This policy memo discusses the trade and finance position of Argentina and the policies it might seek in G20 dialog. It focuses on the finance and trade policies adopted by the government of Argentina.
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Running head: POLICY MEMO FOR ARGENTINA G20 Policy Memo for Argentina G20 Name of the Student Name of the University Author’s Note
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1POLICY MEMO FOR ARGENTINA G20 To, The G20 Board of Directors, From, Advisor of Argentina 3rdDecember 2018 Subject- Discussion on Argentina Trade and Finance Position Respected Sir, The attached Memo summarizes about the trade and finance position of Argentina and the policies this country might be seeking in G20 dialog. The memo mainly focuses on the finance and trade policies adopted by the government of Argentina. This nation has displayed high growth level while maintaining positive trade balance (Atlas.media.mit.edu. 2018). This country has always been dependent on the foreign trade for achieving solid social as well as economic growth. This nation has developed an agro- export framework where they were dependent on external sector. Growth in international mainly trade with MERCOSUR partners has been the major factors that drive this economy MERCOSUR is the political as well as economicagreementbetweenArgentina,Uruguay,Paraguay,Venezuela.Thepurposeof Mercosur is to engage in FTA negotiations with other partners and thus serves as major outlet for the Argentine exports. As of 2017, Argentina world ranking in respect of import is 44 and export is 47. The rank of Argentina’s trade balance is 99 in the world. In the year 2016, this nation has
2POLICY MEMO FOR ARGENTINA G20 exported near around $59B and imported around $55.8 B, thereby resulting in positive trade balance of $3.21B. During the past five years, the total exports of Argentina declined at yearly rate of around -7% that is from $83.9B in the year 2011 to $59B in the year 2016. Moreover, the total imports of this country have declined at yearly rate of around -4.7% during the past five years that is from $72.4B in 2011 to $55.8B in the year 2016. Overall, this country has been experiencing positive trade balance of around $3.21 B in the net exports(Atlas.media.mit.edu 2018).The government of Argentina has adopted several instruments in trade regime for controlling exports or imports of goods. Over the years, this nation designed tariff schedule based on three characteristics that involve- kinds of products, level of fabrication and domestic supply. Figure 1: Trade balance of Argentina Source: (Atlas.media.mit.edu. 2018) Over the last few years, the financial position of Argentina has declined. A run on peso currency hasmainlyshowninvestorsthatthisnation’sfinancialvolatilityisfarfromover.The depreciation has made this nation’s dollar debts highly expensive for government, thereby turning to IMF for $50 billion loan. High inflation rate of Argentina is one of the determinants
3POLICY MEMO FOR ARGENTINA G20 that make it highly vulnerable with respect to other emerging markets. This in turn moves the global investors away from any kind of risky assets.Over the years, the government of Argentina printed money in financing budget deficit, thereby causing the consumer prices to increase. The government has declined this practice but hikes to the utility prices as part to decline subsidies have kept inflation high.The central bank of this nation responded rise in inflation by hiking interest rates and selling dollars in the foreign currency reserves of protecting peso (reuters.com 2018). This in turn resulted in decrease in total reserves that had increased gradually. The rise in inflation rate and financial storm have been hitting this economy over the past few years. However, this nation has been adopting financial policy for returning back to good financial position. This attempt will not only seek to improve their finance position but also enhance economy’s growth (Sandleris and Wright 2014). Figure 2: peso/USD spot rate Source: (reuters.com 2018)
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4POLICY MEMO FOR ARGENTINA G20 Figure 3: Inflation rate of Argentina making it highly vulnerable to global investors Source: (reuters.com 2018) Argentina will be seeking to focus on infrastructure or development, future of work and sustainable food future for further development of economy. This nation will be attempting to create certain conditions for better jobs. They might be seeking to provide skills and tools to the people searching for jobs and specially those whose jobs are at high risk. They will try to provide proper education in order to shape their people future. It will however enable them in creating their own endeavour as well as contribute in economic development(G20.org, 2018).Argentina also seeks in developing infrastructure in order to boosts productivity as well as growth. This will however aid to provide digitalas well as physical access for the citizensto seize opportunities of future economy(Akmanet al.2017).The policymakers of Argentina will seek in developing infrastructure as asset class by addressing data gaps on financial performance, improving project preparation and improving instruments designed for funding infrastructure projects and seeking higher homogeneity among them. This country is also seeking to improve soils and increase total productivity. Furthermore, Argentina will also seek in building valuable
5POLICY MEMO FOR ARGENTINA G20 legacy of previous presidencies around wide array of problems. Overall, this country had been seeking to improve and adopt trade and finance policies. Your's sincerely, Advisor of Argentina.
6POLICY MEMO FOR ARGENTINA G20 References Akman, M.S., Berger, A., Dadush, U., Evenett, S., Johnson, L., Mendez-Parra, M., Ochoa, R. and Schmucker, C., 2017. Key policy options for the G20 in 2017 to support an open and inclusive trade and investment system. Atlas.media.mit.edu. 2018.OEC - Argentina (ARG) Exports, Imports, and Trade Partners. [online] Available at: https://atlas.media.mit.edu/en/profile/country/arg/ [Accessed 5 Dec. 2018]. Berger, A., 2017. The G20 and the Reform of the International Investment Regime.Sticking to the Job, p.33. Clapp, J. and Murphy, S., 2013. The G20 and food security: a mismatch in global governance?. Global Policy, 4(2), pp.129-138. G20.org. (2018).OVERVIEW OF ARGENTINA'S G20 PRESIDENCY 2018. [online] Available at: https://g20.org/en/overview-argentinas-g20-presidency-2018 [Accessed 5 Dec. 2018]. reuters.com 2018.Argentina’s economic crisis explained in five charts. [online] Available at: https://www.reuters.com/article/us-argentina-economy/argentinas-economic-crisis-explained-in- five-charts-idUSKCN1LD1S7 [Accessed 5 Dec. 2018]. Sandleris, G. and Wright, M.L., 2014. The costs of financial crises: Resource misallocation, productivity, and welfare in the 2001 argentine crisis. The Scandinavian Journal of Economics, 116(1), pp.87-127.