See what The PRS Group is covering in our September reports: This month’s coverage of the Americas includes a new report on Cuba, which re-established normal diplomatic relations with the US for the first time in more than 50 years in early August. The easing of restrictions on travel from the US to the island

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SEPTEMBER COMING SOON
This month’s coverage of the Americas includes a new report on Cuba, which re-established normal diplomatic
relations with the US for the first time in more than 50 years in early August. The easing of restrictions on travel from
the US to the island has already given a boost to the tourism industry, and an increase in the limit on remittances will
increase the purchasing power of Cuban households, to the benefit of consumer-focused retailers and service providers.
However, the economic impact of the diplomatic thaw
will be limited by the maintenance of the US embargo
on bilateral trade and investment, which is unlikely to
be relaxed in the absence of substantive political reform
in Cuba. The report will assess the prospects for near-
term progress on that front, and will also discuss the
broader trade and investment implications for President
Raul Castro’s ongoing program of economic reforms,
examining in particular developments related to the
Mariel port and free-trade zone to illuminate the
opportunities and pitfalls for foreign firms looking to
do business on the island.
Our detailed coverage of Western Europe includes a new report on Finland, which was the only member of the EU to
register an economic contraction during the second quarter of 2015. The analysis will include an exploration of what
has gone wrong for an economy that was one of the world’s star performers during the high-tech boom, but which
is now stuck in recession, and an assessment of the potential for the policy prescriptions offered by the center-right
coalition government formed after the April 2015 elections to reverse the declining trend. The decline of Finland’s
traditional electronics and forestry products industries point to an urgent need for structural reforms, including
changes to labor rules that are strongly opposed by the unions, but Finland also faces challenges stemming from a
breakdown in relations with neighboring Russia, a principal trade partner, and the policy constraints imposed by the
country’s euro-zone membership. Our report also assesses whether the three-way coalition can survive for a full-term,
given the likelihood of policy disagreements between pro-EU elements and the more euroskeptic Finns party, which
is also stirring controversy with its hardline position on immigration.
PRS’ coverage of Eastern Europe will feature an update on conditions in Ukraine, where the pro-western government
elected last year is struggling to meet the challenges posed by a badly damaged economy and Russia’s not-so-subtle
efforts to destabilize the regime in Kiev. The government has managed to reach a debt-restructuring agreement
with international creditors, one of the key conditions attached to an IMF-sponsored bailout program. However,

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President Petro Poroshenko’s push for legislation that grants limited political autonomy to eastern regions controlled
by Russian-backed rebels, in fulfillment of the terms of a cease-fire agreement concluded earlier this year, has already
provoked the defection on one of Prime Minister Arseniy Yatsenyuk’s coalition partners, and is fueling broader
political tensions, a fact highlighted by the eruption of deadly violence in Kiev, where armed right-wing nationalists
protesting the legislation clashed with police. Our update will examine the government’s prospects for implementing
the reforms outlined in the IMF agreement, which hold the potential to create significant opportunities for foreign
investors. Key elements of the analysis will include an assessment of the outlook for government stability, which will
be essential to achieving parliamentary approval of reforms, as well as relations with both the EU and Russia, which
will significantly affect economic performance.
Turning to the Middle East and North Africa, PRS will focus on Iraq, where a fragile coalition government already
struggling to contain the spread of the Islamic State insurgency and grapple with the financial challenges posed by
a steep decline in the global price for oil has more recently confronted large-scale protests animated by frustration
over government corruption and the abysmal state of public services. Prime Minister Haider al-Abadi has at least
temporarily staved off a broader crisis by securing approval of far-reaching political reforms, but the deep mistrust
between the country’s Sunni and Shiite communities poses an ever-present threat to the survival of Abadi’s inclusive
government, the collapse of which would create a very real risk of national fragmentation. In addition to assessing the
Baghdad administration’s viability, PRS will analyze security conditions in the country, in particular, the potential for
pushing back Islamic State jihadists whose control of major cities and important oil facilities creates an impediment
to ensuring stability even in the areas still under government control.
Nigeria is the principal focus of our sub-Saharan Africa coverage this month, as we take the opportunity to assess
the first 100 days in office for President Muhammadu Buhari, the All Progressives Congress opposition candidate
and former army general who beat Goodluck Jonathan in a surprisingly calm transfer of power at the elections
in March. Our report hones in on Buhari’s slow start to governance, highlighting the regional bias evident in the
still-incomplete process of forming his Cabinet, and what investors might expect in terms of the policy response to
Nigeria’s increasingly desperate economic situation, which thus far has been painfully slow. Our report weighs up
whether Buhari is capable of bridging sectional and regional divisions, and whether he possesses the political strength
and leadership ability to effectively clamp down on corruption and address the security risks posed by the Boko
Haram insurgency. Our report looks for pointers to any other prospective improvements in the investor climate given
the equally considerable challenges to fiscal-macro stability presented by the continuing negative oil shock, which is
still putting pressure on the currency and is now threatening recession.

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Founded in 1979, the PRS Group is among the earliest commercial providers of political and country risk forecasts. Origi-
nally the Political Risk Services division of Frost & Sullivan, Inc. and then of UK-based IBC Group (now known as In-
forma), the firm occupies a niche market in the risk sector through the application of two globally recognized, proprietary,
quant-driven, and back-tested methodologies: Political Risk Services (PRS) and the International Country Risk Guide
(ICRG). A number of products based on these two risk rating systems are produced at regular intervals throughout the year.
The firm and its methodologies for assessing risk are the product of research conducted by Professors William Coplin and
Michael O’Leary of the Maxwell School of Public Affairs at Syracuse University in conjunction with the US Department
of State and the CIA. The overall goal was to develop an intellectually rigorous way of assessing the various components of
country risk that could be applied to a range of institutional settings. In the wake of the Iranian Revolution, where many
foreign firms were nationalized, the importance of the work intensified.
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Elsewhere, US President Barack Obama’s visit to Kenya in July put the country under global spotlight, allowing
President Uhuru Kenyatta and the governing Jubilee Alliance to boast of growing US support for Kenya’s anti-
terrorism efforts, while concluding a series of business deals with US companies. However, the visit also served to
highlight the government’s mixed record on governance, as Obama prominently warned of a “cancer of corruption”
that is costing the country 250,000 jobs a year. Soon after, Kenya’s auditor general revealed that 26% of the 2013/2014
budget cannot be adequately accounted for.
The parliament is set to debate the long-awaited legislation on petroleum and mining industries, with the constitutional
deadline for this and other key bills recently extended till August 2016. But corruption and security will remain the
key issues as Kenya’s political establishment starts gearing up for the August 2017 presidential election. The economy
remains extremely vulnerable to terrorist violence, although the absence of high-profile attacks by extremist Islamists
linked to Somalia’s Al Shabaab group has created space for a tentative pickup in the tourism industry.
Corruption, security concerns and lower tourism receipts will remain a drag on the economy, denting the boost
from infrastructure investment and lower energy prices. The government’s growth target of 6.9% in 2015 will likely
have to be revised closer to the 6% mark, with downside risks posed by a tightening monetary policy in response to
a depreciating shilling. At the same time, higher spending on security and on the Mombasa-Nairobi railway project
forced the government to raise the budget deficit target to 8.7% of GDP, adding to concerns related to rising levels
of public debt.