 Good day and welcome everybody to this press conference on the economic perspectives for Argentina My name is Peter van Ham. I am the US media lead for the world economic forum And I'll be happy to be joined today by two speakers very high-profile speakers from Argentina Mr. Nicholas Dujovny the Minister of the Treasury of Argentina welcome And Guido Santleris, I hope I said that correct Governor Santleris of the Central Bank of Argentina welcome to both of you We will conduct this press conference in English, but if you have questions in Spanish will be happy to take them Bienvenidos a todos también los que ven en linea desde Argentina y latinamerica y todo el mundo In este conferencia de prensa So today we'll be speaking about the economic perspectives for Argentina 2019 of course a year that we're in 2020 and beyond and We will start of course with in look back at the situation of today. We had an update I believe two days ago from the IMF about the global economic outlook and some perspectives from international organizations, but of course we can hear it firsthand here from the Minister so I want to start with you Minister Dujovny could you in your introductory remarks perhaps tell us where we are in Argentina and what your plans are for the coming years Thank you very much and Good afternoon to to everyone When President Mercury took office in December 2015 Argentina launched a very comprehensive programs of reforms basically The new administration Seek to Reintegrate Argentina with the rest of the world to achieve fiscal solvency To reinstate the rule of law in Argentina and to rebuild the infrastructure that was depleted in the previous Years so that was the very broad economic program that Argentina put in place And that was functioning very well as you may know in 2018 Argentina suffered a series of shocks basically the reversal in capital flows to emerging markets that affected as Specifically because Argentina was an economy that still didn't finish to correct the inherited imbalances received from the previous administration plus the most important drought of the last Fifty years that took an important toll in terms of our exports and growth The message that I would like to convey to you today is that the shocks that we suffered in 2018 Reinforce the commitment of our government towards reforms. So we decided to accelerate The path of conversions towards fiscal equilibrium And that's why we announced that Argentina will reach primary equilibrium in 2019 We received the support of the international community channel through the multilaterals and especially by the IMF that provided a program of 57 billion dollars to Argentina and also the central bank The governor will speak about that in some minutes launch a new Monetary rule very simple very easy to understand and to monitor by the product sector So with this acceleration of the reforms With the new rule in terms of the monetary policy by the central bank. We are seeing a stabilization of the economy inflation is decelerating and all the variables are stabilizing and We think that we are coming out of this episode of 2018 Stronger than we enter into these these problems because Argentina is solving its problems using The normal tools let's say fortifying the fiscal position Leading the peso to move and not resorting to the methods that Argentina used in the past So with this we think that we are regaining the ability to grow still we have a year in 2019 in which growth will not be you know the Very fast, but we are generating the conditions for Argentina to regain a path of sustained growth and to build an economy that can achieve a Sustainable growth in the future. Thank you and indeed also the IMF Inform this on Monday that they expect Argentina to return to growth in 2020 Is that also the expectation of the and the ambition of the Argentinian government? Yes, of course, we think that for the year 2020 as a whole are the Argentina will grow And that's the result of the acceleration of the reforms that we Implemented in the last few months. Thank you And then maybe we turn now to governor Sant Leris of the central bank of Argentina, of course As well an eventful for year in 2018 40 central bank. What are the expectations for 2019? Yes, it's been a little bit more than three months Since we started implementing a new monetary regime Where the central bank targets a monetary upgrade the monetary base? The aim is to keep it constant until mid-June of this year And in these first three months the central bank overachieve in every single month in terms of this objective Of course Inflation in Argentina was very high last year And it's been very high for for many years now and lowering inflation is the biggest challenge that these central bank faces However, we understand very well that lowering inflation to one digit. That's our final target It's not something that can be achieved in a year is something that takes time, but we are working To achieve it and we are I think giving solid steps in that direction Thank you very much for those remarks and indeed That goal is is noted of one digit Inflation to achieve that over time over the long run Can you say anything about what you believe is a is a is a potential path in terms of how many years it takes? To to take undertakes such reforms or such inflation adjustments in this regime We focus on lowering inflation year after year But we don't give the central bank doesn't give forecast in terms of what it thinks inflation is gonna be Each year the keys to make sure that every year is Inflation is lower than the previous year. Great. Thank you very much. And before we turn to questions I perhaps want to ask one more question to To minister to Hovney, of course Argentina is also part of the global economy Has been part of the global economy for a very long time Integrated first more and then less into the global economy and now again more Now there are also worries for the global economy Going forward then and questions being asked here. Are we heading again towards a recession? Are we heading towards a? a slowdown of growth globally Do you plan for such for such events and how can you? React to that and make sure that you can keep on track in Argentina Well, yes, of course We we we track what is going on in the world economy And we we know that there's some deceleration in growth In the world economy, but still we are seeing solid rates of growth In the world And for argentina is very relevant also what happens with brazil brazil is expecting to grow This year above 2% And that is a novelty after many years of recession and being brazil the most important trading partner for argentina That's something that will counterbalance in a big portion The deceleration that we can see in the rest of the world Yeah, and so an important positive signal from within the region that indeed may positively impact the growth story of argentina Of course And then I want to give you the chance now to the journalists in the room If they have any questions for either minister de jovenel or governor sandleris You may let us know Please and if you could take the microphone perhaps stand up and state your affiliation and then the question Sure, uh for governor sandleris, uh, eric martin with bloomberg news The monetary policies of the central bank have helped to stabilize the peso after months of volatility Why do you think that markets have regained faith in the central bank? And also the currency band was recently tested in a way many didn't expect with the peso Falling below the floor of the currency band Right now you can only buy 50 million a day Will you Excuse me. Will you increase that amount if the peso goes below the band again? Thank you. Thank you I think that One element that has been key In terms of achieving this Stabilization Of the effects has been that the whole economic program Was consistent and coordinated Now it was crucial for the central bank to be able to achieve this zero growth in the monetary ways For example that the central bank doesn't make any transfers to the treasury anymore Uh, that was a problem in the past But now the treasury is converging to a balanced budget this year So it doesn't need the central bank to make transfers and transfer stop since the middle of last year already I think that an element that helped us regain confidence and we design it in that way was that By targeting the monetary base, we are targeting an aggregate a monetary aggregate that people can check every day We release the number of what the monetary base is so investors The public in general can check whether the central bank Is doing what he promised it was going to do and it's been three months and a half And we as I mentioned we over achieved in every single month. So I think that that helped Start regaining the confidence in the central bank and in the currency. However, I think that this is a long process Confidence is something that breaks easily and it takes a long time to really regain it. I think we agree. We are taking Sound steps on that direction, but there is still a long way to go regarding the effects as you correctly mentioned The central bank together with the monetary rule announced that There will be a no intervention zone in the effects Within certain limits of the effects so that the effects could float and we had the benefits of having a flexible exchange rate in order to Absorb the shocks that the economy can have but at the same time given that the exchange rate plays a very important role in the argentine economy we wanted to Give some reassurance in terms of there would be some levels where the central bank would intervene The exchange rate appreciated more than 10 percent against the u.s. Dollar in these three months and as you correctly mentioned twice one Week and a half ago and also yesterday it went through the lower end of the no intervention zone and they are the central bank bought international reserves and injected pesos in the economy We did so because We see that appreciation as a sign that the appetite for peso assets is coming back and the demand for money Is starting to increase for very from very low levels Going forward It is a decision of the monetary policy committee of the central bank that is going to be announced at the end of the month To establish the precise amount that the central bank will be willing to purchase every day if the exchange rate remains below the No intervention so at this stage it's 50 million dollars per day We thought that that was prudent was cautious. We didn't want to inject too many pesos Too fast But at the end of the month probably the coupon will analyze whether it's necessary to increase that amount or not It's right with the microphone, please so Not not possible to predict at this point or if you have a personal preference as to What kind of a policy remedy would result from the possible need to increase it? I mean to be able to forecast that no, it's it's it's something that the monetary policy committee will decide Okay, many thanks Other questions and we'll wait for the microphone when you get the microphone Please state your name and affiliation and then ask the question, please Thanks for giving me this chance. I'm with phoenix and from beijing china And so china is an important trading partner with Argentina So do you expect more chinese investment in this year? And what kind of preferential policy would argentina a government offer to chinese business? And in the kind of preferential preferential Just one second before we continue We'll wait until the sound is back in the meanwhile And I think you're yeah, and we're back So the question about investments from china and what policies you implement to accommodate that well China is a very important trading partner for argentina A big portion of our experts, especially on the agricultural side Are directed to china on the other side argentina is a very important of chinese finish Finnish goods So the commercial relationship is is very big and very solid We saw a lot of direct investment from china in argentina And these investments are based on the opportunities that our economy is offering to all the investors in the world So many chinese companies are participating in our ppp programs or are investing in infrastructure in mining But the view of the argentinian government is that we are Setting a common field a common ground for all investors to come to invest to argentina by providing An environment that is attractive for investment Without giving special concessions to The different type of investors is is a common ground for everyone And china is taking a good opportunity of the Chances that argentina is providing to all the investors to come to argentina to invest Thank you so much any other questions from the audience I want to perhaps Yeah, the question over here. I'll bring the microphone Go ahead. No, thank you. I would like to have some more figures What is your estimate for economic growth last year and The prospects for this year. Yes, and just the name and affiliation, please It's a concentration. Thank you very much. So any comments about the economic growth forecast or explanation from last year And the last figures last estimates for growth and for inflation Well We still didn't release The figures for the fourth quarter of argentina Still the the numbers weren't published Argentina faced a contraction of the gp last year That will be around two percent, but we we still don't have The exact numbers And for 2019 Well, argentina makes an official forecast for its gp when we Send our budget bill to the congress Every September the 15th So our our last projection for this year is of a contraction of minus half percent for the gp That specialist is based on the negative carryover that is left in 2018 into 2019 because The contraction of the gp that occurred in argentina last year happened mostly in the second half Of the year. So basically the contraction that we are expecting for this year With the last figures that we projected is based on the negative carryover that 2018 left into this year Thank you. And do you have any latest figures from the central bank about inflation or interest? Well, the last data for december was published already and that's the Close the year 2018 with an inflation that was 47.6 percent as I mentioned It's very high And we are working towards lowering Thank you so much any further questions from the audience over there. We'll bring the microphone Sorry, mark ben die from rotis for the central bank governor just a clarification. So The monetary policy committee will be considering the intervention limits in the coming weeks Is there a particular meeting where you'll be putting this under review? Thank you. Good. Let me clarify that it's not the limits that the monetary policy committee will be Announcing in the coming weeks the question That your colleague answered before referred to the amount of the purchases That the central bank would undertake if the currency is a peso where to appreciate beyond the No intervention zone Both in december and in january We limited the amount that we were willing to purchase of international reserves in that circumstance to 50 million dollars per day Or up to 50 million dollars per day to be precise and what I said is in the event The question was whether we would revise that and say well, that's a monetary policy committee decision to make Very well, thank you so much. I think we have time for perhaps one more question if there is from the audience a question Have a look However, let me give you what is the guiding principle that We use to think about this issue and and the issue basically can be summarizing one word which is to be very cautious The central bank in argentina as we mentioned is slowly revealing its credibility Part of doing so is being very prudent in not inserting pesos in the economy If we don't see that the demand for those pesos is there and that guiding principle will continue to be in place Very well. Thank you so much. I look to the floor for any final questions Otherwise, I will just ask you one more question myself for Mr. Duhovny The theme of the meeting here, of course is globalization 4.0 The idea that we will have an increased globalization when it comes to the digital trade and digital economy As well as of course an environmental globalization Is there any comment you can give from argentina's perspective on this new wave of globalization and argentina's role in it? Well, basically argentina is Open its economy after many years of isolation in which It was banned to import some stuff to export some type of goods or services And and what we are seeing is that argentina is Reengaging into trade Introducing more imports goods into our exports facilitating the increase in productivity and Another issue that is very visible in argentina is the explosion of the entrepreneurial activity In value added services in innovation. We have a very very well qualified Population which is Really doing very very interesting things In terms of innovation and one of the sectors which is actually doing very well in argentina Is the production and export of value added services based in knowledge So and and we see that employment in that sector is going up very rapidly In a sector in which there are no limits to trade, you know So that portrays and displays very well The impact that Being reengaged with the rest of the world Can provide not only to this sector, but to all the economy So we are very happy to to see what is going on With with this. Okay. Thank you very much and on that note I want to thank you minister dohofney and of course governor saint ladies for your time and for being here with us Thank you very much