Country Risk Month Ahead: August 2025

Our country risk experts provide insight into events that could impact the geopolitical landscape in August.

Between July 7 and July 12, the US issued letters to 24 countries notifying them of new tariff rates on their exports to the US, effective Aug. 1 (Aug. 12 for mainland China), unless a trade agreement is reached with the US by that time. Since the initial April 2 tariff announcements and 90-day pause, the US first reached a trade agreement with the UK (signed on June 17). Further deals were announced on social media with Japan (July 23), Indonesia (July 15), the Philippines (July 13) and Vietnam (July 2), but these are still to be finalized.

On July 27, US President Donald Trump also announced a trade deal with the EU, following a meeting with the President of the European Commission, Ursula von der Leyen. The deal set a 15% tariff rate on most US imports from the EU, versus the tariff level of 30% due to become effective on Aug. 1. The US is yet to publish a detailed order clarifying the classification of various imports, notably the status of steel, aluminum and pharmaceuticals. However, the preliminary agreement means that the EU’s countermeasures worth €21 billion that were due to come into force on Aug. 7 are now highly unlikely to be implemented.

In the Asia-Pacific region, while negotiations with China will continue, other Asia-Pacific countries — including Bangladesh, India, Malaysia and South Korea — will attempt to conclude deals by the Aug. 1 deadline. Transshipment restrictions requested by the US, concerns around negotiating Section 232 tariffs, and domestic developments will constrain progress and risk causing delays.

Trump has also announced tariffs of 50% for Brazil, 30% for Mexico and 30% for South Africa, while working on a general trade framework for the African continent. All three countries are likely to seek to delay implementation beyond Aug. 1 instead of applying reciprocal measures if no trade deal is announced by that time. 

On Aug. 17, Bolivians will vote for a new president, vice-president, 36 senators and 130 deputies. If required, as is likely, a second-round presidential vote would take place on Oct. 19, with the change of government scheduled for Nov. 9.

Bolivia has experienced rapid economic deterioration, with its lack of foreign currency reserves having led to reduced imports, in turn generating severe fuel and food shortages and rapid price increases for basic goods. As a result, most presidential candidates’ electoral agendas have focused on measures seeking to improve economic stability.

Free-market-oriented candidates Samuel Doria Medina and Jorge Quiroga are currently leading in polls, with both promising structural economic reforms including currency devaluation and reduction of fuel subsidies, alongside reactivation of Bolivia’s natural gas development and liberalization of exports.

Left-leaning candidates are polling lower, indicating low public support for the incumbent MAS party and popular desire for economic policy change. Senate President Andrónico Rodríguez is currently the left-of-center candidate with the most support. If elected, he would pursue austerity measures and development of key sectors but has so far opposed conditional multilateral financial support, privatizations and currency devaluation.

Supporters of disqualified former president Evo Morales have threatened to disrupt the election, demanding that he be permitted to participate as a candidate despite his candidacy having been rejected by the Constitutional Court. Their actions are likely to include road blockades, delaying transport on intercity highways, particularly through Cochabamba department. We assess that their protests are unlikely to cause the election to be postponed.

France, Germany and the UK, also known as the E3, are the remaining Western signatories of the 2015 Iran nuclear agreement (officially the Joint Comprehensive Plan of Action or JCPOA). The E3 countries have threatened to invoke a mechanism stipulated in UN Security Council (UNSC) Resolution 2231 accompanying the JCPOA to reimpose UN sanctions on Iran by end-August if there is no significant progress in US-Iran talks to reach an alternative nuclear agreement.

Once invoked, the process would take 30 days and cannot be vetoed by any UNSC permanent member, but the invoking parties could reverse the measure if a nuclear deal were reached. Although the E3 can technically invoke the “snapback” up to Oct. 18, 2025, when it expires, additional factors — including the UNSC’s rotating presidency for that month (Russia) — likely make bringing forward the timeline more desirable.

During the 12-day war in June, conducted just before a sixth round of US-Iran talks was scheduled, Israel, and subsequently the US struck key Iranian nuclear facilities, delaying by at least some months Iran’s ability — if such a decision was taken — to produce a nuclear weapon. Iran subsequently suspended cooperation with the International Atomic Energy Agency, which confirmed that its remaining inspectors had left Iran. 

The South Sudanese government and the International Monetary Fund have finalized a Staff-Level Agreement for a ninemonth Staff-Monitored Program (SMP). The SMP is expected to commence in August 2025, assuming the IMF agrees to the SMP targets before then. The SMP will oversee South Sudan’s economic performance but not provide financial assistance. Successful execution of the program would open a path to obtaining financial support from the IMF beyond the nine-month period.

South Sudan has failed to secure immediate financial assistance from the IMF, although it has benefitted from access to emergency shock facilities, including US$174.4 million in emerging assistance granted in 2020 for COVID-19-related programs and US$114.8 million in 2023 through the IMF’s Food Shock window of the Rapid Credit Facility.

The SMP for the next nine months will focus on restoring fiscal and public debt sustainability through prudent debt management and improved domestic revenue mobilization, allowing for essential expenditures like salaries and social programs. Maintaining a tight monetary policy is crucial to control inflation and stabilize the exchange rate.

The required improvements in fiscal prudence, debt sustainability and governance reforms needed to meet SMP targets are widely viewed as ambitious: Substantial deviation from agreed goals established with the IMF would be likely to delay or block the country’s access to concessional IMF financing. Lower global oil prices and oil export disruptions due to the ongoing conflict in Sudan would be adverse indicators for oil-related government income, fiscal consolidation and debt sustainability. 

Ghana’s Finance Minister Cassiel Ato Forson will present the Mid-year Fiscal Policy Review (FPR) in July, covering the 2025 budget period. The FPR is highly likely to focus on continuing measures to control inflation, which declined to 18.4% year over year in May from 21.2% year over year in April and a peak of 23.8% in December, but remains above the Bank of Ghana’s target band of 6%-10% for 2025.

Declining inflation has been assisted by recent currency appreciation, with the cedi around 35% stronger against the US dollar during June than a year previously, providing scope for further reduction of inflation in the June release. Overall, economic indicators are positive, with Ghana having achieved 5.7% real GDP growth in 2024, against an initial target of 3.1%, and 3.1% in 2023.

Foreign exchange liquidity is also likely to be boosted by the International Monetary Fund having announced on April 15 that it had reached a staff-level agreement on the fourth review of Ghana’s Extended Credit Facility (ECF), allowing Ghana to access a further US$370 million once approved by the IMF Executive Board, bringing total disbursement since the ECF commencement in May 2023 to US$2.4 billion (80%).