The year 2024 has proven to be a turning point for the entire world, but especially for Latin America. As a diverse region, LATAM has seen significant economic, social, and political changes.
These are the five most noteworthy news stories for the region in 2024, according to Invezz.
Venezuela’s electoral chaos
Venezuela faced a critical juncture. The outcome of the July 28 elections, marred by technical issues and allegations of fraud, has intensified the country’s political and economic crisis.
With growing public dissent and international scrutiny, the path forward remains uncertain.
The CNE’s announcement of Maduro’s victory was met with scepticism from the international community. The official results declared Maduro the winner with 51.20% of the vote, while González received 44.2%.
This outcome has been met with immediate backlash from various nations.
US Secretary of State Antony Blinken expressed at the time serious concerns, questioning the legitimacy of the results and calling for transparent vote counting.
This political incident also had an impact on Venezuela’s economic prospects. Over the last quarter, the Bolivar has lost at least 36% of its value against the dollar, as political instability dominates people’s purchasing decisions.
Furthermore, newly elected President Donald Trump had threatened Venezuela with stopping to purchase its oil, claiming that the United States “produces more than enough”. Adding to the already difficult economic situation, since oil is the country’s primary source of revenue.
The future remains uncertain as the forthcoming swearing-in event (January 10th) approaches, and the true winner is still unknown. This puts the international community in a difficult political decision about Venezuela.
Trade and migration tensions between the US and Mexico
On November 4th, Mexican President Claudia Sheinbaum had a conversation with Donald Trump, the president-elect of the United States, about migration and security.
This talk followed Trump’s post-electoral threats to impose tariffs on Mexico.
He claimed he had convinced Sheinbaum to take quick action to reduce the flow of migrants heading to the US, insisting that Mexico would act promptly to stop people from trying to cross its southern border.
However, Sheinbaum offered a different perspective on their discussion, suggesting that such threats could lead to necessary trade tensions.
With uncertainty lingering about whether these tariffs will be put in place, Sheinbaum expressed her openness to dialogue but cautioned about the potential negative impact these tariffs could have on both countries’ economies.
She pointed out that tariffs might trigger retaliatory actions, posing risks to important industries in the US, especially the automotive sector, naming major companies like General Motors, Stellantis, and Ford.
The Mexican president showed a strong commitment to finding a resolution to these issues while maintaining the important trade ties between the U.S. and Mexico.
Brazil implemented a 15% minimum tax on the profits of MNCs
Brazil’s government took a significant step in 2024 towards fiscal reform by implementing a minimum 15% tax on the profits of multinational corporations, as detailed in an executive order published in the country’s official gazette late Thursday.
This initiative aimed to bolster revenue in light of the government’s ambitious goal of achieving a zero fiscal deficit while avoiding broad spending cuts that could jeopardize essential social programs.
By aligning with global efforts to combat tax evasion, Brazil seeks to stabilize its financial framework and ensure fair taxation for multinational entities.
The executive order specifies that this new tax will serve as an additional levy on Brazil’s existing social contribution tax on corporate income (CSLL).
This change ensures that all multinational corporations, regardless of their previous tax strategies, will now be subject to the minimum tax requirement.
Brazilian authorities emphasized that this shift represents a broader commitment to sound fiscal management and international cooperation.
While the increased tax burden may reduce profit margins, it also levels the playing field within the tax system, diminishing incentives for aggressive tax optimization strategies that could disrupt fair competition.
Companies will need to reassess their fiscal strategies to accommodate the new tax regime, potentially leading to modifications in investment strategies and operating models.
The Brazilian government has indicated that robust compliance measures will be crucial for the effective enforcement of the minimum tax while minimizing administrative burdens on businesses.
Colombia’s Congress rejects tax reform
Colombia’s Congress dealt a big blow to President Gustavo Petro’s administration this year by rejecting a critical tax reform to strengthen the country’s budget for the coming year.
The proposed reform, championed by Finance Minister Diego Guevara, was to secure an additional 9.8 trillion pesos (about $2.24 billion) for the national treasury.
This denial shows Petro’s administration’s financial troubles and the difficulties of negotiating amid a turbulent legislative scene.
This year, the government has already reduced its spending by 28.4 trillion pesos ($6.49 billion) due to low tax revenue.
These budget cuts highlight the seriousness of Colombia’s fiscal condition, forcing the government to look for new revenue streams through tax reform.
Despite the urgency, economic committees in Congress voted against the proposed reforms, highlighting a deepening divide between the executive and legislative branches.
El Salvador considers Bitcoin law changes to secure IMF loan
El Salvador, the pioneering country that introduced Bitcoin legal tender, recently proposed major changes to its Bitcoin legislation.
This perspective shift occurred as the government was seeking a pivotal agreement with the International Monetary Fund (IMF) for a $1.3 billion loan.
The revisions would allow El Salvador to address the IMF’s ongoing worries about the financial ramifications of its cryptocurrency effort, which was started in September 2021.
According to reports by Cointelegraph, El Salvador was negotiating a $1.3 billion loan deal with the IMF, with conversations ongoing since October.
Also, according to the Financial Times, if the agreement is ratified, it will need considerable changes to current Bitcoin laws.
One of the most significant changes would be the removal of the statutory obligation for businesses to accept Bitcoin as payment.
By implementing this approach, the Salvadoran government wanted to secure an additional $2 billion in funding from foreign financial organizations, particularly the World Bank and the Inter-American Development Bank.
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