The loan will contribute to access to public information, ethical conduct of public officials and management of the financial sector

June 6, 2019

The Inter-American Development Bank approved financing for USD 200 million for the second stage of the Program to Support Transparency and Integrity Reforms in Argentina for the country to continue to strengthen the reforms that the government has been promoting since 2016.

This new operation supports measures that implement greater access to public information by citizens and economic actors through the regulation of the Argentine Access to Public Information Act. The operation also focuses on issues of integrity of officials and reduction of impunity, recognizing the progress in the implementation of a gift registry and the implementation of the “Arrepentido Law”.

One area of ​​special attention is providing more transparency in managing government resources in the procurement of public works, purchases and public employment. This includes the adoption of an electronic management system to contract public works bids.

Finally, the program foresees increasing the effectiveness of the financial system and reducing transaction costs, with the strengthening of transparency based on the adoption of measures aligned with the International Standards of the Financial Action Task Force (FATF) and IFRS, issued by the International Accounting Standards Board (IASC).

The project is the second of two consecutive operations, the first of which was approved in August 2017, under the programmatic policy-based loan modality to support policy reforms.

Buenos Aires, June 4, 2019. Officials of the Ministry of Finance, Interior and AFIP explained the benefits of Sections 205 and 206 of the Productive Financing Act, whose objectives are to channel savings to long-term investments through the capital market, to increase financing for SMEs, and to encourage the construction of social housing.

The regulations provide incentives for closed mutual funds and financial trusts to channel funds into the real economy through the capital market. In addition, it promotes the development of social housing by establishing particular tax benefits for investors.

Under Section 205, investments may be allocated to any type of economic activity within the country without a deadline. In this way, the investor pays the income tax only when it receives the distribution of the fund, that is to say, it is fiscally transparent.

Meanwhile, Section 206 establishes tax benefits in the payment of income taxes for those investments destined to the real estate development of medium and low income housing.

Those vehicles that finance this type of housing will have a 15% reduction in the income tax rate for placements for more than five years (without distribution of shares or participation) and a 0% income tax for placements for more than 10 years.

In recent months, the Ministry of Finance, the Argentine Securities Commission (CNV), the Argentine Insurance Authority (SSN), and AFIP have promoted, in collaboration with the private sector, a set of measures aimed at the promotion of products for voluntary savings, protection and long-term investment.

During the event, the Secretary of Finance, Santiago Bausili and the Undersecretary of Financial Services, Francisco Sosa del Valle, were present on behalf of the Ministry of Finance. In addition, the President of the Argentine Securities Commission, Marcos Ayerra ,and the Vice-Chair of the Insurance Authority, Guillermo Plate, participated. For the Ministry of the Interior, the Secretary of Housing Ivan Kerr attended the event, and so did the undersecretary of Livestock, Rodrigo Troncoso, for the Ministry of Production. The Chair of AFIP, Leandro Cucciolli, also participated.

Representatives of investment funds, construction chambers, insurance companies, stockbrokers, banks and the livestock sector were present on behalf of the private sector.

The Ministry of Treasury reports it awarded all of the offered Fixed-rate Peso Treasury Bonds due on November 2020 (BOTE 2020) for a total of ARS 5.9 billion, nominal value, the cut-off price was ARS 1,000 for every ARS 1,000, nominal value, which represents a Nominal Annual Rate of 26.35% and an Annual Effective Internal Rate of Return of 28.09%. The total amount issued of these instruments, including the amount sold at this auction, is ARS 124.8 billion.

The Ministry received a total of 24 purchase orders.

The modernization of Line D of Buenos Aires subways will increase the frequency of its service and will benefit 577,000 users per day

The Argentine Ministry of Treasury and the European Investment Bank (EIB) signed a Guarantee Agreement for the USD 104-million loan with sovereign guarantee for the implementation of the Project to modernize Line D of the subway network of the City of Buenos Aires, aimed at mitigating the current metropolitan mobility issue.

The total investment in the first stage will be USD 264.75 million (USD 160.75 million contributed by SBASE) and it will be aimed at the implementation of a new management system for the circulation of trains, the readjustment of the power system and improvements in the accessibility, signaling and traffic in the stations.

The meeting, at which the subscribed original documents were delivered, was attended by the Undersecretary of International Financial Relations of the Ministry of Treasury, Martín Soto; the director of operations with Global Partners of the EIB, María Shaw-Barragan; and the deputy adviser of Operations in Latin America and the Caribbean of the EIB, Susan Antz. The parties addressed the importance of this first Sovereign Guarantee Agreement for the Government of the City of Buenos Aires as a demonstration of support for the joint administration of transport and for the diversification of the investment sectors, fostered by the European financing.

The EIB has become a strategic partner for Argentina for the development of investment projects in energy, water and sanitation, management of urban waste, SMEs and transport, among other sectors. The closing of this operation is part of the current portfolio of ongoing projects with the Bank for a total of USD 195 million. The programs include the following: “Financial support for SMEs”, “Comprehensive management of solid urban waste (GIRSU Jujuy)”, “Drinking water and sanitation for the metropolitan area of the City of Buenos Aires (AYSA)”, among others. All of them are organized under a co-financing scheme with important international credit organizations.