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ECONOMY | 22-09-2018 10:32

Macri looks to reassure investors as unions test resolve

President seeking to counter economic narrative during trip to United States – just as unions prepare strike action.

Embarking on what his foreign minister describes as “a very important trip,” President Mauricio Macri flies to New York this evening as a man on a mission, seeking to alter the downbeat narrative surrounding Argentina’s recent economic turmoil.

The president, who will attend next week’s UN General Assembly in the iconic US city, is planning to hold a series of meetings with allies and potential investors, as well as granting interviews to key media outlets, as he seeks to reassure investors that Argentina’s economy will soon stabilise, despite the recent devaluation of the peso and recessive outlook.

His case will be bolstered, in small part, by a calmer close to the week on the exchange markets. After a string of challenging weeks in which the peso continued to slump against the dollar, on Friday Argentina’s currency closed at 38.16 to the US dollar, below the 40-mark.

However, the headlines back home next week may draw the eye of some interested onlookers. On Tuesday, unions – led by the CGT umbrella union grouping – will attempt to shutdown the country as they go on strike, underlining the problems of labour unrest and opposition to the government’s policies.

In addition, statistics released by INDEC this week indicated the challenge ahead: the national statistics bureau revealed that unemployment rose in the second quarter to 9.6 percent, while economic activity in the same period contracted by 4.2 percent year-on-year.

NYC TRIP

The president will stay at The Langham Hotel on 5th Avenue during his time in New York, with no official activities set for Sunday and a break in the schedule that coincides with the Superclásico, in which his club Boca Juniors take on River Plate in a crunch derby clash.

His formal activities begin Monday, with interviews lined up with influential economic publications Bloomberg and The Financial Times. After lunching with potential investors (which the Executive has yet to name) he will meet with US Chamber of Commerce (AmCham) representatives and the Council of the Americas. The headline-making event scheduled for his first full day in New York will be an encounter with US President Donald Trump, who will host a reception for world leaders attending the General Assembly, as is customary. Later, Macri will receive the 2018 World Citizen Award, awarded by the Atlantic Council.

Potential bilateral meetings could also take place with Spain’s Prime Minister Pedro Sánchez, Canadian PM Justin Trudeau and France’s Emmanuel Macron, local outlets reported yesterday.

The president will be accompanied in New York by First Lady Juliana Awada, Foreign Minister Jorge Faurie and Secretary of Strategic Affairs Fulvio Pompeo, among others. Finance Minister Nicolás Dujovne will also be in New York, but on a separate agenda.

A key topic on both the president and the finance minister’s schedule will be the ongoing talks with the International Monetary Fund (IMF), as Argentina seeks to win advanced disbursements of its US$50-billion loan agreement. IMF officials this week said “important progress” had been made by Argentine officials, citing the government’s budget proposal that was sent to Congress on Monday.

While in New York, Macri could meet with IMF chief Christine Lagarde, though Argentine officials would not confirm if a meeting is planned.

Details of the talks with the IMF have been few and far between this week, with only the details of the government’s budget proposal filling the void. However, yesterday reports emerged that the government will apply a new measure in the exchange market that would let the dollar “float” between 32 and 44 pesos, in order to avoid pronounced jumps in the exchange rate of the currency, as has happened in recent months.

Officials would not confirm that information yesterday, although the measure is believed to form part of the new, updated agreement Argentina is said to be close to finalising with the IMF.

‘IMPORTANT’

On Tuesday, just as the CGT leads strike action designed to bring the nation to a standstill, Macri’s day will be dominated by the UN General Assembly, where he is scheduled to address the congress at between 4pm and 5.30pm local time. His speech is expected to be dominated by the economic turbulence facing Argentina and the crisis in Venezuela, although sources say he will also address topics such as renewable energy and – with his biggest political foe Cristina Fernández de Kirchner firmly in the judicial spotlight – the fight against corruption.

Speaking Friday, Foreign Minister Faurie described the coming days as “a particularly important trip,” saying the president would be able to “present the reality of the economic and financial situation,” address queries over “negotiations with the IMF and “rekindle the interest of the investors.”

Before returning home, the president will hold another round of meetings with investors and will speak with Argentine press outlets.

Travelling at a time when Argentina holds the G20 presidency, this will be President Macri’s second trip to the UN annual summit. Last year, amid the midterms campaign, he sent Vice-President Gabriela Michetti to speak in his stead.

CHALLENGING

Attempts to persuade investors and analysts that all is well back home will be tricky, especially with strike action set to cause chaos on Tuesday.

Speaking yesterday, the president said he was under no illusions as the difficulties facing Argentines, especially with purchasing power declining as inflation pushes 40 percent this calendar year.

“It is a difficult time” for Argentina, he said, admitting that “inflation with devaluation has hit us [hard].” Questioned as to the economic hardships facing citizens, the president said: “I know it is a hard road but it was the only possible way.”

For their part, CGT leaders have vowed to show a “measure of strength” on Tuesday with the general strike, the fourth of the Macri administration’s time in office.

Various sectors are expected to adhere to the call, including the Argentine Workers’ Central Union (CTA) and the Teamsters union led by the Moyanos. Taxis, airports, schools, hospitals, banks, ports, shops and bars are expected to close, as well as potentially supermarkets. The biggest impact, however, will be a complete shutdown of public transport, with no train, subway or bus services.

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