ARGENTINA: Inflation & more – 18th Jan 2024

¡Buenos días from Greenway Parks! This is the Rorshok Argentina Update from the 18th of January twenty twenty-four A quick summary of what's going down in Argentina.

Last week wrapped up on a somber note with the release of the official inflation rate for twenty twenty-three. With a yearly average of 211%, the country saw the highest level of inflation since the hyperinflation era in the early nineties. Plus, it’s considered to be the highest in the world right now. December alone saw a harsh spike of twenty-five percent, with the biggest impact coming from beverages and food.

To say that people were surprised by the numbers would be untrue, but it doesn’t make it any less impactful. Food items, including basic ones, experienced a 251% increase this year, which has greatly affected low-income households.

Despite President Milei’s introduction of economic reforms, predictions for future inflation rates remain grim, with some specialists suggesting a potential 500% increase in the coming year.

In the face of skyrocketing inflation, the Central Bank approved the printing of 10,000 and 20,000 peso bills. These will be introduced gradually, starting in June. The Central Bank said this move will make transactions easier, improve the financial system efficiency, and lower the cost of buying finished notes.

The 10,000 peso bill will feature Manuel Belgrano and María Remedios del Valle. Belgrano is best known for his role in Argentina’s fight for independence from Spain. He created the flag and is considered one of the country’s founding fathers. María Remedios del Valle, on the other hand, was an Afro-Argentinian woman who participated in the Argentine War of Independence. Even though her role has often been overlooked, she became known as the Mother of the Nation for her services as a nurse during the war, and later as a combatant.

Meanwhile, the 20,000 peso note will show images of Juan Bautista Alberdi, another key figure that the current president deeply admires. Alberdi is best known for his contributions towards drafting the Argentine Constitution in eighteen fifty-three.

Speaking of cash, the government negotiated an agreement with the International Monetary Fund (or IMF) on the seventh review of the forty-four billion dollar program, signaling a potential disbursement of almost five billion by the IMF. The funds are intended to settle previous IMF debts that are due at the end of this month.

The conditions of the deal include Argentina targeting a two percent primary fiscal surplus of gross domestic product this year as part of President Milei’s stabilization plan. The IMF has shown support toward his measures, although with the understanding that they may lead to public resistance.

After the next payment is settled, the president will have to decide whether to continue the existing program or negotiate a new one.

Following the agreement, the president met with Kristalina Georgieva, the IMF managing director, at the World Economic Forum in Davos. To make an austerity stance, he flew commercial.

While at the forum, he focused on political discussions, while Luis Caputo, the Economy Minister, engaged with business and banking leaders, including figures from Glencore International and Banco BTG Pactual. Caputo also joined Georgieva on various panels on economic prevention, alongside Chief of Staff Nicolas Posse. Diana Mondino, the Foreign Minister, met separately with business leaders from Visa and Nestle.

As for the president, he’d received over eighty requests for meetings with political leaders, economists, and investors — quite a feat for his first international trip as head of state. One of the leaders that he met with was his French counterpart, Emmanuel Macron, and with David Cameron, UK’s Foreign Secretary.

In essence, the trip underscored Milei’s endeavor to champion a renewed embrace of capitalism on the global stage, placing his economic plan at the forefront of discussions during a pivotal panel event before an assembly of world leaders.

Back in Argentina, things got heated in Congress as lawmakers took up the president’s controversial economic and labor reform bill. Despite Milei’s initial all-or-nothing stance, his administration signaled openness to amendments, including the possibility of reducing the public emergency period from two years to one and dropping the proposal to eliminate the PASO primaries. Most likely, concessions like those will have to be made for the bill to be approved.

On a similar note, the government is making waves as it demands social organizations and unions to foot the bill for security operations during recent protests. The sum totals fifty-six million pesos, almost 70,000 US dollars at the official exchange rate.

The move has stirred controversy, with organizations like Libres del Sur denouncing it as government intimidation. The fines target groups involved in two demonstrations in December, one protesting the interruption of state-provided food assistance and the other opposing Milei’s emergency decree. More than a dozen organizations, including the Truckers’ Union and the Argentine Workers’ Central, received notices to cover operational costs.

This push aligns with Security Minister Patricia Bullrich’s stern stance against unlawful protests, emphasizing that those responsible will bear the financial burden. This is sparking a heated debate over the government’s approach to dissenting voices.

There’s also a debate over the government’s approach to gender violence. The National Ombudsman’s Office reported that Argentina witnessed 322 femicides in twenty twenty-three. This exceeds the number of previous years, and raises questions around the president’s controversial push to reform gender laws, including the elimination of the Women, Gender & Diversity Ministry and a proposal to narrow the scope of the Ley Micaela This law was enacted in twenty nineteen, and it mandates gender-based violence training for public officials.

Some training on how to spot fake accounts may also be necessary. This week, President Milei fell for a ruse when a fake Twitter account impersonating Buenos Aires Governor Axel Kicillof engaged him in a heated exchange. The imposter said to have more economic credentials than Milei, and despite clear signs that the account was fake, including a bio that stated "Governor of the Province of Buenos Aires - fake,” Milei responded with a critique of Kicillof’s economic record. When informed of the hoax, Milei insisted that the fake account’s comments could easily have come from the real Kicillof.

The president found himself in yet another Twitter controversy last week, retweeting criticism of China’s lack of freedom shortly after a meeting with the Chinese ambassador. Diplomatic sources are expressing significant confusion and concern, pointing out that Milei appears oblivious to the diplomatic ramifications of his actions. The Ministry of Foreign Affairs worries that China, a crucial strategic partner, might take offense at what they view as an unnecessary insult, particularly given recent efforts to mend and normalize relations.

Luckily, things are going better with India. The country has scored big in the lithium game, securing a historic twenty-four million dollar deal for exploration and production rights in Argentina. This marks India’s initial foray into foreign lithium ventures, strategically aimed at reducing reliance on China for this crucial green technology metal. The companies Khanij Bidesh India and Argentina’s Camyen SE inked the deal in the Catamarca Province, a prime lithium hotspot.

On that note about hotspots, the Buenos Aires Herald news outlet published a piece listing the top Buenos Aires beach towns. If you’re planning to escape the city’s stifling summer heat, you can check out these five towns. To know more, follow the link in the show notes!

One last recommended read before we go: The New York Times published a feature on Blas Omar Jaime, an eighty-nine-year-old man in Argentina who has spent nearly two decades resurrecting the Chaná language, an Indigenous language believed to be extinct. Learning Chaná from his mother, who was a “woman memory keeper,” Jaime embarked on a journey to preserve the knowledge and stories of his ancestors. The article reflects on the broader context of Indigenous erasure in Argentina and the importance of language preservation for identity. Link in the show notes!

Aaaaand that’s it for this week!

Thanks for listening. Lots of you are listening via Spotify, Apple Podcasts, etc, thanks especially to those of you who subscribe. If you ever want to download an episode and just send the very small MP3 audio file to somebody in a messaging app because you think they might be interested, you can download each and every episode on our own website www.rorshok.com/argentina.You’ll find the link in the show notes. Thanks!

¡Nos vemos la próxima semana!