Cristina Fernandez Flies to G-20 in Russia on Tango 01, but Changes Aircraft in Morocco

Headlines 04th September

Cristina Fernandez flies to G-20 in Russia on Tango 01, but changes aircraft in Morocco

Argentine President Cristina Fernández left on Tuesday for Russia to attend the G20 summit to begin next Thursday at the Constantine Palace in Saint Petersburg. The president flew on her office’s Tango 01 to Morocco where she changed aircraft to avoid any possible injunction from hedge funds on the presidential transport.

Leading industrialist tells Cristina Fernandez to abide by the rules of democracy; otherwise it is ‘Chavism’

Deputy Chairman of the Argentine Industrial Union (UIA) Cristiano Ratazzi said that President Cristina Fernández “should leave office once her term ends” because those are the rules of democracy, otherwise it is ‘Chavism’.

Mexico’s Pemex oil company expected to join YPF in developing shale resources

YPF Chief Executive Officer Miguel Galuccio said Argentina’s nationalized energy company is willing to form a partnership with Mexico’s state-run Petroleos Mexicanos to develop shale oil and natural gas deposits in the Vaca Muerta formation.

Food, education and healthcare rising prices keep Uruguay’s inflation out of target

Uruguay’s inflation in August kept climbing and reached 1.04%, totalling 6.74% in the first eight months of the year and 8.86% in the last twelve months, which is well above the Central bank target of 4% to 6%, according to the latest report from the local Statistics Office, INE.

CFK implies Macri connected to attempts to overthrow government

As soon as she arrived in St Petersburg to attend the G20 meeting scheduled to begin tomorrow, president Cristina Fernández de Kirchner got into the Twitter spirit again and spitted out 40 tweets connecting Mayor of Buenos Aires City Mauricio Macri with an alleged attempt to overthrow her government.

CFK to address vulture funds issue during G20 meeting

After arriving in St. Petersburg for the G20 meeting, President Cristina Fernández de Kirchner stressed she will be addreessing the vulture funds issue during the summit despite the US rejected to mention it in the final statement.

Nearly a million Uruguayans did Shopping in Argentina this year (Spanish)

In the past seven months, 903,000 Uruguayans citizens crossed the Rio de la Plata. In that period, made purchases over u$s 380 million.

Cristina Fernandez flies to G-20 in Russia on Tango 01, but changes aircraft in Morocco

Foreign Minister, Héctor Timerman; Ministers of Economy and Labour, Hernán Lorenzino and Carlos Tomada; Secretary of Public Communications, Alfredo Scoccimarro and the Argentine Ambassador to the United States, Cecilia Nahón, are part of the Argentine delegation.

Although host President Vladimir Putin has insisted that the G20 summit will concentrate on economic issues it is understood that the Syrian situation will be on the table. Since both Russia and Argentina, that during August chaired the UN Security Council, oppose any military intervention in the civil-war-torn country, Cristina Fernandez can be expected to address the issue both in informal and formal discussions.

Among the economic issues shared by several G20 members particularly emerging economies, Argentina and Brazil, is the “volatility of financial markets and the dollar evolution” following on the Federal Reserve growing consensus that the time has come to stop with the liquidity stimuli of the US economy thus threatening a massive outflow of capital from emerging economies looking for more profitable investments.

In effect the ‘dollar flood’ looked for higher yields in countries such as Brazil, India, Indonesia and East Europe, but the mere announcement that the US will be limiting stimuli has made currencies such as the Brazilian Real to weaken and capitals have started to move out.

The G-20 played a key role in the 2008/09 crisis and has as its mandate to establish a mechanism for international economic coordination. The official agenda for this coming meeting is the recovery of employment and growth, which are of special interest for the European Union. It would come as no surprise if Cristina Fernandez lectures the EU on the ‘Kirchnerite model’ and her ‘industrialization policy’, which could help explain why the delegation includes besides the Economy minister, Labour Minister Carlos Tomada.

Informally Cristina Fernandez could be asked by her colleagues from Australia and Canada to explain her recent statements underlining that the macroeconomic data of Argentina was sounder and more impressive than that of precisely Australia and Canada, two countries where per capita income is several times higher, inflation is below 3% and crime and corruption are but a mere breeze compared to the South American blizzard.

The Argentine presidential office did not inform of any scheduled bilateral meeting with any of the heads of state attending St Petersburg, but it wouldn’t come as a surprise if there is some reproach attitude towards UK PM David Cameron referred to the lack of dialogue on the Falklands/Malvinas dispute. This could be consistent with her recent presentation at the Security Council when Argentina took the chair and the current mid-term elections campaign that is not showing positive for Cristina Fernandez. The latest attack on Lan Chile and Chilean president Sebastian Piñera is a clear example.

Leading industrialist tells Cristina Fernandez to abide by the rules of democracy; otherwise it is ‘Chavism’

“After an aggressive time, I think the President has now a more contemporizing spirit. When someone is elected to rule a country, he/she must leave when the term is over. That is the rule of democracy, the anti-Chavism idea, let’s call it,” Ratazzi said in an interview with a Buenos Aires radio station.

Ratazzi who is also head of Fiat Argentina, one of the largest industrial groups in the country addressed the issue of inflation, which the private sector estimates range 27% compared to the official 10%, said “it is evident that there are huge price disparities”, and “unfortunately there’s a lot to do on the issue and it is useless to blame inflation on others”.

The businessman added that rise in prices and goods’ supply is a “general problem of the (Argentine) economic organization”.

“I’ve have been addressing the inflation controversy for years. Argentina will have to control inflation and put order into the Argentine economy”.

Regarding the US dollar and the different exchange rates plus the Argentine government’s policy of tightening controls on the foreign exchange market, the UIA representative said Argentine manufacturers need greenbacks to reach “higher rates” in order to “export more and import less.”

“A sole dollar rate is much healthier for the economy,” Ratazzi insisted. The multiple exchange system through export taxes, leads to the dollar ‘clamp’ and the ‘caves’ where illegal foreign money trading takes place.

During the celebrations of Argentina’s Industry Day earlier this week, the business leader had said “devaluation” of the Peso was dangerous and called for a tax reform.

Mexico’s Pemex oil company expected to join YPF in developing shale resources

“YPF is open to generate all the agreements needed to put in production the huge resources from Vaca Muerta and Pemex could be a good partner,” Galuccio said in an e-mailed response to Bloomberg questions.

After YPF sealed its first shale accord with Chevron Corp. on July 16, Galuccio said Argentina needs more partners like the California-based company to stop a production decline that contributed this year to the biggest plunge in central bank reserves since 2002. Energy imports, which doubled to 9.4 billion dollars in 2011 from a year earlier, rose to 10.5 billion in 2012 and are forecast by ex-Economy Minister Roberto Lavagna to climb to 15 billion this year.

“In order to develop reserves we need investments from partners to revert the natural decline of fields,” Galuccio said, adding that “the development of shale gas and oil requires a huge amount of cash and the sharing of risks and expertise.”

In April 2012, Argentina’s President Cristina Fernandez seized majority control of YPF from Spain’s Repsol SA. Mexico City-based Pemex is a minority shareholder in Repsol. Galuccio admitted having had “many business meetings in the last few months” with Pemex’s CEO Emilio Lozoya.

Argentina, which holds one of the world’s largest shale gas and oil reserves according to US Energy Information Administration data, is offering tax and export incentives for energy companies that invest at least 1 billion dollars over a five-year period.

Pemex, the world’s fifth-largest crude oil producer, is also experiencing a decline in production at mature fields as it heads to a ninth straight year of falling output. After Pemex’s July output slid to the lowest monthly level in almost 18 years, Mexico proposed an energy reform that would end a seven-decade state energy monopoly on Aug. 12.

Mexico has untapped shale-gas reserves that may be as much as 460 trillion cubic feet, according to data compiled by Pemex. The Mexican producer has 175 shale exploratory opportunities identified in five areas, according to a quarterly presentation.

Meanwhile figures released by the Secretary of Energy show that Argentina’s oil and gas production during the first half of the year dropped 3.56% and 7%, which is the most worrying since “Argentina virtually runs on gas: at home, electricity generating plants and vehicles”.

In June Argentina’s overseas gas bill amounted to 893 million dollars, up 16% over the same month a year ago, and this does not include imports from Cammesa which manages the electric market and provides gas supplies to the generating plants.

“The fall is structural and persistent (since 2004) and impossible to turn around in the short term. We are paying the price of improvising and disinvestment in exploration in recent years” said Jorge Lapeña a former Energy Secretary. He added: “since gas in the main element of Argentina’s energy equation and domestic demand continues to increase, production fall demands larger and larger imports”.

However the industry admits that YPF under state control has significantly increased the level of activity at the wells, but also under special conditions: better financing with government funding.

However the private sector continues with a greater production fall: Pan American Energy (shared by UKBP, China’s Cnooc and the Bulgheroni family), the second oil company in Argentina has seen an 11% drop in gas and 7% in oil production. The company blames the labour incidents in their main reserve, Cerro Dragon, in June last year: ‘production level once activities resumed have remained below pre-occupation of the wells”.

Other private companies performance wasn’t better and faced with the situation the government of President Cristina Fernandez has started to make effective the incentives promised at the start of the year to those companies that provide greater volumes of gas production to the market.

In November last year President Cristina Fernandez invited the companies to increase gas volume production for which it promised to pay 7.5 dollars per million BTUs, still far from the import price, but far better than the average price paid to domestic production.

CEO Galuccio is attributed to have pressed on the government to make effective the payments (and its promise).

Food, education and healthcare rising prices keep Uruguay’s inflation out of target

A year ago August inflation stood at 0.93%, and 5.39% in the first eight months of 2012 and 7.88% in the previous twelve months.

In August Education, 2.01%; Food and non alcoholic beverage, 1.86%; healthcare 1.53%; Other goods and services, 0.98%, Transport, 0.81%; Leisure, 0.62% and House appliances, 0.74%, were the items with the highest increases.

In the Food and beverage item, Meats, 3.22%; Fresh legumes and vegetables, 2.55% and coffee, tea and other infusions soared 10.06%.

According to INE in the last twelve months, Food jumped 10.6%; Housing, 14.66%; Healthcare, 9.52%; Education, 11.8%; Furniture and house appliances, 8.61%; Restaurants and Hotels, 9.72% and Others goods and services, 8.64%.

Despite a strong performance of the country’s economy since 2003, Uruguay has been unable to keep inflation on target in most years because of a monetary expansive policy fuelled by the government’s budget deficit currently running above 2% of GDP; consumer credit and rigid labour laws with strong unions.

Since in October 2014 presidential elections are scheduled in Uruguay it’s hard to see the ruling coalition taking effective measures to contain spending. Furthermore the current administration of President Jose Mujica has taken advantage of financial markets to extend in time sovereign debt payments, and has sufficient reserves to face “any major volatility”.

“Uruguay is prepared to face markets’ volatility, which have been forecasted in coming months” given expectations of a Federal Reserve announcement, any moment, that it is ending its stimuli program, said Economy minister Fernando Lorenzo during a banks´ congress on Latam banking and economies.

Lorenzo added that Uruguay has managed to ‘reduce macroeconomic risks’ and has ‘high rates of liquidity’ which has given it access to contingent loans that leave aside concerns about debt repayments or expenditure financing.

CFK implies Macri connected to attempts to overthrow government

She referred to “bankers, media owners and their media chatterboxes, economic gurus, monopolistic businessmen, union leaders,” among those who attack the government.

After announcing her arrival to the Russian city, she went on to launch a series of enigmatic phrases like: "Bariloche. The red circle and the black circle. No, it’s not the name of a detective movie.”