ARGENTINA: Controversial announcements & more – 25th July 2024

¡Buenos días from Louse Point! This is the Rorshok Argentina Update from the 25th of July twenty twenty-four. A quick summary of what's going down in Argentina.

On Friday the 19th, Luis Caputo, the economy minister, announced that Argentina has transferred part of its gold reserves abroad, a statement that sparked the opposition’s criticism. Caputo defended the move, stating that holding gold overseas allows for better returns compared to keeping it domestically.

However, the backlash intensified after a controversial statement followed the announcement: Caputo suggested that Argentines might soon need to sell their dollar savings to pay taxes. The way the government sees it, this will strengthen the peso, as people will be getting rid of other currencies. But for the people, this means they’ll have to dip into their savings, which might affect their financial security and plans.

After Caputo’s declarations, the government doubled down on controversy. President Milei’s administration shared that they want to raise the retirement age for both women and men to seventy-five to reduce the financial burden on the national pension system. Currently, the retirement age is sixty for women and sixty-five for men.

The newly-formed May Council will present this proposal to Congress, which aims to delay pension payouts and increase tax revenue by encouraging longer employment. Additionally, the government is considering reinstating a privately-managed retirement system and making union contributions voluntary.

While that may be true, many fear that delaying pensions will exacerbate financial hardships for older citizens. For context, according to a twenty twenty-two study, life expectancy in Argentina is seventy-three years for men and seventy-nine years for women.

Back to the topic of foreign currency, the Central Bank has eased some currency controls, allowing individuals who received pandemic subsidies to purchase dollars in the financial market. With the new rules, these individuals can buy dollars again through specific rates, MEP and CCL. These stem from two methods: MEP allows individuals to purchase dollars through the local stock market, while CCL involves buying dollars through transactions that are settled in foreign accounts, typically used for international transfers and investments.

This change, announced alongside other measures to relax import restrictions, aims to eventually eliminate all currency access regulations. The bank also shortened payment terms for imports and raised the amount service exporters can keep in dollars without converting them.

We also have updates on the infamous Income Tax or Ganancias. The government has updated the Income Tax regulations under the new Measures for Relief and Relevance law, which means this August and beyond, single workers earning over one point eight million pesos monthly (about 1,300 US dollars at the parallel exchange rate) and married workers making more than two point two million pesos (1,500 US dollars) will be taxed. About 800,000 workers who were previously exempt will now be subject to this tax. The new rules also include changes such as taxing overtime and bonuses and removing regional tax benefits that previously applied to workers in Patagonia.

The tax rates start at five percent for income exceeding the threshold and can go up to thirty-five percent for higher earnings. Adjustments to the tax brackets will occur in January and July each year, with an exceptional update scheduled for September this year.

The Measures for Relief and Relevance law also includes a new tax amnesty program aimed at bringing undeclared assets into the open. Effective until March twenty twenty-five, with a possible extension to July, the scheme targets both individuals and companies, including former tax residents, who have assets over 100,000 dollars. Those who declare these assets by September twenty twenty-four will face a five percent tax, rising to ten percent by the 31st of December and fifteen by March twenty twenty-five.

On that note about taxes, Jorge Macri, the Buenos Aires City mayor, announced a new revenue-sharing agreement with President Milei’s administration. Following a Supreme Court ruling that grants the city almost three percent of federal revenue, the city has agreed to abide by the Court’s decision, resolving a long-standing dispute over funding.

Wrapping up our economic news, Forbes recently published some intriguing stats about cryptocurrency adoption in Argentina. According to the publication, the country has the highest rate of cryptocurrency usage in the Western Hemisphere, with two point five million visits to major crypto trading platforms. Many Argentines are buying USDT, a stablecoin pegged to the US dollar, as a hedge against currency devaluation.

Despite the popularity, Argentina lacks regulations for stablecoins, raising risks of fraud and inadequate controls. The Argentine Securities and Exchange Commission has introduced registration requirements for crypto operators, but many local platforms remain unregistered.

Moving on, the Deutsche Welle, the German media company, published an article explaining the severe cold wave that recently hit the Patagonia region, causing temperatures to plummet to minus fifteen degrees Celsius (about five degrees Fahrenheit), which is unusually low for this time of year. This extreme cold is attributed to a weak Antarctic polar vortex, allowing frigid air from Antarctica to move northward. Although the cold snap is significant locally, it is not expected to have a major impact on global climate patterns. Instead, climate change is believed to have contributed to the weakened polar vortex.

Link in the show notes if you want to know more.

From the south to the north, the province of Misiones is ramping up its dengue prevention efforts. With more than 500,000 dengue cases reported in Argentina this year—a staggering 300 percent increase from twenty twenty-three—the province is intensifying its measures, including enhanced vaccination campaigns and mosquito control initiatives.

Misiones is employing new strategies to boost vaccination rates, such as integrating health services with local cultural and recreational activities. Despite these efforts, dengue has resulted in 400 deaths nationwide this year, with Misiones being one of the hardest-hit areas.

Moving into the other side of the North-East border, the Argentine National Refugee Commission is evaluating asylum requests from over 100 Brazilians. Some of them were implicated in the twenty twenty-three attempted coup in Brasilia after Jair Bolsonaro’s electoral defeat. The surge in asylum applications this year contrasts sharply with twenty twenty-three figures.

Also on the topic of Brazil, the country has suspended chicken exports to Argentina following the detection of Newcastle disease on a commercial farm in Rio Grande do Sul. This poultry disease is not harmful to humans, but it’s highly contagious.

In other news, the Paris twenty twenty-four Summer Olympics have kicked off and Argentina is set to feature a strong team aiming for medals across various sports. In U-23 football, the team led by Javier Mascherano is a top contender, with notable players like Nicolás Otamendi and Julián Álvarez. The Rugby Sevens team, fresh off a top finish in the SVNS series, faces tough competition but remains a strong favorite. In hockey, both the men’s and women’s teams are looking to capitalize on previous successes, with the women aiming for gold after silver in Tokyo. The volleyball squad, which earned bronze in Tokyo, will look to build on that achievement. Tennis will see several Argentine players compete on clay, with notable names like Sebastián Báez and Nadia Podoroska. Other sports include swimming, sailing, taekwondo, and athletics, with Argentine athletes participating in twenty-five disciplines overall.

Meanwhile, at the Venice Film Festival, there’s also an Argentine contender. Luis Ortega’s latest film, Kill the Jockey, has been officially selected, competing for a prestigious Gold Lion. The film is set to release in Argentina in September, and it follows the story of Remo, a troubled jockey who vanishes from a hospital after an accident. The movie is Argentina’s sole entry in the festival’s main competition. Ortega, known for his acclaimed film The Angel, expressed his excitement about the Venice premiere.

Speaking of cultural events, the South China Morning Post published an interesting piece about the growing trend of Asian women, particularly from countries like China, Korea, and Japan, immersing themselves in the tango scene of Buenos Aires. Unlike the tourist-oriented tango shows, these women venture into milongas, social clubs where tango is danced in a more authentic, intimate setting. The article delves into the cultural complexities, the dedication required to master tango, and the unique social dynamics of Buenos Aires’ milonga culture. 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!