Argentina Politics Update - 2 August 2023
Agreement with the IMF, surprise JxC win in Chubut, investment in Mara copper project
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Politics
Chubut was the latest upset in a semester full of strong Peronist defeats (Buenos Aires Times, Buenos Aires Herald)
Ignacio Torres won the governorship in Chubut on Sunday, ending over 20 years of Peronist rule in the province
Torres won with 35.7% of the vote, just 1.6% over his Peronist rival Juan Pablo Luque
The opposition Juntos por el Cambio (JxC) coalition also won elections in Peronist strongholds Santa Fe and Chaco, as well as in Mendoza, San Luis, San Juan, and Jujuy
The ruling Unión por la Patria (UP) coalition retained power in the provinces of Córdoba and Formosa
Voter turnout set to be defining factor in Argentina’s election (Buenos Aires Times)
“Declining participation rates tend to favour candidates with more ardent followers,” offering a potential advantage to more extreme candidates Patricia Bullrich and Javier Milei while worrying Larreta
A survey from polling firm Isonomia found that Bullrich and Milei perform better in phone and online interviews, while Larreta and Massa perform better in in-person interviews
This adds an additional layer of concerns regarding the accuracy of Argentine polls
Isonomia expects voter participation to drop below 75% in the August primaries
Ahead of the paso primaries: the Grabois-Massa internal battle is on as Larreta plays both sides in the city of Buenos Aires (Buenos Aires Times)
Grabois, the left-wing social leader running against Massa in the primaries, has been the topic of recent debate as analysts question the number of votes he could possibly win, thereby lowering support for Massa
According to a poll by consulting firm Opinaia, "The majority of those who previously voted for (Eduardo 'Wado' de Pedro and Daniel Scioli) are now leaning towards Massa. However, the voters of A. Kicillof seem not to be so convinced yet and prefer to opt for Grabois."
Axel Kiciloff, governor of Buenos Aires Province, has accepted Massa as the UP candidate and has publicly announced his support for the Economy Minister
Horacio Rodríguez Larreta vs. Patricia Bullrich: the map of alliances and “neutrals” in Juntos por el Cambio ahead of the PASO (La Nación)
Most of the relevant political figures within the JxC coalition have pronounced themselves in favor of either Larreta or Bullrich
Former President Macri has refrained from announcing who he will be voting for in the primaries, and is unlikely to make any sort of pronouncement until after August 13, depending on which candidate wins
Macri has been seen as closer to Bullrich’s campaign and policy positions
Three thirds or polarisation: the possible scenarios between Massa, Bullrich, Larreta and Milei after the PASO primaries (Buenos Aires Times)
A new poll by San Andrés University shows former Security minister Patricia Bullrich with 16.1% of voter intent, followed by Javier Milei with 13.8%
Sergio Massa comes in third with 13.5%, Buenos Aires City Mayor Horacio Rodriguez Larreta in fourth with 9.1%, and Juan Grabois with 4.9%
Post-primary analysis resulted in two possible outcomes:
“In case Horacio Rodríguez Larreta wins the primary and ends up being a candidate, Sergio Massa would get most votes (20.6%), followed by a draw between Rodríguez Larreta and Milei, with 18.5%.”
“If Patricia Bullrich wins the PASO primary of Juntos por el Cambio… then she would get 23.7%, followed by Sergio Massa (20.7%), and Javier Milei (15.9%)”
Inflation was widely seen as the main problem affecting the country (55%), followed by crime, theft and unsafety, and corruption
The end of the Kirchnerite-Macrista grip on power is nigh (Buenos Aires Times)
“The leading coalitions have fractured internally between hawks and doves, with Massa and Rodríguez Larreta trending toward centrist moderation, while Cristina Fernández de Kirchner—represented by Grabois—and Bullrich—who represents Macri—move toward the edges of their respective ideological groups. Finally, Milei and Bullrich seem more in tune with each other, as does Grabois with the traditional leftist parties,” writes Agustino Fontevecchia
A post-PASO primary fracture within both major coalitions is likely to occur, as internal differences push candidates ideologically further and further apart
Little activity in Congress: laws enacted in 2023 half of those passed in first half of 2022 (Buenos Aires Times)
The first semester of 2023 saw only 20 laws enacted, compared to the previous year’s 39 laws
Less than 1% of bills presented were enacted, according to a report by Fundación Barbechando
There were also 40% fewer sessions this semester than the previous year
Economics
IMF reaches agreement with Argentina, will release funds after the PASO primaries (Buenos Aires Times, Bloomberg)
$7.5 billion will be disbursed by the IMF in August, though the amount will be available to Argentina on August 21, just over a week after the primaries
A second disbursement of $7.5 billion will take place in November
Argentina owed the IMF $2.6 billion, to be paid on July 31 and August 1, which it financed through its currency swap line with China and a loan from the Development Bank of Central America (CAF), in addition to other financial resources
Analysis: China holds the key to avoiding Argentina's IMF default. The price tag is unknown (Reuters)
Argentina’s recent turn to its swap line with China can be interpreted as a “short-term bridge loan,” despite few details having been released regarding the loan bridge and even fewer details are known about the swap line
Most of the cases in which China helped Argentina involved an Argentine payment to the IMF; China’s actions have not placed it as an alternative to the IMF
Argentina’s Markets Face Volatility Even With IMF Deal, IIF Says (Bloomberg)
The Institute of International Finance (IIF) sees the most recent agreement with the IMF as “temporary damage control” and unlikely to curb volatility ahead of the October elections
Argentina’s IMF Deal Is Just One Hurdle to Massa’s Presidential Bid (Bloomberg)
It is unlikely the most recent IMF deal will have a significant impact on average voters
Massa barely mentioned the IMF during his past two campaign stops, despite the most recent deal with the lender having just been announced
Lithium + Energy
YPF expropriation payout trial ends: Argentina to pay at least US$4.9 bn (Buenos Aires Herald)
Argentina will have to pay anywhere between $4.9 billion and $16 billion depending on the decision of Judge Loretta Preska, who oversaw the trial regarding state-owned energy company YPF
The final ruling is likely to come over the next few months
Key pipeline needs investment to deliver Argentina's gas dreams, experts say (Reuters)
The recently-inaugurated Nestor Kirchner gas pipeline requires an investment of approximately $40 billion to export the same amount of gas it consumes
A proposal to encourage LNG plant and pipeline construction is currently being reviewed by legislators before it can go to a vote in Congress
Small solar projects help to power Argentina’s energy transition (Buenos Aires Times)
Fossil fuels of natural gas and oil are used to generate 84% of energy consumed in Argentina
Local energy initiatives are seeking to boost renewable energy sources and reduce energy bills
“Self-generation… is aimed at supporting local or even household consumption, but also may see surpluses fed onto wider grids, allowing traditional electricity buyers to become producers”
Glencore Buys Argentina Copper Stake in $475 Million Deal (Bloomberg)
Glencore will purchase a 56.25% stake in the Mara Project from Pan American Silver Corp.
Glencore owns the rest of the project, so they will now be the sole shareholder
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