March 30, 2017

The Minister of Finance, Luis Caputo, met this Thursday with the Minister of Economy and Finance of France, Michel Sapin, to strengthen economic relations between both countries.

At the working meeting, the beginning of activities of the French Development Agency (AFD) was announced.

Michel Sapin highlighted the strong bonds between both countries and, in particular, the number of investment of French firms in Argentina.

Luis Caputo said: “We continue working on creating the conditions for growth and more employment. Within such framework, an agreement like this one, with a fellow country like France, helps us to develop the infrastructure we need in order to be more competitive and to create the jobs that Argentinians need. I would like to highlight the continuous support provided by France over the years within the international financial context”.

The Agency’s beginning of activities, which will focus on the financing of infrastructure works, in particular water infrastructure, strengthens the bilateral cooperation relations. As backgrounds, we can mention the visit of the President of France in February 2016 and the Agency’s diplomatic visit to Argentina in October of that same year.

The meeting allowed both Ministers to make progress in a number of pending issues related to the bilateral agenda with the objective of strengthening the financial relations of both countries.

The AFD is a financial institution aimed at the cooperation with developing and emerging countries in their fight against poverty. The AFD contributes to economic and social growth through financing of development projects, in particular infrastructure. In theory, the AFD should be involved with Argentina in the co-financing with multilateral or regional banks to develop water infrastructure in the country.

France is one of the big foreign investors in Argentina. There are about 250 French firms registered in Argentina. These firms hire around 50,000 employees, mainly in the distribution, automotive, energy, health and financial and technology services sectors. Over the last year, French firms have made numerous investments, supporting the modernization strategy of Mauricio Macri’s Government.

Since December 2015, De Sangosse, Louis Dreyfus, Total, PSA, Renault and Sanofi Pasteur have announced investments for more than 1 billion dollars, showing the confidence French firms have in Argentina’s potential for growth.

March 25, 2017

The International Bank for Reconstruction and Development (IBRD), original institution of the World Bank to help developing countries, approved this Friday the license for a USD125-million loan aimed at the “Development of Drinking Water and Sanitation Services Belgrano Plan”. It is the extension of infrastructure works for the provision and sanitation of water contemplated in Belgrano Plan which is being developed in the North of the country.

The Minister of Finance, Luis Caputo, as Argentine Governor before the World Bank, said this guarantee “is an important tool for the development of infrastructure in Argentina. We need better routes, communications, and housing conditions to be competitive, to create jobs and to grow”. Mr. Minster added that “from the Ministry of Finance we constantly work to guarantee the best financial conditions to finance the growth Argentina needs”.

The 32.5 year-credit has a grace period of 7 years and it will benefit 450,000 Argentinians that will have better access to sanitary and drinking water provision services.

This financing completes the “Second Project of Water Infrastructure of Norte Grande” that began in 2011 with the objective of increasing sustainable access to sanitation services and water provision in the North of the country.

The Director of the World Bank for Argentina, Paraguay and Uruguay, Jesko Hentschel said that: “access to drinking water for the Northern population of Argentina is crucial to reduce poverty and set the basis for a sustainable growth in some of the most vulnerable regions of the country”.

The National Government will complete the investment with a contribution of 25 million dollars. This way, the project will allow extending the works being done within the context of Belgrano Plan in the Provinces of Chaco, Formosa, Tucumán, Catamarca, Salta, Jujuy, Santiago del Estero, Corrientes, Misiones and La Rioja.

Works include the construction, rehabilitation and extension of drinking water distribution networks and sanitation of waste-water systems. These works will also reach remote urban settlements of the above-mentioned Provinces.

Therefore, the Belgrano Plan seeks to reduce the inequality among different regions of the country regarding infrastructure, in order to eliminate extreme poverty and allow the access to basic services for the most vulnerable population of the North of the country.

March 23, 2017

The Minister of Finance, Luis Caputo, presided a meeting this afternoon with journalists of graphical media to announce, together with the presidents of the three public banks, the new policy to promote credit. Within that framework, Javier González Fraga (Banco Nacion), Juan Curutchet (Banco Provincia) and Javier Ortiz Batalla (Banco Ciudad) presented the main characteristics of the credits for access to housing that public banks will offer for the middle-class sectors.

Minister Caputo highlighted that “public banks have to serve the productive sector and to maximize the contribution to the real economy; that is the objective we are pursuing, in this case with mortgage credits”.

The Minister of Economy of the Province of Buenos Aires, Hernan Lacunza, and the Ministry of Treasury of the City of Buenos Aires, Martin Mura, were also present. They announced the submission of a Bill to reduce Gross Income Tax a 1.5% for the mortgage credits of their respective jurisdictions in every bank.

Credits aimed at housing acquisition may be cancelled in a period of up to 30 years: 360 installments that will be adjusted by Purchasing Power Unit (UVA, for its acronym in Spanish) and it will develop according to the Consumer Price Index.

In that sense, Caputo highlighted: “This process of credit recovery that began at the end of last year will have an enormous impact with these mortgage credits that are now part of Procrear, and we are going to develop an even greater market once private banks come into scene”.

Public banks will finance between the 75% and the 85% of the real property value, up to ARS3,1000,000 in the case of Banco Nacion; Banco Ciudad won´t have any limit regarding the real property value and it will lend up to ARS2,000,000 for the acquisition of used and new houses; and Banco Patagonia ARS2,700,000.

In order to access a million-pesos credit, a family group will need incomes between ARS18,500 and ARS24,000, respecting an installment-income relation that varies between the 25% and 30%.

In this sense, Gonzales Fraga said: “For the same cost of a rent, we are giving a family the opportunity to become owners and this is a different Argentina”. Likewise, Ortiz Batalla highlighted: “The 31% of UVA credits nowadays is given by Banco Ciudad and this initiative becomes part of it and it is mainly for the middle-class sector. Nevertheless, the mortgage credit is below 1% of the total product, we have a long path to walk”. On his part, the head of Banco Provincia said that “public banks must play a social role, it is the objective of our institution and of the Governor of the Province, and we have the opportunity to materialize it in the mortgage credit”.

The rates and the amounts of the installments also vary according to each bank. Banco Nacion will apply an interest rate of 3.5% for its clients and of 4.5% for the rest of the public, and it is estimated that the monthly installment will range between ARS4,600 and ARS5,000 for every million pesos lent. In the case of Banco de la Provincia de Buenos Aires, the installment for every million pesos will be around ARS5,931 for its clients with a preferential rate of 5.9% and a rate of 7.5% for the rest of the public. In Banco Ciudad, with an interest rate of 5.9%, beneficiaries will pay an installment of approximately ARS5,993.

Banco Ciudad will have the information available as from next Monday and Banco Nacion and Banco Provincia in the following weeks.

March 20, 2017

The Minister of Finance, Luis Caputo, announced this Monday, together with the British Minister of Trade, the approval of a credit for 1 billion pounds (1.25 billion dollars) offered by the UK Export Finance for projects of exports to Argentina. This way, any enterprise of the UK that wishes to invest in Argentina will be able to access this flexible credit, one of the biggest four for Latin America (together with Mexico, Peru and Chile) and it has very attractive requirements.

Within this context, Caputo highlighted the importance of the announcement: “This agreement with the UK strengthens our position as a productive investment destination, which will bring us more development opportunities”, and he added: “In addition, with this type of financial agreement, Argentina’s foreign trade is favored and thus more and better jobs can be created”. In addition, Hands highlighted in an official release: “Argentina has huge potential to be a modern vibrant economy, and the United Kingdom has committed itself to support the country by means of a constructive relation in areas such as energy, agriculture and infrastructure”.

Both officials held a meeting this morning at the Ministry of Finance, where they talked about the most relevant issues on the bilateral agenda for 2017. The British Ambassador, Mark Kent, and the Chief of Cabinet of the Ministry, Pablo Quirno, also participated in the meeting.

Greg Hands developed a tough working agenda in his visit to Argentina that included meetings with the Ministers of Production, Transport and Tourism, legislators and businessmen. The principal objective of his visit is to announce measures to promote trade and bilateral investment, finance exports and make progress in air services agreements.

UK Export Finance is the UK’s export credit agency that approves loans, insurance policies or bank guarantees with public resources of the UK to help UK companies access export finance.

British authorities highlighted that bilateral trade relations between Argentina and the UK have growing potential. Only in the third quarter 2016 British exports to Argentina increased an 8% compared to the third quarter 2015. Within the main export products we find: pharmaceutical supplies, precious metals, power generation equipment, precision tools, alcoholic and non-alcoholic beverages and electrical equipment and machinery.

The United Kingdom is one of the main investors in Argentina, with a contribution of more than 2 billion dollars in a direct foreign investment and more than 100 British businesses with representation in Argentina.

The British delegation was also comprised by the British Ambassador, Mark Kent; the Director of Trade and Investment in Argentina, Tim Hanson; the Trade Assistant of the British Embassy, Sonia Aponte Tinao; and the regional representative for Latin America of UK Export Finance (UKEF), Sam Hoexter.