Luis Caputo

MINISTER OF FINANCE

Argentina 2017  I  Finance  I  Leader

BIOGRAPHY He has a Bachelor’s Degree in Economics at the University of Buenos Aires and has been Professor of Economics and Finance at the Postgraduate Course of Universidad Catolica Argentina. He was the Secretary of Finance of the Ministry of Treasury and Public Finances of Argentina and worked at JP Morgan in Argentina, Deutsche Bank and AXIS.

“OUR CHALLENGE NOW IS TO MAKE THE REDUCTION OF RATES AND ACCESS TO FINANCING AVAILABLE FOR EVERY SECTOR.”

THE PRESIDENT OF THE WORLD BANK HAS NOT ONLY SAID THAT THE GOVERNMENT’S REFORMS ARE GOING IN THE RIGHT DIRECTION BUT ALSO COMMITTED TO INVESTING OVER USD 2 BILLION IN THE COUNTRY. CAN YOU TELL US MORE ABOUT THIS STRATEGIC PARTNERSHIP?

 

The World Bank is a strategic partner in our program of economic reforms and in the process of recovering the world’s confidence in our country. The World Bank’s support is essential to modernize and improve infrastructure. We need better roads, better trains, and better communications to grow and to create sustainable jobs. Since President Macri took office, the World Bank has financed USD2.3 billion for the public sector at very convenient rates and tenors. The relationship with the World Bank and the rest of the multilateral organizations is essential not only due to the financing they provide but also because their partnership provides a quality stamp.

 

ONE OF YOUR MAIN PRIORITIES IS REDUCING THE COST OF FINANCING IN DOLLARS. WHAT WOULD BE THE IMPACT FOR SMES AND THE ECONOMY?

 

We achieved a reduction in the cost of financing in dollars to an average rate of 4.6% this year. It is the lowest rate in history. This is the result of having recovered the credibility and confidence of the rest of the world. Our challenge now is to make the reduction of rates and access to financing available for every sector, not only for the Government and big companies but also for SMEs and population as a whole. We are pursuing this through public banks and through the development of capital markets. The boom of the 30-year mortgage loans and the large number of SMEs filing applications to obtain financing through the new instrument “ON Simple” are two clear examples of this.

 

ARGENTINA AIMS TO KEEP GROWING THROUGH PRIVATE PUBLIC PARTNERSHIP (PPP) PROJECTS TO REACH 1% OF GDP. CAN YOU TELL US MORE ABOUT YOUR OBJECTIVES AND WHAT KIND OF INITIATIVES ARE BEING PURSUED TO INCREASE THE NUMBER PPPS IN ARGENTINA?

 

Our goal is to reduce fiscal deficit but at the same time we need to increase infrastructure investment. Private Public Partnership (PPP) is the most powerful tool to combine both objectives. The National Government is developing the most ambitious infrastructure plan of our history, always having in mind that we must optimize the existing public resources in order to increase the number of projects. We estimate that 1% of GDP in investment per year will be done through PPP, which is between USD 5 and USD 6 billion, twice the average of the region. The funds will be aimed at road corridors (2,800 km of freeways, 4,500 km of roads), powerlines necessary to support the expansion of the power generation capacity, renewable energy projects and hospitals, among other projects.

 

THE DEVELOPMENT OF CAPITAL MARKETS IS ONE OF YOUR PRIORITIES AND IT IS CONSIDERED AN ESSENTIAL PILLAR IN THE GOVERNMENT’S STRATEGY. WHAT IS BEING DONE IN THIS DIRECTION?

 

The development of capital markets is essential to achieve long-term sustainable growth. Today we have a very small capital market compared to Latin-American countries, a quarter of their average. Our goal is to increase domestic savings and particularly for SMEs which are the main source of jobs. It is important to give incentives for the people to begin thinking in medium and long-term savings. The creation of the new closed-end mutual funds that will enable to invest in infrastructure, real estate developments and renewable energy aims at that. The Bill to reform capital markets is being discussed in Congress and we hope to have the support of the different sectors for its approval.

 

DO YOU BELIEVE THAT ARGENTINA WILL ENTER THE MSCI (MORGAN STANLEY CAPITAL INTERNATIONAL) INDEX IN THE EMERGING MARKET CATEGORY NEXT YEAR AND WHAT WOULD BE THE MAIN BENEFITS FOR THE COUNTRY?

 

Next year I believe we will enter the MSCI index in the emerging market category because the result of the survey showed that all conditions have been met, but that the market needed to wait for the elections result and for this process to consolidate though the next year. It is a process that will develop naturally. This will enable more investment funds throughout the world to place their assets in our country.