December 2017 Newsletter

In this month's Newsletter we provide a summary of our personal vision on the state of Argentina after one year under the administration of President Macri and a forecast for the upcoming year 2017. We also provide an overview on the new law on PPP (public-private partnerships), recently approved by our Congress, which is intended to boost long expected investments, mainly in the infrastructure sector.

1. Balance of first year of President Macri in office

   While 2016 might be regarded as a year of transition and clean-up of the detrimental policies that President Macri's pro-business administration inherited from kirchnerist populism, 2017 is expected to bring with it the positive effects of the ample changes in policy, rules and regulations that the current administration put in place with a great dose of success.

   In this respect, one year after the new President took office, 52 % of the population believes that the general situation in the country will improve during the next year, in spite of the still stagnant economy, according to a recent study carried out by prestigious polling company, Poliarquía. Hope is the word that keeps raising the moods after a difficult year in which -besides the lack of economic growth- both fiscal deficit and inflation stayed at high levels.

   Besides certain criticism to President Macri for trusting alleged neo-Peronism too much the head of the Executive still has a 55% approval rate, not a bad evaluation if one considers that he was elected in November 2015 with a little more than 50% of the votes.

   Even if Macri's administration has received critique from own voters for some harsh (already commented in previous newsletters) measures like the high increase of public / utility services' rates (one of the received timebombs), or the immediate abolishment of taxes in favor of the mining sector -versus the hold off of income tax lowering on certain vulnerable sectors, it is also certain that a lot of concrete positive measures have also been undertaken, such is the case of exchange controls repealing, the end sovereign default, and the maintenance of state subsidies for the most needing, amounting to more than 30% of Argentina's population, a reason not to immeasurably celebrate at end-of-year parties. The same is true for the government's full frontal fight against corruption and rampant drug trade.

   For some observers, the government may have made an error in giving the impression that prosperity would arrive...