Alliance Notes: Argentina & Lebanon Briefs; GMO on ESG; ESG Conference

Monday, November 2, 2020

                         Alliance Events, 11/02/20

 
Contents:
1. Research: Argentina Fiscal Governance Brief
2. Research: Lebanon Fiscal Governance Brief
3. Event: Deep Sea Mining and Sustainability webinar
4. Event: Grantham Mayo Van Otterloo (GMO): Climbing The ESG Learning Curve: Lessons Learned In Emerging Markets  
5. Event: 4th Annual EM ESG Conference
 

New Research

 

1. Argentina Fiscal Governance Brief

The Alliance has published a Fiscal Governance Brief on Argentina. Fiscal Governance Briefs take stock of a country’s fiscal transparency and public financial management. We begin at the central government level, then proceed to other parts of the public sector, including natural resource state-owned corporations. All readers have access to the front page of the report. Alliance members may access the full report. Please click here to request membership information.

In recent years, Argentina has made progress improving its fiscal transparency and fighting corruption. The 2017-2019 Open Budget Survey showed improvements in fiscal reporting. However, fiscal transparency needs to improve further to provide a sufficient understanding of the fiscal position.

The budget framework defines the responsibilities of entities in the budget cycle, laws for disclosures, and discussions that should be included in budgets. However, Argentina falls short of fully implementing its extensive budgetary system framework. There is a need for better oversight from the legislature, as well as full implementation of the budget, and timely audits that validate published information. A strengthening of the fiscal policy framework is needed, including adoption of a medium-term budget. Moreover, the federal government should provide budget forecasts for the next three years, including risk analysis and expected policies to achieve medium-term goals.

The main impediment to increasing transparency is the heavy debt burden and the capacity constraints this imposes on the Finance Ministry. The government defaulted on its bond payments in May 2020 and it negotiated a debt restructuring with private creditors. Defaulted bonds were exchanged for new bonds that pay under 55 cents of every dollar of the original value. Despite this, the debt stock remains high and Argentina owes the IMF $44 billion in loans.

 

2. Lebanon Fiscal Governance Brief

We have also published a Fiscal Governance Brief on Lebanon. 

Lebanon is experiencing a crisis long in the making due to endemic corruption currently compounded by the global pandemic and the catastrophic port explosion on 4 August 2020. Despite a recent change in government, Lebanon still has an enormous task to make its fiscal accounts even baseline compliant.

There has been some progress: the first citizens’ budget was published in 2017. This coincided with the publication of a budget after a gap of eleven years. Yet the very low Open Budget Survey (OBS) score for 2019 corroborates worrying features, such as a lack of published fiscal accounts, the absence of a legislative authority which sets fiscal reporting standards, and a missing independent oversight authority. 

This lack of transparency has created uncertainty and generated a lack of trust in the government. To change course, Lebanon needs to demonstrate an understanding of its fiscal shortcomings and tap foreign technical assistance to begin the arduous path to a baseline of fiscal transparency.

Upcoming Events

 

3. Extractive Industries: Webinar on Deep Sea Mining

The next Extractives Industries Working Group webinar will look at Deep Sea Mining (DSM), a new branch of extractives that is approaching commercial viability but raises a number of sustainability issues. On Thursday 12, November at 9am EST, Professor Saleem Ali of University of Delaware will speak about demand projections for critical metals and how DSM can help meet these needs; the environmental and social risks impact of DSM compared with terrestrial mining; the International Seabed Authority’s regulatory role; cost and liability considerations; and activism around the sector and how responsible investors should respond based on existing science. Register here for the webinar.

 

4. Grantham Mayo Van Otterloo (GMO): Climbing The ESG Learning Curve: Lessons Learned In Emerging Markets

On November 17 at 9am EDT the ESG Initiative will feature Hardik Shah, ESG Practice Lead, and Niyati Dangi, ESG Analyst, from GMO. Hardik and Niyati will discuss GMO’s approach to ESG integration and engagement. Stay tuned for registration information.

 

5. 4th Annual EM ESG Conference 

On December 9 & 10, 2020 join top investors, ESG experts, and emerging market corporates at the longest-running conference dedicated to ESG in emerging markets.  The only conference with emerging market asset management firms with over $30 trillion in AUM and emerging market corporates in one location over two days exclusively focused on ESG. 

New Conference Format for an ESG World

Day 1: Panels and discussions between policy experts, issuers, and investors on top ESG themes dominating investment decisions today. 

Day 2:  Small group meetings between investors and corporates focused exclusively on ESG issues and fireside chats with experts on the ESG Regulatory Environment & Transparency Data, Climate Risk in Portfolios, and the incorporation of ESG data into Credit Ratings.

Small group meetings are confirmed for:
AngloGold Ashanti
Antofagasta
BNDES
Braskem
BRF
Cosan
Enel Chile
Ferreycorp
Grupo Mexico
MHP
Millicom
Minerva
Rosneft
SQM

...and more to come!

REGISTER HERE WITH AN EARLY BIRD DISCOUNT UNTIL NOVEMBER 20. 

                                  The Emerging Markets Investors Alliance is a 501(c)(3) non-profit organization
that enables institutional emerging market investors to support good governance, promote sustainable development, and improve  investment performance in the governments and companies in which they invest.

                                                                                                         www.eminvestorsalliance.org