Saturday, April 13, 2024

ARGENTINA | 11-07-2020 08:39

What we learned this week: July 4 to July 11

Stories that caught our eye over the past seven days in Argentina.



At press time yesterday there was a total of 94,060 confirmed cases of coronavirus and 1,774 deaths, as compared to 72,786 cases and 1,437 deaths the previous Friday. The week started on a sad note by posting a record 75 deaths on Monday. This did not prevent City Hall from sounding a bullish note as to the possibilities of relaxing quarantine after July 17 but their Buenos Aires provincial colleagues (now with almost 60 percent of all new cases) are more cautious. On Wednesday Argentina overtook China, the birthplace of the novel coronavirus, by posting 87,030 cases of Covid-19 infection on the same day Beijing reported 84,941 (China’s death toll is more than twice as high, however). On the same day President Alberto Fernández confirmed that payment of the IFE emergency family benefit of 10,000 pesos to almost a quarter of the population would continue into this month without ruling out its continuation beyond July. On Thursday President Fernández made national unity against the pandemic the main theme of his Independence Day message. That same day the 1,720 coronavirus deaths until then included their most famous name to date – theatre director Agustín Alezzo, 84. Yesterday it was announced that the BNT162b1 experimental vaccine developed by Pfizer and BioNTech would be tested in Argentina as from next month.



Although sandwiched between two important news items (the change of intelligence trial judge at the end of last week and the government’s new debt bond swap offer at the beginning of this), the shock news of the murder of Vice-President Cristina Fernández de Kirchner’s former secretary Fabián Gutiérrez, 46, in El Calafate (Santa Cruz) revealed last weekend displaced all other topics for a while, including the coronavirus pandemic. Four local youths aged between 18 and 23 were already being charged with the crime as the news broke nationwide. Their motive was apparently to extort some of their victim’s considerable wealth presumably derived from alleged Kirchnerite graft (with a possible sexual angle) but the fact that Gutiérrez was a whistleblower in trials of that corruption (although not a protected witness) triggered the Juntos por el Cambio opposition into issuing a rapid statement implying that the murder was not a common crime, a reaction which was questioned by the moderate wing of the coalition without making their misgivings public. Natalia Mercado, the niece of ex-president Fernández de Kirchner, is the prosecutor in the case, with the opposition asking for the case to be put in federal hands.



On Tuesday the government formally presented to the Securities and Exchange Commission in the United States its new bond swap proposal to creditors (already leaked to the press during the weekend) containing some drastic changes in their favour from the initial offer last April such as upping the exit yield from 39 to 53.5 cents per dollar and lowering the grace period from three years to one. Nevertheless, two of the three main bondholder committees remained adamant, not so much because of these new terms closing the differences (favourably received by both Wall Street and the local stock exchange) but because Economy Minister Martín Guzmán continues to insist on tighter class action clauses in order to preclude costly future litigation by holdouts. But Guzmán hopes to outflank these groups by enlisting the support of a majority of all creditors.  



President Alberto Fernández accompanied Independence Day on Thursday with an appeal for national unity against the coronavirus pandemic but it fell on deaf ears in some circles with anti-quarantine, anti-government protests around the downtown Obelisk, repeated in various cities across the country. A van of the pro-government television news channel C5N covering the Obelisk protests was attacked by demonstrators, breaking a window amid insults, prompting immediate repudiation by President Fernández and various government officials. All official Independence Day celebrations, including the Te Deum mass in an almost empty Metropolitan Cathedral, respected quarantine and hence were far less visible. 



Jailed Kirchnerite tycoon Lázaro Báez, remanded in custody for the last four years on charges of fronting money-laundering, was granted house arrest on Wednesday but remains in prison for now – not so much because of the strong public protests against the release of this iconic figure of Kirchnerite graft as because his lawyers consider the bail set of 632.5 million pesos to both excessive and unpayable. If he does leave prison, his co-residents of the Pilar gated community previously housing him have vowed to deny him entry. Denying any intention of pronouncing Báez either innocent or guilty, government sources defended the court ruling as countering the “arbitrary” practice of endless pre-trial imprisonment given a cumbersome judicial process.



On Tuesday the government sent Congress a bill for a broad tax moratorium for companies of all sizes (although conditioning larger companies by forbidding them to distribute dividends or engage in currency transactions beyond the official exchange rate for the next two years) while also announcing that it would subsidise a half of all local tourist packages contracted in the remainder of this year. President Alberto Fernández accompanied these announcements by telling the annual general meeting of the Association of Christian Business Leaders (ACDE in its Spanish acronym) that capitalism would have to be “revised” in the aftermath of the pandemic.  



The quarantine slump continued into May, INDEC statistics bureau reported on Tuesday, with construction posting a plunge of 48.6 percent and manufacturing industry 26.4 percent, both figures by comparison with May, 2019.  



The debt front gave money markets every reason for calm last week with the government’s new bond swap offer spelling out its anxiety not to extend or expand default while no final settlement seems imminent with the leading investment funds still not satisfied. A process of creeping devaluation of the official exchange rate in the last few weeks continued because while the Banco Nación quoted 74.50 pesos per dollar as against 73.5 the previous Friday, the “blue” dollar (the main parallel rate with all other unofficial but legal exchange rates blocked) stayed put at 126 pesos. Argentine bonds fell by over six percent yesterday, influenced by the rejection of the Ad Hoc Committee bondholder grouping including such big names as BlackRock and Fidelity, while country risk was up two percent but still well below last Friday’s 2,540 points prior to the new offer at 2,337 points.   


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