ARGENTINA: PAIS Tax Ends & more – 28th Nov 2024

¡Buenos días from Greenway Parks! This is the Rorshok Argentina Update from the 28th of November twenty twenty-four. A quick summary of what's going down in Argentina.

The government is officially eliminating the PAIS tax for importers, tourists, and credit card payments abroad. This means that businesses no longer have to prepay 95% of the tax when accessing foreign currency for imports, and travelers will no longer face the additional cost when spending abroad.

For tourists, the removal of the PAIS tax should make international travel a bit cheaper, with the dollar-for-tourism rate (also known as dolar tarjeta) hovering around 1,300 pesos.

This move, which takes effect in less than a month, will lower exchange rates for imports and travel, but it also means the government will lose a significant revenue source—around 1% of GDP. As a result, the executive is planning to offset this loss with higher taxes elsewhere, particularly in income and export taxes, which could have broader economic implications in twenty twenty-five.

'Tis the season... to talk budgets. As the debate over the twenty twenty-five national budget heats up, a group of governors from Together for Change, or Juntos por el Cambio, is pressing President Milei’s administration to open the proposed plan for discussion in Congress. They emphasize the importance of passing the budget to maintain market confidence, fight inflation, and ensure fiscal stability. However, they’re also demanding action on key issues, such as compensation tied to the fiscal agreement and funding. While the national government remains focused on achieving a zero-deficit budget, the governors are calling for dialogue and collaboration — warning that without their support, the budget may struggle to pass in Congress.

Speaking of dialogue and collaboration (or the lack thereof), the president has officially acknowledged his growing rift with Victoria Villarruel, the Vice President, announcing that she is no longer involved in key government decisions. Everyone had noticed the strain in their relationship, fueled by public disagreements over issues like Villarruel’s support for raising senators’ salaries despite ongoing budget cuts. According to an interview he gave last Wednesday, the 21st of November, their communication is reduced to what is strictly necessary for their institutional roles.

The president, however, is getting along great with Giorgia Meloni, the Italian Prime Minister. She visited Buenos Aires last week, and Milei proposed creating a new multilateral alliance of right-wing nations to defend private property, capitalism, and freedom. He emphasized the shared goals between his administration and Meloni’s, particularly on issues like free trade and tackling structural problems, such as inflation in Argentina and uncontrolled immigration in Italy.

Argentina is home to the largest community of Italians abroad, including current expats and almost 20 million descendants.

Things might not run so smoothly with the new president across the Río de la Plata. On Sunday the 24th, Uruguay elected Yamandú Orsi of the Frente Amplio party as its new leader. While Orsi has stressed the importance of a strong working relationship with Argentina’s president, the two hold sharply contrasting ideologies. Orsi’s win raises questions about the future of bilateral ties, especially given that Milei’s administration has already clashed with several leftist leaders in the region, including during the recent G20 summit. However, Orsi has urged pragmatism, stating that their relationship has to be good as both countries grapple with pressing regional challenges.

In other news, the government is moving forward with plans to privatize Intercargo, the main air cargo and ground services company. The plan is to prepare all documents by the end of this year to open the company to private bids, with the possibility of an international tender. Intercargo provides key services at twenty-one major airports, including baggage handling, aircraft towing, and passenger transportation.

On that note about transportation, Pablo Moyano, the co-leader of Argentina’s General Confederation of Labor, or CGT, and head of the influential truckers’ union, stepped down on Friday the 22nd following a clash over his push for a national strike against Milei’s administration. His fellow CGT leaders, who advocate for negotiation with the administration, rejected his proposal. Moyano’s exit appears to benefit the government by reducing resistance from organized labor.

Let’s catch up on economics. Wall Street has shown strong support for Argentina’s economic reforms, as evidenced by record inflows into the Global X MSCI Argentina ETF, an exchange-traded fund that offers foreign investors a way to gain exposure to Argentine stocks. The fund saw its assets surge from 100 million dollars to 750 million in the last year, as investors are encouraged by falling inflation. However, the next critical challenge will be lifting capital controls without destabilizing the peso.

Meanwhile, the government has ordered the closure of five public trust funds after a national audit uncovered serious mismanagement and lack of oversight. Among the funds dissolved are those meant to support trafficking victims, finance strategic investments, and assist entrepreneurs. The executive cited issues like poor resource allocation, delayed audits, and weak accountability. This move, formalized by a presidential decree, reflects efforts to tighten controls over poorly performing public programs.

On Sunday the 24th, the government also announced a major overhaul of the art market, eliminating restrictions on the export and import of artworks. Under this new policy, artists and galleries will have greater freedom to participate in international markets without bureaucratic red tape. Temporary export periods for galleries will be extended from one to five years, cutting costs for showcasing pieces at fairs and exhibitions.

Artworks may find it easier to reach Argentina, but tourists are not. Tourism to the country took a hit in October, falling 30% compared to the same month last year. According to the National Institute of Statistics and Census, Argentina received 750,000 non-resident visitors, but the drop was significant. Most visitors came from neighboring countries, with Brazil and Uruguay leading the way.

At the same time, outbound travel by Argentines jumped nearly 25%, with top destinations including Chile, Brazil, and various European countries. This trend resulted in a negative travel balance of 240,000 travelers for the month, underscoring a difficult period for Argentina’s tourism sector.

Also on the topic of travel, shopping trips to Chile have surged, with daily buses crossing the border to buy goods that are up to 70% cheaper due to currency differences. This boom has overwhelmed customs operations, leading to hours-long delays and complaints about ineffective controls. Many items, including counterfeit clothing, are brought back and sold informally, undercutting local businesses in Mendoza, where retailers are struggling to compete. They’ve called for stricter customs enforcement to curb smuggling and protect fair market practices.

Now, onto cultural news. On Monday the 25th, the Argentine comedy series Division Palermo, or Community Squad, created by Santiago Korovsky, won the International Emmy for Best Comedy. The Netflix show humorously explores diversity and inclusion through the story of a quirky urban patrol unit in Buenos Aires, assembled to meet minority quotas and improve the police’s public image. The show premiered in twenty twenty-three to great acclaim and will return for a second season in twenty twenty-five.

Another promising local production is on the horizon. Netflix’s upcoming series Caught, based on Harlan Coben’s twenty ten novel, is set to debut in twenty twenty-five as the first Latin American adaptation of his work. The six-episode thriller, directed by Miguel Cohan and Hernán Goldfrid, relocates the original New Jersey setting to Argentina, with filming taking place in Patagonia and Buenos Aires. The story follows journalist Ema Garay, played by Soledad Villamil, as she navigates the moral and personal complexities of investigating a social worker suspected in a teenager’s disappearance.

For our last story, Argentine singer María Becerra teamed up with Paris Hilton for the music video Without Love, a track from Hilton’s latest album Infinite Icon. Fans were thrilled by the surprise collaboration and amused by a viral backstage clip where Becerra introduced Hilton to Argentina’s mate.

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

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Rorshok Japan Update

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th Nov: 2024

EPISODE NUMBER: 126

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A rocket test explosion, the cyber defense system, Princess Yuriko’s funeral, greenhouse gas emissions, the Italy-Japan defense deal, and much more!

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