Stories that caught our eye: January 5 to 12

ARGENTINA #1

Last month’s inflation was 25.5 percent, making for an annual 211.4 percent in the calendar year 2023 (considered the highest in the world), INDEC statistics bureau (still headed by Marco Lavagna) reported on Thursday afternoon. The leading culprits were miscellaneous goods and services (32.7 percent), healthcare (32.6 percent) and transport (31.7 percent) but the biggest impact came from food and beverages (29.7 percent). At the other end of the scale education stayed in single digits (6.2 percent). Core inflation (excluding seasonal and regulated prices) was 28.3 percent. The government expressed satisfaction in the light of President Javier Milei’s previous estimate that inflation in the first half of December was running at a monthly45 percent while 25 percent would be a “tremendous success.” On Monday City Hall statisticians reported a lower local inflation of 21.1 percent for December and 198.4 percent for the year 2023 although food and beverages rose even more than nationwide (30.4 percent). Estimates for the first week of the year were around seven percent while annual inflation in 2024 is not expected to differ much from last year’s figure.

IN MILEI’S FAVOUR

The government and the International Monetary Fund reached agreement late on Wednesday to refloat the extended facility fund obtained by the Alberto Fernández administration in 2022 but falling through in the third quarter of last year as the result of the gross non-compliance of the previous Economy Minister Sergio Massa giving priority to his electoral campaign. The IMF will remit US$4.7 billion, which is basically money held over from last year. In return the government commits itself to balancing the budget with a primary fiscal surplus of two percent and accumulating US$10 billion of foreign currency reserves to take the Central Bank out of the red, Economy Minister Luis Caputo announced on Wednesday evening. The IMF had high praise for the austerity plans of the Javier Milei administration along with harsh criticism for the inheritance left by Fernández and Massa.

THREE’S NO LONGER A CROWD

President Javier Milei’s ‘Omnibus Bill’ had a bumpy ride through Congress last week as it underwent the scrutiny of plenary sessions of the Budget, Constitutional Issues and General Legislation Committees in the Chamber of Deputies. Four ministers – Guillermo Francos (Interior), Patricia Bullrich (Security), Guillermo Ferraro (Infrastructure) and Mariano Cúneo Libarona (Justice) – appeared before the deputies but the biggest concession came from an official below ministerial rank, Energy Secretary Eduardo Rodríguez Chirillo, who told Congress on Tuesday that the emergency period sought by the government could be halved from two years extensible to another two down to one year with the possibility of a further 12 months. Francos admitted that electoral reform was a parliamentary non-starter while Bullrich directly scrapped one of the 664 articles – Article 331, obliging any public meeting of three people or more to seek permission from her Ministry. Bullrich also had to answer various other questions great and small with Rosario drug-trafficking an example of the former and her denial that half a million Christmas boxes paid by her predecessors had been passed onto soup kitchens an example of the latter. The three days of concessions in Congress were preceded by President Javier Milei saying over the weekend that there would be no negotiations.

UP AND RUNNING IN OLIVOS

Exactly one month after taking office, President Javier Milei kicked off official activity at Olivos presidential residence after finally moving in on Monday afternoon as his future base (planning to go only twice weekly to the Casa Rosada, travelling there by car on Tuesday after rejecting use of the presidential helicopter). The initiation event took the form of a midweek meeting with his inner circle – Cabinet Chief Nicolás Posse, presidential chief-of-staff Karina Milei and spin doctor Santiago Caputo – on the same day Congress committees were dissecting his 664-article omnibus law with ministers present while presidential spokesman Manuel Adorni blamed its slow progress for surging parallel exchange rates. In other news regarding Olivos, Human Capital Minister Sandra Pettovello finally ruled out on Tuesday going to live in the presidential residence (a persistent rumour in recent days also extending to Posse) although she said she would be working many hours there. Finally, the President erupted against journalist Silvia Mercado for reporting that Milei’s English mastiffs were already installed in Olivos.

FT’S VICE-PRESIDENT VICTORIA VILLARRUEL VIGIL

While Argentina’s new and eccentric libertarian president fascinates much of the world, the Financial Times last Tuesday placed its focus on Vice-President Victoria Villarruel, describing her in its headline as “a hardliner who seeks to rewrite history.” The article presented her as the libertarian presidential candidate in the next elections or even sooner should the unstable outsider Javier Milei fail to stay the distance. Villarruel was described as a more “polished” political operator than Milei, the big winner of last year’s vice-presidential debates and “a figure with her own agenda … ready for anything” although also an economic novice. The article portrays her as a pro-life zealot like Milei, a hardliner on law and order but above all, a denialist of the human rights narrative of the 1976-83 military dictatorship as “a false leftist construct.”

OTTAWA CALLING

Canadian Prime Minister Justin Trudeau spoke on Tuesday with President Javier Milei, to congratulate him on his election and to discuss shared priorities. Trade and investment, supply chain integration to advance economic prosperity in the Americas and environmental challenges all formed part of their exchange while Trudeau further touched upon deepening gender equality. The two G-20 leaders also shared concerns about Russia’s “ongoing brutal and unjustifiable invasion” of Ukraine and the conflict in the Middle East with Trudeau underlining the need to uphold human rights and democracy in the face of challenges to the rules-based international order. The president also spoke with German Chancellor Olaf Scholz this week via telephone, with both he and Milei calling for a swift conclusion to the Mercosur-European Union free-trade agreement.

TREASURY BOND ISSUED

President Javier Milei and Economy Minister Luis Caputo on Tuesday signed into being a dollar-denominated Treasury bond of US3.2 billion to run for 10 years, directly underwritten by the Central Bank. The bond is aimed at servicing foreign debt, of which some US$19 billion falls due this year between capital and interest.

NEW WARDEN FOR PORTS

Gastón Benvenuto is the new trustee of the AGP (Administración General de Puertos) port administration, which also administers the Paraná-Paraguay waterway, after President Javier Milei signed Decree 26/2024 on Tuesday. The AGP was created in 1956 and assigned administration of Paraná-Paraguay waterway in September, 2021, where it is responsible for dredging and may collect tolls. Bevenuto replaces José Beni, who had been trustee since May 2020.

LAWFARE NO LONGER A CRIME

Federal judge María Eugenia Capuchetti has acquitted ex-president Mauricio Macri, his former advisor Fabián “‘Pepín’ Rodríguez Simón, former Justice minister Germán Garavano and other ex- officials of the Macri administration on charges of framing cases against their Kirchnerite opposition, which denounced the court cases against them as a “lawfare” plot, for which Capuchetti could find no evidence nor any substantiation from the allegedly pressured magistrates and prosecutors. Nor were media commentaries urging conviction considered undue pressure by the judge, who had been sitting on the case for the past four years but signed her ruling at the end of last year, just before the January court holiday. The ruling has already been appealed by the prosecutor Franco Picardi. In the case of Rodríguez Simón, he fled to Montevideo in late 2020 for fear of arrest on charges of falsely accusing the Kirchnerite tycoons Cristóbal López and Fabián De Sousa of tax evasion of their earnings from Oil Combustibles and remains there to this day.

HOLIDAYS ON HOLD

Almost half the middle class (46 percent) have no holiday plans this summer while 60 percent of the poorer half of the population is not going anywhere either, according to a D`Alessio IROL/Berensztein survey. For the first time in many years trips to Europe (31 percent) outnumber those to Brazil (21 percent) with the upper class more immune from crisis.

MORE BUS STRIKES

At least 10 bus lines went on strike in Greater Buenos Aires last Tuesday with bus-drivers protesting against not being paid their wages while their employers complained of their subsidies not being delivered. Other cities around the country experienced bus strikes early in the week, including Mar del Plata and Bariloche (both focal points of summer holiday tourism).

MAYOR TALKS TOUGH

Following the arrest of three immigrants for holding up a Balvanera shop on Thursday, City Mayor Jorge Macri called for the expulsion of all foreigners from the country.