Argentina, on the Path to Investment
By Dr Gustavo Traversoni, Traversoni & Bengolea Abogados
For the first time in modern history, Argentina is being ruled by a non-traditional political party – neither Peronist nor UCR. The current government has a centrist profile and supports long term liberal policies; it is clearly promarket and has the strong determination to take the country back to the place it was wrongfully taken from owing to the populist policies of the last decades.
President Macri has managed to form a governing team with solid technical knowledge and a clear vision of the complex world scenario. This is widely supported by the opposition in the Parliament, which has decided to accompany the government in this necessary transformation by passing essential laws. Since President Mauricio Macri took office in December 2015, Argentina has been working to provide a stable and adequate macroeconomic and regulatory framework to become an attractive destination for Foreign Direct Investment. The main measures implemented were: removal of capital/repatriation restrictions, free floating currency, closing hold out debt default and successfully regaining access to global capital markets, inflation targeting, public deficit control and the removal of export taxes. The right investment climate along with the country’s comparative advantages and growth prospects provide unique investment opportunities. A private sector with low levels of debt provides a solid platform to finance investment and consumption to return the economy to a sustainable growth path.
Undoubtedly, Argentina has decided to become an international player again, to play a main role and to sustain the historical importance both regionally and internationally that it enjoyed in the past.
The success of the tax amnesty undergone by the Argentine economy at the end of 2016, which resulted in over USD 125,000,000 of assets declared (second worldwide); the passing of new laws fostering business in renewable energy (a 7-year loan at a rate of 3% has recently been taken out with the Chinese Bank Eximbank to construct the largest solar energy site in South America, in the province of Salta), agro, industrial and real estate businesses; entrepreneurship ventures and tax incentives in areas like Vaca Muerta – the second shale gas field in the world – are clear evidence of the political and social decision of the country to carry out an orderly opening of its economy in the search for long term investments.
The role assumed by Argentina in the World Economic Forum Annual Meeting in Davos 2016, aroused world interest in Argentina and achieved, among other things, the support of international entities which acknowledged the importance of Argentina for business in the forthcoming years; this will eventually restore investment grade levels.
The fact that the World Economic Forum in Latin America 2017 was held in Buenos Aires, that Buenos Aires has been chosen to be the next venue for the G20 meeting in November 2018, that Argentina has become a member of the OECD, and that it has returned to the IMF, offers proof that the Argentine economy is on the right path to investment. Moreover, President Macri and President Trump will meet soon in order to sign an agreement on exchange of information in tax issues between both countries.
For the first time in decades, the Presidents of the US, France, Mexico and Japan have officially visited Argentina and signed multiple bilateral agreements in areas of economic importance. The geopolitical place that Argentina holds in critical international situations—such as the ‘Trump’ and ‘Brexit’ phenomena and the new challenges of world politics resulting from certain belligerent positions in the northern hemisphere—leads to the belief that it is a good moment to consider Argentina the place to make medium and long term investments, thus ratifying the fact that Argentina is on the path to investment.
Dr Gustavo TraversoniTraversoni & Bengolea Abogados, Buenos Aires, Argentina
T: +54 11 5031 00 77, F: +54 11 5031 00 77
Published: July 2017 l Photo: Colourbox.de - Henrik Dolle