March 29, 2019
1. U.S. dollar reaches record against Argentine peso
The U.S. dollar reached a record high against the Argentine peso of $44.92 – despite the Central Bank’s daily interest rate hikes. The Argentine peso has already lost 16.4% of its value since the beginning of this year. IMF chief Christine Lagarde will meet with government officials on April 5th to decide whether or not to approve a third disbursement of funds, followed in ten days by the Treasury auctioning USD $60 million worth of Argentine Pesos. Given approval of a third IMF disbursement of USD $10.87 billion, Argentina will have received 70% of its loan. In the same vein, the OECD published a new outlook of the Argentine economy, stating that “certain fiscal and monetary policies will negatively impact growth, at least until July 2019 in the case of monetary policy and even far into 2020 in the case of fiscal policy.”
2. U.S. businesses arrive in Argentina with sights set on investment opportunities
Two U.S. business trade missions arrived in Buenos Aires with the goal of analyzing investment opportunities in the cybersecurity and energy sectors. The largest of these missions was organized by the U.S. Chamber of Commerce in Argentina where some 15 business leaders in the oil sector travelled to Neuquén to visit the Vaca Muerta fossil fuel deposit and meet with Energy Secretary Gustavo Lopetegui. The other mission, led by The Business Council for International Understanding, focused on investment in cybersecurity. The visiting business leaders understood the risks associated with the delicate economic situation and upcoming national elections, but hope to continue to invest while counting on the consistency of norms and clear rules for operating in the country.
3. Poverty rate reaches 32% in the second half of 2018
The Argentine statistical institute announced that the poverty rate hit 32% in the second half of 2018, over the first half of 2018 when the rate reached 27.3%. The same entity stated that a family of four must generate a minimum of ARS $11,117 (USD $247) to avoid homelessness and ARS $27,570 (USD $614) to avoid poverty.
4. Argentine Supreme Court rules against Government once again
Argentina’s Supreme Court declared a recently-imposed income tax on retirees unconstitutional. The measure affected retired and pensioned Argentines who received at least six times the monthly minimum wage, ARS $62,460 (USD $1,391). Even if the court released the decision after a complaint was filed in one particular case, it establishes a precedent that will eliminate the tax for some 150,000 others in the same situation. The reversal comes in light of a claim brought on the national government by the province of Santa Fe, which resulted in the Supreme Court ordering the national government to pay ARS $45 billion (USD $1.04 billion) for its retention of “co-participation” taxes, a similar case to the province of San Luis.
5. Trade surplus reaches USD $460 million in February
According to the Argentine statistical institute, February’s trade surplus reached USD +$460 million, bringing the 2019 total to USD +$832 million. Total trade, however, has decreased 10.9% compared to the same period last year reaching a total of USD $8.468 billion. The surplus comes as a result of a slight increase in exports and a decrease in imports, as a result of the U.S. dollar’s rally and Argentina’s economic recession. February’s results prove positive for the government, registering its second straight surplus in 2019.