¡Buenos días from BA! This is the Rorshok Argentina Update from the 31st of July twenty twenty-five. A quick summary of what's going down in Argentina.

Big news for the farming sector this week, as President Milei announced during the Rural Expo in Buenos Aires that his government is permanently lowering agricultural export taxes—just weeks after raising them. He pitched the move as a way to revitalize farming, a sector that’s still reeling from policy flip-flops and an expected dip in export income.

The reductions affect key products like beef, corn, soy, and sunflower, and come after backlash from the farming lobby, which had pushed hard for tax relief. For the local market, this might lead to price increases. If producers start exporting more because they earn more from international sales, it may reduce local supply and push domestic prices up.

That said, the farming sector is glad to see some relief. In the last few months, big names have defaulted or filed for bankruptcy, weighed down by soaring debt, slumping sales, and limited access to credit. Small businesses aren’t doing better, squeezed by years of drought, rising costs, pest problems, and tighter budgets.

Speaking of relief, the government secured a staff-level deal with the International Monetary Fund, or IMF, for a new two billion dollar disbursement, part of a broader twenty billion dollar agreement reached in April that already delivered an initial twelve billion.

The IMF praised the Milei administration for how quickly it loosened currency and capital controls and agreed to continue refining Argentina’s monetary policies. This signals investor confidence, with Argentine bonds rising on the news. That said, the big challenge continues to be rebuilding reserves.

To know more about the deal, check out the latest episode of the Rorshok Multilateral Update with the link in the show notes!

Also on the topic of alignment with global players, Milei hosted Kristi Noem, the US Secretary of Homeland Security, at Casa Rosada on Monday the 28th. Noem is part of Donald Trump’s cabinet and visited Buenos Aires as part of a broader push to tighten ties between Milei’s administration and the Trump White House.

White at Casa Rosada, Noem signed an agreement that kicked off Argentina’s process to rejoin the Visa Waiver Program. This lays the groundwork for Argentines to eventually travel to the States for up to ninety days without a visa. To make it happen, Argentina has to meet some strict security and migration standards --- think biometric systems and tighter border controls.

If all goes smoothly, this could benefit over a million travelers a year, especially ahead of the twenty twenty-six World Cup. However, it’s going to be a long and arduous process.

Argentina and the US are also moving ahead with a joint military project: building an integrated naval base in the Tierra del Fuego province in southern Argentina. The project aims to counter China’s growing presence in the South Atlantic and Antarctica.

Some critics in Argentina have slammed the plan, accusing the Milei administration of giving up ground on Antarctic sovereignty and warning the base could become a docking spot for US nuclear subs.

Since we mentioned China, the Milei administration just made it easier for Chinese and Dominican nationals to visit Argentina. As long as they already have a valid US visa, the new policy lets them enter the country without needing a separate Argentine visa or travel authorization, allowing stays of up to thirty days for tourism or business.

The move mirrors earlier gestures from both countries, especially China, which waived visa requirements for Argentines earlier this year.

This may be helpful considering the number of tourists leaving the country in June more than doubled the number of foreign visitors arriving. Inbound tourism dropped by nearly a quarter in the first half of the year compared to the same period in twenty twenty-four, and outbound travel surged by 60%.

The strong peso, the removal of currency controls, and weaker currencies in neighbors like Brazil have made it easier for Argentines to travel abroad, especially to nearby countries such as Chile and Uruguay. Argentines also tend to spend more on their trips than the visitors they receive, making this imbalance even more costly.

That surge in spending abroad ties into another issue: Argentina’s banks are running short on pesos. The government has been soaking up local currency to defend the exchange rate, which has driven up interest rates and created a cash crunch, especially for smaller banks. Even with high returns, investors are steering clear of peso assets, preferring to dollarize their portfolios. Without a quick fix, the pressure on Argentina’s financial system could intensify as the elections approach.

In fact, locals ramped up their dollar purchases in June, scooping up 2.4 billion dollars. This spike isn’t surprising, as Argentines often turn to dollars before an election to protect their savings during times of political uncertainty.

Also related to border control: Starting this week, travelers crossing the bridge between the northeastern city of Posadas in Argentina, and Encarnación in Paraguay, will only go through immigration checks on the Argentine side. This new pilot program aims to speed up border crossings and cut down on repeated procedures at one of the region’s busiest crossings.

If this trial works out, they might roll it out permanently and use it at other Mercosur borders too.

In business updates, a group of major investors, including the American Eaton Vance, has teamed up with a dozen banks to back a three billion dollar oil pipeline project in Argentina—the biggest infrastructure loan in its history. The financing will cover most of the costs for the Vaca Muerta Oil Sur project, which aims to build a cross-country pipeline and Atlantic port to ship shale oil from the Patagonia region. The project could double Argentina’s shale output in the next few years by solving a long-standing transport bottleneck.

Key players in the consortium include major energy companies YPF, Vista, Pan American Energy, Chevron, and Shell, all of whom are also putting up equity to complete the funding.

In other news, you might have heard about the residency exams drama. Here’s what happened: In Argentina, medical graduates have to pass a national entrance exam to compete for spots in public hospital residency programs. The test is only held once a year, but this time, allegations surfaced that questions were leaked and possibly sold in advance. In response, the government ordered the top scorers to retake the test, which provoked outrage among those who had received high marks.

The controversy quickly escalated when Manuel Adorni, the presidential spokesperson, suggested that many of the suspiciously high scores came from doctors trained abroad, leading to accusations of xenophobia and even more backlash. Many local doctors argue that it’s unfair to punish everyone, especially without concrete evidence.

About 5,000 doctors sat for the exam this year, and nearly 270 of them will now have to retake it.

On that note about getting caught—though in a very different way—Google just lost a court case in Argentina over a Street View photo that showed a man completely naked in his own backyard. A Street View car snapped the image back in twenty seventeen, and even though the man was behind a two-meter wall, his bare backside ended up all over the internet, along with his house number.

He said the exposure caused serious embarrassment at work and in his neighborhood. A lower court initially dismissed the case, but an appeals court sided with him, saying Google had invaded his privacy and failed to protect his dignity. The company now has to pay him 16 million pesos, which is about 12,500 US dollars.

To wrap things up this week, we’ve got a recommendation: HBO Max is bringing a restored version of an Argentine cult film called Extraordinary Stories to its platform later this year. This two thousand eight film by Mariano Llinás is known for its unconventional structure and four-hour runtime. Back in the day, it broke with the minimalist style of its time, offering a cinematic adventure filled with secret missions, lost treasures, and emotional journeys. The film will also screen at the MALBA museum in August.

Aaand that’s it for this week! Thank you for joining us!

Want to pass along an episode? Go to www.rorshok.com/argentina and download any of the shows as .mp3 files. Link in the show notes!

¡Nos vemos la próxima semana!