July 10, 2020
1. The Government presented the offer for the private debt of foreign legislation
The government finalized its bond swap proposal to private creditors for USD $66 billion. The new details of the amended deal presented to the U.S. Securities and Exchange Commission will pay an average of USD $53.50 for each USD $100 borrowed; cut the grace period to one year from three beginning in September 2021; debt write-offs of 3% and 1.5% depending on the bond maturity; a 3.5% interest rate and others. The Argentine government’s negotiation team, led by Economy Minister Martín Guzmán, highlighted the delicate negotiating position the government has found itself in throughout the process. Creditors will have until August 4th to accept or reject the proposal. The IMF supported the government’s new offer, stating it was “an important step” in the country’s debt restructuring process.
2. Industrial production falls 26.4% in May
The Argentine statistical agency (INDEC) revealed that the country’s manufacturing output index (IPIm) fell 26.4% in May, compared to the same month in 2019. The most affected sector was “automobiles and other transportation equipment at -73.7%, followed by “textiles, clothing, leather and footwear,” which fell -57.2%. Moreover, the INDEC revealed that the variation in the IPIm in the first five months of the year has accumulated a total drop of 16.3% compared to the same period in 2019. However, INDEC also reported a 9% rise compared to April.
3. Buenos Aires Governor announces series of measures for retailers and SMEs
The governor of the Buenos Aires province, Axel Kicillof, presented a new series of assistance measures in a bid to sustain employment in sectors affected by the COVID-19 pandemic. One of the measures includes the launch of a work protection program (PPT), which will grant ARS $500 million (USD $7.05 million) for the payment of worker’s salaries at businesses that did not apply for the National Emergency Assistance Program for Labor and Production (ATP). Kicillof also announced the implementation of an emergency tax plan, which will be led by the Buenos Aires Collection Agency (ARBA) with a financial impact of ARS $1.5 billion (USD $21.14 million); a municipal fund to reactivate cultural and tourism activities worth ARS $300 million (USD $4.23 million), and a financial assistance program for the provincial bank.
4. Retail and consumer goods companies expect the update of Precios Cuidados program
In the following days, the Government should extend the Precios Cuidados program, which seeks to maintain the values of the essential inputs of the basic basket; and update product prices, something that has not happened since January 7th when the program was renewed. At that time, the national government had agreed with the participating companies on a quarterly price update, but due to the pandemic, the increases were never effective. The government evaluates a possible rise of between 5% and 8% and expands the number of products participating in the program.
5. President Alberto Fernández calls on business leaders to recuperate confidence in the country
President Alberto Fernández participated in the annual meeting of the Christian Association of Business Leaders (ACDE), where he requested the assistance of business leaders in recuperating confidence in the opportunity available in Argentina. During his participation, Fernández assured that it is necessary to install “capitalism that unites society, rather than divides it”. Moreover, he referred to the current situation of Brazilian President Jair Bolsonaro, who tested positive for COVID-19, stating that he sent a note wishing him a “speedy recovery.”