April 26, 2019
1. Argentine peso tumbles, recovers slightly by close of market
The U.S. dollar recorded a historic jump in value to the Argentine peso, reaching ARS $47.50; meanwhile the J.P. Morgan Country Risk Index reached 1,011 points for the first time during Macri’s administration. An increased supply of U.S. dollars and a bump in the Central Bank’s Letras de Liquidez rate to 70.04% helped bring the peso down to ARS $47 and the Country Risk back down to 974 before markets closed. The poor performance of the indicators is rooted in electoral uncertainty thanks to Cristina Kirchner’s jump in the polls and the persistent inflation that could exceed 4% in April. On the subject, Macri argued that “the Country Risk rises because the world fears that Argentina wants to take a step backwards,” referring to Kirchner’s performance in the polls.
2. Argentina reaches primary surplus after eight years
Treasury Minister Nicolás Dujovne announced that Argentina reached a primary surplus of USD $10.35 billion – in other words tax revenue exceeded program spending. “[This statistic] represents a marked improvement over the last quarter. For the first time since 2011, Argentina has registered a primary surplus in the first quarter,” stated Dujovne. The Argentine statistical institute also registered a trade surplus in March of USD $1.2 billion and reversed the negative result it had recorded in the same month of 2018. Argentina logged a USD +$2.02 billion surplus in Q1 2019, a reversal of the USD -$2.37 billion deficit noted in Q1 2018.
Ámbito Financiero: Marzo registró un superávit comercial de u$s1.183 M
3. Provinces can now obtain international funds outside of the IMF
The Argentine Government relinquished the possibility of new public works projects when it reached a “zero deficit” agreement with the IMF. When this is added to the close of international lines of credit for provinces – even if they registered a surplus – they could not carry out projects due to high interest rates. Within this framework, governors and the Macri administration began to work on an alternative that would collect the necessary funding, without showing up on the IMF’s radar. During the search, “credit agreements” with international organizations like the Inter-American Development Bank (IADB) and the Latin American Development Bank (CAF) appeared as alternatives.
4. Chamber of Representatives approves knowledge economy project, awaiting Senate approval
The Chamber of Representatives awarded an extension of financial benefits enjoyed by software companies and technology companies through December 2030 in a 182-2 vote. The bill also expanded the reach of the benefits to other technology companies and hopes to generate 200,000 jobs as a result. The initiative will now move on to the Senate where it will need approval before it continues to the desk of President Macri for its enactment into law.
Ámbito Financiero: Diputados aprobó el proyecto de ley de economía del conocimiento
5. Macri to receive Jair Bolsonaro on June 6th
Brazilian President Jair Bolsonaro will make his first official visit to Argentina on June 6th and meet with his Argentine counterpart. According to a press release by the Brazilian Chancellery, the meeting between the two leaders will represent an opportunity to track the progress of agreements made during their last encounter in Brasilia last January. Additionally, the leaders will meet once again in July for a summit of Mercosur’s heads of state.