Argentina Investment Conference
Remarks
November 29, 2018


Jim Yong Kim, World Bank Group President

Buenos Aires, Argentina

As Prepared for Delivery

It’s a pleasure to be here, and I’m very excited to be back in Buenos Aires.
Let me get right to the point: Argentina has experienced economic turmoil in
the past few decades and more recently, but the World Bank Group – and I
personally – believe in the leadership of this country and in a bright future for
Argentina.
Argentina is the 8th largest country in the world – 2.8 million square
kilometers with abundant natural resources. For the first half of the 20th
century, Argentina was among the wealthiest countries in the world: one
hundred years ago, Argentina’s income per capita was 93 percent of the per
capita income of the average of the 10 wealthiest countries. Today, this same
ratio is 38 percent; a massive relative decline. Argentina is the only country in
the world that has entered the “middle-income trap� from above.
How did this happen? Argentines had the same aspirations for growth and
prosperity as anyone living in a high-income country, but Argentine history is
full of volatility, sharp institutional turns and intense battles over the
distribution of its vast resources.
Time and time again, boom periods went hand in hand with unfortunate
policies which led to the rest of the world deciding to stop financing Argentina.
Deep economic recessions followed. The record includes three periods of
hyperinflation, two international defaults and major, abrupt changes in
economic policy. Inflation in 1989 topped 3,000 percent; the country risk of
Argentina reached 7,200 basis points in 2002. Since 1950, only one country
in the world has spent more time in recession than Argentina.
One of the key reasons for these boom-bust cycles was ideology. There was
a debate here in Argentina – and in other parts of the world – about which
economic system to embrace: market capitalism vs. countries with planned
economies that mostly traded with each other.
As we all know, that debate is largely over. In 2017, President Xi Jinping of
China, the head of the world’s largest communist party said that the global
market is the “vast ocean� we all swim in and cannot escape from:
At the World Bank Group, our job is to help every country swim in that vast
ocean. For decades, we must admit, the Bank was squarely on one side of
the ideological debate and ideology influenced our recommendations for our
client countries, sometimes with disastrous results. Today, we’re much more
focused on evidence – what really works to help countries prosper and meet
their development goals.
We’re also helping countries navigate the crises of today – climate change,
famine, fragility, conflict, migration – and prepare for the emerging, complex
future—the digital revolution, the changing nature of work, and the shifts in
economic power.
We’re doing everything we can to make sure that every country understands
the nature of the competition they face in the world. That’s my key message to
every head of state and minister of finance, and President Macri has a
particularly acute understanding of that competition.
Since 2015, President Macri and his Government have done a lot to improve
the economic situation that developed over decades. His government
inherited some tough challenges: one of the most closed-off economies in the
world with no access to capital markets, a double exchange rate, a huge fiscal
deficit, and unreliable statistics.
Under President Macri, Argentina clearly is moving from ideology to evidence.
Today, there’s a new competition framework, discretionary import policies
have stopped, and the price of vital ICT has plummeted as protection was
dismantled. A new capital market law aims to provide a boost to the still very
small financial sector.
Across the country, the ICT revolution is also laying a path for more
transparency and openness. Recently, the government took major steps to
guarantee access to information from the public sector, and the legislature is
debating new ethics laws.
The repercussions from the Cuaderno Scandal have reinforced the country’s
determination to fight corruption, including holding both public officials and
those in private companies accountable. The new law on criminal liability for
the private sector is an important step. I believe that these reforms are here to
stay.
The road ahead will not be easy. There will be a recession this year, but we
believe that it will bottom out soon. The most critical task is to stabilize the
economy, and with an unprecedented international support package, the
commitment to an independent Central Bank and a path for fiscal
consolidation, we believe that Argentina is on the right path.
The World Bank Group has leaned forward strongly to support Argentina, and
we will continue to do so. From the start of the current turmoil through the
middle of next year, the Bank Group will make 3 billion dollars in financing
available. We just approved 1 billion dollars this month in new financing to
support business climate reforms, fiscal consolidation, and social protection
for the poorest and most vulnerable.
The speed and size of our response is unprecedented during my tenure at the
WBG. It’s the clearest expression of our faith in the Macri Administration and
our sense of the importance of the Argentine economy for the region and for
the world.
It’s a critical time for everyone to engage to help Argentina achieve its
potential – and we can do that by finding win-win solutions, where investors
get a good return and Argentina gets the capital it needs.
As investors, you can play a critical role in shaping Argentina’s future. As you
decide where to put your financial resources, we’re eager to help you better
understand both the risks and the opportunities in this region.
I know that all of you have followed Argentina’s international credit rating. It’s
good that the high country-risk premium has started to decline.
The international support package – led by the IMF and complemented by the
Multilateral Development Banks – is strong. And there are tremendous
investments opportunities here in Argentina: natural resources, higher value-
added services, tourism, infrastructure financing and FINTECH.
One example is renewable energy. Around the world, wind and solar alone
represent a 270 billion dollar a year market, and with the support of the
World Bank Group, Argentina has started to unlock some of this potential.
The RenovAr program has awarded 4.8 Gigawatts of new wind and solar
capacity from competitive auctions, representing over 5 billion dollars of
investments over a 20-year period. Given our strong belief in this sector and
the country, the Bank offered a guarantee of 730 million dollars to de-risk
private investments.
As you know, tomorrow, with the Argentine Government, we’re hosting a
Global Investor Forum in the run-up to the G20 summit this weekend. The
Forum will bring together investors, fund managers, and top Government
officials from the G20 countries. Our goal is to find solutions that increase the
flow of capital toward long-term sustainable investments in G20 countries and
beyond.
We will focus on specific outcomes in areas such as mitigating risks,
regulatory reform, increasing incentives and removing disincentives for long-
term sustainable investments. When you invest in infrastructure, in education,
in renewable energy, in health systems – you’re investing to build a better
future for countries like Argentina.
We are committed to doing everything we can to ensure that those
investments are also profitable. Our goal at the World Bank Group is to be an
honest broker to help find win-win solutions and help developing countries like
Argentina reach their full potential.
Argentina is a critical leader in Latin America, and the G20 Presidency has
given it a chance to lead on the world stage, helping shape how the world’s
20-largest economies grapple with global challenges such as the future of
work, and financing for sustainable infrastructure.
I believe that Argentina will build on this momentum and continue to be a
strong and constructive voice, regionally and globally. It’s important for you as
investors to stay engaged in Argentina. There will be bumps on the road
ahead in the short run, but this country has a very bright future, and you can
help change its course by leaning forward.
For those of you who want to be part of building a stronger, more prosperous,
brighter future in Argentina, we’re eager to be your partner.
Muchas gracias.