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(Bloomberg) – Argentina is expanding the freezing of television, the Internet and cell phones until the end of the year, treating them as “essential audience” and applying the kind of controls that can complicate an agreement with the International Monetary Fund.
Freezing means providers won’t be able to increase long-term costs without government approval, according to a statement sent Friday after business hours. Prices for these parts had been frozen since May, and the ban expired at the end of the month.
After months of disputes, Argentina reached an agreement with investors in early August to renegotiate a $65 billion debt following its ninth default. Today, amid what is expected to be the largest economic downturn in its history, the South American country must regain the confidence of global markets.
The freezing of telecommunications is the most recent step taken by the government to involve Array Inflation soars at 42% per year, and the national blockade to curb covid-19 has exacerbated the economic downturn. Argentina has already frozen the merchandise of 2,000 customers, which it also considers essential.
“Faced with the restrictions imposed on us by the pandemic, no one has to give up part of their income to cover the value increases of those services,” President Alberto Fernandez said in a tweet on Friday night. “We guarantee access to everyone.”
His government banned redundancies, doubled severance pay, and established financial controls. The decree was published in the official journal on Saturday.
Fernandez’s populist stance on telecommunications costs contrasts with recent comments through Economy Minister Martín Guzmán, who warned that the country can simply move toward strict capital controls and seek to renegotiate its bills with the IMF, said Adriana Dupita of Bloomberg Economics.
“It will be difficult to reconcile the insistence on this measure with the typical situations incorporated in the agreements with the IMF,” Dupita said.
Argentine news online page Clarín reported that executives at the country’s telecommunications corporations said value controls could only invest in the sector.
(Adds the economist’s comment to paragraph seven, old in all).
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