The Government of Argentina
identified its top economic priorities for 2022 as reaching an agreement with the IMF to
renegotiate the 2018 Stand-By Arrangement, controlling inflation, and continuing the
post-pandemic economic recovery.The government met some of
these goals as Argentina finished 2022 with better-than-expected economic growth at 5.2
per cent. On March 25, 2022, the IMF Executive Board approved an Extended Fund Facility
(EFF) program for Argentina. The EFF contains quantitative targets for continued
compliance with the program that include a reduction in the primary fiscal deficit,
progress toward elimination of monetary financing of the deficit, and the accumulation
of foreign reserves. Argentina has been able to meet the IMF program targets in the
first four reviews despite its heterodox economic measures.
The ongoing conflict in Ukraine disrupted some trade with Russia and higher natural gas prices negatively affected Argentina’s balance of payments due to the need to import natural gas for the austral winter. However, the conflict also opened new demand and higher prices for key Argentine agricultural exports. The Argentine government offered preferential exchange rates to promote soy exports and eliminated export taxes for specific businesses and industries, including small and medium sized enterprises; auto and automotive parts exports over 2021 volumes; and information technology service exports from companies enrolled in the knowledge-based economy promotion regime.
There were also
investment promotion incentives in key export sectors such as agriculture, forestry,
hydrocarbons, manufacturing, and mining. The high cost of capital affected the level
of
investments in developing renewable energy projects, despite the potential for both
wind
and solar power. In an effort to expand production of oil and natural gas, the
current
administration provides benefits to the fossil fuel industry in an attempt to
improve
the cost-competitiveness of renewable energy technologies. The government has
encouraged
the use of biofuels and electric vehicles.
In 2022, Argentina ranked 69 out of 132 countries evaluated in the Global Innovation Index, which is an indicator of a country’s ability to innovate, based on the premise that innovation is a driver of a nation’s economic growth and prosperity. In the latest Transparency International Corruption Perceptions Index (CPI), Argentina ranked 94 out of 180 countries. As a Southern Common Market (MERCOSUR) member, Argentina signed a free trade and investment agreement with the European Union (EU) in June 2019. Argentina has not yet ratified the agreement. In 2022, Argentina and MERCOSUR concluded negotiations with Singapore. During 2022, there was little progress with ongoing trade negotiations with South Korea, Canada, and Indonesia. Argentina ratified the WTO Trade Facilitation Agreement on January 22, 2018. Argentina and the United States continue to expand bilateral commercial and economic cooperation to improve and facilitate public-private ties and communication on trade, investment, energy, and infrastructure issues, including market access and intellectual property rights. More than 265 U.S. companies operate in Argentina, and the United States continues to be the top investor in Argentina with more than USD $12.5 billion (stock) of foreign direct investment as of 2021.
The ongoing conflict in Ukraine disrupted some trade with Russia and higher natural gas prices negatively affected Argentina’s balance of payments due to the need to import natural gas for the austral winter. However, the conflict also opened new demand and higher prices for key Argentine agricultural exports. The Argentine government offered preferential exchange rates to promote soy exports and eliminated export taxes for specific businesses and industries, including small and medium sized enterprises; auto and automotive parts exports over 2021 volumes; and information technology service exports from companies enrolled in the knowledge-based economy promotion regime.
In an effort to address the economic issues, President Fernandez combined the
previous
ministries of economy, productive development, and agriculture, along with the
energy
and mining secretariats, and relations with international financial institutions
(IFIS)
and bilateral and multilateral lenders into a more powerful Ministry of Economy.
Former
President of the Chamber of Deputies, Sergio Massa, assumed control of the
expanded
ministry.
In 2022, Argentina ranked 69 out of 132 countries evaluated in the Global Innovation Index, which is an indicator of a country’s ability to innovate, based on the premise that innovation is a driver of a nation’s economic growth and prosperity. In the latest Transparency International Corruption Perceptions Index (CPI), Argentina ranked 94 out of 180 countries. As a Southern Common Market (MERCOSUR) member, Argentina signed a free trade and investment agreement with the European Union (EU) in June 2019. Argentina has not yet ratified the agreement. In 2022, Argentina and MERCOSUR concluded negotiations with Singapore. During 2022, there was little progress with ongoing trade negotiations with South Korea, Canada, and Indonesia. Argentina ratified the WTO Trade Facilitation Agreement on January 22, 2018. Argentina and the United States continue to expand bilateral commercial and economic cooperation to improve and facilitate public-private ties and communication on trade, investment, energy, and infrastructure issues, including market access and intellectual property rights. More than 265 U.S. companies operate in Argentina, and the United States continues to be the top investor in Argentina with more than USD $12.5 billion (stock) of foreign direct investment as of 2021.
