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       T R O U B L E D   C O M P A N Y   R E P O R T E R

                 L A T I N   A M E R I C A

          Friday, March 8, 2019, Vol. 20, No. 49

                           Headlines



A N T I G U A   A N D   B A R B U D A

LIAT: Grenada Government to Make Cash Contribution to Airline


B A R B A D O S

BARBADOS: Ex-Exec. Says Comprehensive Plan Needed to Raise Services


B E R M U D A

DIGICEL INTERNATIONAL: Moody's Rates Proposed USD550M Notes B1


D O M I N I C A N   R E P U B L I C

DOMINICAN REPUBLIC: Economy Grows & Grows, But Informality Weighs
DOMINICAN REPUBLIC: Energy Plan Could Cut Consumption by 13.2%
DOMINICAN REPUBLIC: Medina Meets With Business Leaders


J A M A I C A

JAMAICA: Will be Good After IMF, Says EPOC Official


M E X I C O

MEXICO: AMLO Rips Rating Agencies, Says They Are Punishing Country


P A R A G U A Y

PARAGUAY: Growth Uneven Due to Weak Second Half


P U E R T O   R I C O

GERMAN SANTANA: Stay Remains Lifted in Favor of Creditor SFS


V E N E Z U E L A

PETROLEOS DE VENEZUELA: Declares Emergency as Tankers are Returning
PETROLEOS DE VENEZUELA: Rusfincorp to Take on Firm's Accounts

                           - - - - -


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A N T I G U A   A N D   B A R B U D A
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LIAT: Grenada Government to Make Cash Contribution to Airline
-------------------------------------------------------------
Caribbean360.com reports that the Grenada Government said it
intends to make a cash contribution to the financially struggling
regional airline LIAT, operating as Leeward Islands Air Transport
by the end of this month.

Minister of Trade, Industry, Cooperatives and Caribbean Community
(CARICOM) Affairs Oliver Joseph said the decision was made by
Cabinet, and comes against the backdrop of agreement by CARICOM
Heads of Government at their recent inter-sessional meeting that
the Antigua-based airline should be restructured, according to
Caribbean360.com.

The report notes that the decision also followed a report from
Antigua and Barbuda's Prime Minister Gaston Brown that approaches
would be made to the governments of Grenada, St Kitts and Nevis, St
Lucia, and Guyana, which benefit from the carrier, to become
shareholders.

LIAT is majority owned by several Caribbean governments, with
Barbados, Antigua and Barbuda, St Vincent and the Grenadines, and
Dominica being the largest shareholders, owning 97.4 per cent of
the airline, the report relays.  Private shareholders and employees
hold the remaining shares, the report notes.

"For Grenada, we have always maintained that we would like to see
LIAT continue to serve the people of the region, but in order for
us to contribute state resources to LIAT, the airline must be
restructured and operated in a manner that ensures sustainability,"
the report quoted Minister Joseph as saying.

The value of the Government's contribution is yet to be determined
as the Dr. Keith Mitchell-led administration is awaiting
information from the regional airline, the report relays.

"The amount of money that we will contribute will be based on the
information submitted to us by the LIAT Board, which we hope to
receive very shortly, so that by the end of the month, we can make
a cash contribution," said Mr. Joseph, the report notes.

In addition to the cash payment this month, the Government is also
willing to pay LIAT additional funds based on load factor, the
report relays.

"If, for example, LIAT is operating a flight between Trinidad and
Grenada that is unprofitable, Government will pay to ensure that
the airline breaks even on that particular route," Mr. Joseph
explained, the report notes.

The report says that the Grenada Government said it is hopeful that
going forward there will be a financial turnaround for LIAT.

"If you're operating a business, you have to ensure that it is
sustainable over the long run. We have to ensure sound financial
management and reporting from the LIAT Board," Mr. Joseph said,
adding that Grenada's position is that there should be no political
interference in the management of the airline, the report adds.

LIAT, operating as Leeward Islands Air Transport, is an airline
headquartered on the grounds of V. C. Bird International Airport in
Antigua.  It operates high-frequency inter-island scheduled
services serving 21 destinations in the Caribbean.  The airline's
main base is VC Bird International Airport, Antigua and Barbuda,
with bases at Grantley Adams International Airport, Barbados and
Piarco International Airport, Trinidad and Tobago.

                         *     *     *

The Troubled Company Reporter-Latin America, citing Trinidad
Express, on November 24, 2016, reported that the Barbados
government defended the operations of the cash-strapped regional
airline, LIAT, even as opposition legislators called for it to be
stop being a financial burden on the island. Both Prime Minister
Freundel Stuart and his Finance Minister, Chris Sinckler, defended
the airline, whose major shareholders are Antigua and Barbuda,
Barbados, Dominica and St. Vincent and the Grenadines. Mr. Stuart,
speaking in Parliament, said despite the criticism the value of the
airline should not be underestimated that the Antigua-based LIAT
remains important to Barbados.

According to the TCR-LA in May 8, 2015, the Daily Observer said
that LIAT was attempting to lose excess baggage as part of measures
to make the carrier "a smaller airline in 2015."  In a document,
signed by Director of Human Resources Ilean Ramsey, eligible
employees were asked to opt to apply for voluntary separation or
early retirement packages to avoid being made redundant, according
to The Daily Observer.

TCRLA reported on Dec. 2, 2014, citing Caribbean360.com, that
chairman of the shareholder governments of the financially troubled
regional airline LIAT, Dr. Ralph Gonsalves said while he is unaware
of the details regarding any possible retrenchment of employees,
the airline needs to deal with its high cost of operations.

The TCR-LA on March 10, 2014, citing Caribbean360.com, reported
that LIAT said it will take "decisive action" to deal with
unprofitable routes as the Antigua-based airline seeks to make its
operations financially viable.

On Sept. 23, 2013, the TCRLA, citing Trinidad and Tobago Newsday,
reported that there's much upheaval at the highest levels of LIAT,
the Board and the Executive. Following the sudden resignation of
Chief Executive Officer Captain Ian Brunton, David Evans replaced
Mr. Brunton as chief executive officer.



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B A R B A D O S
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BARBADOS: Ex-Exec. Says Comprehensive Plan Needed to Raise Services
-------------------------------------------------------------------
Caribbean360.com reports that former Governor of the Central Bank
of Barbados Dr. DeLisle Worrell says raising the quality of the
island's public services to the levels of the Canadian or Irish
public services is the single most important measure Government can
take to accelerate the growth of the economy.

And he says the first order of business must be to assemble the
expertise to develop an action plan to transform the way the
Government operates, according to Caribbean360.com.

"We need a comprehensive plan of action for the introduction of
modern Government systems and processes, to replace current
systems.  Our current systems have remained largely unchanged since
pre-Independence days.  Their antiquity is reflected in the way
transactions are recorded and processed, the military-style
hierarchies of Government, and the archaic titles and
responsibilities of public officers.  These must all now be
replaced," Mr. Worrell advised in his March economic statement,
according to Caribbean360.com.

"The plan of action should stipulate new forms of organisation
which are cooperative rather than hierarchical. A matter for
decision which requires the input of several public officers should
be sent directly to everyone concerned, and they should make a
single collective decision after reviewing the material. At
present, such decisions go up through a hierarchy, in a lengthy
process which lacks the benefit of the collective wisdom of
everyone involved," the report quoted Mr. Worrell as saying.

The report discloses that Mr. Worrell said along with new
processes, the plan of action should include annual targets for the
delivery of all public services.  These, he said, should include
annual targets for educational achievement, health services
provision, crime reduction, upgrade of sanitation services,
improvements in tax revenue collection, etc, the report notes.

The report relays that the former Central Bank Governor said there
should also be final targets for longer term projects, such as the
completion of the island's sewerage systems, and the replacement of
fossil fuels by renewable sources of energy.

"Government should hire the best international expertise to develop
the national plan of action. The experts chosen should have
demonstrated experience with countries like our own. The team
should include, and preferably be led by, Caribbean professionals
of proven capacity and independent minds," the report quoted Mr.
Worrell as saying.

He added that the national action plan and the action plans of
Government departments, agencies and state-owned corporations
should provide information on: the public services that are to be
delivered; measurable targets for the delivery of public services
in the coming year; stages for the delivery of long term
objectives, with deadlines for each stage; and the institution's
budget for the next year and a budgetary framework for the next
three years.

The report notes that Mr. Worrell said further that an executive
summary of the national action plan, together with a summary of the
main targets, should be published for the information of the
general public; a progress report on the previous year's targets
should be included in the preparation of each year's action plan,
beginning next year; and published annual reports should be
expected of all Government departments, agencies and state
corporations, with information on achievement of set targets, and
plan modifications if needed to stay on target.

"Government needs suitable international expertise to assist with
renewal of the leadership of the professional public service. Along
with the new organization and up-to-date technology will come new
posts and new responsibilities, with new skills and knowledge
requirements.  The existing public sector leadership must be
evaluated for suitability to the new requirements, and needed
skills must be sourced from Caribbean and international markets.
The newly-recruited public sector leadership would have the task of
marshalling necessary skills for the modernized public service,
through a process of evaluation of current staff, retention,
separation and recruitment," Mr. Worrell maintained, the report
says.

"CXC results that are the envy of our Caribbean neighbors, public
transport that is courteous, on time and comfortable, comprehensive
sewerage in Bridgetown and on the south and west coasts, and well
surfaced roads -- these and more are all within the country's grasp
. . . What is required is a modern public service and new
leadership with the knowledge and skills to run efficient public
services in a dynamic world," he added, says the report.

As reported in the Troubled Company Reporter-Latin America on
Nov. 22, 2018, S&P Global Ratings raised its long- and short-
term local currency sovereign credit ratings on Barbados to 'B-/B'
from 'SD/SD' (selective default). At the same time, S&P Global
Ratings assigned its 'B-' issue-level rating to Barbados' long-
term debt issued in its debt exchange. S&P Global Ratings also
affirmed its 'SD/SD' long- and short-term foreign currency credit
ratings on the country, and its 'D' (default) ratings on Barbados'
foreign-currency issues. Finally, S&P Global Ratings raised its
transfer and convertibility assessment on the country to 'B-' from
'CC'.



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B E R M U D A
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DIGICEL INTERNATIONAL: Moody's Rates Proposed USD550M Notes B1
--------------------------------------------------------------
Moody's Investors Service assigned a B1 (LGD1) rating to the
proposed USD550 million senior secured notes due 2024 to be issued
by Digicel International Finance Limited (DIFL) and Digicel
Holdings (Bermuda) Limited. The Caa1 corporate family rating (CFR)
of Digicel Group Limited (Digicel), as well as the ratings on all
existing debt instruments within the group, remain unchanged. The
outlook on all ratings is stable.

The rating of the proposed notes assumes that the final transaction
documents will not be materially different from draft legal
documentation reviewed by Moody's to date and that these agreements
are legally valid, binding and enforceable.

RATINGS RATIONALE

The transaction consists of new USD550 million senior secured notes
due 2024 to be issued by DIFL and Digicel Holdings (Bermuda)
Limited, which proceeds will be used (1) to repay the drawings
under DIFL's USD100 million revolving credit facility (RCF) (fully
drawn currently); (2) to repay all of the existing USD300 million
term loan A at DIFL; (3) to pay transaction-related fees and
expenses; and (4) for general corporate purposes. On February 26,
Digicel entered into an amendment to the existing DIFL credit
agreement to increase the maximum total debt to adjusted EBITDA
maintenance covenant ratio from 4.5x to 5.0x. This amendment, which
is conditioned on the repayment of at least 50% of the term loan A
and of all of the drawings under the RCF by April 30, 2019, would
become effective concurrently with the closing of the proposed
senior secured notes transaction.

If USD550 million are issued, the transaction would slightly
increase total debt, by around USD150 million, increasing the ratio
of total debt to adjusted EBITDA, as per DIFL's credit agreement
definition, to 4.59x from 4.42x (as of December 2018) pro forma for
the considered transaction. At the same time, the transaction would
eliminate debt amortizations related to the term loan A (assuming
it is fully repaid) and provide DIFL with around USD140 million
additional cash, which could be distributed to DIFL's parent
companies and alleviate somewhat the group's liquidity pressures.
The covenant waiver would also become effective.

The new notes will have terms substantially similar to those of the
existing DIFL secured credit facility, which comprises a USD300
million term loan A, an outstanding USD1,044 million term loan B
and a USD100 million RCF. In particular, the new notes will be
guaranteed by each of DIFL's subsidiaries that is a guarantor or
obligor under the DIFL secured credit facility and will be secured
by a first-priority lien on the same collateral as that of the
existing DIFL secured credit facility.

The B1 rating on the new notes is aligned with the ratings of the
existing DIFL debt instruments and three notches above the Caa1 CFR
of Digicel, reflecting the notes positioning in the waterfall ahead
of the debt instruments at Digicel Limited, Digicel Group One
Limited, Digicel Group Two Limited and Digicel Group Limited.

Digicel's Caa1 CFR continues to reflect its high leverage and
untenable capital structure, with the company facing large debt
maturities in the coming years, and its weak liquidity profile.
While Digicel benefits from product and geographic diversification,
leading market positions and high operating margins, it is present
in emerging markets with a history of instability and exposure to
adverse weather events and currency depreciation. In addition, the
group's operating performance continues to be affected by revenue
and earnings declines and negative free cash flow.

Digicel's liquidity has been weakening for several quarters, with
negative free cash flow resulting in a decline in the company's
cash balance (USD96 million at December 2018) and the full drawing
of its revolving credit facility, while the increase in leverage
resulted in tight leeway under its financial covenants. If Digicel
cannot issue at least USD250 million, the covenant waiver will not
become effective and covenant leeway will continue to be very
tight. At December 2018, DIFL's total debt to adjusted EBITDA ratio
was 4.42x against a limit of 4.5x.

The stable outlook reflects Moody's expectations that Digicel will
gradually return to positive free cash flow, resulting in some
improvement to its financial and liquidity profile.

Digicel's ratings could be downgraded if the company's liquidity
continues to weaken, it does not refinance its debt maturities well
ahead of time, its free cash flow remains negative, or if its debt
to EBITDA (Moody's adjusted) ratio does not improve, increasing the
likelihood of some form of debt restructuring.

Digicel's ratings could be upgraded if the company's liquidity
improves and its leverage declines, driven by a clear improvement
in its operating performance, a return to positive free cash flow
generation and the completion of asset sales.

The principal methodology used in these ratings was
Telecommunications Service Providers published in January 2017.

Incorporated in Hamilton, Bermuda, Digicel is the largest provider
of wireless telecommunication services in the Caribbean. The
company operates in 31 markets in the Caribbean and South Pacific
regions. In addition, the company provides a comprehensive range of
business solutions, cable TV and broadband and other related
products and services. The company also operates a wireless network
in Panama through its 45% ownership interest in affiliate, Digicel
Holdings (Central America) Limited. Digicel generated revenue of
USD2.3 billion in the 12 months to December 2018.



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D O M I N I C A N   R E P U B L I C
===================================

DOMINICAN REPUBLIC: Economy Grows & Grows, But Informality Weighs
-----------------------------------------------------------------
Dominican Today reports that the Dominican economy has been
constantly growing in recent years, but is unable to create
sufficient taxes and jobs, said the economist Jose Luis de Ramon in
the panel "Economic Perspective of the Dominican Republic."

"We have grown, but with much informality, that is, our inability
to create formal jobs, our inability to generate taxes with this
growth, that is, it gives us a GDP, but it does not generate taxes
and it does not generate jobs, which is a description what we
should look at," the report quoted Mr. de Ramon as saying.

"We also have grown with continuous deficits since 2004 that we had
banking crises," said the economist in the dialogue hosted by
Seguros Banreservas, the report notes.

The report discloses that Mr. Luis added that informality is
Dominican Republic's problem for which the jobs being created are
"very mediocre; they are domestic services, handymen, that kind of
thing. We are growing, but we are taking people to look for their
daily income in an informal market."

As reported in the Troubled Company Reporter-Latin America on Sept.
24, 2018, Fitch Ratings affirmed Dominican Republic's Long-Term,
Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable
Outlook.

DOMINICAN REPUBLIC: Energy Plan Could Cut Consumption by 13.2%
--------------------------------------------------------------
Dominican Today reports that if the Energy and Mines Ministry's
National Energy Efficiency Plan is applied, the country could save
3,276 gigawatts per year, or a 13.2% cut in consumption until
2030.

Energy and Mines minister Antonio Isa Conde said if such plans were
applied throughout the country, in industries, in commerce, in
tourism businesses and homes, the savings would be comparable to a
250-megawatt plant, according to Dominican Today.

The report notes that Minister Isa said despite the progress in
terms of savings, he's not satisfied "even with the people around
me."

He stressed that the need to save must become part of the people's
awareness, the report relays.

To mark World Energy Efficiency Day, Minister Isa urged for the end
of the waste culture in the use of energy.  "The issue is part of
the Electric Pact, demonized by political sectors suffering from
myopia, since it contemplates as mandate the implementation of the
Energy Efficiency Law," the report quoted Minister Isa as saying.

As reported in the Troubled Company Reporter-Latin America on Sept.
24, 2018, Fitch Ratings affirmed Dominican Republic's Long-Term,
Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable
Outlook.

DOMINICAN REPUBLIC: Medina Meets With Business Leaders
------------------------------------------------------
Dominican Today reports that President Danilo Medina met with the
newly-elected board of the National Business Council (Conep), to
continue to strengthen the public-private partnership.

The meeting took place before noon in the National Palace,
according to Dominican Today.

"We feel consulted and taken into account," said Conep President,
Pedro Brache, at the end of the visit, which, according to the
Presidency, "transpired in an atmosphere of cordiality," the report
notes.

"This meeting ratified all that feeling we have in terms of working
hand in hand with the State so that the Dominican Republic develops
more and we have a better country," the report quoted Mr. Brache as
saying.

As reported in the Troubled Company Reporter-Latin America on Sept.
24, 2018, Fitch Ratings affirmed Dominican Republic's Long-Term,
Foreign-Currency Issuer Default Rating (IDR) at 'BB-' with a Stable
Outlook.



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J A M A I C A
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JAMAICA: Will be Good After IMF, Says EPOC Official
---------------------------------------------------
Caribbean360.com reports that Economic Program Oversight Committee
(EPOC) Co-Chair, Keith Duncan believes Jamaica is and will be in
good stead to manage its affairs after the borrowing relationship
with the International Monetary Fund (IMF) concludes later this
year.

"We will have sufficient [net international] reserves, our debt
levels will be down, tax revenues are buoyant, and we will continue
to run primary surpluses, so that our debt to gross domestic
product [GDP] ratio can be reduced to 60 per cent in fiscal year
2025/26," the report quoted Mr. Duncan as saying.

He said Government's first Supplementary Budget target of $378.1
billion, and was 10.1 per cent over the intake of $353.1 billion
for the corresponding period in 2017; revenue and grants amounting
to $448.8 billion, which exceeded the budgeted $437.3 billion by
2.6 per cent; and a seven per cent Central Government Primary
Surplus out-turn of $107.7 billion, which surpassed the $68-billion
PSBA target, and the Government's $809-billion first Supplementary
Budget target for 2018, according to Caribbean360.com.

The EPOC Co-Chair also indicated that capital expenditure, year
over year, increased by $14.4 billion or 46.6 per cent from $31
billion between April and December 2017 to $45.4 billion for the
corresponding period last year, the report notes.

The report relays that key among the monetary targets, Duncan
further stated, are a nine-month non-borrowed reserves total of
US$2.5 billion, which significantly exceeded the PSBA target of
US$2.2 billion; and net international reserves amounting to just
over US$3 billion.

He also advised that the value of Jamaica's dollar vis-a-vis the
United States dollar as at February 25, 2019, was J$131.02 to US$1,
the report says.

This, he said, reflected an appreciation of 1.9 per cent ($2.54),
following a 6.56 per cent ($8.38) depreciation the previous month,
the report notes.

The report discloses that the EPOC Co-Chair said the overall strong
performance enabled the Government to meet all eight macro-fiscal
structural benchmarks, spanning November 2016 to December 2018.

"The Government has also met the 14 structural benchmarks for
public-sector transformation, public bodies and public-service
reform through end-November 2018," Mr. Duncan indicated, the report
relays.

He advised that the sole outstanding PSBA structural benchmark is
capping of the total stock of domestic arrears of seven public
bodies at $6.4 billion during the program period, "which is being
met on a monthly basis, to date, by the Government," the report
says.

The report notes that Mr. Duncan said based on these out-turns,
coupled with the projected decline in the debt to GDP ratio to 96.4
per cent by the end of the 2018/19 fiscal year on March 31, and to
90.9 per cent at the end of 2019/20, "Jamaica is in a good place to
be able to move on its own".

He noted that the fifth PSBA review ends on March 8, with the final
slated for June 2019, the report relays.

"So, we will be on our own and not in an IMF program, according to
statements from Prime Minister [Andrew Holness] and Minister of
Finance and the Public Service [Dr. Nigel Clarke]," Mr. Duncan
said, the report says.

The report notes that the EPOC Co-Chair noted that successive
Administrations have, since 2013, remained fiscally disciplined and
prudent in negotiating Jamaica through the economic challenges
experienced.

Additionally, he said measures have been implemented and are being
pursued to further consolidate the gains recorded, in efforts to
resuscitate Jamaica's economy, the report relays.

Notably, Mr. Duncan pointed out, is establishment of the
independent Fiscal Council, slated to be up and running by the end
of 2019, and affording greater autonomy to the Bank of Jamaica,
through legislation, measures which are intended to ensure Jamaica
"remains on track," the report notes.

He argued that debt reduction to 60 per cent of GDP will afford the
Government increased fiscal space to channel greater resources into
education, health, social transformation, and social intervention,
thereby "spurring economic growth," the report adds.

As reported in the Troubled Company Reporter-Latin America on Sept.
27, 2018, S&P Global Ratings revised its outlook on Jamaica to
positive from stable. At the same time, S&P Global Ratings affirmed
its 'B' long- and short-term foreign and local currency sovereign
credit ratings, and its 'B+' transfer and convertibility assessment
on the country.



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M E X I C O
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MEXICO: AMLO Rips Rating Agencies, Says They Are Punishing Country
------------------------------------------------------------------
EFE News reports that Mexican President Andres Manuel Lopez Obrador
said that credit rating agencies were punishing Mexico and
state-owned companies, such as oil giant Pemex, for the "neoliberal
policies" adopted by prior administrations.

The Mexican leader, popularly known as AMLO, said the rating
agencies had remained "quiet" while his predecessors implemented
harmful economic policies, according to EFE News.



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P A R A G U A Y
===============

PARAGUAY: Growth Uneven Due to Weak Second Half
-----------------------------------------------
The International Monetary Fund said Paraguay has grown rapidly in
the past decade and a half, contributing to a sharp drop in
poverty. Prudent macro policies, with low inflation and low
government deficits, played an important role. Vulnerabilities have
declined, with a significant reduction of both external and public
debt. The key challenge going forward will be to sustain this rapid
growth, as the factors that have propelled it in the past-including
the boom in agriculture commodity prices-may provide less support
going forward. Improving the business climate and governance will
be key to continued convergence to higher living standards.

                        Near-term Outlook

GDP grew by around 33/4 percent in 2018, driven by strong domestic
demand, fueled by a rebound in credit growth, while the
contribution of net exports was negative. But growth was uneven. A
strong first half of the year was followed by a weaker second half,
as Paraguay felt spillovers from regional financial turbulence. The
crisis in Argentina led to an increase in risk aversion toward the
region, which contributed to a depreciation of the guarani against
the dollar, although by less than the depreciation experienced by
neighboring countries. As a result, the guarani appreciated sharply
vis-a-vis the Argentinean peso and the Brazilian real. The impact
was felt in a sharp drop in tourism and cross-border trade.
Weather-related shocks in agriculture also contributed to the
slowdown in growth.

For 2019, growth is expected to reach around 31/2percent. Growth is
being affected by a drought early in the planting season, which
will reduce the soybean harvest. This should be partially offset by
a pickup of tourism and cross-border trade, which will benefit from
the unwinding of the real exchange rate shock that occurred in
2018.

Risks to growth are broadly balanced. Developments in neighboring
countries will be key; agricultural commodity prices are another
risk factor. The strength of domestic demand is also uncertain and
will depend on the recovery of government investment, now that the
transition to a new government is completed.

The continued commitment of the new government to the fiscal
responsibility law is welcome. Fiscal policy in 2019 will be
neutral, with the deficit changing little from that in 2018. Nontax
revenue estimates in the budget appear-as in previous years-overly
optimistic and reaching the target will necessitate containing
expenditure-as has been done in the past.

The monetary policy rate was on hold in 2018, and both GDP growth
and GDP levels remained broadly in line with potential. Inflation
fell to 3.2 percent by the end of the year, the result of the
decline in oil prices, and the reduction in prices of imports from
neighboring countries. In February 2019, the BCP cut the monetary
policy rate from 51/4 to 5 percent, citing uncertainty about the
external environment and incipient weakening of domestic demand.

The current monetary policy stance appears appropriate.
Year-on-year Inflation should move back to 4 percent by year's end
(the middle of the central bank's target range), as last year's
real exchange rate appreciation reverses.

Exchange rate flexibility should help to absorb shocks. Exchange
rate intervention should continue to aim at preventing disorderly
market conditions and mitigating excess volatility only.

                 Longer-term Growth Challenges

Paraguay has grown rapidly, with real GDP growing by an average 4½
percent annually in the past decade and a half, well above the
Latin America average. This has contributed to a sharp decrease in
poverty rates, from 58 percent in 2002 to 26 percent currently.
Nonetheless, poverty remains high by regional standards.

Rapid growth was partly the result of a bounce-back from the crisis
in the late 1990s and prudent macro-economic policies. Inflation
and exchange rate volatility came down as the central bank shifted
to inflation targeting, while prudent fiscal policy reduced public
debt from 52 percent in 2002 to around 20 percent currently. Fiscal
policy remained conservative during the commodity price boom. As a
result, Paraguay did not go through the boom-bust that its
neighboring countries experienced.

The global agricultural commodity price boom, which led to a sharp
expansion of agricultural exports, also played an important role.
In dollar terms, agricultural exports are now 5 times what they
were in 2003. Sowing areas for the main crops are 2½ times what
they were fifteen years go. The surge in commodity prices spilled
over to the non-tradable sector through an appreciation of the real
exchange rate, which boosted incomes. The rapid growth in incomes
led to a surge in domestic demand.

In some respects, the economy looks very different from fifteen
years ago. The share of electricity and water has fallen by two
thirds, to 8 percent of GDP. The share of services is now almost 50
percent of GDP. Exports have diversified, and external
vulnerabilities have declined-total external debt of the private
and public sector has fallen from almost 200 percent of GDP in 2002
to 40 percent currently.

The key question going forward is how to maintain rapid growth of
real incomes. Paraguay's economy is still heavily dependent on the
agriculture sector. But agricultural prices are already off
previous highs and may decline further as global demand slows. And
agricultural land cannot continue to expand at the same rate as in
the past.

Future growth will increasingly need to come from the
non-agriculture/non-electricity export sector, which is growing
rapidly, but is still small. For this, higher private sector
investment is needed, including from abroad.

        Improving the Business Climate and Governance

Low taxes and low energy prices are important attractions of
Paraguay for domestic and foreign investors, but these are offset
by a weak business climate and governance.

A better business climate and improved governance would help
facilitate diversification and productivity growth. Compared to
other countries in the Western Hemisphere and Europe, Paraguay
scores relatively weak on business climate and governance
indicators. Cross country data show that there is a strong link
between the value of these indicators and GDP per capita.

Policies that focus on improving transport infrastructure, rule of
law and the quality of education would be particularly helpful. The
mission estimates that reforms in these areas would not only have
the largest impact on growth, but also have the most support from
the private sector.

In this context, the mission welcomes the new government
initiatives to increase the ease of doing business. These include
legislation to simplify the process of small business registration,
a new bankruptcy law, and legislation to allow companies to use
moveable assets as collaterals. The government is also seeking to
get rid of outdated bureaucratic procedures for businesses and to
increase digitization in government services. To facilitate higher
competition in key industries, the National Commission for
Competition has been revived, which is tasked with combating
monopolies and improving the transparency of industry regulations.

                             Fiscal Policy

Prudent fiscal policies in the past 15 years have reduced the
debt-to-GDP ratio. But fiscal space is limited, as the deficit is
close to the 1.5 percent ceiling under the Fiscal Responsibility
Law.

While fiscal space is limited, spending needs are large. To create
room for the investment needed for some of the identified reform
areas, revenues (which are low by international standards) need to
be increased.

Current headline tax rates are low, but effective tax rates are
even lower. The personal income tax rate is 10 percent, but this
tax yields only 0.1 percent of GDP. Reducing exemptions and
deductions and improving tax compliance will raise effective tax
rates, even if headline rates remain unchanged. The mission looks
forward to the proposals of the tax commission that is tasked with
modernizing and simplifying the tax system.

There should also be some room to reprioritize expenditure within
the existing envelope.

Spending levels in Paraguay are low compared with other countries,
but spending composition is lopsided, with a high share of
government expenditure going to wages, while there is a need to
increase infrastructure and social spending, including health and
education. Indeed, the government wage bill in Paraguay is similar
as a percent of GDP to that in other countries in the region-even
though the role of the government is much smaller. The mission
looks forward to the upcoming recommendations of the expenditure
review commission.

                         Financial Sector

Financial soundness indicators show the banking sector is well
capitalized and profitable, and risk-based supervision is
progressing. Supervision of financial cooperatives should continue
to be strengthened.

There is scope to improve supervision of the casas de credito and
casas comerciales; supervision standards for this sector should be
adopted quickly.

It remains important to establish a pension fund supervisor.
Currently, pension funds administer the public's trusted money
under a few, overly rigid rules, but without oversight. Supervision
would mitigate risks, allow pension funds to invest in a wider
range of assets and facilitate the development of a domestic
capital market.

Restoring the long-term sustainability of the pension system is
another challenge that should be tackled now, before the
demographic windfall dissipates. This can be achieved through
timely and gentle parametric adjustments to pension age, benefits
and contribution rates.

Implementing all these structural reforms and continuing with
prudent macroeconomic policies would allow Paraguay to continue
growing rapidly and improving living standards for all
Paraguayans.

As reported in the Troubled Company Reporter-Latin America on
Feb. 8, 2019, Fitch Ratings has assigned a 'BB+' rating to
Paraguay's USD500 million bond, with final maturity in 2050. The
bond has a coupon of 5.4%.  Proceeds from the issuance will be used
for capital expenditures and to refinance a portion of outstanding
debt.



=====================
P U E R T O   R I C O
=====================

GERMAN SANTANA: Stay Remains Lifted in Favor of Creditor SFS
------------------------------------------------------------
On remand, Bankruptcy Judge Brian K. Tester considers the U.S.
Bankruptcy Court for the District of Puerto Rico orders granting
Creditor Santander Financial Services' Motion for Relief of Stay
and denying Debtors' Motion to Alter or Amend Order. Debtors German
Rosado Santana and Lilian Alejandro Diaz appeal the orders.

After a thorough review of the motions, Judge Tester denies the
motion to alter or amend order and the stay remains lifted in favor
of Creditor.

The court determines that Debtors' motion neither provides the
court with genuine reasons why it should revisit the Order lifting
the stay, nor compelling facts or law in support of reversing the
prior decision. Debtors' basis for reconsideration stems from their
belief that the Creditor acted in bad faith when it purportedly
refused to ignore their proposal for adequate protection payments
and proof of insurance coverage. The court, Debtors assert, lifted
the stay protection without this updated information. The Debtors
misconstrue the events of the August 29, 2017 final hearing on
Creditor's motion to lift the stay and the subsequent Amended
Minute Entry.

The minutes are clear as to the matters discussed at the August
29th, 2017 final hearing and the deadlines established by the
court. The court determined at said hearing, that all the factors
were present for the lift of stay to be granted on that date. It
was only upon the Debtors' request for reconsideration, that the
deadlines were established as a last opportunity for them to
provide Creditor with proof of hazard insurance and pay the arrears
owed on their adequate protection payments. It is undisputed that
the adequate protection arrears payment was not made and that the
proof of hazard insurance was not provided to Creditor within the
time allowed. Moreover, when the order lifting the automatic stay
in favor of Creditor was entered on Dec. 1, 2017, the Debtors had
still not cured the arrears on the adequate protection payments nor
provided proof of hazard insurance to Creditor.

In their motion to reconsider, the Debtors fail to establish any of
the required legal factors. Moreover, the court finds the argument
raised in the Creditor's opposition compelling and legally sound.

Debtors have failed to establish the legal requirements for
reconsideration under Rule 9023 of the Federal Rules of Bankruptcy
Procedure, and therefore, their Motion to Alter or Amend Order is
denied. The stay remains lifted in favor of Creditor.

A copy of the Court's Opinion and Order dated Feb. 26, 2019 is
available at:

     http://bankrupt.com/misc/prb16-09874-11-166.pdf

German Rosado Santana and Lillian Alejandro Diaz filed for chapter
11 bankruptcy petition (Bankr. D.P.R. Case No. 16-09874) on Dec.
20, 2016, and is represented by Nicolas A. Wong, Esq. of Wong Law
Offices.



=================
V E N E Z U E L A
=================

PETROLEOS DE VENEZUELA: Declares Emergency as Tankers are Returning
-------------------------------------------------------------------
Marianna Parraga at Reuters, citing document from the state-run
firm and sources, reports that plans by the German operator of a
portion of the Venezuelan state oil company's tanker fleet to
return 10 vessels because of unpaid fees prompted a unit of
state-run Petroleos de Venezuela S.A. (PDVSA) to declare a maritime
emergency.

PDVSA's weak finances, the result of mismanagement, a sharp decline
in oil output and U.S. sanctions designed to oust President Nicolas
Maduro, have prompted dozens of suppliers and partners to stop
working for the company, according to Reuters.

The report notes that the United States and more three dozen other
countries have thrown their support behind an interim government
being formed by the country's congress chief, Juan Guaido.

PDVSA's maritime arm, PDV Marina, lacks about 160 people, including
captains, machinists and operators, to immediately take back the 10
vessels from Bernhard Schulte Ship Management (BSM), according to a
notification by PDV Marina's security department that was viewed by
Reuters.

BSM officially notified PDV Marina's top authorities of its
"unilateral decision to deliver the fleet operated by the company
due to lack of payment and cash flow for paying pending salaries
and staff onboard," putting PDVSA in a "critical situation to
receive the tanker fleet," the document said, the report relays.

BSM last month confirmed its crews would abandon PDVSA vessels Rio
Arauca and Parnaso, held in Portugal due to unpaid fees to several
companies, the report says.  A third vessel operated by BSM, the
Icaro, was seized in Curacao by a group of shipping companies
claiming unpaid bills from PDVSA, the report notes.

BSM operated a fleet of 13 tankers owned by PDVSA and two very
large crude carriers jointly owned by PDVSA and China's PetroChina.
The amount owed by PDV Marina to BSM is at least $15 million,
according to a source at the company and a document seen by
Reuters.

The report relays that over a dozen tankers with Venezuelan oil
around the world have been arrested in recent years by authorities
or otherwise prevented from leaving because PDVSA has not paid for
services.

The two tankers retained in Portugal arrived in 2017 for repairs
and were caught in the middle of legal fights between PDVSA and
creditors, the report notes.

In Curacao, a PDVSA operated refinery got a court order to free the
seized tanker Icaro and place its oil in storage until the dispute
is resolved, the report discloses.  The vessel remains anchored in
Curacao waters, according to Refinitiv Eikon vessel data, the
report adds.

As reported in the Troubled Company Reporter-Latin America on Aug.
24, 2018, S&P Global Ratings affirmed its 'SD' global scale issuer
credit rating and 'D' issue-level ratings on Petroleos de
Venezuela S.A. (PDVSA).

PETROLEOS DE VENEZUELA: Rusfincorp to Take on Firm's Accounts
-------------------------------------------------------------
Polina Nikolskaya at Reuters, citing an unidentified source,
reports that the Russian accounts of Venezuelan companies,
including state oil firm PDVSA, will be moved to the Russian
Financial Corporation Bank (Rusfincorp), which is sanctioned by the
United States.

The decision had been agreed with the Russian government, the
source, who is familiar with the negotiations, said, confirming an
earlier report by the RIA news agency, according to Reuters.

"This is not the Kremlin's direct responsibility to open accounts
and coordinate with business," Kremlin spokesman Dmitry Peskov
said, while Rusfincorp said that it has no information that
Venezuelan companies, including PDVSA, intended to transfer their
accounts to the bank, the report notes.  Reuters reported last
month that Russian lender Gazprombank had decided to freeze the
accounts of PDVSA and halted transactions with the firm to reduce
the risk of the bank falling under U.S. sanctions.

Russian authorities made the decision to move the Venezuelan
accounts after consultations with their counterparts and business
in Venezuela, two sources familiar with the negotiations were cited
as saying by RIA, the report relays.

The United States imposed sanctions against Rusfincorp, which is
owned by Russian arms exporter Rosoboroneksport, and some
businessmen in April 2018 in one of Washington's most aggressive
moves to punish Moscow for its alleged meddling in the 2016 U.S.
election and other "malign activity," the report says.

As reported in the Troubled Company Reporter-Latin America on Aug.
24, 2018, S&P Global Ratings affirmed its 'SD' global scale issuer
credit rating and 'D' issue-level ratings on Petroleos de
Venezuela S.A. (PDVSA).


                           *********


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.

Copyright 2019.  All rights reserved.  ISSN 1529-2746.

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