TodoTec, a US-based financial technologies (fintech) company is considering signing a three-year consulting contract with PagoLoco, a new company developing an epayments system in Jefalonia. This is a small South American country, historically controlled by a group of prominent families. However, the majority of the population is in the lower economic class.
The contract, payable in U.S. Dollars, calls for TodoTec to provide consulting services and license their technology for the development of the new national epayments system. The government of Jefalonia agreed to issue bonds denominated in US Dollars to build a new data management center to house the project. The local currency, the Piscocrudo, has been stable against the US Dollar for the last two years.
However, politics in Jefalonia are currently unsettled. The leading candidate for the July 2018 presidential election is Amlotonia Notrumpla from the Populist Party. If elected, she has promised to make “big changes” to government programs and economic policy. Prepare a memo for TodoTec management to discuss risk factors from a new populist government. What steps might TodoTec take to reduce potential risks?