September 18, 2020
1. The government announced the extension of the isolation
Through a video published in social networks, the extension of the social isolation/distancing, preventive and obligatory until October 11 inclusive, was announced. The national government will leave it up to local authorities to decide what measures to take in their territories. However, it is recommended to establish greater restrictions in the provinces that have presented the greatest number of cases in the last 15 days (Jujuy, Mendoza, Río Negro, Santa Cruz, Tierra del Fuego, Santa Fe, La Rioja, Tucumán, Salta Neuquén and Córdoba). On the other hand, in the City of Buenos Aires, terraces and internal patios will be set up in gastronomic stores.
2. National government presents 2021 budget
On Tuesday, the Fernández administration submitted the 2021 budget to Congress, as established by the constitution. The budget is based on projections of an inflation rate of 29%, economic growth of 5.5% and a deficit at 4.5% of the GDP. Economic return is projected to decrease -22.9% compared to 2020, while financial return is predicted to increase 16.8%. The guiding principles behind this year’s budget include macroeconomic stabilization via an expansive fiscal policy framework, and financial sustainability to obtain an equilibrium compatible with growth. The government also identified its public investment focal points, which are productive and social infrastructure, innovation and development, public health, education and connectivity, active social inclusion and gender and diversity.
3. Argentine Central Bank tightens currency exchange restrictions
The Argentine Central Bank (BCRA) announced a series of measures with the intention of alleviating the pressure on its reserves and reducing the exchange rate gap. The president of the BCRA, Miguel Ángel Pesce, stated that credit card purchases abroad will be discounted from the USD $200 monthly savings quota, and also establishes a 35% income tax withholding on income on dollar savings and on credit card purchases abroad. Additionally, the BCRA eliminated minimum holding periods that affected the purchase of securities in foreign currencies and their subsequent liquidation in local currency. Companies with monthly maturities exceeding USD $1 million will count with a grace period to restructure with creditors and the cancellation of up to 40% of its capital maturities will be considered. The BCRA argued that “the initiative intends to maintain the current quota of USD $200 per month but discourage demand for foreign currency made by persons for the purposes of hoarding and credit purchases.”
4. August inflation stands at 2.7%
The Argentine statistical agency (INDEC) released its consumer price index – the country’s official measure of inflation – for the month of August, registering a rate of 2.7%. Since the beginning of 2020, inflation has accumulated to 18.9%, and 40.7% with respect to August 2019. According to the INDEC, the categories that registered the biggest increases included foods and non-alcoholic beverages (3.5%); equipment and home maintenance (3.5%) and recreation and culture (3.3%). It is worth noting that for the 2021 budget, the government project an inflation rate of 29% for next year, compared to the 32% rate projected for the end of the current year.
5. Government presents Plan Conectar 2020-2023
In an event hosted at the headquarters of state-owned enterprise ARSAT (Argentine Satellite Solutions Company), President Alberto Fernández revealed his Plan Conectar 2020-2023 (Connect Plan). The initiative plans to strengthen communications infrastructure with the goal of achieving universal access to ICT services and latest-generation bandwidth connections for Argentines. Additionally, the government will invest ARS $37.9 billion (USD $502.8 million) into the Argentine satellite system, the federal fiber optic network (REFEFO), open digital television and the National Data Center, all under the auspices of ARSAT. With this in mind, the plan will spur the construction of a telecommunications satellite, ARSAT SG1, the laying of 4,408 km of fiber optic cables and the update of storage, server, network, backup and software equipment.