The end of the gas subsidies & more – 11th Jan 2024

¡Buenos días from Greenway Parks! This is the Rorshok Argentina Update from the 11th of January twenty twenty four. A quick summary of what's going down in Argentina.

After an eventful end of the year, twenty twenty four saw a rather quiet start without any progress in the reform agenda. Instead, a significant obstacle arose for the government when the National Labor Appeals Court issued an injunction to halt the implementation of the labor reforms outlined in the president’s comprehensive decree. Remember that the newly elected president, Javier Milei, presented a 366-article decree of “necessity and urgency” as one of his first presidential measures.

The labor law changes were intended to take effect about two weeks ago, but Judge Alejandro Sudera raised doubts about the real necessity and urgency of Milei’s decree, suspending the measures until Congress evaluates it further. This is seen as a temporary victory for the General Confederation of Labor, or CGT, but the government plans to appeal.

Either way, the Supreme Court has indicated that it will not address any cases against the decree until the judicial recess ends. This means a definitive resolution is unlikely at this time, and will remain so for at least a month.

The government experienced another setback: after a devaluation of fifty-four percent, the peso has weakened in parallel markets, and exporters and importers are preparing for a potential currency selloff. While President Milei’s early actions initially had positive effects, the current situation is raising concerns.

In fact, Argentina is preparing to make a nearly one billion dollar payment to foreign bondholders this week to restore investor confidence. The payment deadline serves as a crucial test for Milei’s administration, which is expected to pay using foreign reserves boosted by the president’s initial measures.

The good news is that the World Bank predicts that Argentina’s economy will experience growth of almost three percent in twenty twenty four. While the institution cautions about ongoing inflation, the country can expect a slight easing of growth now that the severe drought has passed.

Speaking of passing, you know what’s not running anymore? The Buenos Aires ‘D’ subway line. If you’re a local, this news might bum you out. The subway line that runs between Microcentro and Nuñez is shutting down for the entire summer. Yes, you heard that right. From the 8th of January until the 17th of March, it will shut down completely as part of a modernization plan financed by a 104 million dollar loan from the European Investment Bank.

The upgrades aim to enhance operations, improve efficiency, and ensure safety standards by replacing railroad switches. The subway line’s closure will also allow for the completion of renovations at the Facultad de Medicina station. So, yeah, time to find some other means of transportation.

Even though it won’t help you get from Nuñez to Microcentro, there’s some exciting news for travelers. A bunch of low-cost airlines like JetSmart, Flybondi, Paranair, and GOL are spreading their wings and launching new routes. Flybondi recently started a new Buenos Aires-Mar del Plata route, Paranair is set to connect Asunción in Paraguay with Córdoba, and GOL is making a comeback with a direct route between Buenos Aires and Bogotá, Colombia. JetSmart is also adding new routes, including direct flights to Concepción in southern Chile, connections between Argentina and Chile, and improved offerings to Peru.

In other news, keep in mind that gas subsidies will be completely removed by April. Starting from February, there will be a gradual transfer of the gas price component, with thirty-three percent transferred each month until April. Subsidies will be removed for all users, irrespective of their income category. But from the 1st of April, a new subsidy scheme will be implemented based on a family’s total income, considering their basic energy needs. The details of the new scheme will be provided in a forthcoming public hearing in March.

The removal of the subsidies, like all the other reforms, will have an impact on people’s consumption habits. Already in December, Argentines bought significantly less food, medicine and gasoline compared to the previous year, as reported by various sources, including the Argentine Confederation of Medium-Sized Companies. Overall retail sales dropped by almost fourteen percent year-on-year, with food and drinks stores experiencing a twenty percent decline, followed by pharmacies at nineteen percent and hardware stores at fourteen percent.

The decrease in sales was attributed to consumers anticipating a devaluation of the peso and price increases, prompting them to make purchases in November instead. The cancellation of public works projects and soaring gasoline prices also contributed to the decline. In addition, sales for the Día de Reyes, or the Three Kings’ Day, celebration dropped by more than thirteen percent, with purchases limited to kids’ clothing and toys.

On that note, former economy minister Sergio Massa made a reappearance after losing the presidential election. He attended a meeting with the leaders of the main CGT union grouping, where he expressed concerns about the economic and political situation and criticized himself for not being forceful enough in warning the middle class about the potential price increases that would come with Milei’s policies.

Massa also warned that in March, Argentines will experience a significant income drop due to increases in expenses such as school costs and the absence of collective bargaining talks. He said that the middle class will be the most affected by the deregulatory measures and price hikes.

Moving on, you may or may not remember that the World Meteorological Organization recently appointed an Argentine meteorologist as their head. Celeste Saulo is the first woman and the first South American to head the organization. Last week, she said that her main priority is to assist the most vulnerable countries in dealing with the effects of climate change and extreme weather. In her own words, coming from the Global South makes her acutely aware of the need to do more to prioritize the needs of the most vulnerable.

She plans to enhance weather and climate science, improve observations and data exchange, leverage artificial intelligence advancements, and expand early warning services to mitigate the impact of climate change.

In some healthcare news, experts in Rosario, in the Santa Fe province, have advised people in rural areas to get vaccinated against Argentine Hemorrhagic Fever or AHF, a highly lethal disease. The vaccine is recommended for people between fifteen and sixty-five years old, as Santa Fe is an endemic area for AHF.

Rodents in rural areas typically transmit the disease, but there have also been cases reported in urban areas. The vaccine is included in the national calendar and available free of charge in public hospitals.

Also in the country’s calendar is the World Economic Forum in Davos, stating the 15th of January. President Milei will attend alongside with other notable figures such as French President Emmanuel Macron, Israeli President Isaac Herzog, US Secretary of State Antony Blinken, and Middle East leaders. The summit will focus on the war in Gaza and the theme of Rebuilding Trust.

Speaking of trust issues, the Asian news outlet The Diplomat published a piece suggesting that Argentina’s new administration reevaluate the twenty fourteen deep space station agreement with China.

The agreement approved the establishment of the Chinese station in the Neuquén Province, and the piece raises concerns about its potential for both civilian and military applications. Even though the agreement exempts Argentina from international responsibility for Chinese activities, the political shift and China’s growing influence in the region may prompt Argentina to reassess it. To know more, follow the link in the show notes!.

One recommendation before we go. If you tuned into the Golden Globes on Sunday the 7th, you may have heard about a foreign language film nominee titled Society of the Snow. Directed by the Spanish filmmaker J.A. Bayona, the movie tells the true story of a group of Uruguayan teenage rugby players who survived a plane crash in nineteen seventy two in the Andes Mountains.

The film, based on the book by one of the survivors, is not for the faint of heart, but it does deliver an intense and awe-inspiring depiction of the story every person in the South Cone has heard about. It is now available on Netflix and in some movie theaters such as Multiplex.

Aaand that's it for this week!

It is the second week of the year and you still haven’t told your friends about us? How do you sleep at night?!

Remember you can help us financially with the link in the show notes.

¡Nos vemos la próxima semana!