Americas: Foreign exchange shortage stokes concerns over Bolivia’s deepening financial crisis

Sectors: all
Key Risks: credit risk; economic risk; business risk

In Bolivia, on 19 March President Luis Arce’s government admitted the country was facing a foreign exchange (FX) shortage following overdemand for US dollars. The Central Bank’s FX reserves fell from US$15.12bln in 2015 to US$3.54bln in February – of which only US$302m were in foreign currency. The reserves are not enough to cover even three months of imports. The drop – caused mainly by the fall in exports and global inflation – has raised fear among citizens, who have desperately sought to buy US dollars to maintain their savings in recent weeks. On 14 March Fitch Ratings cut the sovereign credit rating from “B” to “B-“, lowering its outlook from stable to negative. The downgrade and plunging reserves have led to growing concern over the potential for currency devaluation and debt default. The crisis is set to deepen.

Asia Pacific: Clashes between police and Imran Khan supporters in Pakistan

Sectors: all
Key Risks: civil unrest; political violence

In Pakistan, on 18 March police clashed with supporters of former prime minister Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party outside the Judicial Complex in the capital Islamabad. The incident followed attempts by police to arrest Khan after he failed to show up for a court summons to face corruption charges. A previous attempt by police to arrest Khan on 14 March resulted in clashes outside his home in Lahore and triggered nationwide protests. A court cancelled the arrest warrant for Khan, although that has done little to defuse tensions. Police forces have since arrested nearly 200 of Khan’s supporters and claimed to have seized weapons from them. With Khan continuing to claim that the charges against him are politically motivated and with anger towards the government’s failure to address economic conditions growing, the risk of mass protests and violence is escalating.

Eurasia: Chinese President Xi Jinping arrives in Moscow

Sectors: all
Key risks: war on land

In Russia, on 21 March Chinese President Xi Jinping will hold official talks with Russian President Vladimir Putin as Beijing strengthens its ties with the Kremlin while attempting to mediate the war in Ukraine. Russian officials have portrayed Xi’s visit as the legitimation of Moscow’s invasion of Ukraine as part of a struggle against US hegemony.Putin hopes that Beijing will provide military assistance to his military campaign. However, Beijing has maintained an ambiguous stance on the conflict whilst offering a 12-point peace plan on the 24 February anniversary of the invasion. China has echoed Russia’s grievances over the West’s role in the conflict and has benefitted from the increased supply of energy products from Moscow in light of Western sanctions. Xi is expected to reaffirm Beijing’s close ties with Moscow, but is unlikely to pledge military assistance.

Europe: French government faces no-confidence vote; protests and strikes set to continue

Sectors: all; oil and gas; transport
Key Risks: civil unrest; business and economic risks; political instability

In France, on 20 March the government will face a no-confidence vote following its use of a special constitutional clause to pass a controversial pension reform without the approval of the National Assembly on 16 March. Police have clashed with protesters in Paris for several consecutive days, with at least 120 people being detained on 18 March after setting rubbish bins on fire and destroying bus stops. Separately, on 18 March the CGT union announced that workers would shut down the country’s largest oil refinery in Normandy. Nationwide strikes and protests over the pension reform – which includes raising the retirement age from 62 to 64 years – began in January and have recently escalated. If the National Assembly rejects the no-confidence vote – which is widely expected – the bill will be officially approved. Further violent protests and disruptive industrial action are likely.

MENA: Israeli PM makes mild compromise on judicial reform

Sectors: all
Key Risks: civil unrest; political stability; economic risk

In Israel, on 20 March Prime Minister Benjamin Netanyahu announced a series of mild changes to his planned judicial reform amid weeks of nationwide demonstrations. The announcement followed a call during which US President Joe Biden suggested that Netanyahu seek a compromise with his political opposition to prevent further unrest. However, the proposed amendments are arguably unsubstantial and only involve technical changes to the judicial nomination process. On 18 March hundreds of thousands of Israelis demonstrated against the reform for the 11th consecutive week increasing pressure on Netanyahu’s government. The unrest is also having a significant economic impact, with the Israeli shekel recently falling by 0.4 per cent against the US dollar and with capital flight ongoing. Netanyahu’s mild compromise is unlikely to appease neither the opposition in the Knesset nor demonstrators. Consequently, protests are expected to continue.

Sub-Saharan Africa: Sudan’s leaders agree to form a new transitional government on 11 April

Sectors: all
Key Risks: political stability; civil unrest

In Sudan, on 19 March the leaders of the Forces for Freedom and Change (FFC) pro-democracy group, commanders of the Sudan Armed Forces (SAF) and the paramilitary Rapid Support Forces (RSF) agreed to form a new transitional government on 11 April. The stakeholders agreed to form an 11-person committee to draft a new constitution. The committee will comprise nine pro-democracy civilian leaders, one from the army and another one from the RSF. The committee members will sign a final draft of the transitional Framework Agreement – first agreed in December 2023 – on 1 April and a constitutional declaration on 6 April. The agreements are intended to resolve the political crisis triggered by the October 2021 military coup. The formation of the government is a key step to revive flows of much needed economic assistance and to end the near daily pro-democracy protests.