Argentina’s economy was in trouble. Then the Covid-19 hit

“El Viejo Buzón” (The Old Mailbox) was a very popular cafe in downtown Buenos Aires and a meeting place for generations of Argentines, commoners and celebrities, since its founding there are 37 years. It’s the kind of old-fashioned local cafe that never runs out. This was the case until March 20, when the coronavirus pandemic hit Argentina and the country closed its doors.

“It’s an unusual situation because the blinds are closed and the tables empty when the main thing in a place like this is the people,” Evangelista said.

A normally noisy establishment, the old mailbox is now mostly quiet – hanging on, hoping against hope that it can survive. On the CNN visit, the only sound to be heard was a coffee machine for the meager take-out business operated by the only employee in the area, one of eight in total. Evangelista says he was able to avoid layoffs thanks to a government credit program that is due to expire on September 20.

For Santiago Olivera, it is already too late. The restaurateur had to close three establishments – two bars, “Bad Toro” and “Sheldon” and “Clara”, a cafeteria – in the upscale Palermo district of the capital, laying off more than 60 people.

“We started to accumulate debts since March which resulted from paying wages and rents without generating income. I had to take out loans from banks. We have accumulated more debt month after month because of taxes, utilities and rents, ”Olivera told CNN.

They are among hundreds of cafes, bars and restaurants in Buenos Aires that have been forced to close due to the coronavirus pandemic. Their demise is a troubling new chapter for Argentina’s struggling economy, which has been rocked by soaring inflation and stagnant growth even before Covid-19 slammed the door on businesses.

“Argentina has not increased since 2011”

The pandemic has been brutal for small and medium-sized businesses around the capital Buenos Aires. According to the Federation of Commerce and Industry of the Autonomous City of Buenos Aires (FECOBA, its Spanish acronym), 24,200 of these companies, or about 22% of the total, had to close their doors for good in mid-July.

“The closures did not stop even when the country started to reopen,” said FECOBA president Fabián Castillo, referring to a brief reopening in Buenos Aires last month that was canceled due to a increased rates of coronavirus infection.

Jonatan Loidi, financial analyst, author and professor of economics, says the pandemic and the implementation of a lockdown have worsened an economy already in recession.

“Argentina has not increased since 2011. Over the past three years, there has been not only a lack of growth, but also a decline in the country’s GDP, as well as other macroeconomic indicators that are clearly not not ideal, ”Loidi told CNN.

Loidi pointed out that the annualized inflation rate in Argentina, even before the pandemic, was 55%.

“Uncertainty is the word that best describes life in Argentina these days,” Loidi said, adding that business owners and individuals must agree to five different exchange rates for things like paying for imports in dollars. or make purchases online.

Argentina has had its share of financial collapses. Riots and civil unrest erupted in December 2001 after then-finance minister Domingo Cavallo announced a freeze on bank deposits, a crisis that would result in the resignation of Cavallo himself and his boss, former president Fernando de la Rúa. At Christmas, De la Rúa’s successor Adolfo Rodríguez Saá was forced to resign after announcing that the country had defaulted on $ 93 billion in Argentina’s sovereign debt. The crisis is gone one in four unemployed workers and 55% of the population facing poverty.

Less than two decades later, Argentina faces another financial crisis that has been brewing for over a year and which already sparked protests in September and October last year due to the ongoing currency crisis, among other factors. The Argentine peso plunged more than 35% against the US dollar in August 2019.

The US dollar currently sells for well over 70 pesos in Argentina, and the amount of dollars an ordinary Argentine can buy is strictly limited.

The government of President Alberto Fernández struck a deal on August 4 with creditors who owe $ 65 billion, or about 20% of the country’s crushing $ 323 billion total debt. The deal gives some short-term relief by avoiding another default while retaining some access to foreign capital.

But Fernández says his priority is a business involving the coronavirus vaccine developed by AstraZeneca with the British University of Oxford that would be made in Argentina and Mexico, which he hopes will put the country’s economy back on track. rails.

In the meantime, the president announced on Friday that quarantine measures would remain in place across the country until the end of August.

Patience is weak.

About 25,000 Argentines took to the streets of Buenos Aires on Monday to protest a judicial reform launched by Fernández aimed at adding more judges to the Supreme Court – which opponents say is a gamble to stack the court with allies – the economic crisis and the government’s management of Covid-19. Similar protests also took place in major cities such as Cordoba, Mar del Plata and Rosario.

Sitting at his desk in “The Old Mailbox” cafe, Felipe Evangelista fears that the development of a vaccine will take longer than the country’s economy can support.

“One of my main fears is that people won’t come back,” he said.

He says he wonders if life will change so much that people will never return to the little corner cafe that has been a gathering place for generations of Argentines … but hope is the last to die.

“We hope that when this [pandemic] turns around, people will come back, fill the tables and sing again. We hope they will be ready to tango again and get back to what we once were. “

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