Argentina, Fernández Under Pressure to Backtrack on Vicentin

On 10 June, ‘cacerolazos’ (pots-and-pans protests) took place in Argentina’s capital Buenos Aires, as well as in other cities across the country, in rejection of the government led by President Alberto Fernández’s plan to nationalise Vicentin, a local agricultural firm.
Argentina Vicentin agricultural

Analysis:

This reaction from the Argentine public is just the latest in a series of criticisms that Fernández and his government are facing over the temporary takeover and mooted expropriation of Vicentin, which filed for bankruptcy last year. Local business leaders and the political opposition have taken a strong stance, questioning the legality of the move. Amid signs that the government’s intervention in Vicentin risks not only producing confrontation with the private sector, but could also carry a high political price, Fernández has given indications that he may reconsider his plans for the firm.

  • The calls for a public protest against the expropriation of Vicentin gained traction online yesterday, and cacerolazos were heard in the evening in several Buenos Aires neighbourhoods. There were also protests in other parts of the country, including in Avallenada, Santa Fe province, where Vicentin is headquartered.
  • People had already taken to the streets in protest in Avallenada on 9 June. Luciano Zarich, the designated deputy auditor for the government takeover, had to be escorted to his hotel by the police for his own safety. Zarich was reportedly unable to enter Vicentin’s premises yesterday, as he was not provided with the keys.
  • Adding to the pressure from the agricultural sector and financial markets, there are signs that the ruling party is itself divided over the issue. A minister in the provincial government of Santa Fe, which is led by Omar Perotti from the ruling Partido Justicialista (PJ, Peronists), has openly opposed Fernández’s announcement.
  • Speaking on the radio yesterday, President Fernández said that he had had a “good conversation” with the CEO of Vicentin, Sergio Nardelli, and is confident that matters can be taken forward without conflict.

Looking Ahead:

Fernández is due to meet with members of Vicentin’s executive board today (11 June) to discuss the form and extent of the government’s intervention in the company.

In brief: Argentina could see double-digit recession

* The Organisation for Economic Co-operation and Development (OECD) has released its latest Economic Outlook report, according to which Argentina’s economy could contract by more than 10% this year. Considering two possible scenarios, one in which the peak of the coronavirus (Covid-19) outbreak has passed, and another in which the epidemic sees a second surge with an accompanying dip in economy activity (the ‘double-hit scenario’), the OECD projects that Argentina’s GDP will contract by around 8.3% or 10.1%. The OECD notes that Argentina’s economy was already in recession and facing uncertainty over the restructuring of its public debt before the pandemic hit. While it highlights the “bold and timely” measures taken by the Argentine government to contain the spread of the virus, the OECD notes the impact of these measures on production capacity and domestic demand, and expects economic recovery to be slow, citing “severe macro-economic imbalances” such as persistently high inflation, a high fiscal deficit, and rising public debt (expected to reach 83% of GDP by the end of 2020). 

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