PASO OUT OF STEP
Last Sunday’s PASO primary voting ended disastrously for the ruling Frente de Todos coalition, winning just under 31 percent of the vote nationwide and in only six of the 23 provinces – not including their main stronghold of Buenos Aires Province, where they had been counting on a face-saving triumph, and only including two of the eight provinces electing senators in November. President Alberto Fernández came under immediate pressure from the Kirchnerite wing of his coalition to change both his Cabinet and policies but stuck to his guns on the former front while agreeing to announce a raft of pension and welfare benefit hikes on Thursday to win back voters. But on Wednesday a quarter of his Cabinet spearheaded by Interior Minister Eduardo ‘Wado’ de Pedro (all responding to Vice-President Cristina Fernández de Kirchner) presented their resignations to enforce the Cabinet changes while the next day the veep upped the pressure by penning an aggressive open letter. Amid a climate of tension, the Thursday announcements were delayed while the presidential trip to Mexico was suspended. As the week closed, President Fernández was reportedly poised to announce Cabinet changes over the weekend.
Economy Minister Martín Guzmán (under intense fire to resign in the first half of the week) managed to meet the statutory September 15 deadline for budget submission, presenting the 2022 Budget to Congress in the last minutes of Wednesday. The draft budget forecasts an annual inflation of 33 percent for next year for a monthly average of 2.3 percent (while upping this year’s from the original 29 percent to 45 percent), a primary fiscal deficit of 3.3 percent of Gross Domestic Product, an official exchange rate of 131.10 pesos per dollar by the end of next year, a growth rate of four percent (following a rebound of eight percent this year) and energy subsidies to the tune of 1.5 percent of GDP to be achieved via segmented public service billing (otherwise they would be 1.8 percent). The 2022 Budget assumes that none of the capital repayments of US$19.1 billion due next year to the International Monetary Fund (IMF) will be made since an agreement will be reached in the course of 2022. Wages are forecast to grow over five percent ahead of inflation after four years of falling purchasing-power while state revenues will surge 45.3 percent from 10.7 to 15.7 trillion pesos. The deficit will be financed by issuing public bonds to the tune of 1.2 trillion pesos (two percent of GDP) and by printing 1.08 trillion pesos (1.8 percent of GDP) with a further 1.1 percent of GDP from other sources. The Central Bank will thus be covering 79 percent of the deficit according to the Instituto Argentino de Análisis Fiscal (IARAF) think tank.
THE WEEK IN CORONAVIRUS
Argentina reached 114,286 deaths and 5,237,159 confirmed cases of coronavirus contagion by press time yesterday as against 113,282 deaths and 5,221,809 cases the previous Friday. Not much sign of the long-awaited Delta variant last week beyond an outbreak at the ORT College in Belgrano and officials said Friday just five percent of locally transmitted cases are of that strain. A new protocol for City schools was issued dropping mandatory isolation for all schoolchildren in a class bubble with a suspected Covid-19 case. An Education Ministry report released on Tuesday quantified 1.87 million students as having problems reconnecting to school following the lengthy suspension of classes. On Thursday City Hall further relaxed restrictions on social meetings (up to 4,000 outdoors and also indoors if below 70 percent of capacity), shopping and transport with opening hours for nightlife extended to 3am.
POVERTY LINE & INFLATION
A four-person household in this city needed to earn 67,780 pesos last month to stay above the poverty line and 35,700 pesos not to fall into destitution, City Hall statisticians informed on Tuesday. These figures are 1.85 percent higher than in July (less than the August figure of 2.5 percent announced by INDEC national statistics bureau the same day) due to static meat prices and slower increases in the costs of daily food. Families above the poverty line need to reach almost 105,000 pesos a month to avoid being vulnerable and 335,892 pesos to be considered wealthy. Even if the INDEC figure fell below three percent for the first time since last September, core inflation remained above at 3.1 percent, worrying analysts, especially with the exchange rate and public utility billing both repressed. But the Economy Ministry celebrated five straight months of falling inflation.
BRAZILIAN IN AT IMF
The International Monetary Fund on Monday tapped Ilan Goldfajn, 55, chairman of Credit Suisse Group AG in Brazil and a former Central Bank governor there, to head its Western Hemisphere Department as from early next year, replacing Mexican Alejandro Werner after eight years. Argentina’s massive US$45-billion debt with the IMF will clearly be a major priority for him. While heading Brazil’s Central Bank (2016-2019), Israeli-born Goldfajn earned a reputation as a tight money man.
After a post-electoral dip of four pesos, the “blue” parallel dollar closed the week yesterday back at the previous Friday’s 185 pesos. The official exchange rate rose 103.25 to 103.75 pesos, as quoted by Banco Nación, or 171.20 pesos with the 65 percent surcharges for authorised purchases. The CCL (contado con liquidación) and MEP (mercado electrónico de pagos) parallel but legal exchange rates both rose from 170.65 to 172.58 pesos and from 170.78 to 172.44 pesos respectively. Country risk, which had closed as high as 1,540 points on the eve of the electoral weekend, fell to 1,490 points on Monday but had inched up to 1,496 at yesterday’s close.
LOPEZ-DE SOUSA AGREE OIL DEAL
Grupo Indalo businessmen Cristóbal López and Fabian De Sousa have agreed to pay off their Oil Combustibles tax arrears (originally eight billion pesos but since rising to 12.7 billion pesos) in 97 quotas at a monthly interest rate of 2.84 percent, they announced on Tuesday after AFIP revenue office withdrew tax evasion charges against the Group and announced that instead officials of the Mauricio Macri presidency would be investigated for “political persecution.”
CLARENS ON TRIAL
The Federal Appeals Court yesterday confirmed the trial of financier Ernesto Clarens, among other defendants, for money-laundering to the tune of US$160 million (or 502 million pesos at the time) embezzled from public works awarded to Kirchnerite tycoon Lázaro Báez. Clarens has worked closely with the Kirchner family in the past, even naming his company Invernes SA after the late Néstor Kirchner.
KARINA MOYANO CASE
Council of Magistrates member Pablo Tonelli is pressing for the impeachment of Lomas de Zamora federal judge Federico Villena on accusations of malfeasance for ordering the return to Karina Moyano (the daughter of veteran teamster leader Hugo Moyano) of US$400,000 and 600,000 pesos impounded in her home during a court-ordered raid within the context of a drug-trafficking case. Villena claims that the raid was a mistake since Karina Moyano’s house had been the property of a suspected drug-trafficker six years ago and she herself was not under suspicion, but the money has yet to be returned due to procedural delays.
Amid all last week’s bad news on the electoral front, President Alberto Fernández found one positive item to highlight on Tuesday – the identification of four new soldiers buried at Darwin Cemetery on the Malvinas islands by the Argentine team of forensic anthropologists working with the Red Cross, as well as the confirmation of two previous identifications. The newly identified quartet were ensign Guillermo Nasif, Corporals Marciano Verón and Carlos Misael Pereyra and border guard Juan Carlos Treppo while the identities of ensign Ricardo Julio Sánchez and Corporal Víctor Samuel Guerrero were confirmed. The servicemen (all members of the Border Guard) perished when their helicopter was shot down over Mount Kent in 1982. "Glory to those who died for our country," tweeted ex-president Mauricio Macri.
ALBERTO JOINS BIDEN
President Alberto Fernández took time off from his post-electoral complications yesterday morning to participate via videoconference in the Major Economies Forum on Energy and Climate Change of G20 countries convoked by his United States colleague Joe Biden. Fernández devoted much of his time to complaining about the “unsustainable debt” of US$57 billion owed to the International Monetary Fund (IMF) left to him and the country by the Mauricio Macri presidency, calling for better payment conditions.