Argentina's Trade and Finance: A G20 Policy Memo & Economic Analysis

This policy memo assesses Argentina's trade and finance position in the context of the G20 summit. It highlights Argentina's historical reliance on foreign trade, particularly within MERCOSUR, and its recent trade balance. The report also addresses the nation's financial challenges, including currency depreciation, high inflation, and reliance on IMF loans. Argentina's focus areas for the G20 include infrastructure development, the future of work, and sustainable food practices. The memo concludes by emphasizing Argentina's ongoing efforts to improve its trade and finance policies for economic growth and stability.

Running head: POLICY MEMO FOR ARGENTINA G20
Policy Memo for Argentina G20
Name of the Student
Name of the University
Author’s Note

1POLICY MEMO FOR ARGENTINA G20
To,
The G20 Board of Directors,
From,
Advisor of Argentina
3rd December 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
economic agreement between Argentina, Uruguay, Paraguay, Venezuela. The purpose of
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
has mainly shown investors that this nation’s financial volatility is far from over. 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)

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 digital as well as physical access for the citizens to seize
opportunities of future economy (Akman et 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?.
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reuters.com 2018. Argentina’s economic crisis explained in five charts. [online] Available at:
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five-charts-idUSKCN1LD1S7 [Accessed 5 Dec. 2018].
Sandleris, G. and Wright, M.L., 2014. The costs of financial crises: Resource misallocation,
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