July 24, 2020
1. President gives presentation at Council of the Americas
President Alberto Fernández gave a virtual presentation before the Council of the Americas, a think tank made up of bankers, business leaders, investors and regional experts. In the conference, which had approximately 10,000 participants, Fernández assured that Argentina “needs investment, production, work and development.” He also referenced the country’s external debt renegotiation talks with bondholders emphasizing the importance of sustainability, in other words that debt should be paid according to Argentina’s level of development. Finally, he spoke about Argentina’s economy at the time he took office and stated the difficulties of reaching a financial equilibrium in the middle of a pandemic.
2. The government announced that the Labour and Production Assistance Programme will continue until December
The national government announced the extension of the Labour and Production Assistance Programme (ATP) until December 2020. President Alberto Fernández led the presentation and Productive Development Minister, Matías Kulfas reported on the details of the measure. In terms of supplementary salary, companies up to 800 employees with lower income compared to the same month in 2019 will be able to access this benefit. The payment will be half of the salary of each worker, with a minimum of 1 and a maximum of 1.5 minimum vital and mobile salaries. The minister also announced state-subsidized credits for the payment of salaries for companies that have reached a variation in their turnover up to 30%. For the cultural sector, the grace period in the payment of the loan will be twelve months, while the grace period for the remaining beneficiaries will be three months. In addition, zero-rate credits for single-tax and self-employed persons will continue. Finally, the official informed that the registration to the mentioned benefits continues to be through AFIP.
Ámbito Financiero: Kulfas anunció que el programa ATP continuará hasta diciembre
3. Three largest bondholder groups present counteroffer to government
Three major groups of Argentine bondholders announced that they developed a new proposal for the government to consider. Despite this union, some of these bondholder groups are divided, as certain investment funds accepted the last offer presented by Economy Minister Martín Guzmán. The government rejected the proposal, made official by the U.S. Securities and Exchange Commission, although aspects of it could be included in a modification at the legal level. It is worth noting that the deadline for accepting or rejecting the bond swap deal is August 4th, but the deadline for the actual swap is one month after, meaning the government can continue with negotiations through September.
4. Economic activity falls 20.6% in May
The Argentine statistical agency (INDEC) reported that economic activity in May registered a -20.6% drop compared to May of last year. Nonetheless, the Monthly Estimate of Economic Activity (EMAE) increased by 10% in comparison to April. The indicator also revealed that industrial activity dropped -25.7% and trade by -20.9%. The most affected sectors include hotels and restaurants (-74.3%) and construction (-62.2%). It is worth noting that the year-over-year drop in economic activity for May is -26.4%, the worst such drop since 2002.
5. The regulation of Telework advances in Senators and the debate for the extension of the moratorium is extended in Chamber of Deputies
The Commission of Labor and Social Welfare of the Senate gave a remote work bill the green light without modifications after receiving preliminary approval from the Chamber of Deputies. Although the virtual meeting was attended by representatives from business advocacy organizations like the Argentine Industrial Union (UIA) and the Argentine Institute for Business Development (IDEA) to voice their disapproval, senators from the majority Frente de Todos party threw their support behind the project. With this approval, the initiative will now be discussed in the upper legislature, whose virtual sessions were postponed. On the other hand, in the Chamber of Deputies, the ruling bloc decided to extend for a week the approval of the project to extend the moratorium in the Budget Commission. This decision was made since the opposition blocks, including Juntos por el Cambio and Consenso Federal, proposed modifications to the text. The opposition parties had agreed to include in the project a “prize” for good taxpayers, tied with an incentive to continue paying their commitments on time. Although the Head of the Federal Public Income Administration (AFIP), Mercedes Marcó del Pont, dismissed that possibility, the president of the Budget Commission, Carlos Heller, suggested that the idea could be worked. Finally, the opposition rejected the point which incorporated a tax pardon for bankrupt companies.