The US government has targeted government controls and high inflation

The US State Department today released its description and analysis of the investment climate in Argentina. This is a routine document from the Washington administration addressed to companies and funds in that country that have business here, have investment plans, or are considering divesting. The report is relevant because it is an official document and reflects the views of American businessmen. Other features of the Argentine economy are, for example, that of Article IV of the IMF.

What does this State Department work say?

basically that “Economic uncertainty, interventionist policies, high inflation and persistent economic stagnation have prevented the country from maximizing its potential”.

So far no news. It is that the 2021 version of the report started the same way.

This year’s paper highlights a critique of government policy in the sense that it has shown no results after nearly three years of administration. For example, the restructuring of local and foreign debt, with private individuals and organizations, for 100,000 million dollars that Martín Guzmán, former Minister of Economy had to face.

In this regard, the analysis is eloquent. What the country has not yet resolved the financing of the deficit and that is why it has resorted to the issue that triggered the inflation rate.

“Unable to access international capital markets, the government relied on printing money from the Central Bank to finance the deficit, further fueling inflation. Although the Argentine economy recovered 10.3% in 2021, offsetting a 10% decline in 2020, economy remains below pre-recession levels In 2021, the Argentine peso (official rate) depreciated by 17%, inflation reached 50.9% and the rate of poverty reached 37.3%.

The document then reviews, one by one, the market intervention measures that the government has instituted.

“Even as the pandemic receded and economic activity recovered, the government cited rising poverty and high inflation as reasons for continuing, and even expanding, price controls, capital controls and foreign trade controls. Agricultural and food exports, such as beef, soybeans, and flour, were frequent targets of government intervention. Starting in May 2021, the government introduced bans and other restrictions on beef exports to cope with rising domestic prices.

More than 300 companies from that country do business in Argentina, and the United States remains the largest investor with over $ 10.7 billion (shares) of foreign direct investment as of 2019.

The paper cites examples of how Argentina’s investment environment compares to other countries. In 2021, for example, the country ranked 73rd out of 132 countries evaluated in the Global Innovation Index, which is an indicator of a country’s ability to innovate, based on the assumption that innovation is an engine of economic growth and prosperity. of a nation. In Transparency International’s latest Corruption Perception Index (CPI), Argentina ranked 96 out of 180 countries in 2021, down 18 places from 2020.