September 6, 2019
1. Government enacts decree to contain price of U.S. dollar
The Argentine government enacted a Necessity and Urgency Decree (DNU) requiring prior authorization for purchases of U.S. dollars over USD $10,000 per month. Moreover, the decree allows for foreign transfers in foreign currencies up to USD $10,000 per person per month. The withdrawal of U.S. dollars amassed in banks remains unrestricted. The rule makes it so businesses and institutions (legal persons) will be prohibited from stockpiling dollars, but can pay debts in dollars, pay for imports, buy property and other activities deemed justifiable by the Central Bank. On the other hand, the norm states that exporters must settle their earnings from foreign sales within a five-business day window after a charge, or 180 days after a shipping permit is granted (15 days for raw materials). The decree will remain active through December 31st of this year. Following the announcement, President Mauricio Macri stated that these are “measures we don’t like, but we’re hoping to protect the savings of the middle class.” Yesterday in the province of Cordoba, two days before the start of the electoral campaign for the general elections in October, the president declared that he is “with all the energy set in reaching the ballotage”.
2. Alberto Fernández travels to Spain and meets with officials
Frente de Todos presidential candidate Alberto Fernández traveled to Spain to fulfill academic obligations, although he took advantage of his time there to meet with Spanish Foreign Affairs Minister and future EU diplomatic chief Josep Borrell. Fernández also met with Prime Minister Pedro Sánchez, who received him in Madrid’s Palacio de La Moncloa. Additionally, he plans to hold a conference detailing his position on the free trade agreement between the EU and Mercosur. Spain, under both the governments of conservative Mariano Rajoy and socialist Pedro Sánchez, have both played a leading role in facilitating the deal made last June, which President Mauricio Macri celebrated as one of his administration’s key achievements. In addition, he met with Portugal’s Prime Minister Antonio Costa
3. Buenos Aires governor announces economic measures worth ARS $1.35 billion
A little over a month following Argentina’s primary elections, Buenos Aires Governor María Eugenia Vidal presented a new series of social programs and help for SMEs costing a total of ARS $1.35 billion (USD $24.13 million). The province of Buenos Aires announced reinforcements to the Promotion, Preservation and Regularization of Employment Program (PREBA) which provides benefits of up to ARS $5,000 (USD $89.50) per employee. Additionally, extra budget for social programs and scholarships, as well as a 45% increase in the minimum pension were also approved in August. The announcement was expected following the economic recovery measures launched recently by the Macri administration. The electoral situation is even more concerning for Macri’s coalition in the province of Buenos Aires than at the national level, as Vidal finished 20 points behind Frente de Todos candidate and former Economy Minister Axel Kicillof in last month’s primaries. “These measures are not part of any election campaign. I am here as governor, not as a candidate,” concluded Maria Eugenia Vidal.
4. Argentina to retain status as “emerging market”
Morgan Stanley Capital International, a global leader in creating indices widely used by investors, released a statement saying it is “closely monitoring the evolution of the market” following measures announced by the Argentine government last weekend and is “analyzing potential impact [of the measures] on accessibility” to Argentine shares for international investors. The statement also confirmed that, for the time being, Argentina will continue to be classified as an “emerging market,” despite the capital controls imposed by the Macri administration. On the other hand, credit rating agency Moody’s Latin America downgraded its issuer and debt ratings – on the domestic and global scale in both Argentine pesos and foreign monies – for eight provinces and two municipalities and placed ratings under review for downgrade, an announcement which resonated negatively among a group of 17 domestic companies, particularly in the energy sector. The downgrade affected the provinces of Buenos Aires, Córdoba, Chaco, Chubut, Formosa, Misiones, Río Negro, Tucumán and the cities of Córdoba and Buenos Aires.
5. Social conflict increases amidst economic crisis
In the context of economic difficulties across Argentina, social tensions continue to increase. Several recurring marches have occurred on the streets of Buenos Aires and in other areas in the country, demanding an increase in public spending and urging the declaration of a nutritional emergency. In this same vein, opposition legislators requested the nutritional emergency decree, threatening a special session to discuss the issue next week if the Macri administration does not comply. A nutritional emergency would lead to the creation of the National Program of Food and Nutritional Security as an instrument to guarantee the provision of food to the most vulnerable portions of the population under the age of 16. Additionally, budgets for community kitchens would increase, and an ARS $10 billion (USD $179.2 million) plan to fortify assistance is planned. The last time a nutritional emergency was declared in the country was during the 2001 economic crisis and lasted through December 21, 2002.