Archive for 26 diciembre 2016


26 diciembre, 2016


Argentina Christmas update

25 diciembre, 2016







By Matt O’Brien
December 22, 2016

Argentina could have been the United States.

Like the U.S., it was one of the world’s 10 richest countries at the turn of the last century. And also like the U.S., that made it a New World magnet for Old World immigrants. But unlike the U.S., that was as good as it ever got. There was no Argentinian Dream. Just a nearly never-ending nightmare of either falling behind gradually or falling behind suddenly. All of which was self-inflicted.

Its fundamental problem was how unequal it was. About 300 families controlled most of the land, the economy, and the government. Everyone else was just a cog in their beef-and-grain-exporting machine. Or, as the Financial Times’s Alan Beattie has put it, Argentina is “what North America might have looked” like “if the South had won the Civil War and gone on to dominate the North.” Which is to say that it was a semi-feudal aristocracy dependent on a steady supply of cheap labor.

If this sounds like a good way to start a class war, that’s because it was. Up until recently, Argentina had spent most of the last 100 years alternating between left-wing populists who promised to share the country’s wealth, and right-wing military dictatorships that tried to stop that from happening. And, of course, with the stakes so high, neither side was willing to play by the rules. The Peronists tried to tip elections in their favor by locking up the opposition’s leaders, shutting down their newspapers, and getting rid of unions that weren’t loyal to the regime. The army, meanwhile, didn’t bother with any kind of democratic pretense. It launched coup after coup after coup, outlawing the Peronist Party, and, in the 1970s, “disappearing” tens of thousands of activists and ordinary people too.

Argentina is a reminder of one of the most forgotten caveats in history. Class struggle, Marx said, would either end “in a revolutionary reconstitution of society at large” or “in the common ruin of the contending classes.” We might want to put a little more emphasis on that second part.

Argentina, though, hasn’t just been hurt by people fighting over power. It’s also been hurt by what people have done in power. Right-wing governments had no interest in educating the workers or investing in anything other than the landowners’ exports. And left-wing governments just nationalized industries, protected others with tariffs, and made promises they could only afford by printing money. The result was a century of inflation and stagnation. As The Economist points out, Argentina went from having an income per capita that was 92 percent of 16 of the richest countries in 1914 to just 43 percent today. The irony, of course, is that even when Argentina did open up its economy and try to cure its congenital inflation in the 1990s, the way it did so—pegging the peso to the dollar one-to-one—made it unable to respond to even the smallest shock. So when one came along, Argentina ended up in its own private Great Depression.

The point is that nothing is inevitable. The arc of the political universe is long, and it doesn’t have to bend toward progress or justice or anything else good. It can point backwards if that’s where we aim it. And we might. Like Argentina, we have high levels of inequality. And also like Argentina, we have pretty extreme political polarization. But what really might make us like Argentina is if we have politicians who deride expertise, who think that policy is something that fits into 140 characters, and who hint that elections are only something you have to respect if you win.

The United States, in other words, could still be Argentina.

By Luc Cohen
Dec 23, 2016

Argentina’s economy shrank in the third quarter, remaining in recession as inflation ate into consumer purchasing power and weak activity in top trading partner Brazil hurt manufacturing, government data showed on Thursday.

Economic activity fell 0.2 percent in the July-to-September period, marking the fourth straight quarter of contraction. Compared with the same period in 2015, the economy shrank 3.8 percent, the second straight quarter of year-on-year declines, government statistics agency INDEC said.

Growth has been elusive during the first year of center-right President Mauricio Macri’s administration. Since taking office last December, ending more than a decade of leftist rule, Macri has implemented free-market measures to revive the economy and attract foreign investment.

Earlier this year, Finance Minister Alfonso Prat-Gay said the economy would likely grow in the third quarter. But investments have been slow to arrive and inflation reaching 40 percent this year has hurt domestic consumption.

Cumulatively, the economy fell 2.4 percent during the first three quarters of the year compared with the same period last year.

“This confirms that the recovery has been delayed longer than we expected,” said Alejo Costa, chief strategist at Buenos Aires-based brokerage Puente.

The government expects the economy will expand 3.5 percent next year, though private economists’ forecasts are lower at a median of 3.0 percent.

The quarter-on-quarter contraction was less severe than the previous three quarters, boosted by higher public works spending and a more expansionary monetary policy from the central bank, Costa said.

He added that November data showed signs that a rebound was beginning, with public works boosting construction activity, increasing demand for materials like steel and cement. Government data on November economic activity is expected next week.

Macri is counting on public works spending to drive growth next year ahead of legislative elections in October to prevent his “Let’s Change” coalition, which lacks a majority, from losing ground in Congress.

The public sector grew 1.2 percent in the third quarter, while social services and health care grew 2.4 percent.

The country’s key agriculture sector fell 2.8 percent in the third quarter compared with the same period last year, while manufacturing activity fell by 8 percent. Construction fell 12.9 percent year-over-year.

INDEC revised its GDP figures for the first and second quarters to contractions of 0.8 percent and 1.9 percent, respectively, compared with 0.5 percent and 2.1 percent previously.

By Luc Cohen
Dec 22, 2016

Argentina’s congress approved a reform to the country’s income tax code on Thursday after President Mauricio Macri’s government reached a deal with unions and governors to quash a competing proposal from opposition lawmakers.

Last month, Macri’s center-right administration proposed a reform in line with its goal of trimming next year’s budget deficit to 4.2 percent of gross domestic product. But in a rare show of unity, the lower house opposition passed its own version with far more generous tax cuts, forcing the government to negotiate.

The lower house passed the measure by a 166-5 vote, after it easily passed the Senate 55-2 on Wednesday.

Economists said the law passed on Thursday was closer to the government’s original proposal than the opposition’s project and would not threaten Macri’s efforts to trim the 2017 deficit.

But the episode nonetheless unnerved investors by raising the likelihood that a divided Peronist opposition can unite to prevent Macri, whose “Let’s Change” coalition lacks a legislative majority, from passing additional market-friendly reforms ahead of midterm congressional elections in October.

“With this law, investors discovered how vicious the Peronist part could be when they smell blood,” said Jorge Piedrahita, CEO of broker Torino Capital. He noted that Macri remains politically vulnerable if he cannot revive an economy that is still in recession a year after he took office.

At issue in the income tax debate was how much to raise the minimum taxable income level, as rampant inflation seen at 40 percent this year and 20 percent next year has eroded Argentines’ purchasing power.

The law passed on Thursday raises the minimum taxable income level by 23 percent to 37,000 pesos ($2,377.93) a month for a married couple with two children, more than the government’s initial proposal but less than the opposition plan. The government will make up for some of the shortfall with a tax on gambling.

The revised law will reduce government revenue by 7 billion pesos ($443.88 million) next year compared with the initial proposal.

While not disastrous, the rise in interest rates globally has raised the stakes for Macri’s ability to meet fiscal targets, said Marcos Buscaglia, founding partner at consultancy Alberdi Partners in Buenos Aires.

“The financing of 2017 is an uphill task,” Buscaglia said. “They still have to issue a lot of bonds, and the international situation has become more challenging.” ($1 = 15.7700 Argentine pesos) (Reporting by Luc Cohen and Buenos Aires newsroom; Editing by Dan Grebler)

By Martin Langfield
Dec 22, 2016

Latin America’s rightward turn will face serious tests in the next few months. Several countries in the region have shunned leftist populism of late as a reaction to leaders’ economic ineptitude. But if their pro-business successors deliver all the pain of austerity without decent growth, they’ll face renewed opposition, whether at the ballot box or on the streets.

Argentina’s President Mauricio Macri took office in December 2015 on a promise to undo the damage wrought by his statist predecessor, free-spending Peronist Cristina Fernandez. He hasn’t skimped on the pain, lifting currency and trade controls and slashing government spending in a blitz that has sparked regular protests. Growth has not picked up as he promised, however. Economists polled by the central bank in November estimate GDP will shrink 2 percent in 2016. That may flip to a 3.2 percent expansion next year, but Macri needs recovery to be front-loaded: mid-term elections are in October.

His counterpart in Brazil, Michel Temer, has similarly been pushing through a dose of economic orthodoxy since taking over from his impeached leftist predecessor, Dilma Rousseff, in August. He will try to get unpopular reforms to the country’s unsustainable pension system through Congress in 2017, a key plank in his bid to restore investor confidence. Such bitter pills would be sweetened by recovery after a huge downturn under Rousseff, but economists reckon 2017 GDP will grow less than 1 percent. If Temer can’t show results, a like-minded pro-business candidate could struggle in 2018 presidential elections.

Chile may provide the biggest surprise. It boasts a long-running duopoly of fiscally prudent center-left and center-right coalitions. But there’s a risk this may unravel in the country’s presidential and legislative elections in November. If the region’s rightward swing holds, conservative former President Sebastian Piñera will succeed the outgoing Michelle Bachelet, a moderate leftist. But independent parties did unusually well in October’s local polls and Chileans are increasingly disenchanted with conventional politicians of all stripes. That may open the door for an anti-establishment politician like left-leaning Senator Alejandro Guillier.

Populism is harmful, whether of left or right. The passing of Cuba’s Fidel Castro laid to rest a certain kind of self-appointed savior. Latin America, like the rest of the world, needs fewer authoritarian blowhards, not more.

By Almudena Calatrava
23 December 2016

The children said they wailed as the two Roman Catholic priests repeatedly raped them inside the small school chapel in remote northwestern Argentina. Only their tormentors would have heard their cries since the other children at the school were deaf.

The clerical sex abuse scandal unfolding at the Antonio Provolo Institute for hearing impaired children in Mendoza province would be shocking enough on its own. Except that dozens of students in the Provolo Institute’s school in Italy were similarly abused for decades, allegedly by the same priest who now stands accused of raping and molesting young deaf Argentines.

And the Vatican knew about him since at least 2009, when the Italy victims went public with tales of shocking abuse against the most vulnerable of children and named names. In 2014, the Italian victims wrote directly to Pope Francis again naming the Rev. Nicola Corradi as a pedophile and flagged that he was living in Francis’ native Argentina. Yet apparently, nothing was done.

At least 24 students of the Provolo institute in Argentina have now come forward seeking justice for the abuse they say they suffered at the hands of Corradi, 82, another priest, the Rev. Horacio Corbacho, 55, and three other men. The five were arrested in late November by police who raided the school and found magazines featuring naked women and about $34,000 in Corradi’s room.

All the suspects are being held at a jail in Mendoza and have not spoken publicly since their arrest.

“From the pope down … all of the Catholic Church hierarchy is the same. They all knew,” one of the Mendoza victims told The Associated Press through a sign language interpreter.

Another victim said the priests would rape again if released.

“This happened in Italy … it happened again here, and it must end,” the victim said, insisting on speaking anonymously. “Enough!”

Victims and prosecutors say the anal and vaginal rapes, fondling and oral sex by the priests took place in the bathrooms, dorms, garden and a basement at the school in Lujan de Cuyo, a city about 620 miles (1,000 kilometers) northwest of Buenos Aires.

The school has “a little chapel with an image of the Virgin and some chairs where the kids would get confession and receive the communion. That’s where some of the acts were happening,” Fabrizio Sidoti, the prosecutor who has been leading the investigation since the scandal broke, told the AP.

Children from other regions of Argentina who lived at the dorms were especially vulnerable and often targeted by the abusers. The tales are harrowing: One of the victims told the AP she witnessed how a girl was raped by one priest while the other one forced her to give him oral sex.

The prosecutor is expecting more than 20 other people to provide testimony and more victims to come forward.

Pope Francis has not spoken publicly about the case and the Vatican declined to comment.

Advocates of sex abuse victims by priests question how Francis could have been unaware of Corradi’s misdeeds, given he was publicly named by the Italy victims.

“No other pope has spoken as passionately about the evil of child sex abuse as Francis. No other pope has invoked ‘zero tolerance’ as often. No other pope has promised accountability of church superiors,” said Anne Barrett Doyle, co-director of BishopAccountability, an online resource about clerical abuse. “In light of the crimes against the helpless children in Mendoza, the Pope’s assurances seem empty indeed.”

On Dec. 11, the pope appeared in a video using sign language to wish deaf people worldwide a merry Christmas — a gesture that fell particularly flat in Argentina as Catholics struggle with the enormity of the scandal.

“Either he lives outside of reality or this is enormously cynical … it’s a mockery,” said Carlos Lombardi, an attorney who specializes in canon law.

The Provolo case first exploded in Italy in 2009, when the Italian victims went public with stories of abuse after what they said were three useless years of negotiations with the diocese of Verona, where the institute has its Italy headquarters.

The 67 victims alleged sexual abuse, pedophilia and corporal punishment at the hands of priests, brothers and lay religious from the 1950s to the 1980s. At the time, 14 of the victims wrote sworn statements and videotaped their testimony detailing the abuse they suffered. They named 24 priests, lay religious and religious brothers in a list that was published online.

Corradi was one of those included in the list, which specified he was in Argentina at that time.

In 2010, the Vatican ordered the Verona diocese to investigate the claims. One of the victims named Corradi during the inquiry.

But he apparently was never sanctioned. Five other accused were.

The Italian victims didn’t stop.

On Dec. 31, 2013, they wrote to the pope asking him to institute an independent commission of inquiry to investigate clerical sex abuse in Italy.

On Oct. 20, 2014, they wrote Francis and the Verona bishop naming 14 priests and lay religious from the institute who were still alive and in ministry who allegedly had sexually abused them. They named Corradi, and noted that he and three others were in Argentina.

“We must point out that the behavior of the church is not in the least bit in line with the ‘zero tolerance’ stance of Pope Francis,” they wrote, listing the 14 priests and their current locations. “Such behavior makes us think that the church has no interest in the suffering provoked by priests who sexually abused deaf children, priests who continue to live their lives normally, priests who never apologized to victims, priests who never asked forgiveness and for whom the church itself attempts to let the time pass in hopes that everything is forgotten.”

No response was immediately received.

More than two years later, the Vatican’s No. 3 official, Monsignor Angelo Becciu, acknowledged receipt of the letters. In a Feb. 5, 2016, response, he said that as far as the Provolo victims’ request for a commission of inquiry was concerned, he had forwarded the proposal to the Italian Bishops’ Conference.

The Italian Bishops’ Conference didn’t respond to an email seeking comment on whether such a commission was under consideration.

“I’m convinced that some hierarchy covered this up. They sent the wolf to take care of the sheep,” said Alejandro Gulle, the chief prosecutor in Mendoza.

The Mendoza Archbishopric says it was unaware of the accusations against Corradi. “A religious man comes to a diocese and you trust the legitimate superior,” spokesman Marcelo De Benedectis said.

He said that allegations aired by the case have been “so outrageous,” the Mendoza diocese has taken measures like demanding a sworn statement from religious people stating that they don’t have “backgrounds” under canon or civil law.

The Vatican’s Congregation for the Doctrine of the Faith has been informed about the Mendoza accusations, he added.

Unlike the Verona case, the alleged crimes in Mendoza have not expired due to the statute of limitations and could lead to up to 50-year jail sentences for a conviction.

A prosecutor is also probing accusations by a man who says he was abused at the Provolo Institute in the city of La Plata when Corradi first arrived in Argentina in the 1980s.

“We want justice to be served. We might be able to get long sentences. I hope they’re the maximum,” said Gulle, the Mendoza prosecutor. “But we’ll never compensate the spiritual damage suffered by these children.”

By Victor Caivano and Almudena Calatrava
23 December 2016

BUENOS AIRES, Argentina (AP) — A court in Argentina has indicted Justin Bieber for allegedly sending his bodyguards to beat up a photographer and take his camera equipment outside a Buenos Aires nightclub three years ago.

Court clerk Soledad Nieto confirmed the decision to the Associated Press on Thursday. She said Judge Alberto Banos did not issue an arrest warrant and the Canadian pop idol can appeal the court decision, which was signed Wednesday and surfaced late in the day.

Argentine photographer Diego Pesoa alleges he was chased down and beaten on Nov. 9, 2013, by Bieber’s bodyguards outside the INK nightclub, where the singer and his entourage partied during his South American tour. Pesoa also said the bodyguards took some of his camera equipment.

Pesoa’s lawyer, Matias Morla, celebrated the judge’s decision, saying that he had acted without being pressured by Bieber’s fame, and instead “treated him like anyone else.”

Morla also said that the judge has ordered the preventive seizure of about $28,000 from Bieber to cover potential legal costs. To collect the money, Morla said he would ask the judge to request U.S. authorities to embargo some of Bieber’s goods in Los Angeles.

An email message sent to Bieber’s manager, Scooter Braun, was not immediately returned Thursday.

Bieber apologized during his Argentina trip for defiling the national flag on stage and got into trouble with police elsewhere during the tour for allegedly spraying graffiti in Brazil and Colombia.

In June, Bieber said on his Twitter account that he would like to play in Argentina on his Purpose Tour but “until the legal conditions change there I can’t.”

Hundreds of his fans, known as “Beliebers,” then marched in Buenos Aires carrying signs saying “Argentina Needs Justin” and “Right To Music,” asking the judge to let the singer perform in Argentina.

Bieber has not returned to answer questions about the alleged attack. His tour goes to Latin America in 2017 but there are no dates published for Argentina.

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Argentine update – Dec 15, 2016

16 diciembre, 2016



3. ARGENTINA: COUNTRY FORECAST SUMMARY (Economist Intelligence Unit – ViewsWire)

4. ARGENTINA: ECONOMIC STRUCTURE (Economist Intelligence Unit – ViewsWire)

5. ARGENTINA: KEY DEVELOPMENTS (Economist Intelligence Unit – ViewsWire)



By Luis Andres Henao
December 14, 2016
BUENOS AIRES, Argentina — Venezuela’s foreign minister threatened to enter Argentina’s foreign ministry through a window if necessary Wednesday, but she still didn’t get into a meeting of South American countries that suspended her nation from the Mercosur trade bloc.

Police were forced to intervene after Delcy Rodriguez arrived at Argentina’s foreign ministry and accused other Mercosur members who have been critical of her government of conspiring against Venezuela.

Rodriguez was eventually allowed to enter the ministry, send tweets and “enjoy the building,” Argentine Foreign Minister Susana Malcorra said at a news conference. But Malcorra said the Venezuelan was not allowed to attend the meeting and she told Rodriguez in person that Venezuela was not invited.

“I want to be very clear: You never go to a summit, to a multilateral meeting without authorization,” Malcorra said. “This led to a complex situation that I would have preferred to avoid where the foreign minister wanted to enter, in her words: through the door or through a window.”

Mercosur accepted Venezuela as a member when South America was dominated by leftist governments in an effort to link the region’s biggest agricultural and energy markets.

But socialist-run Venezuela fell afoul of its neighbors as it cracked down on the political opposition while conservative governments assumed power in Argentina and Brazil. Venezuela’s regional influence also waned as it cut back on oil shipments once provided to allies at cut-rate prices.

Venezuela was suspended from Mercosur earlier this month over what other member nations said was its failure to comply with commitments on democracy and human rights that it made when it joined the group in 2012.

Malcorra said that Mercosur will use mechanisms for resolving conflicts and that she remains hopeful Venezuela can adopt the standards required for membership.

“We’re waiting for Venezuela to do its part and meet its obligations,” Malcorra said. “When that happens, Venezuela will be welcomed back into Mercosur.”

By Caroline Stauffer
Dec 14, 2016

Dec 14 Argentina is in talks to buy four C-295 aircraft manufactured by Europe’s Airbus Group SE as it moves to replace an outdated military fleet, a navy spokesman said on Wednesday.

Purchase of the twin-turboprop tactical military transport planes for the navy and air force could take up to two years to complete, the spokesman said.

Argentina’s state-run news agency Telam said the four planes were meant to help replace a fleet of F-27s, the last of which was retired in November.

The amount Argentina is willing to pay for new planes is unknown.

Telam also said Airbus had signed an agreement with Argentina’s aircraft factory (FadeA) earlier this year giving FadeA a role in manufacturing planes.

Airbus did not immediately respond to a request for comment.

3. ARGENTINA: COUNTRY FORECAST SUMMARY (Economist Intelligence Unit – ViewsWire)
13 December 2016

Country forecast overview: Highlights

* The president, Mauricio Macri, of the centre-right Propuesta Republicana (Pro), is pressing ahead with a programme of economic policy adjustment in an effort to eliminate distortions and return the economy to sustainable growth. The adjustment process is proving a difficult one, involving politically unpopular austerity measures, and the risk of social unrest will therefore remain significant for much of the forecast period.

* Given the president’s minority position in Congress, and the priority given to urgent macroeconomic reforms, there is likely to be limited progress on the pursuit of legislation that would successfully address long-standing institutional weaknesses and structural constraints to growth. Comprehensive reforms to strengthen bureaucracy, reduce corruption or enhance the effectiveness and independence of the judiciary will be slow. Furthermore, The Economist Intelligence Unit does not expect meaningful advances-at least in the short term-on a structural reform agenda (incorporating tax and labour market reform) that could improve long-term potential growth rates.

* After a contraction in real GDP in 2016 reflecting macroeconomic policy tightening and currency depreciation, we are forecasting a pick-up in exports, investment and private consumption in the medium term. There will be a business confidence boost from policy tightening. Combined with macroeconomic adjustment, and a gradual removal of foreign-exchange and import controls, these policies should set the economy on a more solid long-term footing. However, some aspects of the policymaking environment will remain tricky, with labour-market reform and a comprehensive fiscal reform remaining low on the agenda.

* Currency adjustment should gradually bolster the current account as a weaker peso starts to boost goods and services exports and rein in imports. On this basis, we expect the current-account deficit to narrow in 2017-21. We also expect the country’s ability to finance moderate current-account deficits to improve over the forecast period, assuming that capital inflows pick up as investor confidence in the Macri administration grows.

* Argentina’s GDP per head is still among the highest in the region and, combined with improved access to credit, moderate rates of economic growth in the medium term will boost purchasing power and create market opportunities. Still-high poverty rates and income inequality will restrict the pool of consumers, but to a lesser extent than in many other countries in the region.

Country forecast overview: Key indicators

Key indicators 2016 2017 2018 2019 2020 2021
Real GDP growth (%) -2.2 2.5 3.7 2.9 3.3 3.3
Consumer price inflation (av; %) 41.3 22.2 12.8 9.3 7.9 6.3
Budget balance (% of GDP) -5.3 -4.9 -4.2 -3.6 -3.1 -2.9
Current-account balance (% of GDP) -2.6 -1.9 -1.5 -1.6 -1.5 -1.5
Lending rate (av; %) 31.3 23.1 16.2 11.7 10.0 8.7
Exchange rate Ps:US$ (av) 14.8 17.0 19.0 20.7 22.1 23.5

4. ARGENTINA: ECONOMIC STRUCTURE (Economist Intelligence Unit – ViewsWire)
13 December 2016

Data and charts: Annual trends charts

Data and charts: Quarterly trends charts

Data and charts: Monthly trends charts

5. ARGENTINA: KEY DEVELOPMENTS (Economist Intelligence Unit – ViewsWire)
13 December 2016

Outlook for 2017-21

* In his first year of office, the president, Mauricio Macri, has introduced substantial policy adjustments as his administration works to reduce economic distortions and return the economy to sustainable growth.

* The combined effect of high inflation and subsidy cuts is hitting consumers hard, and their patience with adjustment is wearing thin. This poses risks to governability but, so far, relations with Congress remain fairly good.

* After a contraction of 2.2% in 2016, we are projecting a solid recovery in GDP in 2017-18, taking growth to 3.7% in full-year 2018. However, weak external conditions will drag down growth in the second half of 2018 and in 2019-21.

* After a post-devaluation spike in inflation in 2016, we expect easing in 2017-21 on the back of fiscal tightening and increased domestic output. The shift to an inflation-targeting framework will support price stability.

* The peso will continue to depreciate gradually in nominal terms (following devaluation at end-2015) in 2017-21, as substantial dollar demand amid rising imports will be countered by solid capital inflows.

* Currency adjustment should gradually bolster the current account as a weaker peso starts to boost goods and services exports, and dampen imports. As a result, the current-account deficit will gradually narrow in 2017-21.

* The Economist Intelligence Unit expects capital inflows to pick up in 2017, reflecting moves to address economic imbalances and a weak legal frame-work. This will support higher foreign-exchange reserves and import cover.


* The government has agreed to support legislation declaring a “social emergency” that will see more funds dedicated to social groups in 2017-19. Government, business and unions have also agreed a temporary firing freeze.

* The government has also presented a proposal for income tax reform to Congress, with the aim of reducing the tax burden of lower-income taxpayers.

* After an initial setback in the Chamber of Deputies (the lower house of Congress), the government has succeeded in passing framework legislation guiding public-private partnerships (PPPs), which is expected to boost investment in infrastructure and support the economic recovery.

* In Argentina’s first Article IV consultation in a decade, the IMF has expressed broad support for the country’s economic policies. A normalisation of relations with the IMF represents another encouraging sign in the govern-ment’s efforts to restore trade and investment relations with key partners.

* Consumer prices rose by 2.4% month on month in October, reflecting the one-off impact of increases in utilities tariffs. Core inflation came in at 1.8%.

13 December 2016


The Banco Central de la República Argentina (the Central Bank) has loosened restrictions on US dollar-denominated lending to the government for the first time since the 2001-02 crisis.


Argentina’s financial crisis of 2001-02 was driven in part by currency mismatches on banks’ balance sheets. The restrictions on dollar lending to the public sector were put in place in the aftermath of the crisis to help to address the problem. Restrictions have now been loosened in response to rapid growth in dollar-denominated deposits, reflecting inflows emanating from a tax amnesty on undeclared financial assets this year. Another factor contributing to the change is likely to have been the expectation of higher financing costs for emerging markets in the wake of Donald Trump’s victory in the US presidential election in November, which risks complicating the government’s external financing plans.

Under the new regulations, banks will be able to underwrite dollar-denominated Treasury bonds for an amount equivalent to half that lent to the private sector. At the end of November dollar-denominated deposits amounted to US$27.1bn, while dollar-denominated loans totalled US$9bn, which means that at present the government will be able to borrow around US$4.5bn from banks, although this figure is likely to rise. In 2017 government financing needs are likely to come to around US$30bn.

Under previous regulations, bank lending in dollars had been restricted to exporters with revenue streams in dollars. Regulations have been eased to some extent for the private sector as well to include suppliers of exporters. The loosening of restrictions on public-sector borrowing in dollars comes with the stipulation that the government’s ability to collect export or import taxes must be considered by banks at the time of underwriting. The government has, in fact, lifted most export taxes since it took office in December 2015, although hard-currency revenue from taxes on soya exports will continue.

Critics have suggested that the new regulations send a signal of continued government influence over Central Bank operations. However, the Central Bank governor, Federico Sturzenegger, asserts that the goal of the latest measure is merely to activate the high level of idle dollar liabilities by increasing regulatory flexibility.

By Elizabeth King
December 14, 2016

In December 2001, Argentina was thrown into chaos. The worst violence the South American nation had seen since the early 1980s raged across the country as president Fernando de la Rúa resigned: 39 people were killed, the economy tanked, and police became aggressive against civilian demonstrators.

But while protests and riots raged, and the nation’s presidency changed hands three times in 10 days, a generation of Argentine computer fanatics, made resourceful by unstable and challenging economic and social circumstances, was busy learning to program, publishing cheeky technical e-zines, and gearing up to become elite hackers.

Though Argentina was confronted with state violence and a severely devalued peso, hacker culture bloomed. In 2001, the same year that de la Rúa prematurely stepped down from office, the renowned annual securities conference Ekoparty was founded in Argentina.

The Ekoparty Security Conference is one manifestation of the hacking boom. It has been held annually in Buenos Aires since it was founded by Juan Pablo Daniel Borgna, Leonardo Pigner, Federico Kirschbaum, Jerónimo Basaldúa and Francisco Amato in 2001. During this gathering of hackers in Argentina’s capital, securities pros present research, participate in hacking competitions, race to pick locks, and meet with major securities companies from around the world.

Ekoparty describes itself as “a unique space for the exchange of knowledge” which “provides a series of dynamic and relaxed activities, related to playfulness and computer security.” Despite how serious hackers are about their work, there’s no doubt they have a lot of fun doing what they do, a theme this conference embraces and encourages among attendees.

There has also been a pop culture embrace of Argentina’s hacking culture. A crime and mystery TV mini-series called El Hacker premiered in 2001, highlighting a national interest in this line of work during this time period, and reemphasizing hacking as a new theme in the global entertainment (The Matrix was released just two years prior with international success).

The peso’s value plummeted following the 2001 crisis, and everything became more expensive, including computers and other technology that young hackers-in-training wanted to get their hands on. But this new barrier to access didn’t stop teenagers and young adults from pursuing their urge to subvert programs, create game cheats, and learn how to find the vulnerabilities inherent to any machine.

Lucas Apa, a hacker and penetration expert with US-based security company IOActive was fresh off of an evening addressing the Argentine senate and discussing electronic voting security risks when we spoke over the phone.

Apa told me he first became interested in hacking while playing video games as a kid. “When video games went into CD format, they became very expensive,” he remembered. “So it was really common to buy cracked [or, pirated] games. Sometimes the games worked, other times I’d take them home and there would be a problem with the crack.”

This was the first time he encountered manipulated software and was immediately interested. “From games I started looking at other kinds of software, and was intrigued with how cracks were made. By now it was 2001, and there was a Spanish language cracks mail list called Cracks Latinos. Lots of Argentines learned about cracks from these mail lists.”

Learning cracks, Apa said, ended up becoming very useful for writing exploits (data or a piece of software that can take advantage of a program’s vulnerabilities), one of the most lucrative forms of hacking, and something Argentine hackers are famous for.

Apa and fellow IOActive consultant Carlos Mario Penagos presented at the Black Hat conference in 2013 after they found ways that malicious hackers could hack into industrial plants via wireless sensors. With these exploits, Apa and Penagos found it was possible to manipulate sensors from up to 40 miles away, a security gap that could potentially have had catastrophic consequences in the wrong hands.

Exploit-writing has been a boon for many Argentine hackers, including Juliano Rizzo. Rizzo’s hacking career is currently focused on cryptography, cryptocurrencies, and practical cryptographic attacks previously worked for many years in exploits before “becoming bored with it,” he told me over email.

Before going on to write one of the more important exploits in recent years, Rizzo developed into a hacker the old-fashioned way: he learned to program by hand at the same time he was learning to read and write, he participated in hacker call-ins where a group would discuss security and “H/P/C/V/A: hacking, phreaking, cracking, virus, anarchy”. He also created security challenges for video games with his older brother, and dove into securities magazines written by fellow Argentines.

One of the few Spanish-language securities magazines available at the time, Rizzo said, happened to be written by Argentine hackers, Minotauro Magazine. Another important security magazine Juliano remembers reading was Virus Report, which was edited by the now-deceased Argentine hacker, Fernando Bonsembiante.

By 2001, Juliano was 18-years-old and studying in school, and attending Def Con and Black Hat (both big name international hacking conferences). He wouldn’t attend Buenos Aires’ Ekoparty until 2008, and three years later gained global attention for an exploit he wrote with Vietnamese hacker Thai Duong, which the duo presented at Ekoparty in 2011.

This exploit (only one of several projects Rizzo and Duong have done together), named the BEAST (Browser Exploit Against SSL/TLS) revealed major vulnerabilities in a widespread security protocol that websites use to encrypt data flowing through the internet. With the exploit, hackers would be able to decrypt transactions on PayPal or steal passwords from Gmail. The BEAST exploit, as Thai said at the time, “implements the first attack that actually decrypts HTTPS requests.”

Even without knowing their country is home to some of the world’s top hackers, Argentines often refer to themselves and their compatriots as “life hackers,” or at least subscribe to the idea that Argentines are adept at finding a way to make things work. Some Argentines have told me they think of themselves as MacGyvers. Whether it’s upcycling everything from old pens to jelly jars, or learning to soup up your own computer instead of buying a new one, there’s a talent here for always finding new ways to look at things such that new possibilities emerge.

This cultural trait and mode of thinking is in no small way behind the talented hackers emerged in this country. The crisis in 2001 seems to have fallen at a critical moment, throwing the entire nation into chaos, and fostering, among some, a desire to ‘stick it to the man,’ as hackers are wont to do.

“There were so many problems and a lot of sadness throughout the country,” Apa told me. “So a fascination with technology became a kind of escapism. For some hackers, learning to hack felt like doing something against ‘the system’ or against major corporations that they felt negatively about.”

This sentiment builds on one of the themes that was being discussed in hacker circles such as during the calls Rizzo dialed into: anarchy. Hacking is necessarily a subversive pursuit, and who is better equipped to subvert than brilliant computer pros accustomed to living life on the precipice of possible turmoil?

Hackers are, ultimately, highly skilled and creative problem-solvers, and as it happened, Argentina was faced with a vast number of difficult problems on nearly all levels (political, social, financial) at the same time home internet was becoming common, and there were a lot of young people willing to learn their way through the barriers to become computer pros.

Due to economic instability and restrictions on imports, Argentines have always had to make things work with fewer and lesser resources. The benefit here, Apa said, is a developed knack for “using what is available in ways that nobody else has thought of to accomplish new things.”

This makes them not only particularly Argentine, but also exceptional hackers.


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Argentine update – Dec 12, 2016

16 diciembre, 2016






5. ARGENTINA: COUNTRY OUTLOOK (Economist Intelligence Unit – ViewsWire)


December 12, 2016

BUENOS AIRES, Argentina — The U.S. government on Monday declassified a second set of records relating to human rights abuses committed during Argentina’s 1976-1983 dictatorship.

The release is part of a decision announced by President Barack Obama during a visit to Argentina in March coinciding with the 40th anniversary of Argentina’s military coup. The first batch was released in August.

The release of the second set of about 550 documents was announced at the former Argentine Navy School of Mechanics where thousands of leftist dissidents were jailed and tortured during the dictatorship. [RELEASE WAS DURING A CEREMONY HONORING FORMER STATE DEPARTMENT OFFICIAL PATT DERIAN FOR HER HUMAN RIGHTS WORK IN ARGENTINA. ]

Argentina’s human rights secretariat is expected to publish the documents in English between Tuesday and Wednesday.

The documents belong to the CIA, FBI and other agencies. They include the presidencies of Richard Nixon, Gerald Ford, Jimmy Carter and Ronald Reagan.

December 12, 2016

President Obama announced during his March 2016 visit to Argentina that the United States would embark on a comprehensive effort to identify additional records related to human rights abuses committed under Argentina’s dictatorship. In a ceremony to commemorate the victims of the dictatorship at the Parque de la Memoria in Buenos Aires, President Obama said, “to continue helping the families of the victims find some of the truth and justice they deserve, I can announce that the U.S. Government will declassify even more documents from that period including, for the first time, military and intelligence records, because I believe we have a responsibility to confront the past with honesty and transparency.”

The declassification project represents an historic effort by U.S. Government agencies and departments to search, identify, review for public access, and provide records that shed light on human rights abuses in Argentina between 1975 and 1984. In 2002, the United States declassified over 4,000 State Department cables and other documents from the period of the Argentine military dictatorship. These records have helped Argentina hold human rights abusers accountable, for example, by supporting Argentine criminal investigations into human rights violations under the dictatorship.

This additional effort – requested by Argentine President Mauricio Macri and human rights groups – involves over 14 U.S. Government agencies and departments, including for the first time the Central Intelligence Agency, the Federal Bureau of Investigation, the National Archives and Records Administration and the archives of four Presidential Libraries, as well as several components of the Department of Defense, including the military departments, the Joint Chiefs of Staff, and the Defense Intelligence Agency.

Secretary of State John F. Kerry delivered an initial set of 1,000 declassified records to President Macri on August 4, 2016. This second set totals approximately 500 newly declassified records. Many reside at the Jimmy Carter Presidential Library, but there are also records from the Presidential Libraries of Gerald R. Ford, Ronald W. Reagan, and George H.W. Bush, including a small set of documents produced after 1984. These records, alongside the documents released earlier in 2016, are available to the public at, and will also be made available in hard copy at each of the relevant Presidential Libraries. This set also includes portions of the President’s Daily Briefs from the Carter and Reagan administrations, in the first significant release of CIA presidential briefing documents from these administrations.

The United States provided these documents to the Government of Argentina today as part of Argentina’s commemoration of the work and life of an American diplomat, Patricia Derian, who served as the first Assistant Secretary of State for Human Rights and Humanitarian Affairs from 1977-1981, and who passed away in May 2016. Derian was a tireless advocate for human rights, and her work is reflected in many of these documents, including several that she personally drafted that addressed the detention, torture, and disappearance of Argentine civilians at the hands of the dictatorship. In recognition of her dedication to human rights, Argentina honored Derian in 2006 with its highest award for a foreign government official, the Order of the Liberator General San Martín. In today’s commemoration, Argentina will further honor Derian by placing a plaque with her name at the Archivo Nacional de la Memoria.

This ongoing declassification project, led by the Office of the Director for National Intelligence (ODNI) with support from the White House and Executive branch agencies, involves hundreds of hours of agency staff resources, including records managers, archivists, historians, and declassification and information access professionals. U.S. Government officials are searching records for relevant information to review for potential public release. The reviews of these records are on a “word-for-word” basis – a more exacting and revealing process than the typical reviews agencies conduct on their historical records when they release or withhold entire records on a “pass-fail” basis.

U.S. Government agencies are conducting this declassification effort through five major tasks. With the public release of documents today, the first two tasks are complete:

• Make records from the Gerald R. Ford, Jimmy Carter, Ronald W. Reagan, and George H.W. Bush Presidential Libraries available to the public. Records from the Presidential Libraries are of great historical interest, given their importance in documenting U.S. decision-making at the highest level. Archivists at the four Presidential Libraries searched their holdings for relevant classified documents and provided them for interagency review. In addition to the records of Presidents Ford, Carter, and Reagan, archivists also identified several documents from Vice President George H.W. Bush’s files at the George H.W. Bush Presidential Library.

• Make responsive portions from the President’s Daily Brief (PDB) available to the public. The PDBs are considered the Intelligence Community’s most important product, providing information on the most significant global national security issues. The release of the relevant portions of these PDBs is only the 3rd time in history PDBs have been declassified, and the first-ever Carter-era and Reagan-era PDBs publicly released.

U.S. Government agencies continue their work on the three remaining tasks:

• Make previously withheld information from the Department of State’s 2002 declassification project available to the public. While the Department of State declassified its cables and records that provided evidence of human rights abuses, it withheld some information for national security classification or statutory-based restrictions. The Department of State and other relevant agencies will re-review these cables and records in an effort to publicly release additional information. This re-review is expected to be completed in early 2017.

• The U.S. Government will make available to the public records related to human rights abuses that occurred between 1975 and 1984 in Argentina. This will be a comprehensive search of hundreds of federal records series and hundreds of thousands of pages to identify relevant individual documents for review and potential release. The ODNI will coordinate an interagency public access review of relevant records. This review is expected to be complete in late 2017.

• Make the 1977-1981 Foreign Relations of the United States South America volume available to the public. The Historian’s Office at the Department of State is expediting publication of this volume, with the goal of publishing the Argentina and Regional Issues chapters by late 2017.

These newly declassified records represent a continued commitment by the United States to promote justice and reconciliation in Argentina, to underscore the importance of transparency, and to highlight our shared commitment to human rights. These records represent the second step in a lengthy and ambitious declassification process.

By Walter Bianchi
Dec 12, 2016

Dec 12 Argentina’s peso currency weakened 0.62 percent to an all-time low of 16.1 per U.S. dollar on Monday as residents of the South American country sought dollars ahead of year-end holiday vacations, local foreign exchange brokers said.

President Mauricio Macri took office a year ago after winning office on a free-markets platform. He allowed the peso to float on the foreign exchange market, scrapping years of currency and trade controls that had scared off investors.

Macri promised a wave of foreign direct investment would enter Argentina during 2016. But it remains low with the economy stuck in a recession and household purchasing power slammed by annual inflation expected by economists to end the year at 40 percent.

By Matías Pérez
12 December 2016

Touching letter from the brother of Lucía Pérez, the 16-year-old Argentine girl, whose recent murder resulted in important protests in Argentina, with great international repercussion.

Let her close her eyes and rest in peace.

Two men brought the limp body of a 16 year old girl to the doors of an addiction clinic in Mar del Plata, Argentina. They said she had overdosed on drugs. But doctors found that she had been sexually tortured, with the final act of impaling her causing such pain that her heart ruptured.

A week after this horrific murder and a year after thousands protested the stabbing death of an Argentine woman in broad daylight by a man she had turned down, even more women came out to the streets in Argentina, Uruguay, Mexico, Chile and other countries to raise the alarm about violence against women. On social media, they are using the hashtag #NiUnaMenos, #NotOneWomanLess.

According to an article in Argentine magazine Página 12, it was the younger of two men, aged 23 and 41, who lured the girl out of her home and brought her to his house, where she was drugged with cocaine and subjected to depraved acts including being impaled on a rod in a manner recalling a “bestial practice from the 6th and 5th centuries BC.” A third man helped clean and redress her before they dumped her at the clinic.

Lucía was especially close to her brother, aged 19. On his Facebook, he wrote:

I wish I could have illustrated this letter with a photo of me and my sister laughing, or a picture of her being hugged by our parents. But no, we can’t even do this, because while we are still trying to deal with the fact that they killed her and the way that they killed her, we also have to deal with the death threats raining down on us.

What was Lucía like? She loved art, rock music and animals. There she would be, in every verse of a Viejas Locas song, bopping along, hugging an abandoned pet, always smiling, cuddling her dog, sending out good vibrations in every direction, just because.

She led a quiet life, not going out much until that cursed Saturday, October 8. They came to get her at 10 am, after Dad had already left for work. When my mom came home at 3 pm, she found her Facebook open on her computer next to her set for making mate, because yes, Lucía thought she would be right back. They had tricked her into leaving.

At 6 pm, a girlfriend told me that we had to go the police station because my sister had been involved in an accident. I could never have imagined what was waiting for me. The officer who met me and my mom didn’t know how to tell us, leaving us in an office for 10 interminable minutes until someone gave us the news. And the whole world crumbled on us. I asked to see her body, but they said no. I refused to leave and would not give up until they let me. She was on a stretcher, her eyes slightly opened as she used to do when she went to sleep.

Today, three suspects, Matías Farías, Juan Pablo Offidani and Alejandro Maciel, are under arrest. But for us, that’s not enough. We want true justice, we want all the cases they are involved in to be investigated and every person who has information to be able to go and give it to the prosecution. We need support, from anyone, because this is a case concerning all of us, independent of party lines. A girl, my sister, was horrifically murdered.

And we need to recognise that maybe this time it was Lucía who suffered because of this brutal gender-based violence, but next time it could happen to you, or to someone you love more than anyone else in the world. We need to gather the strength to come out to the streets and scream all together now more than ever, “Not one woman less.”

It’s the only way we’ll stop a thousand more Lucías from being killed. It’s the only way we can close her eyes and let her rest in peace.

5. ARGENTINA: COUNTRY OUTLOOK (Economist Intelligence Unit – ViewsWire)
12 December 2016

Argentina: Country Outlook


POLITICAL STABILITY: The president, Mauricio Macri, who was inaugurated in December 2015 for a four-year term, is pressing on with a programme of economic policy adjustments. Mr Macri, of the centre-right Propuesta Republicana (Pro) party, is working to reduce economic distortions and return the economy to sustainable growth. Reflecting the scale of economic mismanagement under the previous government, the adjustment process requires politically unpopular austerity measures. As he approaches the end of his first year in government, these measures are taking a toll on Mr Macri’s popularity, whose opinion poll ratings have fallen below 50% in recent weeks. The combined effect of a post-devaluation inflationary spike and cuts in energy and transport subsidies is hitting consumers hard, and their patience with adjustment is wearing thin.

ELECTION WATCH: Mr Macri’s Pro party is small but increasingly influential. Apart from the presidency, it now controls the governments of Buenos Aires city (the capital) and province, which together account for almost half of the population. However, the Pro is in a minority position in both houses of Congress and, although it may make some gains in mid-term legislative elections in October 2017, it is likely to remain in this position throughout the forecast period given the dominance of the Peronist party in national politics and its strong grassroots presence. The Peronist party continues to be split into various competing factions. As it loses the powers of patronage bestowed on it by the presidency and struggles with corruption allegations, the leftist-populist Frente para la Victoria (FV) wing of the party will lose influence and the position of the traditional Peronist wing will improve, leaving it well placed to make gains at the expense of the FV in the 2017 mid-term elections.

INTERNATIONAL RELATIONS: Efforts by the Macri administration to repair relations with trade and investment partners have achieved rapid results, and The Economist Intelligence Unit expects relations with key trade partners in the region and elsewhere to remain strong, with the possible exception of the US. Like most other governments in Latin America, the Macri administration was wrong-footed by the victory of Donald Trump in the US presidential election in November. After cultivating increasingly strong ties with the current US administration, led by Barack Obama, Mr Macri is likely to abandon efforts begun as recently as October to secure preferential trade ties with the US with a view to an eventual free-trade agreement. The Argentinian government will remain keen to seek trade deals under the auspices of the Mercado Común del Sur (Mercosur, the Southern Cone customs union, comprising Argentina, Brazil, Paraguay, Uruguay and Venezuela). The problem for Argentina and its Mercosur partners is that, just as the grouping has started to reverse its own protectionist tendencies, free trade has shifted off the political agenda not only in the US but also in Europe. Our forecasts do not currently assume a successful conclusion of free-trade talks with the EU, but the workings of intra-Mercosur trade are, at least, likely to improve in the forecast period. Efforts at joining the Alianza del Pacífico (Pacific Alliance, a regional trading bloc that includes Chile, Peru, Colombia and Mexico) may also make progress, although this is not currently reflected in our five-year economic forecasts.

POLICY TRENDS: The Macri administration has made good initial progress on a programme of adjustment intended to put the economy on a sounder footing, but much remains to be done. Having devalued the peso, reduced agricultural export duties and energy subsidies, and secured a deal with holdout creditors allowing Argentina to exit default, the government’s attention has turned to the reduction of inflation, which is another key condition for a recovery in private consumption and investment. Monetary policy is easing after a sharp increase in interest rates early in 2016, but rates remain high and will dampen price growth. However, reductions of the fiscal deficit and nominal wage growth will also be required to reduce inflation, and these will be polit1ically difficult. Our baseline forecast assumes that there will be some progress in both areas, which should slow inflation and ultimately boost investor confidence. However, there are substantial risks to this assumption, as adjustment is taking place amid a post-devaluation inflation spike that will test the patience of voters and unions, and raise public spending pressures. Even under our baseline forecast we do not expect inflation to fall to single-digit levels until 2019.

ECONOMIC GROWTH: Based on available data for the second half of 2016, and on a recent downward revision to our 2017 GDP forecast for Brazil (Argentina’s biggest trade partner), we have revised down both our 2016 GDP estimate and our 2017 GDP forecast. After a contraction of 2.2% in 2016 (previously 2%) we continue to expect real GDP to return to positive territory in 2017. But with Brazil now likely to post barely positive growth next year, manufacturing activity in Argentina will be subdued, limiting GDP growth to just 2.5% (down from a projected 2.7% last month). We currently expect the recovery to peak at 3.7% in 2018. However, the annual growth rate for that year masks an expected sequential deceleration in the second half of 2018 resulting from a projected weakening of Chinese import demand. By 2019, when we also project a cyclical downturn in the US economy, real GDP growth in Argentina will slide back below 3%, before a modest recovery takes hold again in 2020-21. We have not made downward adjustments to our forecasts for Argentina in the light of the recent victory of Donald Trump in the US presidential election, although this does present some downside risks to our forecasts.

INFLATION: The Macri administration introduced a new consumer price index in May 2016 in an effort to address widespread concerns about the quality of official data. However, reflecting a lack of historical data to provide a full picture of 12-month inflation trends, we are, for now, continuing to use the Buenos Aires consumer price index as a proxy for inflation at the national level. This showed 12-month inflation of 44.7% in October, reflecting currency and tariff adjustments by the new administration. Assuming tight monetary and fiscal policy (spending will remain negative in real terms until 2018), the inflationary spike will prove transitory, and we expect gradual disinflation in the medium term, provided that domestic demand remains subdued relative to the boom years of 2004-11 and domestic supply strengthens on the back of an improved regulatory environment for agricultural producers. The main risks to this forecast stem from possible failure to tighten fiscal policy as projected, a weaker than expected peso and the difficult process of reining in nominal wage growth. However, if the Macri administration is able to tackle the high level of wage indexation (a key obstacle to the reduction of inflation towards OECD levels) there is also the potential for inflation to slow more than we currently project in the medium term.

EXCHANGE RATES: Some modest depreciation pressure following Brexit in June and the US election on November 8th caused the peso to weaken to Ps15.9:US$1 in early December, from around Ps14:US$1 at mid-year. We expect further weakening in 2017-21 as domestic interest rates continue to decline and the Federal Reserve (the US central bank) continues a monetary tightening cycle. However, the positive outlook for portfolio and foreign direct investment (FDI) inflows will be supportive of the currency, which will dampen depreciation pressure and produce some periods of real currency appreciation. In nominal terms, we expect the peso to end 2017 at Ps18.04:US$1 and to end 2021 at Ps23.96:US$1.

EXTERNAL SECTOR: As the terms of trade improve and a weaker peso gradually boosts goods and services exports, improvements in the trade and services accounts will offset a rise in profit remittances related to the removal of foreign-exchange controls, causing the current-account deficit to narrow from 2017. From a peak of 2.6% of GDP in 2016, we expect the deficit to fall fairly steadily to 1.5% of GDP by 2021. We also expect the country’s ability to finance moderate current-account deficits to improve, assuming that portfolio and FDI inflows pick up as investor confidence in the Macri administration grows. The result will be a rise in foreign reserves in nominal terms. Our forecasts currently assume FDI inflows averaging 2.1% of GDP in 2017-21, and foreign reserves representing import cover of an annual average 6.5 months in the same period.

12 December 2016


The interior minister, Rogelio Frigerio, is currently in China in a bid to drum up investment to finance around US$33bn in public works projects.


The visit forms part of a broader effort on the part of the government to seek external finance for domestic investment, with the need for fiscal tightening precluding a sharp increase in public-sector outlays. Although China has appeared open to the idea of boosting trade and investment ties with Latin America in the wake of the US election victory for Donald Trump, Mr Frigerio nevertheless has an ambitious wish list, seeking Chinese investment in 19 projects spread across eight of Argentina’s provinces.

These include, among others, a US$2.2bn investment in the construction of a hydroelectric plant on the Neuquén river in central Argentina; a US$2bn investment to revive the San Martín commuter railway line in the Buenos Aires metropolitan area; a US$1.1bn hydroelectric plant in the western San Juan province; US$1.1bn to improve water infrastructure in the Salado river basin south of Buenos Aires; and a US$1bn project to construct hydroelectricity facilities at Potrero del Clavillo, in the northern Tucumán province.

Mr Frigerio’s trip is particularly important because government pledges to raise inward foreign direct investment (FDI) have not yet yielded results. The president, Mauricio Macri, stated at the beginning of the year that a potential US$20bn in inflows was possible in 2016, but FDI reached only US$3.4bn in the first six months-only half of the level registered a year earlier, owing partly to a relaxation of foreign-exchange controls that led to a slump in reinvested earnings by multinationals.

The government will hope that the recent passage of private-public partnership legislation will incentivise Chinese investors. However, securing the targeted US$33bn in investment is likely to prove difficult. Most of the projects identified by the government are not new, with some having been on the drawing-board for decades. A combination of technical difficulties, caution from external investors and bureaucratic delays have stalled several of these projects.



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10 diciembre, 2016