PASO Primaries Coming Soon & more –27th July 2023

¡Buenos días from Greenway Parks! This is the Rorshok Argentina Update from the 27th of July twenty twenty-three A quick summary of what's going down in Argentina.

The PASO primaries are just around the corner, and we can expect the campaign to become fiercer in the next two weeks. At least until the early hours of the 11th of August, when the election silence or veda electoral begins. In Argentina, certain activities are prohibited during a forty-eight-hour period prior to an election day. That includes all forms of campaigning, like public rallies, political advertisements, and any other form of election-related propaganda. Plus, shops won’t be able to sell alcohol from eight p.m. on the day before the election and until nine p.m. on the day the elections are held.

The purpose of these measures is to allow voters to make informed decisions without any last-minute influence.

As we approach the 13th of August, the day of the primaries, you may get better acquainted with each candidate and their campaign promises. If you’re still in the dark, the Americas Society in collaboration with the Council of the Americas published an article that explains not only who the top candidates are, but also how the election process works in Argentina.

Among other things, the article explains what it takes for candidates to move past the PASO stage and make it to the actual election date. Wanna know more? Link in the show notes!

Speaking of campaign promises, Presidential candidates Patricia Bullrich, Horacio Rodríguez Larreta, Javier Milei, and Juan Schiaretti all said they would eliminate export duties on agricultural commodities if they were voted into office. This is particularly relevant since the rural sector is hungry for new measures.

Over the last week, the possibility of a new, beneficial exchange rate for agricultural exports being implemented began to take hold, although the initiative has not made the best of impressions in the rural sector itself. The President of the Argentine Rural Society called it “a new patch”, while showing his annoyance at this kind of policy.

On the other side of the same coin, the health system is struggling due to import barriers. Certain high-tech surgeries have been put on hold due to restrictions on imports that have resulted in a lack of medical inputs. Chambers bringing together health care practitioners and suppliers have asked Health Minister Carla Vizzotti and Economy Minister Sergio Massa to review the current situation and solve the delays in the import approval. There is an imminent risk of a shortage of products, spare parts, and supplies for medical equipment used in surgeries, diagnoses, and treatments.

However, the government took the opposite route and announced new measures to bolster foreign reserves, including new taxes on imports.

Meanwhile, the informal exchange rate rose significantly over the course of the last week, reaching 552 pesos per dollar for the first time in history. This means the parallel dollar is almost double the official rate, which closed at 284.

This is why Argentina’s companies are quickly trying to get more dollars before the elections, which can bring uncertain and unstable times. Many companies see an opportunity to restructure their debt at very low interest rates. They want to safeguard their money from losing value in case the government faces a shortage of dollar reserves and the local currency gets devalued. To do this, they are issuing bonds with almost no interest, and when these bonds reach maturity, investors will be paid according to the current exchange rate.

Speaking of companies and dollars, a new study by the Association of Entrepreneurs for the Argentine Development revealed that only half of companies use the official exchange rate to set costs. This was reflected in the wholesale prices of imported goods, which rose fifty-five points above the official exchange rate over the past year.

The government is complaining that companies have increased prices well above inflation, and well above the official exchange rate, despite importing at that rate.

On that note about new studies being released, the International Monetary Fund revised Argentina’s growth projection for twenty twenty-three to negative 2.5%, all due to the drought. The IMF also placed next year’s economic growth at almost 3%.

Also expected to rise is lithium production. A flurry of mining projects and production expansions could lead to a 50% increase this year compared with twenty twenty-two, followed by a tripling in twenty twenty-thwo’s production volumes in twenty twenty-four.

On top of that, Argentina’s first National Plant for the Technological Development of Lithium Cells and Batteries will start production in September on the premises of the National University of La Plata. With this new development, Argentina aims to become a strategic player in the region not only for the extraction of lithium but for the production of batteries as well.

The University of La Plata plant will enable the production of battery cells for two thousand homes, used for the storage of wind and solar energy for populations that are currently disconnected from the electricity grid.

In other business news, the major Spanish retail company Inditex, which owns Zara, has made an announcement that it is exiting the Argentine market. The company stated in a press release that it has reached a preliminary agreement with the multinational Regency Group to hand over the management of its brands’ operations in Argentina and Uruguay. As a result, Zara and Zara Home will still be present in the region, but they will now operate under a franchise contract managed by Regency.

The reason behind this decision lies in Zara's business model, which heavily relies on importing clothing.

But while companies are struggling with import bans, one item swiftly made its way into Argentine territory. We’re talking about Messi’s Inter Miami jersey, which is the hot item of the season. The General Customs of Argentina even warned about “a deluge of irregular entries” of Inter Miami jerseys, with its agents having seized at least 250 over the last week in different procedures of baggage transgressions.

Since we’re on the topic of the football star, the FIFA Women’s World Cup has kicked off. The Argentine National Football Team made its debut on Monday the 24th with a 1-0 loss against Italy at the Eden Park Stadium in Auckland. The match took place at three a.m. in Argentina’s time zone, which made it difficult for people to support the team in real time. The Women’s national team has increased in popularity in the last few years, but it’s still years away from having the same impact as their male counterparts or being as recognized as other women’s teams across the world.

In Brazil, for example, the government has announced civil servants can turn up to work four hours late when the national team is playing at the Women’s World Cup tournament.

Speaking of international competitions, UK officials were angered when the European Union referred to the Falkland Islands as Malvinas this week. The European Union and the Community of Latin American and Caribbean States (or CELAC) reignited the dispute over sovereignty. Ursula Von der Leyen, the head of the EU, acknowledged CELAC's stance on sovereignty and mentioned the topic for the first time in a joint statement, calling them “Malvinas / Falklands” in English.

Newspapers around the world echoed the news, and it did not take a long time for a complaint from the British government headed by Rishi Sunak to come, as he questioned the EU and claimed that the Malvinas Islands are British.

Argentine Foreign Minister Santiago Cafiero called the motion on Malvinas a triumph of Argentine diplomacy.

And to close this edition, Buenos Aires City and Mendoza are now destinations endorsed by the Michelin Guide. Argentina is the first Spanish-speaking country in Latin America to achieve this recognition, which defines Buenos Aires City and Mendoza as first-level culinary destinations. The first selection of restaurants for both locations will be unveiled on the 24th of November, according to the criteria of an anonymous team of Michelin inspectors.

Aaaaand that’s it for this week! Thanks for joining us!

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¡Nos vemos la próxima semana!