Manufacturing companies in Argentina have postponed investments in the second half of the year, as the economy takes longer than expected to recover, according to Reuters. President Mauricio Macri has sought to reform the economy through market-oriented reforms and settling Argentina’s debt with creditors. In addition, the economy is threatened by higher living costs and decreased consumption.
President Mauricio Macri announced that Argentines holding undeclared assets or cash in overseas accounts could bring it back to Argentina without legal consequences, according to The Wall Street Journal. The government aims to tax offshore money to fund pensions and other programs. Analysts estimate that over $500 billion in Argentine assets remain in overseas accounts, and incoming funds would be taxed anywhere from 0% to 15%.
Former President Cristina Fernández de Kirchner was called to testify before the central bank this week for allegedly manipulating the Argentine peso during her tenure. Kirchner fiercely denied the allegations and has called the investigation a political attack against her legacy.
Argentina’s lower congressional house approved a bond settlement with creditors, and President Mauricio Macri expects to win support in the Senate, according to Reuters. The government would pay over $4.65 billion to a group of investors who are determined to see a return of their money.
The president has attempted to attract investors and spur the economy by working with creditors, but he faces an uphill battle as political opponents may stall some of his market-oriented policies. The proposed settlement derives from a $100-billion bond default in 2002.
Argentina offers one of the few places on earth where oil companies are not suffering from the full force of the collapse in prices.
Argentina regulates oil prices, a policy originally intended to insulate the public from the whims of the market, protecting people from triple-digit crude prices. However, with the crash in prices since mid-2014, the effect of the regulation has reversed: motorists are now effectively subsidizing the oil industry.
Argentina has announced that it plans to formally launch its bid for full member in the Organization for Economic Cooperation and Development (OECD) next month. The announcement came last week from Finance Minister Alfonso Prat-Gay, following a meeting he had with OECD chief Angel Gurría at the World Economic Forum in Davos.
At the World Economic Forum, Argentine President Mauricio Macri made positive headway with U.S. and European leaders, according to the Associated Press. Investors and the world community praise his reform approaches, such as slashing export taxes and lifting restrictions off the peso. The center-right president replaced leftist leader Christina Fernandez de Kirchner in December.
The government issued a “national statistical emergency” as President Mauricio Macri seeks to reform how Argentina gathers statistics in pursuit of an accurate depiction of the economy, according to AFP.
Critics maintain that former President Cristina Kirchner’s cabinet failed to put forth honest numbers, forcing the National Statistics and Census Institute to withhold data pertaining to such matters as poverty and GDP. Argentina received a censure in 2013, by the International Monetary Fund for discrepancies in GDP numbers when compared to third-party data.
President-elect Mauricio Macri won Sunday’s runoff election against Daniel Scioli on a platform of free market principles and spending cuts, according to the Los Angeles Times. His election marks the end of Kirchnerismo, which encompasses 12 years of leftist political thought helmed by President Cristina Fernandez de Kirchner and her late husband, former President Nestor Kirchner.
Argentina’s economy shows slight improvement as more investors buy up the nation’s debt and become more bullish on Argentine stocks. The election process is set to take place in October 2015, and many hope a change in leadership would improve the economy.
