Improving Argentina’s infrastructure: The opportunities for Canadian companies

Improving Argentina’s infrastructure: The opportunities for Canadian companies

Its name comes from the Latin word for silver, argentum. And although it’s richness in minerals helped them become one of the world’s wealthiest countries a hundred years ago, Argentina suffered during most of the 20th century from recurring economic crises.

The recently elected government pledges to return Argentina to greatness, and that promise could mean considerable opportunities for Canada in the country where the tango was born.

Time to dance

“Argentina has decided to take its place in the global landscape,” newly-minted President Mauricio Macri said in an interview with Bloomberg News at the World Economic Forum in Davos, Switzerland at the end of January of this year.

Elected to presidential office in December 2015, Macri has taken significant steps to liberalize the Argentine economy by lifting capital controls, floating the peso, negotiating debt payments with holdout bond creditors, and removing export controls on some commodities. Additionally, the Macri government has made it a priority to collaborate with public and private stakeholders in order to improve the business and investment climate and correcting policy and the economic distortions.

The infrastructure plan

According to Export Development Canada’s economist for South America, Andrea Gardella, infrastructure development is essential in boosting Argentina’s economy. “One of the things the government is focusing on is increased connectivity inter-regionally and better access to upgraded ports and airports,” she says. ”The lack of infrastructure is a massive hurdle for a variety of sectors, particularly the agriculture sector in Argentina, and costs them significantly in productivity.”

The Argentine government recently agreed that $41 billion would be allocated for Macri’s Belgrano Plan, a program of road, rail and air infrastructure development that aims to upgrade the 10 provinces in northern Argentina.

“The government sees three channels to explore their progressive infrastructure plan” says Gardella. ”Concessions; but there are limited funds; funding through international financing, which they are trying to develop; and Public-Private Partnerships (PPPs) are another potential way to make it happen.”

Depending on the size of the projects, the Macri government believes that the country is in a position to attract US $30-40 billion, channelled through PPP projects within the next five to six years.

The Argentine government also targets infrastructure improvement and modernization to 17 airports across the country, an investment that could also be focused through PPPs.

Canada and Argentina

The stock of Canadian direct investment in Argentina, as reported by Statistics Canada, stood at $1.18 billion in 2015, supported by the presence of Canadian companies in the mining sector, agriculture industry and energy sector.

According to the Canadian Trade Commissioner Service, cleantech, education and mining are the sectors with the greatest opportunities for Canadian companies in Argentina.

Deepening ties have been underscored by several high-level visits, including the June 2014 visit to Argentina by Canada’s former Foreign Minister John Baird.

On November 17th, Prime Minister Justin Trudeau will visit Argentina where among the goals of the trip is encouraging “sustainable economic growth, inclusive governance, security, climate change, and gender equality.”

Categories South & Central America

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