Upcoming Argentina Elections and the Impact on Relocation
This weekend, on October 27th, Argentina presidential elections will be held. After Mauricio Macri’s defeat in the primary elections on August 11th to Alberto Fernandez and the former president Cristina Fernandez de Kirchner, few think he can overturn a 16-point deficit in so little time, but the government hopes that recent signs of an economic revival would be enough to encourage voters to stick with his free markets reform agenda, despite a recession and 55% annual inflation.
Current political and economic climate in Argentina
The government of Argentina has imposed currency controls in an attempt to stabilize markets as the country faces financial crisis. The government has restricted foreign currency purchases following the collapse of Argentinean peso. Companies will have to seek Central Bank permission to sell pesos to buy foreign currency and to make transfers abroad. Just for reference, to demonstrate the huge inflation the country is under: currently 1 USD equals to 60 pesos. Last year, at the same time, 1 USD equaled 22 pesos.
The real estate market in Argentina right now is recessive. Argentina is back again at the stage where there are many properties for sale and few options available for renting. Due to the devaluation of the currency and high inflation rate, most landlords are not accepting payments in Argentine pesos, and are requesting that payments be made in U.S. dollars only. Also, many landlords do not accept payment via wire transfer anymore, they only agree with receiving cash. This may be an issue for many companies since, for safety reasons, they do not permit their employees to withdraw large amounts of money for the purpose of rental payments.
For Argentine investors and landlords, the U.S. dollar is the only source of protection against current economic uncertainty. In the few rental lease agreements when payment is agreed to be made in Argentine pesos, a rental increase of 20% every six months may apply and would be stipulated upon lease negotiation.
Impact on Relocation
Cartus’ LATAM office and our partners in Argentina will continue to monitor this situation and alert our clients about any possible risk or impact this current situation might pose to upcoming and ongoing assignments to Argentina. Also, we have compliance and quality measures in place to make sure that all our clients’ guidelines and policies are followed accordingly, despite the current market obstacles.