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Over 450 U.S. companies are currently operating in Argentina and employ over 150,000 Argentine workers. U.S. investment in Argentina is concentrated in the manufacturing, information, and financial sectors. Other major sources of investment include Spain, Chile, Italy, France, Canada, and Japan. Continuing Argentine arrears to international creditors (including over $20 billion in default claims by international bondholders and over $6 billion owed to official creditors, including the U.S. Government) and a large number of arbitration claims filed by foreign companies are legacies of the 2001/2002 economic crisis that remain to be resolved and adversely impact Argentina's investment climate.
Over 450 U.S. companies are currently operating in Argentina and employ over 150,000 Argentine workers. U.S. investment in Argentina is concentrated in the manufacturing, information, and financial sectors. Other major sources of investment include Spain, Chile, Italy, France, Canada, and Japan. Continuing Argentine arrears to international creditors (including over $20 billion in default claims by international bondholders and over $6 billion owed to official creditors, including the U.S. Government) and a large number of arbitration claims filed by foreign companies are legacies of the 2001/2002 economic crisis that remain to be resolved and adversely impact Argentina's investment climate.
The 12 Kirchnerist years it left Argentina with twin deficits of 17 points of GDP. In turn, of those 17 points of GDP, 15 corresponded to the consolidated deficit between the Treasury and the Central Bank. Therefore, there is no viable solution that avoids attacking the fiscal deficit. At the same time, of those 15 points of the fiscal deficit, 5 correspond to the National Treasury and 10 to the Central Bank. Therefore, the solution implies, on the one hand, a fiscal adjustment in the national public sector of 5 points of GDP, which, unlike in the past, will fall almost entirely on the State and not on the private sector. On the other hand, it is necessary to clean up the Central Bank's interest-bearing liabilities, which are responsible for the 10 points of the Central Bank's deficit.
Issuing 20 points of GDP, as was done by the outgoing government, is not free. We are going to pay for it in inflation. At the same time, the foreign exchange trap, another legacy of this government, not only constitutes a social and productive nightmare, because it implies high interest rates, low activity level, low level of formal employment and miserable real wages that drive the increase of the indigent poor, but also the surplus of money in the economy today is twice as much as it has been in the past. To have an idea of what this implies, let us remember that the Rodrigazo multiplied the inflation rate by 6 times, so a similar event would mean multiplying the inflation rate by 12 times and given that it has been traveling at a rate of 300%, we could go to an annual rate of 3,600. At the same time, given the situation of interest-bearing liabilities of the Central Bank, which is lower than it was before Alfonsín's hyperinflation, in a very short time the amount of money could quadruple and thus bring inflation to levels of 15,000% per year. This is the inheritance they leave us: a planted inflation of 15,000% per year, which we are going to fight tooth and nail to end.
The Alberto Fernández government has left Argentina with hyperinflation and it is our top priority to make every possible effort to avoid such a catastrophe that would lead to poverty above 90% and indigence above 50%. Consequently, there is no alternative solution to adjustment. On the other hand, the inheritance does not end there, since the imbalances in tariffs are comparable to the disaster left by Kirchnerism in 2015. On the exchange rate front, the gap ranges between 150% and 200%, levels also similar to those we had during the Rodrigazo. At the same time, the debt for importers exceeds 30 billion dollars and the profits withheld from foreign companies reach 10 billion dollars. The debt of the Central Bank and YPF amounts to 25 billion dollars and the outstanding Treasury debt amounts to an additional 35 billion dollars. This is the bomb in terms of debt at $100 billion that will have to be added to the nearly $420 billion of already existing debt. Naturally, to these problems must also be added this year's debt maturities, where debt maturities in pesos are equivalent to US$ 90 billion and US$ 25 billion in foreign currencies with multilateral credit organizations. However, with financial markets closed and the IMF agreement collapsed due to the brutal defaults of the outgoing government, the debt rollover is challenging even for the mythical Cyclops. As if all this were not enough, this is taking place in an economy that has not grown since 2011. And in line with the above, formal employment in the private sector remains stagnant at 6 million jobs, reaching the insanity that it has been surpassed by 33% by informal employment. Therefore, it should not surprise anyone that real wages have been destroyed, located around 300 dollars per month, which are not only 6 times lower than those of convertibility, but if the trend of those years had been maintained, or as they used to say, the damned neoliberalism, today they would oscillate between 3,000 and 3,500 dollars per month. They have ruined our lives. They have made the country drop 10 times our salaries. Therefore, we should not be surprised that populism is leaving Argentina 45% poor and 10% indigent. After such a situation, which by all means seems irremovable, it should be clear that there is no possible alternative to adjustment. There is also no room for discussion between shock and gradualism. First, because from the empirical point of view, all gradualist programs ended badly, while all shock programs, except for the 1959 program, were successful. Secondly, because from a theoretical point of view, if a country lacks reputation, as is unfortunately the case of Argentina, businessmen will not invest until they see the fiscal adjustment making it recessionary. Thirdly, and no less important, gradualism requires financing. And unfortunately, I have to tell you again, there is no money.
In social matters, we are receiving a country where half of the population is poor, with a completely broken social fabric. More than 20 million Argentines cannot live a dignified life because they are prisoners of a system that only generates more poverty. As the great Jesús Huerta de Soto says, anti-poverty plans generate more poverty. The only way out of poverty is with more freedom. At the same time, 6 million children will go to bed hungry tonight, walking barefoot in the streets, and others who have fallen into drugs. The same happens in the field of education. To give you an idea of the deterioration we are going through, only 16% of our children are in school on time, only 16%, only 16 out of every 100. That means that 84% of our children do not finish school on time. In turn, 70% of the children who do finish school cannot solve a basic math problem or understand a text. In fact, in the latest PISA evaluations, Argentina is ranked 66th out of 81, and seventh in Latin America. Argentina was the first country in the world to end literacy. If Sarmiento would stand up and see what they did with education. In health care, the system is completely collapsed. Hospitals are destroyed, doctors charge a pittance, and Argentines have no access to basic health care. So much so that during the pandemic, if Argentines had done things like the average country in the world, we would have had 30,000 deaths. But thanks to the state of neglect and inefficiency, 130,000 Argentines lost their lives.
In all spheres, wherever you look, the situation in Argentina is an emergency. If we look at our country's infrastructure, the situation is the same. Only 16% of our roads are paved and only 11% are in good condition. Therefore, it is no coincidence that about 15,000 Argentines die every year in traffic accidents. What I want to illustrate with all this is that the situation in Argentina is critical and emergency.<ref>[https://www.cronista.com/economia-politica/texto-completo-del-discurso-de-javier-milei-en-las-escalinatas-del-congreso/]</ref>
==History==
==History==