After the mandatory quarantine, ordered by the government last Friday, the demand for fuel plummeted by up to 85% over the weekend. Oil production is down somewhat, between 15% and 20%, compared to the days before the measures; although drilling and completion of wells stopped, they are in a safe condition. Revenues are going to be negatively affected.
The real estate market in the province of Buenos Aires registered a 27.4% year-on-year decline in February. In the second month of the year, 3,182 titles registered. The total amount of real estate transactions was 8,198 million pesos ($128.7 bn). Concerning total amounts, there was a 19.3% decrease compared to the same month in 2019.
The government’s economic team came to the aid of self-employed, single-tax payers and informal workers; with an extraordinary bonus of 10,000 pesos that will be paid in April, and will involve an injection of 36.747 billion pesos ($581.1 billion). The measure will cover 3.6 million families, almost 30% of households in the country, in a segmentation made by poverty rate and the impossibility of replacing the activity with telework.
Argentina received $15 million from the development bank FONPLATA for the construction of 11 Modular Emergency Hospitals, which will have 760 beds to attend the emergency caused by COVID-19.
As part of the battery of measures designed to cushion the drop in activity caused by the coronavirus, the government announced the creation of an emergency family income, to deliver in April for 10,000 ($157) pesos, which could be repeated in May if the isolation continues. It will aim at workers between 18 and 65 years old, independent, non-formal and mono-tributors of Categories A – average income of 17,400 pesos ($273) per month and B – average salary of 26,100 pesos ($410) per month.
Argentina’s country risk shot up 11.2% to 4,519 basis points, according to the J.P. Morgan index, and most Argentine bonds trading on the New York Stock Exchange were down. Local bonds traded on Wall Street fell up to 4% in Bonar 2024; 3.9% in Bonar 2037; and 1.9% in the Hundred Year Bond.
The company most hit was Despegar, dedicated to the sale of air tickets and tourist packages, with a drop of 269% on the day and 57.3% on the month. Given the fall in agricultural commodity prices, the company Cresud, Argentina’s leading producer of essential farm goods with a growing presence in Brazil, was also hit with a 13.1% drop. In third place was Ternium with a fall of 9.4%, while the only stock with a rise was Mercado Libre, with an advance of 1.1%.
Orocobre is halting operations at its Argentine operations as the country grapples with COVID-19. The government of Argentina enacted the Decree of Necessity and Urgency (DNU) #297/20 on March 19, 2020 requiring a national mandatory quarantine including prohibition of circulation of citizens and movement of personnel and supplies within the country. Consequently, the Olaroz Lithium Facility (Olaroz) has moved operations to care and maintenance, and currently holds sufficient stock to meet customer orders until the end of April.
Argentina’s country risk rose 4.30% on Monday to 4,238 basis points, according to the index prepared by J.P. Morgan, and most Argentine bonds trading on the New York Stock Exchange were down, in another day marked by the advance of the coronavirus pandemic.
The government announced that there is no more room for a fiscal adjustment due to critical social needs and that the maturities are unpayable, taking into account that Argentina has a financing need for 2020 equivalent to 22% of its GDP. The International Monetary Fund (IMF) stated that Argentina needs debt relief over the next decade and should reduce financing needs to 3% of GDP. The imminent negotiation poses a “take away” of between $55 billion and $85 billion, with rates between 5% and 9%, and terms ranging from 7 years to 3 years. The recession in Argentina for 2020 expected to be around 1.5%, is likely to worsen, the government has set up a battery of measures for the most vulnerable segments of the population, although there are still unmet demands. The money injection will be approximately 2.2% of GDP.