ARGENTINA: Bases Law & more – 4th July 2024

¡Buenos días from Louse Point! This is the Rorshok Argentina Update from the 4th of July twenty twenty-four. A quick summary of what's going down in Argentina.

Unfortunately, we still don’t know what happened to Loan Peña, the five-year-old boy who disappeared in the Corrientes province last month. On Saturday the 29th, his aunt testified that the ex-officer Carlos Pérez and the municipal employee María Victoria Caillava accidentally ran over the child. This testimony marks a significant shift in the investigation, which initially explored the possibility of child trafficking across the Paraguayan border. Authorities now believe the child’s body may have been buried, and further searches are planned to verify the aunt’s account. However, they can’t confirm the theory as no trace of him was found.

The second most important headline this week has to do with the Bases Law, which the lower house finally signed. The reform package has officially come into effect. Recall that it includes the reinstatement of the income tax but excludes the proposed privatization of the flagship carrier Aerolíneas Argentinas, the national postal service Correo Argentino, and state media outlets. It also allows President Milei to declare an economic emergency and disband federal agencies.

Following the approval of the Bases Law, the blue dollar surged past 1,400 pesos, marking the highest currency gap in six months. Also, the country’s bonds and shares dropped up to ten percent after Luis Caputo, the economy minister, and Santiago Bausili, the president of the Central Bank, failed to specify when currency controls or the cepo would be lifted. Shares of major banks like Banco Macro, BBVA Argentina, Grupo Supervielle and Grupo Financiero Galicia have fallen off significantly after previously performing well. Plus, country risk rose above 1,500 points.

While Milei’s administration won’t be lifting the cepo anytime soon, it has initiated the second phase of its economic plan, which includes the replacement of Central Bank notes with new Treasury debt to curb monetary emissions. This move will phase out one-day repo notes with a forty percent interest rate in favor of Treasury notes, giving the Central Bank more autonomy in setting interest rates without increasing its debt.

Consulting firms and economists believe that for bank stocks to recover, there must be a substantial economic rebound and growth in private-sector lending, which has been low. For now, the market is too anxious about the government’s exchange rate policy and fiscal plans, especially amid rising foreign currency demand and seasonal reserve losses.

On a related note, Milei recently accused a member of the International Monetary Fund of being influenced by leftist groups, specifically the São Paulo Forum. He criticized them for endorsing financial policies that, according to him, hinder Argentina’s economic recovery, particularly the decision to maintain exchange restrictions despite pressure to lift them. He denied any plans for peso devaluation, countering suggestions from analysts and emphasizing that Argentina’s economic woes stem from competitiveness issues rather than monetary policies.

Speaking of Brazil, President Milei has decided to skip the upcoming Mercosur Summit in Asunción, Paraguay, to avoid a confrontation with the Brazilian president, Luiz Inácio Lula da Silva, whom Milei called a “corrupt Communist” during his campaign. He refused to apologize, and instead escalated the ongoing feud by calling him “an idiot dinosaur” in a social media post.

Even though he will be sending Diana Mondino, the foreign minister, to the Mercosur Summit, he still has plans to visit Brazil. Instead of meeting with Lula da Silva, he will join a rally with Lula’s rival, Jair Bolsonaro.

Also on the topic of international feuds, Bolivia has recalled its ambassador from Argentina following President Milei’s government’s assertion that Wednesday’s coup attempt was fabricated. Last week, soldiers and tanks took up position outside Bolivia’s government buildings. According to the country’s president, this was an attempt to unseat him. However, the ease with which the situation was resolved, including the arrest of the main military figure behind the incident, has raised questions about its nature and motivations.

Since we’re talking about arrests, the government has put forward a bill in Congress to lower the age of criminal responsibility from sixteen to thirteen. According to Patricia Bullrich, the security minister, and Mariano Cúneo Libarona, the justice minister, thirteen-year-olds today have sufficient mental capacity to understand the consequences of their actions. The proposal includes sentencing guidelines ranging from three to six years, with potential alternatives like community service, except in cases involving severe harm to victims, which could lead to up to twenty years in specialized facilities.

Another law in the works is the Conan Law, named after the president’s late dog. This law is currently under debate in the Chamber of Deputies and seeks to reform existing animal cruelty statutes. The proposed changes aim to stiffen penalties for animal abuse, with fines up to thirty times the minimum wage, and prison sentences that range from six months to five years.

Moving on, the National Entity for Communications in Argentina, or ENACOM, has scrapped regulations that previously capped price increases for internet, mobile phone, and cable TV services. This move allows telecommunications companies to freely adjust their rates, replacing earlier restrictions that limited monthly increases to ten percent.

Effective immediately, the decision aims to align pricing with fair and reasonable standards while ensuring operational sustainability and competitive market dynamics. That said, this coincides with a time when Argentine households are taking steps to mitigate the costs of telecommunications services, reflecting broader concerns over affordability.

From telecommunication to healthcare, electronic prescriptions are now mandatory. To ease the transition, there’s a 180-day period for adjustments. This means doctors will be issuing digital prescriptions instead of paper ones from now on.

The Ministry of Health has set up the National Registry of Digital Health Platforms to manage this shift. While the switch is underway, paper prescriptions are still accepted, particularly in regions with limited connectivity. The Ministry is also offering training to ensure a smooth rollout nationwide.

There’s news for pensioners, too. Starting in July, pensions, retirement benefits, and allowances will increase by four percent, with the minimum pension rising to 285,000 pesos (some 200 US dollars according to the parallel exchange rate) thanks to a bonus of 70,000 pesos (or fifty dollars). The National Social Security Administration, or ANSES, announced that this increase will apply across various benefits, including the Universal Pension for the Elderly and Non-Contributory Pensions.

This new adjustment follows the government’s updated mobility formula, which ties benefit increases to inflation rates. Despite this, there’s an ongoing debate in Congress over a proposed additional increase to account for high inflation in January.

In other news, Argentina will significantly boost its lithium production with the launch of four new projects in the coming months, nearly doubling the country’s production capacity. These projects are located in the Andean region known as the lithium triangle, and they are crucial for President Milei’s economic agenda.

Faustino Oro, the ten-year-old chess prodigy, made history once again by winning the Masters Tournament at Club d’Escacs in Barcelona. This is the second-highest rank in chess after Grandmaster. Born in Buenos Aires City in October twenty thirteen , he has become the youngest International Master ever, surpassing the previous record set by the US player Abhimanyu Mishra in twenty nineteen.

Speaking of wins, the National Men’s Football Team is doing well at the Copa América. Despite significant lineup changes and the suspension of coach Lionel Scaloni due to arriving late onto the field in the previous match, the team secured a decisive 2-0 victory over Peru.

Here’s some recommended reading before we go: UK’s Far Out Magazine published an article about Anthony Bourdain’s visit to Buenos Aires. The renowned American chef, author, and television personality traveled to the city in January twenty sixteen to film a travel documentary episode, which became one of the best in his Parts Unknown series. Check out the article with the link in the show notes!

Aaand that’s it for this week! Thank you for joining us!

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¡Nos vemos la próxima semana!