November 1, 2019
1. Electoral panorama
National general elections took place last Sunday, October 27th. The Frente de Todos ticket, led by Alberto Fernández and his vice presidential pick Cristina Fernández de Kirchner, emerged victorious in the first round with 48% of the vote, followed by Juntos por el Cambio, led by incumbent President Mauricio Macri and his running mate Miguel Ángel Pichetto with 40%. Although Juntos por el Cambio was able to improve upon the negative results of last August’s primaries, flipping the provinces of Entre Ríos, Mendoza, San Luis and Santa Fe in his favor and maintaining victories in the city of Buenos Aires and Córdoba, Frente de Todos was able to win 18 of the country’s 24 districts. In the city of Buenos Aires, Horacio Rodríguez Larreta (Juntos por el Cambio) was reelected as chief of government with 55% of the vote, becoming the first candidate to win that position in the first round. Axel Kicillof (Frente de Todos) beat out incumbent Governor María Eugenia Vidal in the province of Buenos Aires’ gubernatorial contest with 52% of the vote and an advantage of nearly 14 points. The international community also kept a close eye on the elections in Argentina. IMF Managing Director Kristalina Georgieva congratulated Alberto Fernández for his victory adding that the multilateral lender hopes to work in tandem with his administration to confront Argentina’s economic challenges. Chinese President Xi Jinping also joined in congratulating the president-elect, reiterating his country’s interest in working with Argentina. The U.S. government also responded positively, with the White House releasing a statement hoping to take on the “task of promoting regional security, prosperity and the rule of law.” Brazilian President Jair Bolsonaro broke from the trend, lamenting Fernández’s victory, although he stated he would wait for the new government’s first actions before deciding on the future of relations between the two countries.
2. Argentine Central Bank restricts purchase of U.S. dollars
Following the results of the general elections, the Argentine Central Bank (BCRA) further restricted the purchase of U.S. dollars in a bid to preserve the country’s federal reserves and prevent the Argentine peso from devaluating further. Moreover, the BCRA stated that only USD $200 can be bought in one month if the transaction is made via a bank account, or USD $100 if done in cash. Prior to the opening of the markets on Monday, BCRA head Guido Sandleris held a press conference where he defended the new restrictions, “We will do everything in our power to ensure that the central bank has the tools at its disposal for a steady monetary policy.” Finance Minister Hernán Lacunza confirmed that these measures are “transitional” and that the IMF is aware of them. Additionally, Lacunza will remain a part of the economic team into the next administration to maintain a consistent avenue of communication with the IMF. Yesterday, the BCRA decided to restrict various credit card transactions involving currency consumption. In addition, tourists will have a limit to withdraw cash advances with the credit card of USD $50 for each withdraw.
Ámbito Financiero: Cómo queda el cepo con la nueva medida del BCRA
3. President Macri and President-elect Fernández met to ensure smooth transition
President Mauricio Macri received President-elect Alberto Fernández at the presidential mansion the day after elections to speak about the transition which will take place on December 10th. Both leaders appeared optimistic following the encounter, agreeing to “do what is best for the country” and create a transition team made up of four figures from the Frente de Todos that will meet regularly with the current cabinet. Vice President Gabriela Michetti and Vice President-elect Cristina Fernández de Kirchner also had a conversation to discuss the transition in the Senate, also opting to choose a team to lead the transition. With respect to the province of Buenos Aires, Governor María Eugenia Vidal met Governor-elect Axel Kiciloff who both agreed to have their staffs meet to begin the transition next Monday.
4. Alberto Fernández begins travels to Mexico and the U.S.
President-elect Alberto Fernández will travel to Mexico on Friday to meet with Mexican President Andrés Manuel López Obrador on Monday, his first foreign trip following his electoral victory. Fernández will focus on regional politics, especially the situation in Venezuela and the second Grupo de Puebla meeting, where he will be accompanied by friendly legislator Felipe Solá and one of his closest advisors, Santiago Cafiero. The Grupo de Puebla – a group of left-leaning leaders that hope to counter the regional view of the right-leaning Grupo de Lima – will soon meet in Buenos Aires. The Mexican president and the Argentine president-elect have both stated that the Venezuela conflict should be resolved by Venezuelans and, along with Uruguay, reject intervening in Venezuela’s internal politics, in stark contrast to the position taken by Grupo de Lima leaders Sebastián Piñera (Chile), Iván Duque (Colombia), Jair Bolsonaro (Brazil) and Mauricio Macri (Argentina). Before returning to Argentina, Fernández will travel to Houston, Texas to meet with business leaders in the energy sector, with sights set on developing the energy potential of the Vaca Muerta shale formation.
5. Argentine tax agency imposes withholdings on VAT and income to electronic wallets
The Argentine tax agency (AFIP) established rules that will apply value-added tax (VAT) and income tax to transactions made with electronic wallets. The norms hope to level the playing field for this method of payment with debit and credit cards that are already subject to these taxes. In effect, the AFIP will be applying these taxes to the purchase of movable property, rentals and/or provisions of services carried out with digital payment methods. General Resolution 4622, which was published this Wednesday in the Official Bulletin, states that the percentages that should be withheld depend on the payment method selected when paying with an electronic wallet – 0.5% if using a debit card or 1% if using a credit card. The norm will take effect on November 19th.