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Argentina’s Mauricio Macri assumed the presidency on December 10, 2015, following twelve years of rule by Presidents Nestor Kirchner and Cristina Fernandez de Kirchner. At the outset, the Macri government found an economy mired in low growth and a country largely disconnected from the world. The series of reforms that the Macri government initiated were aimed at reintegrating Argentina into the world and producing economic growth, stability and predictability for citizens and investors alike.
The following scorecard is a list of the most significant reforms being planned and executed by the Macri government. We hope this summary helps to deepen understanding of the choices that are on the table and demonstrates that reform processes are incremental, as each reform moves forward at its own pace. This scorecard will be updated monthly as we see tangible progress on individual reforms. The current status of the reform can be found on the back of the corresponding card. We welcome your comments and feedback, as no such accounting of reforms can ever be complete.
Completed
Incomplete
In Progress/Partial Success
Complete
DIFFICULTY: High
The former government severely restricted exports of agricultural products. Duties aimed at keeping food prices low in domestic markets, restrictions discouraged production and alienated farming sector.
Actual implementation of this decision was easy as it only required the issuance of decrees. The elimination of the export permit system, Register of Export Operations (ROES) was replaced by Declaraciones Juradas de Ventas al Exterior (DJVEs), which eliminates the pre-approval requirement for export sales.
In Progress
DIFFICULTY: Medium
Argentina has great potential use for solar and windpower that has been developed to a limited extent- new government wants to promote large, private investment.
The government is taking the right steps towards implementation. The Ministry of Energy approved 17 projects for AR$1.8 billion and 1109 MW. On November 2017, in the second round of the Renov.Ar program, 1409 MW were awarded over 66 offers, surpassing the original cap of 1200 MW. In total, 228 offers were received for a total of 9831 MW.
In Progress
DIFFICULTY: High
Proposed electronic voting; new campaign financing regulations; banning "listas colectoras" except when parties are of a formal coalition; mandatory debates for presidential candidates; regulating transition between administrations.
Following previous attempts at electoral reform, the Macri government vows that 2018 will be the year to focus on campaign finance regulations, the elimination or limitation of mandatory voting in primaries, and the implementation of a national electronic single ballot system.
In Progress
DIFFICULTY: High
A large number of substantial subsidies distorted relative prices, encouraged excess consumption of utilities and greatly increased the budget deficit, which had risen to 6.1% of GDP in 2017.
Elimination of subsidies increased inflation significantly with negative reactions from citizens. Some price hikes took effect but others were rolled back by judicial rulings. The government saved AR$65 billion in 2017. Public transportation prices will go up in June 2018, following rising prices for energy, water, gas, and toll systems.
Complete
DIFFICULTY: High
After Argentina defaulted on its foreign debt in 2001, an important number of Argentine bond holders sued for settlement. The new government has made agreements with almost all of the "holdout" creditors.
This reform was very difficult as it required reaching agreements with all bond-holders, submitting an offer that US federal courts would support, and obtaining Congressional approval of a law. All measures were achieved by April 2016. Argentina's credit rating has improved and interest rates charged to Argentina have dropped.
In Progress
DIFFICULTY: Medium
Previous administration under President Kirchner had isolated Argentina and strained Argentina's international relations. New government has begun proactively strengthening relations within the Americas and internationally.
Argentine partners around the world have responded positively but some goals will demand prolonged negotiations. Argentina will host the G-20 summit in 2018 and seeks membership in OECD. New observer status in the Pacific Alliance grouping and interest in more bilateral free trade agreements and negotiations for a MERCOSUR-EU agreement.
Complete
DIFFICULTY: Medium
Almost all imports were subject to authorizations issued on non-transparent and discretionary criteria.
The measure could have been difficult due to lack of foreign exchange, but trust in new government prevented a rush of purchasing foreign currencies. New SIMI import system procedure replaced the previous import system (DJAI).
In Progress
DIFFICULTY: High
All export duties were eliminated in January 2016, except those on soybean and soy products, which were reduced. Remaining duties will be gradually reduced. An additional 5 percent reduction will be effective on January 1, 2018.
Elimination of duties caused an increase in domestic prices of some food products. This was difficult as duties on industrial and agricultural products, particularly soy, are an important part of revenue. Until 2015, exports in most sectors were taxed. The cut to soybean export duties is set to go from 30% to 18% in two years.
Complete
DIFFICULTY: High
After years of strict and inconsistent interference in exchange markets, effective January 2016, foreign currencies can now be bought and sold without restrictions in Argentina.
The measure was expected to be difficult but trust in the new government made its implementation easy. Foreign exchange markets have been stable since implementation of the reform. Many remaining minor restrictions were eliminated in December 2016.
Complete
DIFFICULTY: High
Integral tax reform will require the sanction of a complex congressional act because of the number of taxes to be reformed and of the conflicting interests that will have to be harmonized.
The Argentine Congress approved the new tax reform in December 2017. The law seeks to reduce inefficient taxes and would reduce the corporate tax rate from 35% to 30% to promote investment, as well as new tax hikes on social security to foment legal employment. It also aligns transfer pricing rules in Argentina to OECD standards.
In Progress
DIFFICULTY: Medium
A large program to improve infrastructure in the northern provinces of Argentina. The primary difficulty will be obtaining funding for all aspects of the plan.
Plan Belgrano includes the construction or improvement of highways, railroads, water supply and sewages, airports and harbors. Projects need to be defined, bids need to be reviewed, contracts need to be awarded, and the plan financed. The project was relaunched on February 2018, with a 22% increase from its 2017 budget.
In Progress
DIFFICULTY: Medium
Dual highways serve a limited number of large cities. This network's extension will provide high speed safe transportation service to many other cities.
Starting in April 2018, new highways will be designed, bids will be solicited, contracts will be awarded, and funding will be allocated. The government will see aUS$20 billion investment from the private sector over 15 years. A road-show was held around the world to promote the plan between the builders and international investors.
In Progress
DIFFICULTY: Medium
Modernization of suburban railroads that serve an area where about nine million people live and/or work. Elimination of obstacles to automotive circulation in the city.
Mostly obsolete suburban trains travel over dated railways, with deficient signaling and other safety devices. Railroad lines cut streets in the city of Buenos Aires, affecting traffic. Since the Macri government came to power, investment in Argentina's railroads has increased. Around AR$45 million has been pumped into the railway system.
In Progress
DIFFICULTY: High
Transformation of the Federal Police into a force principally focused on the struggle against federal crimes, especially organized crime. Reinstatement of the Gendarmerie's role as a border patrol force.
Until 2016, the Federal Police had been concentrated in the City of Buenos Aires. Almost 20,000 federal agents were transferred to the new local city police force while the rest are being redeployed around the country. The Gendarmerie will return to protect borders. Reform will incorporate retirees to cover less demanding tasks.
In Progress
DIFFICULTY: High
Acquire state-of-the-art equipment and improve maintenance of old but usable equipment. Redefine the aims of military factories and equip them adequately, securing their efficient performance. Difficult as the armed forces have been neglected for 15 years.
Most equipment is obsolete and usable equipment is not well maintained. Most military factories are idle or don't efficiently produce goods for civilians. The country wants to modernize its land forces like tanks, artillery vehicles and armored personnel carriers. Budget limitations have not allowed acquisitions from Russia and China.
In Progress
DIFFICULTY: High
Increase peacekeeping operations. Form "Cruz del Sur" Task Forces with neighboring countries such as Brazil and Peru, similar to that which exists with Chile.
In the past Argentina played an important role in peace-keeping operations. Now they are limited. A joint task force exists with Chile. This policy of close cooperation with a neighboring country should be reproduced with Brazil and Peru.
In Progress
DIFFICULTY: High
Complete the inventory of glaciers. Reach greater uniformity of provincial regulations.
A national environmental law bans mining in areas neighboring glaciers. Laws in some provinces ban the use of cyanide compounds and other chemicals and open-pit mining. An inventory of glaciers is in progress, but has come into scrutiny as it excludes many bodies of ice that could be unprotected under the 2010 Glacier Protection Law.
In Progress
DIFFICULTY: High
Strengthening of MERCOSUR and its free-trade agreements (FTAS). Establishment of FTA's between Argentina and other countries.
Mercosur has been increasingly isolated from the globalization movement. An agreement with the European Union is now the aim for 2018. First steps were taken towards a bilateral agreement with Mexico, and a free trade agreement was signed with Chile. Measures are also being taken to increase trade with Canada.
In Progress
DIFFICULTY: High
Reorganization is required for Judiciary to deal effectively with organized crime; creation of new federal courts and specialized bodies of officials and investigators to support them. Fighting organized crime requires personnel with state-of-the-art training and equipment. New procedural laws must redefine roles of judges and prosecutors.
Some of these reforms are included in the Justicia 2020 Program. Some of the proposals include reforming the Council of Magistrates by making it less political in its decisions to appoint/remove judges, granting prosecutors more power, extending the number of work hours for judges, and reducing the time it takes to close cases.
In Progress
DIFFICULTY: High
OECD membership means paying lower interest rates and having greater capacity to attract investments.
Argentina must make major reforms in legislation and government operation to be OECD eligible, implying a major culture shift in government, business, labor and civil society. In 2017 the government presented a Plan of Action to meet OECD standards. The country has been active in 23 OECD committees.
In Progress
DIFFICULTY: Medium
Extension of Internet connectivity to 1200 communities through optic fiber links.
Arsat, the state-owned telecommunications company, has brought Internet connection to 400 towns with the goal to reach 500 by the end of 2018. Their end goal is to reach 1,300 localities, investing almost AR$3 billion in its efforts.
In Progress
DIFFICULTY: Medium
Different telecommunication media are now regulated by separate laws. The aim is to have only one law drafted with new realities in mind.
The government is drafting the new law and has created a website to encourage citizen participation and suggestions in the writing of the law. The new law will reform and update the Audiovisual Communication Services Law and the Argentina Digital Law. In December 2017 the government extended the deadline for drafting the law by 180 days.
In Progress
DIFFICULTY: Medium
Construction of a mine that will produce 460 Tm of uranium dioxide per year.
This mineshould produce enough uranium dioxide to supply all the needs of Argentina's nuclear reactors. The construction was delayed because of protests against the environmental hazards. In November 2017, President Macri signed a decree which introduced an option to totally or partially privatize Dioxitek.
In Progress
DIFFICULTY: High
CAREM-25 is a 27 MW nuclear reactor designed in Argentina for small cities. It can reach up to 300 MW. RA-10 is a 30-MW nuclear reactor for the commercial production of radioisotopes used in industry and medicine.
The degree of difficulty, particularly for CAREM-25, is a result of it being a major scientific, technological, engineering and industrial challenge. Its design is wholly Argentine. RA-10 will supply all of Argentina's demand and allow exports. President Macri recently reached out to other countries to invest in the nuclear reactor.
In Progress
DIFFICULTY: High
Embalse, one of three of Argentina's nuclear power plants is being refurbished to deliver power for thirty more years.
The 600 MW Embalse power plant began operating in 1984. It is undergoing major renovation aimed at increasing its capacity to 700 MW. As part of the refurbishing project, a new computer system was installed in the plant's control room in January 2018, one that would keep the plant's system functioning and secure for the next 30 years.
In Progress
DIFFICULTY: High
An all-encompassing plan aimed at increasing productivity and creating 200.000 new private sector jobs. The proposed plan will foster competition, transparency and entrepreneurship, by enforcing macroeconomic measures and infrastructure projects.
Difficulty of the plan lies in the magnitude of the objective. Multiple obstacles have to be faced. Macroeconomic goals such as lowering the cost of capital and infrastructure projects aimed at providing adequate energy supply, transportation and communications are addressed in individual reforms.
In Progress
DIFFICULTY: Medium
Only 87% of urban residents receive drinkable water through pipelines and about 50% of households are not connected with public sewers.
The Plan aims at reaching 100% supply of potable water though pipelines and the construction of sewers to serve 8.9 million persons in three years. It recently received a line of credit for US$70 million from the French Development Agency to continue its work.
In Progress
DIFFICULTY: High
Today investments in research and development (R&D) are between .6 and 0.7% of GDP. The Plan aims at raising them to 1.5%.
The Plan seeks to balance private and public investment in R&D to reach the 1.5% of GDP target. An additional measure to increase R&D is to promote the hiring by commercial companies of personnel with postgraduate degrees.
In Progress
DIFFICULTY: High
The National Financing Plan, complemented with the National Productive Financing Plan and the Development of Capital Markets Plan. Other programs include new line of credit extensions to Small and Medium Enterprises (SMES) by the Banco de Inversión y Comercio Exterior, as well as the Exporta Simple initiative, making easier for SMES to export.
These programs recognize the obstacle to growth posed by limited and high-cost funding supplied by the Argentine financial system and capital markets. These Plans seek to provide low-cost funding to SMES and promote financial inclusion. On November 2017, the government presented a new plan that was approved by the representatives.
In Progress
DIFFICULTY: High
A set of programs to increase skills among workers particularly those unemployed; reduce labor costs while maintaining wages; and employ young adults.
Unemployment is higher for young adults and those less skilled, but formal employees are costly for many businesses. To be competitive, Argentina must develop high-wage skilled jobs instead of focusing on low-wage labor intensive industries. This is a priority for the government in 2018, along with bringing informal workers to legal work.
In Progress
DIFFICULTY: Medium
The Vaca Muerta reservoir puts Argentina among the top holders of non-conventional hydrocarbon reserves in the world.
In January 2017, Macri announced an agreement among all public and private stakeholders that would reduce costs and pave the way for large investments in Vaca Muerta. Approx. AR$6-8 billion in investments were confirmed by mid-2017. In October 2017, the state-owned company YPF said it would invest over US$30 billion in shale by 2022.
In Progress
DIFFICULTY: Medium
Goal of adequate and balanced energy supply by installing 22,000MW new power capacity by 2025. Renewable energy will be responsible for 20 percent and nuclear energy for 10 percent of total output.
The Plan Nacional de Energía aims to balance the demand of households, government and productive activities with adequate reserves to face climate changes and accidents. Contracts are being executed for 59 projects that represent 2,400 megawatts (MW) of new wind, solar and biomass energy.
In Progress
DIFFICULTY: Medium
Distrust in tax authorities led many Argentines to hide assets. At the same time, the Executive did not comply with Supreme Court resolutions regarding pensions.
In July 2016, Congress approved a moratorium on undeclared assets with reasonable penalties. Funds collected will be applied to comply with social security legislation that had not been applied correctly. As of December 2016, AR$116.8 billion was declared and AR$148.6 billion was collected in fines.
In Progress
DIFFICULTY: Medium
For many years Aerolíneas Argentinas prevented other airlines from expanding services and entering the Argentine domestic market.
In December 2016, a reform process started that should result in more investment by private companies already in the domestic market and new companies. By November 2017, five private airlines had been approved by the government for in-country flights. The country expects to open 77 domestic and 58 international routes.
Complete
DIFFICULTY: Low
Two decrees seek adequate defense of public interests in the face of legal actions or contracts and bids involving government agencies and government officials or their close relatives.
Decree 201/2017 concentrates on the Procuración del Tesoro cases between government agencies and the President, Vice President, and cabinet ministers and their close relatives. Decree 202/2017 requires publicity of bids made to or contracts between government agencies and relatives of public officials and strict controls of proceedings.
Complete
DIFFICULTY: Medium
Enacting legislation that would extend criminal penalties to corporations. Current legislation limits criminal penalties to their directors and managers.
The President has submitted a bill that would extend criminal penalties to corporations to Congress, approved by both chambers in late December 2017, along with ratification of the OECD Anti-Bribery Convention.
In Progress
DIFFICULTY: Medium
The Buenos Aires Metropolitan Area Central Market serves as a concentration market for most fresh food products distributed to the city and its suburbs.
Inaugurated almost four decades ago, it requires renovation and expansion, with the additional aim of transforming it into a base for the export of processed foods.
In Progress
DIFFICULTY: Medium
Decades of excess governmental regulation and populism have discouraged the rise of local entrepreneurs capable of competing in free markets.
The Ley de Emprendedores (Law 27349), sanctioned on April 12, 2017, gives tax incentives to new enterprises and creates a Fund that will provide loans and equity to them. It also makes it easy to for Argentine entrepreneurs to create their own business in less than 24 hours.
In Progress
DIFFICULTY: Medium
For years, there have been complaints in the press and public opinion about nepotism in the national government, friends and family members often named in positions for which they are not adequately prepared. The move would save the government AR$1.5 billion.
To fight nepotism, the Macri government issued a decree in which cabinet members would be prohibited from placing friends or family in ministries. Around 40 family members of current ministers will have to leave their posts in a matter of 30 days.
In Progress
DIFFICULTY: Medium
The Aprender 2016 exams held in Argentina showed that 70.2% of students in fifth and sixth grade cannot solve basic math problems and 46.4% cannot comprehend basic texts. An estimate of 5 out 10 students drop out before finishing high school.
The Plan Maestr@ and Secundaria 2030 look to extend universal coverage, decrease school dropout rates, and guarantee Internet access to all schools by 2018. The plans also emphasize the development of critical thinking, digital competency, communication, and responsibility.
Complete
DIFFICULTY: Medium
As part of the country's efforts to reduce the budget deficit, a new pension reform as this had been deemed an important part of the structural deficit.
In 2017, Senate approve new pension reform. Pensions will be adjusted every 3 months, as inflation would have a 70% weight, and the remaining 30% will vary based on worker salaries. The reform guarantees a minimum retirement for 30-year contributors to the pension system, and retirement at 70. Estimates put savings at AR$72 billion.
Incomplete
DIFFICULTY: High
The government set out to pass labor reform in 2017, looking to lower costs for employers and formalize the situation of unregistered workers. Negotiations with labor unions have led to mixed reactions. The proposed changes have been put on hold until March 2018.
The government will continue to negotiate with opposition party leaders and with labor unions on passing labor reform under two to three different bills.
Incomplete
DIFFICULTY: High
Inflation has been a scourge suffered by the Argentine economy for the last seven decades. The current administration has adopted various efforts and goals for inflation which look to converge the inflation rate to the single digits by the year 2020.
The inflation targets were not met in either 2016 or 2017. In December 2017, the government decided to relax the original goals, giving the central bank more time to achieve disinflation of the economy at slightly higher inflation rates.
Methodology: To establish this list, CSIS reviewed the Argentine press and professional literature and consulted informally with economists and business leaders. To refine and narrow down the list, CSIS did extensive desk research from Washington, D.C. Your feedback is welcome.
Argentina Reforms is a product of the Andreas C. Dracopoulos iDeas Lab, the in-house digital, multimedia, and design agency at the Center for Strategic and International Studies. Established in Washington, D.C., over 50 years ago, the Center for Strategic and International Studies (CSIS) is a bipartisan, nonprofit policy research organization dedicated to providing strategic insights and policy solutions to help decisionmakers chart a course toward a better world. To learn more about CSIS, visit www.csis.org.
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