April 18, 2019
1. March inflation reaches 4.7%
The Argentine statistical agency released its monthly inflation report for March, revealing a rate of 4.7% for the month – the highest since October – bringing 2019’s Q1 inflation rate to 11.8%. Year-over-year, inflation reached a total of 54.7%. All sectors registered price increases: foods and beverages (6%), transportation (4.2%), education (17.9%), clothing and footwear (6.6%), and water, electricity and gas (2.7%). President Macri had anticipated that inflation would reach a “peak in March,” adding that it will drop in the following months.
2. Government launches social benefits and consumer incentives
With the goal of curbing the economic crisis and containing prices, the government launched a series of economic measures to kick-start consumption. These include the Business Loyalty Law, which aims to avoid abuse of power at the top of large companies or monopolistic conduct; an agreement with 16 companies to freeze the price of basic household items for six months; discounts at supermarkets, clothing stores, lighting, tourism, household appliances, and construction materials between 10% and 25% for the 18 million people receiving social security benefits; and a price freeze on gas, electricity and transport bills through end of year. Additionally, beneficiaries of social programs will receive discounts on medicine between 20% and 70% at a network of 5,000 pharmacies nationwide.
3. Government announces benefits for SMEs
The government also launched a series of economic measures to benefit small and medium enterprises (SMEs). The primary measures include a new payment plan that will extend expired tax debts for all taxpayers (for expirations up to January 31st of this year, including withholdings and tax payments), better conditions for businesses and lower withholdings for exporting SMEs. The new payment plan allows SMEs to pay their debts in 60 quotas as opposed to 48. On the same token, SMEs will pay a maximum monthly interest rate of 2.5%, lower than that of previous initiatives and below that of the market’s rate. Businesses will also receive credit card payments within 10 business days as opposed to 19. Withholdings will be eliminated for all SMEs exporting at a rate higher than that of the previous year – so long as the business exports less than USD $50 million annually.
4. Macri postpones trip to Europe
President Mauricio Macri postponed next week’s scheduled visit to France and Belgium, where he was slated to meet with his counterparts from both countries as well as EU authorities. The trip was intended to strengthen political and trade relations, promote Argentina’s candidacy for OECD membership and work out details of the EU-Mercosur free trade talks currently underway. Additionally, he had planned a meeting at FIFA’s headquarters to boost Argentina’s bid to host the World Cup in 2030. Macri suspended the trip after learning about March’s inflation numbers, stating that it was “a time to remain in the country.”
Ámbito Financiero: Macri suspendió la gira a Francia y Bélgica
5. Argentina’s Central Bank established exchange rate non-intervention range for 2019
Argentina’s Central Bank (BCRA), with the blessing of the IMF, established a new range of exchange rate values where it will not intervene and froze them through the end of the year. The measure aims to establish a semblance of predictability due to its lowering of interest rates and an anticipated drop in inflation. The ceiling of the non-intervention range will be set at a price of ARS $51.45 and a floor of ARS $39.75 compared to the U.S. dollar through December. Through the end of June, the BCRA will refrain from buying U.S. dollars if the peso drops below the non-intervention zone, while if the peso’s value surpasses the non-intervention zone, it will sell its U.S. dollar reserves ahead of schedule.