July 5, 2019
1. Electoral Panorama
Days before the start of the official campaign for the primary elections named PASO and with Cristina Fernández de Kirchner traveling to Cuba, where her daughter is interned, her running mate Alberto Fernández met with 12 governors to align the strategy of the coalition Frente Todos. The Frente Todos candidate also visited former Brazilian President Lula Da Silva, who is in prison and supported the candidate’s negative view of the MERCOSUR-EU agreement. On the other hand, the national government met with the Peronist governors of the provinces of San Juan, Entre Ríos and Chaco, in search of possible allies after the announcement of the vice-presidential candidate of Peronist senator Miguel Ángel Pichetto. In addition, after the G20 in Japan and his visit to FIFA in Switzerland, President Mauricio Macri returned to the country and met with businessmen from the Chamber of Small and Medium Enterprises, where he claimed the agreement between MERCOSUR and the European Union. This Sunday, July 7, the electoral campaign formally begins, in the face of the primary elections of August 11.
2. Macri defended the Mercosur-EU treaty against businessmen
Last Wednesday, President Mauricio Macri participated in a meeting with 56 business chambers and several ministers of his cabinet. It was the first discussion, prior to future meetings between the government and each sector, on the free trade agreement between the European Union (EU) and Mercosur. In this way, a consensus was sought among the businessmen. Although concerns were expressed and questions were raised about the impossibility of thinking of competing with Europe in a situation of macro instability such as the current one, the responses were positive. Faced with questions from small and medium enterprises (SMEs), the president explained that “there is going to be a specific EU fund for SMEs to be able to reconvert and seek competitiveness. On the other hand, the president ratified that there are possibilities to advance in a free trade pact with the United States.
3. Without Lagarde, the IMF prepares the fifth disbursement of U$S 5,500
The International Monetary Fund (IMF) concluded the fourth review of the agreement with Argentina. After sharing the results with the IMF’s executive board, it will be known when the IMF will authorize the expected fifth disbursement of US$5.5 billion for Argentina. In addition, the managing director of the International Monetary Fund (IMF), Christine Lagarde, was appointed as the new president of the European Central Bank, so the agency appointed David Lipton as interim managing director. The government stated that “IMF support comes from the world’s partners, not just Lagarde,” does not affect the agreement.
4. Country risk fell 22% in one month
The risk dropped 22% in one month and pierced the 800 points, returning to mid-April values. This indicator, which closed Wednesday at 795 units, reflects the cost overrun that Argentine debt issuers (whether the national government, provinces or companies) must pay to obtain financing in the markets compared to U.S. assets. On the other hand, the dollar fell on Thursday for the sixth consecutive day, amid operations limited by the Independence Day holiday in the United States. The currency fell back to $42.60 at the National Bank, also returning to the values it held in April.
5. Oil company YPF will quadruple its production in Vaca Muerta by 2023
The president of the oil company YPF, Miguel Gutiérrez, pointed out that the company’s gross production of shale oil in Vaca Muerta amounts to 61,400 barrels per day and that it aspires to multiply it by 4.2 times by 2023. The executive said he will invest US$ 3.25 billion, of which US$ 1.2 billion will be to adapt the refining plants and US$ 2,050 million will be invested in the Neuquén field, allocating US$ 500 million to facilities. On the other hand, the government asked the New York courts to reject a request for a summary judgment for the expropriation of YPF. The summary trial is a mechanism that allows a judge to decide without having to hold the trial in its entirety. The defenders of YPF and the Argentine State demand that this request be rejected and argue that there is no place to make such a claim.