Country risk month ahead: February 2022

State elections in India

Elections will be held in five Indian states beginning on 10 February, with results declared on 10 March. These are scheduled for Punjab, Goa, Uttarakhand, Manipur, and India's largest state, Uttar Pradesh (UP). UP, where Prime Minister Narendra Modi's Bharatiya Janata Party (BJP) is in power, will provide an indicator of public voter sentiment for the central government. BJP's performance in UP will, therefore, indicate its prospects in the 2024 parliamentary election, in which Modi will seek a third term. So far, close to 10 members of the UP government have defected to opposition parties, but party defections are routine in Indian elections. The defections would potentially be replicated in the central government only if BJP were to lose the UP election, which would point to reduced support for Modi and is unlikely for now. Outside UP, Punjab is one of the few states where the main opposition Indian National Congress (Congress) still holds government by itself and BJP has not registered any state election victories. Repeating a victory in Punjab, therefore, is essential for Congress to convey its relevance in the national political consciousness. This would affect the prospect of a future coalition of opposition parties, led by Congress.

Indicators to watch:

• Public rallies by political parties of tens of thousands of people ahead of the elections, likely increasing the number of coronavirus disease 2019 (COVID-19) cases, would negatively affect public perception of the parties conducting the protests.
• India's Union Budget for 2022-23 will be announced on 1 February. Limited focus on rural social welfare schemes will have a heavy impact on UP's rural population and damage public support for the BJP.

South Africa's national address

South African President Cyril Ramaphosa will deliver the State of the Nation Address on 10 February, outlining the government's key priorities for 2022. Ramaphosa is likely to outline how the government intends to unlock USD8 billion worth of pledged financial assistance for the transition to renewable energy, agreed with various Western nations at the UN Climate Change Conference in November 2021. He is also very likely to announce new measures to promote localization, particularly within the manufacturing sector, and the steps to be taken in 2022 towards establishing a new basic income grant. This is likely to initially entail the extension beyond March 2022 of the current ZAR350 (approximately USD22) Social Relief of Distress Grant that was introduced in May 2020 as a means of alleviating the economic impact of COVID-19-virus-related lockdowns on the unemployed.

Costa Rica's presidential election

Costa Rica's presidential and legislative elections will be held on 6 February. Three opposition contenders are leading the field of 25 candidates, indicating that a government different from the current ruling center-left Citizens' Action Party (Partido Acción Ciudadana: PAC) is likely to take office on 8 May. The frontrunners are former president José María Figueres of the centre-right National Liberation Party (Partido Liberación Nacional: PLN), Lineth Saborío of the centreright conservative Party of Social-Christian Unity (Partido Unidad Social Cristiana: PUSC), and Fabricio Alvarado of the conservative evangelical right-wing New Republic Party (Partido Nueva RepúblicaL: PNR). If none of the candidates obtain 40% of the vote, which is likely as no candidate is currently polling above 20%, a second-round will take place on 3 April. The three leading candidates would probably encourage an investor-friendly environment and prioritize attracting foreign direct investment. They are likely to focus on fiscal consolidation and to conduct renegotiations with the International Monetary Fund (IMF) over its three-year USD1.78-billion Extended Fund Facility. Further IMF disbursements are contingent on reaching a set of fiscal targets and domestic approval of seven bills. The latter will be difficult, since the proposed legislation includes several unpopular measures, including tax increases. The future composition of Congress will be an indicator of the new government's capability to pass and implement pending fiscal consolidation bills.

Kazakhstan recovers from unrest

After experiencing the most significant unrest in more than three decades of post-Soviet independence in the first week of 2022, the nationwide state of emergency has been lifted, even as law enforcement authorities continue 'anti-terrorist operations' in the biggest city Almaty, and the Almaty and Zhambyl regions, where the level of terrorist threat was elevated to 'red'. Former president Nursultan Nazarbayev's brief video message on 18 January was probably meant to reassure foreign businesses operating in Kazakhstan, particularly those that are members of the Foreign Investors' Council, that they have nothing to fear even as his influence in government and business circles is waning. Nazarbayev's declining influence is manifested in institutional changes, including President Kassym-Zhomart Tokayev's assumption of the chairmanship of the Security Council, which was Nazarbayev's lifelong privilege prior to the unrest. In addition, two of Nazarbayev's sons-in-law lost influential positions in state-owned companies and his younger brother Bolat allegedly fled the country before the protests were suppressed. In his address to the legislature on 11 January, Tokayev promised to dismantle the oligarchic groups that prospered under the presidency of his predecessor. The authorities are likely to intensify detentions of civil society members under the pretext of pursuing those who allegedly engaged in violence and looting during protests.

Other events to watch

• African Union (AU) annual heads of state summit 5-6 February
• Somalia's delayed legislative election concluding 25 February
• Belarus to conduct a referendum on constitutional amendments on 27 February
• New parliamentary session in Malaysia from 28 February

Posted 01 February 2022 by James Petretta, Country Risk Director, Economics & Country Risk, S&P Global Market Intelligence and

Lindsay Newman, Executive Director, Economics & Country Risk, S&P Global Market Intelligence