ARGENTINE UPDATE – Dec 10 & 11, 2015


1. ARGENTINE PRESIDENT BLASTS INCOMING LEADERS IN FINAL SPEECH (The Washington Post)

2. ARGENTINA’S NEXT FINANCE CHIEF MEETS DEBT DISPUTE MEDIATOR (The New York Times)

3. UNSEEMLY SPAT MARS ARGENTINA’S PRESIDENTIAL TRANSITION (The Wall Street Journal)

4. INCOMING ARGENTINA FINANCE MINISTER MEETS WITH CREDITORS (The Wall Street Journal)

5. ARGENTINE CENTRAL BANK PRESIDENT QUITS UNDER PRESSURE FROM MACRI (Chicago Tribune)

6. ARGENTINE BANK GOVERNOR BOWS TO PRESSURE FOR RESIGNATION (Financial Times)

7. ARGENTINA SEEKS PROMPT DEBT NEGOTIATIONS, MEDIATOR POLLACK SAYS (Bloomberg News)

8. ARGENTINE PRESIDENTIAL FEUD TURNS INAUGURATION CEREMONY TO FARCE (Bloomberg News)

9. MACRI’S CHALLENGE: RESTORE ARGENTINA’S LONG-LOST ECONOMIC POWER (Reuters News)

10. ARGENTINA’S FERNANDEZ TO SKIP MACRI INAUGURATION IN ROW OVER SITE (Reuters News)

11. INCOMING ARGENTINE OFFICIAL WILL ‘PROMPTLY’ BEGIN DEBT TALKS: MEDIATOR (Reuters News)

12. ARGENTINE CENBANK CHIEF WILLING TO QUIT, UNDER PRESSURE TO STAY (Reuters News)

13. ARGENTINA’S BLOATED PUBLIC PAYROLL A THORN IN MACRI’S SIDE (Reuters News)

14. OUTGOING PRESIDENT ENTREATS ARGENTINES TO PROTECT HER LEGACY (Reuters News)

15. ARGENTINE BIODIESEL GROUP AIMS TO BLOCK U.S. TAX CREDIT CHANGE (Reuters News)

16. ARGENTINA STOCKS, BONDS TO BUY AS ECONOMIC PIVOT BEGINS (Barron’s Blog)

17. ARGENTINA’S OUTGOING PRESIDENT REFUSES TO ATTEND SUCCESSOR’S INAUGURATION (Fox News)

18. ARGENTINE CENTRAL BANK CHIEF ALEJANDRO VANOLI RESIGNS (Dow Jones Institutional News)

19. MAURICIO MACRI TAKES HELM IN ARGENTINA: TOUGH BATTLE WITH VULTURE POLITICIANS AHEAD (Forbes)

20. MACRI COULD BE A GAME CHANGER FOR ARGENTINA FDI (Business News Americas)

21. ARGENTINE UTILITIES: KIRCHNER SUBSIDIES MUST END (Business News Americas)

22. INFLATION CREATES ‘PERFECT STORM’ FOR LOSS ADJUSTERS IN ARGENTINA (Business News Americas)

23. PRESIDENT OBAMA ANNOUNCES PRESIDENTIAL DELEGATION TO ARGENTINA TO ATTEND THE INAUGURATION OF HIS EXCELLENCY MAURICIO MACRI, PRESIDENT-ELECT OF THE ARGENTINE REPUBLIC (White House Press Releases And Documents)

1. ARGENTINE PRESIDENT BLASTS INCOMING LEADERS IN FINAL SPEECH (The Washington Post)
By Peter Prengaman and Debora Rey
December 10, 2015

BUENOS AIRES, Argentina — Tens of thousands of supporters jammed Argentina’s most famous square Wednesday night to say goodbye to President Cristina Fernandez, who lauded her government’s achievements while blasting the incoming administration in the same withering tones she aimed at opponents throughout her eight years in office.

As blue and white Argentine flags waved and people cheered on a balmy night, Fernandez gave a speech that was both a recap of her years in power and a clear sign that she does not plan to make things easy for President-elect Mauricio Macri, who will be inaugurated Thursday.

Fernandez addressed the crowd on Plaza de Mayo in downtown Buenos Aires amid widespread criticism for her decision not to attend Macri’s inauguration.

The two spent much of the last 10 days bickering over where the presidential baton and sash would be handed over. Macri wanted to receive them at the Casa Rosada presidential offices from Fernandez, while she insisted the handover happen in Congress. Many Argentines viewed the argument as a national embarrassment.

Without mentioning him by name, Fernandez framed the tiff as Macri’s fault. She also criticized a Wednesday federal court ruling in a case brought by Macri that determined her presidency ended at midnight, saying it would leave Argentina without a president until Macri’s swearing-in at midday Thursday.

“I can’t talk much because after midnight I’ll turn into a pumpkin,” she joked.

Fernandez talked about “an agenda from the outside being imposed on the region,” apparently referring to the United States and others she sees as enemies of Argentina. During her two terms in power, Fernandez frequently accused other countries of meddling in this South American nation’s affairs, though rarely provided details.

For 12 years, Fernandez, and before her, late husband and predecessor, Nestor Kirchner, dominated the political landscape. The couple rewrote the country’s social contract, spending heavily on social programs for the poor while passing liberalizing laws, such as legalizing gay marriage in 2010.

They also aligned Argentina with socialist leaders like the late Venezuelan President Hugo Chavez and Bolivian President Evo Morales, who attended Fernandez’s farewell speech.

“She made me proud to be Argentine for the first time in my life,” said onlooker Pablo Vega. “She defended the interests of the country more than anybody.”

Macri, who ran on free-market ideas, beat Fernandez’s chosen successor by 3 percentage points in a runoff election last month. The close result underscored the deep polarization in Argentina, and Fernandez has made clear she will continue to be heard, albeit from the sidelines of power.

The 62-year-old, who was barred by the constitution from seeking a third consecutive term, leaves office with approval ratings around 40 percent, and some have speculated she might try to run again in 2019.

However, just as many Argentines love her, many also loathe her, and the fight over the presidential transition brought out the frustration of detractors.

By Wednesday afternoon, her decision not to attend the inauguration had spawned a trending Twitter hashtag: #CFKVerguenzaMundial, or Fernandez’s world shame.

2. ARGENTINA’S NEXT FINANCE CHIEF MEETS DEBT DISPUTE MEDIATOR (The New York Times)
By Alexandra Stevenson
Dec. 9, 2015

Argentina’s incoming secretary of finance met this week with the arbiter of a bitter decade-long legal dispute between the country and a group of New York hedge funds, opening a new path toward a potential resolution.

Luis Caputo, a former banker and soon to be the finance secretary, traveled to New York to meet with Daniel A. Pollack, a court-appointed special master who has been tasked with mediating negotiations, according to a statement from Mr. Pollack’s office.

The meeting was sought by Mr. Caputo, who will begin his new role on Thursday. It follows a meeting between the group of creditors, led by the billionaire Paul E. Singer, and Mr. Pollack last week.

The creditors sued Argentina seeking repayment on bonds the government defaulted on in 2001. The departing administration of President Cristina Fernández de Kirchner has balked at the creditors’ demands.

While no negotiations to resolve litigation occurred in either meeting, Mr. Caputo expressed the intention of the new administration under President-elect Mauricio Macri to begin negotiations promptly once the new government is sworn in, according to the statement.

Mr. Macri’s presidential victory last month is expected to bring a sudden shift to the right in Argentine politics after decades of rule by Peronists. The son of an industrial tycoon and once mayor of Buenos Aires, Mr. Macri has sought to strike a different tone from Mrs. Kirchner, who succeeded her husband, Néstor Kirchner, in 2007. Mr. Kirchner, who died in 2010, and Mrs. Kirchner were in power for 12 years.

Among Mr. Macri’s priorities will be to reignite a beleaguered economy, and he has pledged to loosen currency controls and lower export tariffs. Mr. Macri has also said he would negotiate with the country’s holdout creditors.

The news will raise fresh hopes that both sides can resolve the protracted fight, which has left Argentina almost entirely locked out of international capital markets. Whether Mr. Macri’s administration can come to an agreement with the holdout creditors will be a test of that pledge.

NML Capital, a unit of Elliott Management, has led a group of holdout investors in seeking full repayment of the bonds Argentina defaulted on. After the default, the Argentine government offered to exchange those defaulted bonds with new “exchange bonds” that were worth significantly less.

Rejecting the offer, NML Capital sued Argentina after a breakthrough ruling in Federal District Court in Manhattan. Judge Thomas P. Griesa ruled that whenever Argentina paid holders of its exchange bonds it would also have to pay the holdouts. Unable to make a payment to its exchange bond holders, Argentina defaulted on its debt again last summer.

The dispute has raised ire among Argentines and fueled tensions. In Buenos Aires, graffiti of vultures is strewn across the city, referring to NML Capital, other creditors and Judge Griesa.

Mr. Singer has asserted that the creditors are willing to negotiate with Argentina. But under the last Kirchner administration, neither side sat down to negotiate, Mr. Singer recently said.

“By being a country that scoffs at the rule of law, they sacrifice so much,” Mr. Singer said in an interview last month. “It makes so much sense for Argentina to sit down with us.”

There are still questions about how far Mr. Macri will go to negotiate. Some of his own advisers have indicated that it is not at the top of the agenda.

For now, the prospect of a new creditor-friendly administration in Argentina has been met with optimism in the market. The benchmark government bonds that expire in 2024 have rallied since Mr. Macri’s ratings first went up in the polls, said Siobhan Morden, head of Latin American fixed income strategy at Nomura.

“I think Argentina will prioritize a normalization of creditor relations, as market access could help smooth the transition,” Ms. Morden said, adding, “As a former Wall Streeter, Caputo has the perfect credentials to lead negotiations.”

Jonathan Gilbert contributed reporting.

3. UNSEEMLY SPAT MARS ARGENTINA’S PRESIDENTIAL TRANSITION (The Wall Street Journal)
By Taos Turner
Dec 9, 2015

Departing President Cristina Kirchner won’t attend Thursday’s inauguration of her successor, Mauricio Macri

BUENOS AIRES—As Argentines inaugurate Mauricio Macri as president on Thursday, one person will be strikingly absent from the scene: departing leader Cristina Kirchner.

Mrs. Kirchner’s surprise decision to skip the ceremony, revealed by a spokesman late Tuesday, makes her the first president since the return of democracy in 1983 to miss her successor’s inauguration. It also marks the culmination of a fiercely personal battle between Mrs. Kirchner and Mr. Macri over how and where the inauguration should take place.

The public spat between the two has befuddled Argentines, led to last-minute litigation and forced the security details of visiting dignitaries to scramble to figure out where they are supposed to be and when.

“We’re a banana republic,” said Liliana Lamens, a 60-year-old nurse. “This kind of thing didn’t happen even when the military dictators handed over power.”

Argentine presidents have traditionally taken the oath of office in Congress and then moved to the Casa Rosada, the pink-hued presidential palace in downtown Buenos Aires, where they received a presidential sash and scepter from the departing head of state.

Mrs. Kirchner insisted, however, that Mr. Macri hold both ceremonies in Congress, as she and her late husband and predecessor Néstor have done since 2003, and where she has many loyal supporters.

In a recent phone call, Mr. Macri told the president he wouldn’t bow to her demands and would do the ceremony his way. Mrs. Kirchner took to Twitter this week to accuse him of “yelling” and “threatening” a “lone woman,” allegations Mr. Macri´s advisers denied.

Mr. Macri led his “Let’s Change” opposition coalition to victory in November´s runoff election against Mrs. Kirchner’s handpicked Peronist party candidate, Daniel Scioli.

Scores of Kirchner allies in Congress have vowed to follow her in ditching the inauguration, raising tensions as Mr. Macri seeks broad support to help pass legislation to overhaul the economy and end a legal dispute with hedge funds in the U.S.

‘I’m not his companion. This is not his birthday party.’ —Departing President Kirchner, referring to Mr. Macri

With the economy in the doldrums and inflation running at around 25% annually, many Argentines said the feud is the last thing they want to hear about. Users of Twitter said more than 210,000 times that Mrs. Kirchner’s decision was an “international embarrassment,” according to Horacio Cairoli of SocialLive.biz, a Buenos Aires-based firm that monitors social media networks.

In her Twitter posts, Mrs. Kirchner said she was trying to play nice. She posted a photo of yellow flowers at the presidential residence and said she had them planted to welcome Mr. Macri, whose party color is yellow. But she also offered a stinging rebuke to the president-elect.

“I’m not his companion,” she said in a Facebook post. “This is not his birthday party.”

Amid the impasse, Mr. Macri went to court to clarify the exact hour when he would become president to determine who had the legal authority to organize the ceremonies. On Tuesday, a federal prosecutor affirmed that Mrs. Kirchner’s term ends at midnight before the inaugural, depriving her of any right to dictate events.

“There is very little difference between this and a coup d’état,” said Oscar Parrilli, a spokesman for Mrs. Kirchner. He said the legal maneuvering would cut her term short and leave Argentina without a president for 12 hours until Mr. Macri is sworn in.

A federal judge affirmed the prosecutor’s opinion on Wednesday and added that a third person, Sen. Federico Pinedo of Mr. Macri’s coalition, would become president briefly before Mr. Macri is sworn in.

The departing president is out to show Mr. Macri that she will continue playing a key role in politics, said Lucía López, a 62-year-old retiree. “I think she’s marking the terrain for Macri and within the Peronist movement,” she said.

Mrs. Kirchner also raised eyebrows this week when her personnel moved to expropriate the official presidential palace Twitter account, @CasaRosadaAR, and prevent the Macri administration from using it. A description on the account, which has until now been used for official government purposes, said it would become dedicated to the Kirchners after Mrs. Kirchner steps down on Thursday.

The dispute has been hard on Juan Carlos Pallarols, the artisan who has been making scepters for Argentina’s presidents since 1983. He said one of his employees was mistreated by a Kirchner administration official who threatened to send in the police if he didn’t turn over the scepter he had made for Mr. Macri. He later got a call from the director of ceremonial affairs at the presidency, apologizing for the incident.

Mr. Pallarols told a local TV station that he hadn’t experienced anything like this since he was pressured by the military dictatorship over the design of a scepter 32 years ago. He said that back then he expected to be treated poorly by people “who threw others out of airplanes,” but that he expected better from people in power these days.

“I’m sad,” he said.

4. INCOMING ARGENTINA FINANCE MINISTER MEETS WITH CREDITORS (The Wall Street Journal)
By Julie Wernau
Dec 9, 2015

Move signals change from previous administration in $10 billion debt battle.

Argentina’s in-coming secretary of finance met with creditors this week who are owed $10 billion in court judgments against the sovereign nation, signaling his intention to settle the long-standing debt battle.

The meeting sends a signal from Argentina’s incoming administration that it plans to reverse the course of outgoing President Cristina Kirchner, who has long referred to holdout creditors stemming from a 2001 sovereign default of more than $80 billion as “vultures.”

The battle between Argentina and the group of creditors, mostly hedge funds, has circled the world as those hedge funds seek out assets owned by Argentina to seize in lieu of payment.

Daniel Pollack, appointed by a U.S. District Judge to oversee negotiations, said no substantial negotiations occurred at the meeting. He said Luis Caputo, the in-coming finance secretary, requested the meeting and expressed “the intention of the new Administration to commence such negotiations promptly after they are sworn into office on Thursday.”

Mauricio Macri, the incoming president and leader of the “Let’s Change” coalition, has been outspoken about the economic policies of his predecessor. The party’s aim is to roll back policies that Mrs. Kirchner implemented as a means to help the working class but that business leaders and investors say have stymied economic growth.

Investors are largely expecting swift changes, including a devaluation of the country’s currency and a settlement with creditors, a move that would broadly open the nation to international capital.

Attempts to contact representatives for the creditors and Argentina weren’t immediately successful.

5. ARGENTINE CENTRAL BANK PRESIDENT QUITS UNDER PRESSURE FROM MACRI (Chicago Tribune)
By Daniel Cancel and Charlie Devereux
December 9, 2015

BUENOS AIRES, Argentina – Argentine Central Bank President Alejandro Vanoli resigned Wednesday under pressure from President-elect Mauricio Macri, who plans to remove currency controls with reserves standing at a nine-year low.

In a six-page letter submitted to outgoing President Cristina Fernandez de Kirchner a day before Macri assumes power, Vanoli defended his time in office while insisting he never intended to become an impediment to the new government, according to a copy released by the bank.

“I take this decision on the back of the electoral result and after a deep period of reflection, with the serenity of spirit that I feel for having shown and defended my duty to our country and people,” Vanoli said in the letter. “It was never my intention to remain in office as an obstacle to the functions of an elected government and nor did I ever conceive of resisting in order to maintain office for personal appetite.”

During 13 months at the central bank, Vanoli used a currency swap system with the Chinese yuan to bolster reserves and maintain a crawling peg. He also used local U.S. dollar futures contracts to damp devaluation expectations. Macri has said Vanoli isn’t qualified to hold the post and has nominated Federico Sturzenegger to replace him.

Macri will be sworn in on Dec. 10 and says he plans to let the peso float from his first full day in office. With the official rate at 9.7 pesos per dollar and the black market at 14.8 per dollar, the outgoing administration say that he’s going to impose a “mega-devaluation” on Argentines and that consumer prices are already rising on expectations.

Vanoli was previously head of the local securities regulator. His last weeks in the post were overshadowed by an opposition probe into alleged “fraud” due to the bank’s intervention in the onshore futures market. Vanoli said the charges are political and even said he had received threatening phone calls.

Sturzenegger, a 49-year-old economist with a doctorate degree from the Massachusetts Institute of Technology, will probably take over. He was president of Banco Ciudad for five years until 2013 and previously taught courses at University of California Los Angeles, Harvard and worked as head economist at energy firm YPF.

“Clearly he’s very qualified for the role,” said Mauro Roca, a New York-based economist at Goldman Sachs. “He seems like a great option, he knows monetary policy extensively and even though he’s inheriting a difficult situation, along with his team he’ll do the best to get it back on track.”

Sturzenegger and Vanoli were scheduled to meet this afternoon, according to a central bank official who can’t be named because they are not authorized to speak publicly.

6. ARGENTINE BANK GOVERNOR BOWS TO PRESSURE FOR RESIGNATION (Financial Times)
By Benedict Mander in Buenos Aires
December 9, 2015

Alejandro Vanoli, Argentina’s central bank governor, has resigned after repeated calls for him to step down by the president-elect, Mauricio Macri, who will be sworn in on Thursday.

Mr Vanoli offered his resignation in a six-page letter to outgoing president Cristina Fernández on Wednesday that contained a vigorous defence of his much-criticised stewardship of the monetary authority, which he will hand over with precariously low foreign exchange reserves.

“Although certain sectors are trying to spread the idea that reserves are ‘at zero’, the reality indicates otherwise,” wrote Mr Vanoli, who argued that the devaluation that Mr Macri is widely expected to implement in order to realign Argentina’s overvalued exchange rate was unnecessary.

“If the president-elect decides to impose a violent devaluation it will be exclusively as a result of a political decision,” wrote Mr Vanoli, who pledged to “continue fighting . . . for a socially just, economically free and politically sovereign country”.

Last month Mr Macri said he would appoint Federico Sturzenegger, a respected economist who turned the lossmaking Banco Ciudad into the most profitable state-owned company before becoming a congressman in 2013, as governor of the central bank.

Mr Vanoli’s resignation comes amid an increasingly messy and, at times, farcical transition of power to the centre-right Mr Macri after a dozen years of leftist rule under Ms Fernández and her husband and predecessor, Néstor Kirchner.

If the president-elect decides to impose a violent devaluation it will be exclusively as a result of a political decision
– Alejandro Vanoli’s resignation letter

After a flurry of extrabudgetary spending decrees and last-minute appointments in recent days, Ms Fernández is now refusing to attend Mr Macri’s inauguration on Thursday in which she would be expected to hang the presidential sash on her successor.

If Mr Sturzenegger’s appointment is approved by congress, he will take over a central bank whose reserves are at an almost 10-year low having plunged by more than half since 2010, from $52bn to less than $25bn, today, according to Mr Vanoli.

However, many economists warn that liquid reserves are dangerously low since they have been used to prop up the peso’s value against the dollar, which is valued at 9.7 pesos at the official exchange rate but commands about 15 pesos on the black market.

Mr Macri called for Mr Vanoli’s resignation at a press conference the day after his election victory, amid outrage at the bank governor’s attempt to prop up the official exchange rate by selling about $17bn of future dollar contracts at an artificially low rate that will cause serious losses for the central bank if the peso is devalued.

7. ARGENTINA SEEKS PROMPT DEBT NEGOTIATIONS, MEDIATOR POLLACK SAYS (Bloomberg News)
By Carolina Millan
December 9, 2015

* Incoming Finance Secretary Caputo met with Pollack in New York
* Pollack met separately with creditors holding $10 billion

Argentina’s new government looks to begin talks with disgruntled creditors leftover from the country’s decade-old debt dispute promptly, according to court-appointed mediator Daniel Pollack.

Pollack said that he met Argentina’s incoming finance secretary, Luis Caputo, earlier this week in his New York office and spoke with representatives of bondholders with $10 billion of judgments in their favor last week, according to an e-mailed statement. No substantive negotiations occurred in either meeting and no new date has been set to resume talks, he said.

“Mr. Caputo expressed to Mr. Pollack the intention of the new administration to commence such negotiations promptly after they are sworn into office on Thursday, December 10,” Pollack said in the statement. “The meeting took place at the request of Mr. Caputo and was introductory in nature.”

The end of President Cristina Fernandez de Kirchner’s presidency starting tomorrow is a turning point in the debt saga that has kept Argentina ostracized from international capital markets since 2001. Outgoing Economy Minister Axel Kicillof had called Pollack biased and called for his removal. He was also called “just another vulture” by the Fernandez administration, a name used to describe the litigating hedge funds led by Paul Singer’s Elliott Management. Macri named former JPMorgan Chase & Co. banker Alfonso Prat-Gay as his Finance Minister who in turn tapped the 50-year-old Caputo, a former head of Deutsche Bank AG in Buenos Aires, to oversee the holdout debt issue and review financing options.

Macri, who campaigned on a platform of economic reform, will inherit a country with inflation at an estimated 25 percent and foreign reserves at a nine-year low. He’s seeking tough negotiations with the holdout creditors to resolve the dispute and regain access to foreign bond markets. Argentina defaulted for a second time last year after Fernandez refused to abide by a U.S. court order to repay the creditors.

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8. ARGENTINE PRESIDENTIAL FEUD TURNS INAUGURATION CEREMONY TO FARCE (Bloomberg News)
By Daniel Cancel
December 9, 2015

* Outgoing president refuses to attend Thursday’s ceremony
* Cabinet Chief says legal complaint was trigger for absence

Argentina’s presidential inauguration ceremony on Thursday has taken a farcical turn after outgoing President Cristina Fernandez de Kirchner refused to attend and hang the sash on her successor.

The decision comes after President-Elect Mauricio Macri asked a federal court to rule that Fernandez’s presidency ends tonight at midnight rather than tomorrow. The request makes it impossible for her to oversee the ceremony, her Cabinet Chief Anibal Fernandez told reporters in Buenos Aires.

“The President has made the decision, there aren’t the appropriate conditions for her to be present,” Fernandez said. “It could even be risky for her to attend.”

Macri made the request to end Fernandez’s period in office early after her government filled the pages of the official gazette in the past few weeks with last minute hirings, extra budgetary spending decrees and the naming of ambassadors. The conflict turned petty last week when Fernandez accused Macri of raising his voice to her in a dispute over the location for the inauguration ceremony.

“This measure is intended to prevent the President from taking decisions that could affect the incoming authorities in the inauguration ceremony on Dec. 10,” the legal filing said.

Fernandez sent about 80 messages last week from her Twitter account complaining about Macri and the inauguration ceremony. The profile of the official Twitter page for the Casa Rosada, as the presidential palace is known, was even changed to show allegiance to the Kirchners and says it will be non-official starting Dec. 10.

The bickering follows years of tension between the former mayor of Buenos Aires and the president, when their offices faced each other across the central square. Fernandez has often warned that the opposition would unwind her social policies and hand decisions over to the International Monetary Fund, the U.S. and corporate interests. While she received Macri at the presidential residence after his victory in a runoff on Nov. 22, there were no pictures from the meeting or video.

Fernandez will speak at a rally today in Buenos Aires during her last full day as president and unveil a bust of her late husband Nestor Kirchner at the presidential palace. She plans to take a commercial flight to her home province of Santa Cruz tomorrow where her sister-in-law is being sworn in as governor. Her son Maximo will be a lawmaker in Congress.

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9. MACRI’S CHALLENGE: RESTORE ARGENTINA’S LONG-LOST ECONOMIC POWER (Reuters News)
By Hugh Bronstein
Dec 10, 2015

Mauricio Macri takes over as president of Argentina on Thursday, promising to harness its vast natural resources and jettison populist policies to revive an economy that has for decades fallen short of its potential.

If he gets it right, investment could stream into the country, given its Pampas grains belt, promising technology sector, highly educated work force and some of the world’s juiciest shale oil deposits.

Outgoing leader Cristina Fernandez is from the populist tradition of Juan Domingo Peron, and his iconic wife Evita, who expanded the reach of the state in the 1940s.

During her eight years in power Fernandez ring-fenced Argentina with protectionist trade policies meant to bolster local industry. She increased welfare spending at a time when millions of Argentines needed help climbing out of poverty after a devastating 2002 economic crisis.

Aided by high world grains prices, her first years in power saw strong economic growth. But the end of the commodities boom combined with heavy government spending and currency controls to hit growth and send inflation soaring to well above 20 percent.

Macri, a conservative businessman and mayor of Buenos Aires, won the presidential election last month by pledging to ease trade and currency controls and give the free market a chance.

“The only way to fight poverty is to create more jobs,” he said, emphasizing the bigger role the private sector is to play.

The enmity between Fernandez and Macri has risen to the point where Fernandez and her allies say they would not attend Macri’s inauguration.

Supporters say the changes he will bring in are long overdue, but he will have to tread carefully if he is to cut state spending to sustainable levels without pushing the troubled economy into recession.

SHARES SOARING

“With the resources this country has, there’s no reason for our economy to be stalled or imports to be blocked,” said Teresita Ugolini, a 70-year-old cosmetologist who remembers the open export policies that once transferred the wealth of the Pampas to the cosmopolitan boulevards of Buenos Aires.
In 1930, Argentina was the world’s No. 6 economy with a gross domestic product bigger than the rest of Latin America combined, but financial mismanagement and political instability in recent decades have caused one crisis after another.

Macri wants to light a fire under exports by letting the overvalued peso currency weaken, and to settle a politically sensitive lawsuit filed by U.S. hedge funds who are demanding full repayment of debt Argentina defaulted on in 2002.

A settlement would open up much-needed international bond financing, and Macri’s team knows its way around Wall Street.

Incoming finance minister Alfonso Prat-Gay was global head of foreign-exchange research at JP Morgan before leading Argentina’s central bank from 2002 to 2004.
The local Merval stock index has risen 17 percent since Macri did better than expected in the first round of the presidential election and then went on to beat the candidate from Fernandez’s party in a run-off.

Continued optimism depends on quick action on issues like closing a 50 percent gap between the official and black market currency exchange rates, and freeing up farm exports.

Corn and wheat planting have been stunted by export quotas meant to control local food prices. Farmers say the quotas kill profitability by over-supplying the local grains market.

Macri says he will immediately ditch the quotas. He also vows to eliminate export taxes on corn and wheat while steadily lowering a levy on soy exports.

“Macri needs to get some immediate points on the board to justify the confidence that exists on things like exchange rate unification and elimination of farm export taxes,” said Gary Kleiman, of Kleiman International Consultants in Washington.

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10. ARGENTINA’S FERNANDEZ TO SKIP MACRI INAUGURATION IN ROW OVER SITE (Reuters News)
By Richard Lough and Jeffrey Benkoe
Dec 9, 2015

Argentina’s President Cristina Fernandez will skip the swearing-in of her conservative successor Mauricio Macri, top government officials said, as a row between the two reached a crescendo a day ahead of the ceremony.

Macri, who narrowly won the Nov. 22 runoff election, wants to receive the presidential sash and baton in the Pink House presidential palace. Fernandez, however, insists the full swearing-in ceremony take place in Congress, where Fernandez’s Front for Victory party holds the most seats.

Her refusal to participate comes after Macri took the dispute over the ceremony to the law courts, seeking an injunction affirming that Fernandez’s term would end at midnight on Wednesday.

It would be the first time since the 1983 end of Argentina’s military dictatorship that a president has not attended the inauguration of an elected successor.

Fernandez’s intelligence chief, Oscar Parrilli, said late Tuesday there was “little difference between this and a coup,” referring to Macri’s petition before the court, adding the conditions were not right for the outgoing leader to attend.
Macri’s victory turned Argentine politics on its head, ending twelve years of leftist populism under Fernandez and her late husband and predecessor, Nestor Kirchner, with a promise to remove state controls on the economy and open the doors to investors.

Parrilli and Fernandez’s chief-of-staff, Eduardo de Pedro, met with close aides to Macri on Tuesday but the talks broke down.
A spokesman for Macri could not be reached immediately.

Fernandez’s cabinet chief, Anibal Fernandez, blasted Macri’s move to go to the courts, calling it “incomprehensible.”
“History is going to look down on them badly,” Fernandez said his daily briefing to reporters.

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11. INCOMING ARGENTINE OFFICIAL WILL ‘PROMPTLY’ BEGIN DEBT TALKS: MEDIATOR (Reuters News)
By Nate Raymond
Dec 9, 2015

NEW YORK – A court-appointed mediator in the Argentina debt dispute said on Wednesday that the country’s incoming secretary of finance intends to begin settlement talks in the long-running litigation “promptly.”

Daniel Pollack, a New York lawyer appointed to oversee the settlement discussions, confirmed he had a meeting earlier this week at his offices with the incoming finance official, Luis Caputo.

Pollack said Caputo expressed the intention of the new administration to commence settlement negotiations “promptly” after Argentine President-elect Mauricio Macri is sworn into office on Thursday.
Pollack said he also met a week earlier with representatives of bondholders holding $10 billion in judgments against Argentina. No substantive negotiations to resolve the litigation occurred at either meeting, he said in a statement.

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12. ARGENTINE CENBANK CHIEF WILLING TO QUIT, UNDER PRESSURE TO STAY (Reuters News)
By Jorge Otaola
Dec 9, 2015

Dec 9 -Argentine central bank chief Alejandro Vanoli is willing to resign ahead of Thursday’s inauguration of President-elect Mauricio Macri but is under pressure from the outgoing government to stay in his post, a central bank source said on Wednesday.

Vanoli’s resignation would pave the way for Macri to press ahead with unwinding capital controls and unifying the exchange rate, a central plank of his campaign promise to liberalize Latin America’s third biggest economy.

Vanoli is a trusted ally of outgoing President Cristina Fernandez and has criticized Macri’s monetary policy plans, which he says will lead to a sharp devaluation and a spike in inflation.

His mandate ends in 2019 but he has said he will not stand in Macri’s way if the new president insists on a sharp weakening of the peso currency.

“He knows that the most logical thing to do is resign because he will find himself on a collision course with Macri’s decisions, but he is facing pressure from the government which doesn’t want to do the incoming government a favor,” said the source who is familiar with Vanoli’s thinking.
Vanoli could not be reached for comment.

Relations between Fernandez and Macri ahead of the handover of power have fallen to such a low ebb that top government officials say Fernandez will not attend the inauguration ceremony.
Vanoli declared last week that he would make an announcement on his future within days, saying that he would likely make his statement over the weekend. But he remained silent.

Argentina’s financial markets expect him to step down and traders say it is just a question of timing.

Macri, who narrowly won a runoff election on Nov. 22, wants to appoint respected economist and congressman Federico Sturzenegger as central bank chief.
The central bank source said that Vanoli and Sturzenegger were meeting on Wednesday.

“At the markets close there may be an announcement,” the source said.

Argentina’s stock exchange is the last market in the country to close, at 5 p.m. (2000 GMT).

Currency reform can probably only begin once a new bank president takes office and it is clear there will be a sufficient supply of dollars, Macri’s nominee for finance minister said over the weekend.

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13. ARGENTINA’S BLOATED PUBLIC PAYROLL A THORN IN MACRI’S SIDE (Reuters News)
By Sarah Marsh
Dec 9, 2015

Dec 9 – Roberto Sanchez faced death threats, tire-burning protesters and a siege of his town hall last month after taking power as mayor in a backwater town in northern Argentina and vowing to reduce the bloated public sector
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