in 2007, that included the manipulation of INDEC statistics, the increasing government intervention in the markets and the ensuing isolationist policies.”

The book avoids relying on clichéd explanations of “foreign conspiracies” and instead offers that the government could solve its problems by recognizing its faults and correcting its mistakes, says Loser, who now serves as President of the Centennial Group Latin America and a Senior Fellow at the Inter-American Dialogue.

“The vulture funds may seek profits, but it was the government that did not try to solve the problem of the holdouts after 2010,” Loser says. “The government agreed instead on an adolescent vocal confrontation with American courts and then complained about a default that could have been easily avoided. Instead, they involved the UN, the G-20, and other fora to attack the holdouts, without ever seeking a practical solution.”

© Copyright Latinvex  

More TradeTalk