Argentina: $20 billion in wealth has been transferred to the top in Macri's first 5 months in office
According to a study published by the the Center for the Study of Social Change (CECS), policy changes in the first five months of Argentine President Mauricio Macri's tenure have resulted in a net transfer of around 20 billion dollars to the country's largest corporations. The amount is equal to almost two weeks of Argentine GDP.
This transfer of wealth, the most dramatic since the 2001 collapse, benefited agricultural export companies, financial institutions, large food companies, and a small number of large industrial groups.
Since Central Bank reserves - excluding the $12 billion in net loans granted to the Macri administration by JP Morgan, Chase Manhattan, and other financial entities - have fallen by $6 billion, and since fixed investment locally has also fallen, the report concluded that much of this windfall has been transferred to offshore accounts and investments. Net capital flight from Argentina, according to the Central Bank itself, reached $3.3 billion in the first quarter alone - the highest quarterly figure since the international financial crisis in 2009.
The principal causes according to the report were the 40% devaluation decreed by Macri on December 17, financial deregulation (which facilitated capital flight and tax evasion), a sharp increase in interest rates (enacted to prevent capital flight from snowballing), and a reduction and/or elimination of withholding taxes for exporters (which incentivized suppliers to squeeze out the domestic market by way of sharply higher prices).
The report, Transfer of Capital, was authored by Itai Hagman, Pablo Wharen, and Martín Harracá. This transfer, according to their study, "created unavoidable changes in income distribution, affecting the quality of life of most Argentines by reducing purchasing power, as well as making Argentina more vulnerable to external vicissitudes."
The 281 billion pesos thus transferred ($20 billion) "is 75% more than the annual federal budget for public works, nearly four times the budget for national universities, four times the federal health budget, six years of the Universal Childhood Allowance, and nine times the federal housing budget."
Argentina, they concluded, "runs the risk of again incurring in a vicious cycle of upward transfer of wealth, capital flight, and ballooning external debt."
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