August 2, 2019
1. Electoral Panorama
With ten days to go from the primary elections (PASO), the candidates are in the final stretch of the first electoral round, with rallies across the country. Alberto Fernández, the presidential candidate for Frente de Todos party, tried to position the economy as a campaign issue, by criticizing the Central Bank’s president monetary policy as “inconsistent and risky”. Moreover, Fernández insisted that the rise in Leliq rates, the debt emission that can only be acquired by banking entities, has the sole objective of avoiding the hike of the dollar in order to favor Mauricio Macri in the elections. Nevertheless, the comments didn’t have an impact on the market. The government, seeing the neutral reaction of investors, decided not to respond to the opposition candidate. On the other side, after 150 artists, academics and intellectuals signed a letter in support of President Mauricio Macri, Alberto Fernández gathered with more than eight thousand members of the scientific, technological and academic community who support Frente de Todos.
2. Agroindustry will be a Ministry once again
President Mauricio Macri, through the signing of a decree and before giving a speech at the Exposición Rural – an important annual agricultural and livestock event – confirmed the reinstitution of the Secretary of Agroindustry to the Ministry rank. Eleven months ago, it had been degraded to Secretary within the sphere of the Production and Labor Ministry. With this measure, the President is strengthening his relationship with the agricultural sector, responding to a request raised weeks ago by the Mesa de Enlace (an important group from the rural sector). Additionally, the agro sector will round up this year with a record harvest of 147 million tons, registering a rise in the meat production, already around six million tons. Thus, the sector is once again acknowledged by the Government, who reduced at the beginning of July, from 4 to AR$ 3, the withholdings on every dollar exported for 207 products from regional economies.
3. Millionaire bid for the construction of the Vaca Muerta gas pipeline
Government officialized this Wednesday the notice to public tender for the service delivery of natural gas transport, from the Cuenca Neuquina to Gran Buenos Aires, the Litoral and the city of Salliqueló. The bidding procedure was made through the resolution 437/19 from the Government Secretary of Energy, published this Wednesday in the official bulletin. The goal is to have the construction of this first phase completed in the Winter of 2021, something that would allow to replace the liquefied natural gas (LNG) with domestic production, for around 240 million a year. The new gas pipeline – which will have an initial minimum capacity 15 million cubic meters per day in the first stage – could be expanded in future stages to 40 million daily cubic meters.
4. The wages grew 2,8% in May, but still lost against inflation
According to the Argentina´s national statistical agency (INDEC) the wage index grew 2,8% this last May, and remained below the inflation, which reached in the fifth month of the year a 3.1% rate. Salaries of registered employees grew 3.6% in May, while in the private sector wages grew 4.2% and in the public sector only 2,4% according to the official statistics. In year to year terms, the total wage index registered in May a jump of 38,4%, which represented the best nominal performance, while the inflation reached a record of 57,3%, the highest figure in 28 years. Regardless, real wages fell 12% year to year during the fifth month of 2019.
BAE Negocios: El poder adquisitivo perdió 12% interanual
5. Government claims that there won’t be dollar fluctuations after primary elections
The Presidency General Secretary, Fernando de Andreis, assured that “the macroeconomic conditions are not given” for the dollar to be shocked “throughout the year”. Thus, Mauricio Macri’s secretary minimized the impact of Alberto Fernández’ idea about lowering the rate for Leliq (debt emission that can only be acquired by banking entities) and disregarded his warning on the currency is undervalued. In a press conference, after the Cabinet meeting, De Andreis said: “We are not expecting major shocks throughout the year”. In order to justify his stance, he said that the Casa Rosada is “complying with all the guidelines of the plan” for the economy agreed with the IMF, “so there shouldn’t be any upheavals to the dollar”.