August Monthly Inflation Skyrocketed & more – 21st Sep 2023

¡Buenos días from The Springs! This is the Rorshok Argentina Update from the 21st of September twenty twenty-three A quick summary of what's going down in Argentina.

Spring is finally here, and price increases are in full bloom. Argentina experienced a whopping twelve percent surge in monthly inflation in August, the highest jump since nineteen ninety-one. This increase was largely attributed to the currency devaluation following a surprising primary election outcome.

Economists foresee double-digit inflation persisting in September, potentially pushing the country towards recession. Despite this inflationary shock, the Central Bank is expected to maintain its key interest rate, anticipating a slowdown in price rises later in the year.

Speaking of projections, the government filed the twenty twenty-four budget on Friday the 15th, featuring forecasts of seventy percent inflation, an official exchange rate of 600 pesos to the US dollar, and a 2.7% GDP growth. However, nobody expects it to be treated before the elections.

Both Economy Minister Sergio Massa and Deputy Javier Milei requested to postpone the discussion of the twenty twenty-four budget bill until after the election, which is not uncommon in Argentina. Representatives from both sides, including Speaker of the Lower House Cecilia Moreau and ruling coalition deputy Carlos Heller, will convene to explore potential common ground.

The government plans to maintain a stable exchange rate until the 15th of November and then return to a crawling peg regime.

You may recall a few episodes ago we mentioned that Sergio Massa had unveiled a variety of economic benefits for different groups, including a payment of 60,000 pesos (some eighty dollars at the parallel exchange rate) for private-sector workers. Well, keep in mind that if you live in an apartment building, the condominium fees will go up, as building supers will receive that bonus. The costs of the bonus payments won’t be covered by companies’ social security contributions because condominiums aren’t classified as businesses, but rather as nonprofit legal entities managing building expenses, so the cost should be covered by either owners or tenants.

The Organization for Economic Cooperation and Development (or OECD) is predicting that the country will experience the deepest recession among G20 nations this year and the next one. According to the OECD’s latest report, Argentina’s GDP is expected to shrink by 2% in twenty twenty-three and 1% in twenty twenty-four. The global economy, on the other hand, is set to grow by 3% in twenty twenty-three, with the United States leading the way with a 2.2% growth rate.

In other news, a significant political shift was seen in the Chaco province, where the main opposition coalition, Together for Change or Juntos por el Cambio, secured a major victory, ending sixteen years of Kirchnerite rule in the province. Leandro Zdero, the Juntos por el Cambio candidate, emerged as the new governor with forty-six percent of the vote, defeating incumbent Jorge Capitanich.

The victory is seen as a boost for the opposition and presidential candidate Patricia Bullrich. Capitanich’s defeat comes after months of political turmoil, including the presumed femicide of Cecilia Strzyzowski, a twenty-eight-year-old woman, which damaged his re-election prospects.

On that note about election prospects, Javier Milei’s interview with Tucker Carlson smashed records with over 300 million views in twenty-four hours, becoming the most-watched video on X (formerly Twitter). The conversation covered various topics, including socialism, Pope Francis, and inflation. Milei reiterated his stance not to engage in business with any communist countries, including China and Russia. He also expressed his opposition to abortion and called it a murder.

Speaking of high-profile meetings, President Fernández met with Alexandria Ocasio-Cortez, the US Congresswoman, in New York, where he’s attending the 78th UN General Assembly. The meeting followed Ocasio-Cortez’s denunciation of an alleged corruption scheme involving a top US Supreme Court justice and a billionaire US investor tied to Argentine debt due to his leadership of the “vulture” holdout funds. Argentina was in a prolonged legal battle with them over a multi-billion-dollar debt.

The exchange occurred at the Argentine Consulate, and Fernández expressed his agreement with Ocasio-Cortez’s criticism of the corruption scheme, even comparing it to what happened at Lago Escondido, another issue involving judges, prosecutors, and other significant figures in Argentina.

Fernandez also talked about previous legal disputes involving vulture holdout funds and expressed his concern over recent rulings against Argentina, particularly related to the nationalization of state energy firm YPF.

Also related to the topic of rulings, Argentina’s Vice President, Cristina Fernández de Kirchner, received bad news on Monday the 18th when the country’s top criminal court decided to revisit her legal troubles. They revoked the previous rulings from twenty twenty-one that had let her off the hook in two major cases. One of these cases involves allegations of corruption and money laundering linked to hotels owned by her family during her time as president. The other case is tied to a controversial memorandum with Iran, also during her government.

Now, it looks like these cases will go to trial, though there’s likely to be more legal wrangling before that happens. Cristina has been facing various corruption charges recently and says the courts are unfairly targeting her.

Moving on, the Mar del Plata Energy Cluster, an organization focused on promoting and developing the energy sector in the coastal city, predicts that the first offshore hydrocarbon well in the North Basin of the Argentine Sea could attract investments totaling forty billion dollars and employ around 125,000 workers over the next thirty years.

The drilling, set to start between December twenty twenty-three and June twenty twenty-four, has already begun preparations at the Mar del Plata port, and studies indicate that the offshore potential in this region could surpass that of the Vaca Muerta shale gas deposit. However, meeting the projected timeline is a challenge, as the process that starts with exploration permits and ends with the production commencement, typically takes eight to ten years.

Meanwhile, Argentina is gearing up to become a major world exporter of natural gas, with a focus on increasing exports as production rises in Vaca Muerta. Energy Secretary Flavia Royon announced that the first goal is to halt gas imports by twenty twenty-four or twenty twenty-five, except during periods of high demand, particularly in winter.

In the meantime, Massa is actively negotiating to enhance the country’s energy infrastructure and exports. These negotiations include plans to transport gas from Vaca Muerta to the Argentine north and discussions with Bolivia to utilize existing infrastructure to send gas to São Paulo, Brazil.

Additionally, the inauguration of the Vaca Muerta Northern Pipeline is set to increase crude oil exports to Chile. These efforts are part of a broader strategy to improve Argentina's energy balance and reduce energy imports, potentially leading to an energy surplus for the first time since twenty ten.

Speaking of foreign affairs, the Federal Court of Appeals in Buenos Aires ruled to remove a foreigner from the list of urgent heart transplant recipients since the Peruvian patient lacked permanent residency in Argentina, a requirement stipulated by law.

A recent event could have influenced the removal, as an Argentine national was denied medical treatment and subsequently died in Bolivia due to a stab wound. This triggered an outpouring of public outrage on social media, as Argentina’s healthcare system has a reputation for providing equal care to patients of all nationalities.

In other news, UNESCO recognized the ex-ESMA Navy Mechanics School in Buenos Aires as a World Heritage site. The site was a notorious clandestine detention, torture, and extermination center during Argentina’s last military dictatorship.

Here’s a more exciting recognition to lift your spirits: the Latin Grammys nominations just dropped, and both Argentina and Colombia are taking center stage. Argentina’s Bizarrap and Maria Becerra are making waves, with Bizarrap crushing it with six nominations, including Record of the Year and Song of the Year for his collab with Shakira. The Latin Grammys are changing things up this year by taking the show to Seville, Spain, and it’s all going down on the 16th of November.

And that’s it for this week! Thank you for joining us! Before we leave, we wanted to thank everyone who has been listening to us, and welcome all the new subscribers! We are happy the Rorshok Argentina community is growing!

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¡Nos vemos la próxima semana!