August 30, 2019
1. Government announces new economic measures
Finance Minister Hernán Lacuzna announced four measures intended to ease financial pressures and the exchange rate. First, the Treasury extended the expiration dates of short-term bills of exchange (15% to be paid on the day of expiry, 25% after 90 days and the remaining 60% following 180 days). Second, the renegotiation of medium-term debt (10 years) with foreign banks, which could affect the incoming government. Third, the renegotiation of the expiration dates of stand-by funds loaned by the IMF set for June 2021. Finally, the submission of a bill to Congress that proposes medium-term, locally-issued bond swaps. The IMF reacted cautiously to debt-reduction measures made by the government, stating it is “in the process of analyzing and evaluating their impact.” Additionally, the financial entity signaled they were “important steps to make, given the need for liquid and to safeguard its reserves” and that it “will continue to stand by Argentina during these difficult times.”
2. IMF meets with government and leading opposition candidate
Peronist presidential candidate Alberto Fernández held a meeting with representatives from the IMF, in light of his convincing performance in Argentina’s recent primaries. Although the tone of the meeting remained cordial, Fernández clearly opposed the IMF’s suggestions. Fernández is no stranger to criticizing the financial entity, having claimed it’s “co-responsible [with the government] for the social catastrophe impacting a growing portion of Argentine society,” although he confirmed his intention to comply with payments to the IMF should he be elected in October. Prior to the meeting with Fernández, the organization met with the government to analyze the progress of the country’s public accounts, as part of the terms for the release of stand-by funds by the IMF in June 2018. The state of public accounts is key for the IMF approving another loan for USD $4.5 billion, which is slated for mid-September.
3. U.S. dollar near exchange rate record and Country Risk Index reaches 2,300 points
The U.S. dollar was being sold at ARS $60.50 at branches of the Argentina national bank after having reaching ARS $62 in the morning, close to the ARS $63 it hit on August 14th. JP Morgan’s Country Risk Indicator – which rolls together several variables relating to treasury bonds issued by the U.S. and another country to gauge that country’s attractiveness to investors – reached 2,300 points yesterday, well above the 860 points registered before primary elections.
4. #24A: the movement in support of the government
Following the defeat in Argentina’s primary elections, Macri voters convened a rally August 24th to show support for the president and his cabinet in anticipation of October’s general elections. Under the motto, “We defend the republic,” thousands of friendly demonstrators arrived at the Casa Rosada (president´s office) where President Macri emerged on the balcony, appearing emotional next to his wife Juliana Awada. “We cannot abandon the path, we must continue together,” Macri shared on social media. The demonstration in Buenos Aires was accompanied by others in major cities like Rosario, Córdoba, Neuquén, Mendoza and Tucumán.
5. Trade agreement between Mercosur and EFTA
On August 23rd negotiations between Mercosur and the European Free Trade Association (EFTA) concluded in Buenos Aires. The agreement is a logical extension of the agreement signed last June between Mercosur and the EU. The agreement with the EFTA – composed of Iceland, Liechtenstein, Norway and Switzerland – agreed to cover topics of a regulatory nature, like services, investments, government purchases, trade and customs facilitation, sustainable development, competition and defense of trade and intellectual property. Regarding access to markets, more than 97% of the exportable offer of Mercosur to EFTA countries will be given preferential treatment. Some of the products that will benefit from the agreement include: beef, poultry, wine, corn, honey, vegetable oil, among others. The EFTA will eliminate tariffs on nearly all manufactured goods, making it easier to insert them into global value chains.