Political Climate Report
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CONTACT INFORMATION POLITICAL & REGULATORY RISKS [email protected] Juan Cruz Díaz [email protected] www.cefeidas.com Megan Cook +54 (11) 5238 0991 (ARG) [email protected] REPORT +1 (646) 233 3204 (USA) Marina Martínez de Hoz Posadas 1564 [email protected] 4th Floor Katrina Cohen Cosentino Ciudad Autónoma de Buenos Aires [email protected] C1112 ADB CLIMATE República Argentina Political Climate Report - ARGENTINA July 14, 2020 POLITICAL IN THIS ISSUE Argentina’s lockdown continues with strict conditions in Buenos Aires Page 3 Political dynamics around COVID-19 and the metropolitan area, where it is set to last through July 17 response and will likely be extended, albeit with a loosening to allow many Page 4 commercial activities to resume. Across much of the rest of the Government attempt to takeover agriculture company halted by pushback country, economic and social life has gradually resumed. The government continues to skillfully manage the political dynamics Page 6 Government looks to expand economic around the lockdown and has extended support for companies and relief, hints at post-crisis agenda individuals as economic figures increasingly reflect the negative Page 7 impacts of the lockdown. Meanwhile, the government’s attempt to Congress continues to advance laws, as politicking picks up take over agricultural company Vicentín was met with swift pushback and has been put on hold, representing the first major Page 9 Argentina improves restructuring setback for the Alberto Fernández administration. The issue has offer, looks to reach deal with bondholders polarized political debate and reached Congress, where legislators clashed on that and other divisive issues while managing to find consensus on COVID-19-related issues. Separately, in early July, Argentina presented a new debt restructuring offer to international bondholders; while the two sides are now much closer than they have been to date, a deal has thus far remained elusive. Argentina’s strict lockdown continues in Buenos Aires, rest of the country gradually reopening Argentina’s capital and metropolitan area, as well as several other areas with community transmission, remain under strict lockdown. However, across much of the rest of Argentina, economic activity and social life are gradually resuming, subject to regional restrictions and health and safety protocols. At the time of publication, Argentina had recorded 103,265 cases and 1,926 deaths. Over the last month, the government has extended the “mandatory, preventative social isolation”, which began at midnight on March 20, several additional times. On June 4, the president, flanked by Buenos Aires City Mayor Horacio Rodríguez Larreta and Buenos Aires Province Governor Axel Kicillof, announced a 21-day extension of the lockdown in Buenos Aires as well as parts of Chaco, Córdoba, Chubut and Río Negro. In Buenos Aires City, the government announced new flexibilization measures, including the opening of local clothing stores, further permission for recreational outings for children on weekends, and physical activity from 8pm to 8am, all while respecting health protocols. Find more about our services Follow @CefeidasGroup By early June, most of the rest of the Buenos Aires and the metro area—raised ENTINA G country had moved to a more relaxed increasing concern about the outbreak and phase known as “mandatory, the potential saturation of the health AR – preventative social distancing”. In this system in the coming weeks. Despite this, phase, people can resume regular the overall death rate in Argentina is PCR economic and social activities, following among the lowest in Latin America (see strict health protocols, such as using face graph). masks, maintaining two meters of distance and ensuring frequent hand washing and In response to rising numbers, on sanitation. There also remain limits on the June 26 Argentine President Alberto size of indoor events. Nationwide, Fernández announced the extension international borders are still closed, large- of the mandatory social isolation scale events remain suspended and through July 17. This new stage of interjurisdictional transportation is isolation began on July 1 when lockdown restricted to essential workers. Although conditions became stricter in areas with there have been some reversals to strict community transmission of the virus and lockdowns and restricted mobility in more controls were implemented on several areas where recent COVID-19 transport and mobility. In Buenos Aires outbreaks have occurred, large areas of City and the metropolitan area, the the country remain in this phase. new stage amounted to a reversal of the gradual opening that had However, the situation is different in occurred in recent weeks and a return Buenos Aires and the metropolitan to a “new phase 1” similar to the area, as well as some regions such as strict lockdown that began on March Chaco, where cases have continued to 20. Only the essential businesses increase, and the lockdown has originally exempted (grocery stores, remained stricter. In late June, a sharp pharmacies and some specific industries) uptick in the number of cases confirmed as well as banks can open. Circulation daily nationwide—from less than 1,000 at permits had to be renewed, and expire the start of the month to well over 2,000 more frequently, and controls have been per day, more than 90 percent of that in strengthened on public transport. 2 Source: Deaths taken from https://coronoavirus.jhu.edu/data, as of July 13. Recreational walks with children remain on returning to strict lockdown and ENTINA G authorized, but many commercial activities the governments have sought to show that had opened in recent weeks have had the metropolitan area as an AR – to shut down once again. In Buenos Aires interconnected region. Several days Province, some industries were allowed to earlier, the governments announced the PCR remain open but workers must use private creation of the “AMBA Index” to jointly transportation. track relevant statistics in the metropolitan area. They also began frequent public Political dynamics around COVID-19 announcements of daily occupation of ICU response units in the metropolitan area to draw attention to one of the factors driving the Although fatigue with the lockdown decision to return to a stricter lockdown. has increased, especially in the capital As of publication, ICU units in the Buenos area where it remains strictest, polls Aires metropolitan area were at about 61 still show that the majority of percent of capacity. Argentines continue to support the lockdown and see it as an appropriate On June 26, as previously mentioned, the response to the ongoing public health president announced the extension of the crisis. lockdown alongside Buenos Aires Mayor Horacio Rodríguez Larreta and Buenos Nevertheless, the decision to Aires Province Governor Axel Kicillof to strengthen the lockdown in Buenos show political support and consensus for Aires and the increase in cases in the the new measures. However, in a break metropolitan area exacerbated the from the prior announcements of the political tensions between the extension of the mandatory isolation provincial and city governments, period, which occurred in live press which are governed by opposing conferences, this announcement came in parties. There were already tensions the form of a previously taped between the two jurisdictions over announcement that lasted nearly an hour. differing approaches to the lockdown (see This allowed the president and the May PCR for background), but these two other leaders to carefully align became more apparent in June as the and target their messages. For city government moved to re-open example, they sought to highlight efforts more businesses and authorize new to increase testing and contact tracing, activities in response to increasing which has become a focus of criticism as a demands from its base for weakness of the government’s efforts to liberalization. The city government date. authorized some limited open-air physical activity, which the opposition painted as a While the provincial government measure that only benefitted a privileged publicly continues to support stricter group that was not considering the public measures, the city government has health impact of their actions. They suggested it will push to allow many expressed concern that this attitude would activities to resume after July 17, if make it more difficult to control the spread the number of new cases daily of cases in the province. remains plateaued. However, despite some differences in terms of favored Leading up to the June 26 extension approach, the Buenos Aires provincial announcement, the Buenos Aires City and city governments continue to government had suggested that it would work to show a unified front in their not go back on these liberalization responses to COVID-19. On July 13, measures. However, the city and Rodríguez Larreta and Kicillof met privately provincial governments were to discuss and align approaches to the ultimately able to reach an agreement next phase of the lockdown in the capital. 3 This is expected to begin on July 18 and chambers and agricultural sector ENTINA G will likely include a return to a situation organizations also opposed it. Moreover, similar to early June in Buenos Aires City protests in northern Santa Fe Province AR – in which the majority of small shops were (where Vicentín is based) put pressure on able to open and adults permitted to provincial Governor Omar Perotti,