☀ ARGENTINA SHINES AGAIN
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Argentina shines, attracting wide international support for the new government
The Press Secretary of the United States has announced the upcoming state visit of President Barack Obama and First Lady Michelle Obama to Argentina. This will take place on 23 and 24 March. The news has caused a very positive movement in local markets. It should help strengthen investors’ incipient confidence both in domestic and foreign opportunities.
In Buenos Aires, President Obama and the First Lady “… will meet with the new Argentine President, Mauricio Macri, to discuss President Macri’s reform agenda… The President will deepen efforts to increase cooperation between our governments in a range of areas, including trade and investment, renewable energy and climate change…”
Argentina shines like old times
This is the comment in offices and cafes throughout Argentina. Renewed optimism is perceptible, largely due to the announcement of the visit of President Obama.
It has been almost twenty years since such an announcement has been made. During Kirchner’s era, bilateral visits were suspended. The meetings that did occur between the presidents of both countries were only due to protocol, being by coincidence and in the framework of multilateral meetings.
Below the statement by the Press Secretary of the United States, published on the website of the Embassy in Argentina, there is a prominent link to a press release which recounts a preparatory visit.
From 10 to 12 February this year, the Assistant Secretary of State for Economic and Business Affairs, Charles H. Rivkin, met “…with officials of the Government of Argentina. They had explored areas for deepening bilateral economic cooperation, enhancing bilateral trade and investment, and promoting sustained economic growth in both countries. ”
This visit, coupled with the announcement of the forthcoming presidential visit, confirmed the strong support of the United States for the policies of the new Argentine government.
Left, President of the United States Barack Obama. Right, Assistant Secretary of State for Economic and Business Affairs Charles H. Rivkin.
Reforms undertaken by the new Argentine government
A little more than two months in, the three main measures put in place by President Macri and his new government are the buoyancy of the local currency, the opening up to international markets and freeing up the flow of capital.
These three measures have received much support, especially from analysts for banks and foreign investment funds, who perceive that Argentina shines with a renewed high growth potential.
Buoyancy of the local currency
The liberalisation of the exchange rate of the Argentine peso has been a successful measure. It is being implemented with proper precautions. The Argentine Central Bank has set the interest rate at four percent, which will be adjusted according to the indicators advised.
This indirect control, held by most central banks in the world, has helped control the feared devaluation and potential inflation.
This measure has been welcomed by the markets, especially because it allows recognition of the true economic parameters of Argentina, which in recent years were only glimpsed, but had no certainty, because the previous government had intervened so much in the economy. Central Bank of Argentina:
President of Argentina, Mauricio Macri
Openness to international markets
The new government of President Macri has lowered many export taxes, and in some cases they have been totally eliminated.
In recent years, taxes on exports – especially a 35 percent tax on soybean exports – had greatly scared off agricultural investment in Argentina.
Investors were particularly focused on neighbouring countries with policies that discouraged exports, and therefore investment.
Today, Argentina shines with very good omens, preparing to re-enter the agricultural market.
Freeing up the flow of capital
The painful memory of the “Argentine corralito” is receding.
Restrictions on the movement of capital have been limited to the minimum necessary to prevent the arrival of speculative capital.
Therefore, capital that has no desire to stay in the country is moving, as interest rates and exchange rates are in their favour.
Most countries have restrictions in this regard, and Argentina continues that trend. These are “dangerous capitals” for any economy, as they have the potential to destabilise the local economy.
The Central Bank of Argentina states on its website the necessary restrictions and assurances that have been implemented in order to receive foreign investment and capital flow.Central Bank of Argentina:
This attitude of openness has been welcomed by international banks, as well as local and foreign investors.
Field of lettuce in Tilcara, Argentina
Argentina shines, multiple opportunities to invest
As a result of the three major measures directly favouring capital market transparency, as well as many other measures taken by the new government regarding the internal economy, such as deep cuts to subsidies in different sectors, there are many opportunities open to investors.
The sectors which have most benefited from these policies are agriculture and livestock, and related industries such as the dairy and meat industries, particularly the export sector.
Cattle grazing in a Patagonian valley
Prospects for agricultural investment in Argentina
In the 4,000 km long and 300 km wide area bordering the Andes, there are many pastures and more than five million cattle.
The FAO has estimated that with proper investment, over ten million cattle could graze in this region.
The figures are impressive. The potential growth of Argentina today is excellent. This is because investment has been limited for so many years.
The technology for pasture management has improved in the meantime, and Argentina has a substrate and an agrarian culture to help make optimum use of the natural resources and investments that will materialise in the near future. FAO
English Editor: Audrey van Ryn
Researcher & Translator: Mª Verónica Brain
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