One Month Later In Argentina, The Turnaround We’ve Been Predicting Is Playing Out
Argentina‘s new President Macri took office on Dec. 10, 2015. One month later, what’s the situation on the ground in this country?
As improved and as improving as everyone allowed himself to hope it could be.
When Mauricio Macri was elected, colleagues and I anticipated great positive change, and we have not been disappointed. Speaking as someone with a lifetime of experience living and investing in Argentina, I can tell you that I’m wholly impressed by all that has taken place during President Macri’s first weeks in office.
Specifically:
— Corruption is retreating in the face of an independent judiciary…
Every day we are seeing new information coming to press on scandals that are being cleaned up. On Sunday, for example, after a manhunt lasting almost two weeks, three convicts who had been in prison for drug-related crimes were recaptured. Notably, they involved prior top government officials in their declaration, and it’s not unreasonable to assume it is those influences that allowed their prison break.
Meantime, reforms are being made to separate political influence from the judiciary and to protect civil rights (reserving phone-tapping authority to the Supreme Court, for example, away from prosecutors).
— Exchange controls have been eliminated…
Exchange controls were eliminated the first week of government. And, together with that, barriers to foreign trade have likewise been eliminated.
— There has been a significant exchange correction…
Again, this was accomplished during the first week of government. The Argentine peso has moved from approximately 9.80 per US$1 to 14 per US$1.
— Export tariffs have been reduced…
These were eliminated for all exports the first week of government. The sole exception is soybeans; export tariffs for these will be phased out gradually. The importance of this for all the provincial economies cannot be overstated.
— Argentina is making a plan to address its default status…
The first formal meeting with holdouts was held this week. A negotiated solution is in the pipeline.
— Both Argentine and foreign investors are returning to the market, after years of absolutely no interest…
Looking ahead and thinking longer term, I expect further important changes for the better, including:
— Fiscal reform…
This will take time; however, a reduction in individuals’ income tax was implemented Macri’s first week after taking office.
— A gradual roll-back of bureaucratic overload…
Again, in the making, and very positive early signs are already evident.
— A balanced fiscal budget…
Already thousands of public employees politically appointed during the last administration, many without actual work posts, have been fired. A deep revision of expenditure is under way.
— A massive surge forward through infrastructure investment that will allow Argentina to develop more of its enormous potential…
We have been predicting that 2016 would be Argentina’s turnaround year. Two weeks into this New Year, our forecasts are playing out exactly as we hoped they would. It’s time to be paying attention and taking a position.
Steve Rosberg
Editor’s Note: For information on current investment opportunities in Argentina, get in touch with our man on the ground, Steve Rosberg, here.
Argentina will be among the 21 countries featured during this year’s Retire Overseas Conference taking place Aug. 28–31 in Las Vegas. VIP places for this, the only event we’ll be holding in the United States this year, are nearly sold out. Details on how to join us in the room as a VIP attendee are here.
