March 26, 2021
1. Economy Minister holds meeting with IMF director during U.S. visit
Economy Minister Martín Guzmán held a two-hour meeting with IMF director Kristalina Georgieva, where they discussed Argentina’s economic future and negotiations taking place between Argentina and the multilateral lender. Georgieva stated that they would continue in close dialogue. Nonetheless, both in Washington and on Wall Street, expectations are that a final agreement between the two will take place after October’s legislative elections. The IMF director also approved a USD $4.35 billion package for Argentina that will broaden special drawing rights (SDR), providing relief for the Argentine central bank. Additionally, Guzmán met with U.S. Treasury Department officials and participated in a virtual meeting with President Alberto Fernández and World Bank director David Malpass, who asked the government to implement policies that reduce subsidies on tariffs.
2. Government announces withdrawal from Lima Group
By means of a statement, the Argentine Chancellery announced the country’s withdrawal from the Lima Group – a multilateral body created in 2017 to seek a democratic solution to the crisis in Venezuela. The reasons behind this decision include the Fernández administration’s opposition to the “isolation” policy it has enacted towards Venezuela. Additionally, the statement denoted that “the best way to help Venezuelans is by facilitating an inclusive dialogue that does not favor any one sector in particular, but achieves internationally controlled and accepted elections. On the other hand, the text describes that the sanctions and blocks imposed on Venezuela “have done nothing but aggravate the population’s situation – especially the most vulnerable.” The Macri administration was one of the main drivers behind the group, but this position changed once the new government took office.
3. Chamber of Deputies to debate income tax reform on Saturday
Chamber of Deputies President Sergio Massa convened an extraordinary session on Saturday to debate reforms to an income tax reform bill he authored. The bill seeks to exempt income tax for nearly 1.3 million workers earning a monthly income below ARS $150,000 (USD $1,633). The session on Saturday would have taken place after the Juntos por el Cambio and Consenso Federal coalitions, and the deputies corresponding to Córdoba Governor Juan Schiaretti met to discuss a biofuel bill from the Senate. The quorum of 129 deputies, however, was not reached, and Thursday’s debate did not take place.
4. Argentina’s GDP contracted 9.9% in 2020
Argentina’s national statistical institute (INDEC) published a report on Tuesday that revealed a 4.3% drop in GDP during the last quarter of 2020, capping off a pandemic-fueled annual contraction of 9.9%. For 2020, the most affected economic sectors were hotels and restaurants (-49.2%); community, social and personal activities (-38.9%); transportation, storage and communications (-17%); and manufacturing (-7.7%). Only the electricity, gas and water (0.9%) and financial intermediation (2.1%) registered increases in 2020 compared to 2019. Additionally, investment fell 13% and private spending by 13.1%. Public spending dropped 4.7%. Regarding foreign trade, exports and imports plummeted 17.7% and 18.1%, respectively.
5. President Fernández led the summit for the 30th anniversary of Mercosura
On Friday morning, President Alberto Fernández headed the summit for the 30th anniversary of the creation of Mercosur, which was held virtually due to the outbreaks of cases of COVID-19 in the region. During the event, he called on his peers from Brazil, Uruguay and Paraguay (in addition to the non-member countries, Chile and Bolivia) to “redouble their efforts and deepen their willingness to walk together” and asked “not to erode the productive structures” of the member countries. In addition, he stated that “Mercosur’s insertion in the global world must be in favor of our productive sectors and not against them” and proposed the creation of an observatory for the quality of democracy, aimed at protecting and promoting democracy, freedom and peace in the region.