Drinks giant Coca-Cola Co and automaker Renault-Nissan have each announced big new investments in Argentina in a sign of renewed foreign interest after a pro-business government took power there.
The Renault-Nissan conglomerate is to invest US$600 million to launch construction of three new kinds of pickup truck at its plant in Cordoba, Argentina, the government said on Friday.
On Thursday, it announced that US company Coca-Cola, the world’s largest drinks maker, would invest US$1 billion in expanding its bottling and distribution operations in Argentina over the next four years.
Argentina, Latin America’s third-largest economy, emerged last month from 12 years of protectionist trade policies under former Argentine president Cristina Fernandez and her late husband and predecessor Nestor Kirchner.
The new conservative Argentine President Mauricio Macri struck the deals with executives at the World Economic Forum currently under way in Davos, Switzerland, it said.
Macri said the auto industry is “fundamental for creating jobs in the quest to achieve zero poverty.”
The Coca-Cola deal, meanwhile, is a “vital” part of his strategy to boost industry in Argentina.
In Davos, Macri also met with energy, oil, computing and telecom executives. Since taking office on Dec. 10, he has pushed through economically liberal reforms to reverse Kirchner’s policies.
Macri on Friday said that talks to reach a fair agreement with holders of the nation’s unpaid bond debt might be slower than anticipated, but confirmed that Argentina is plannign to make a proposal to the creditors involved in its 2001 default on Feb. 1.
Argentina is renegotiating about US$10 billion of unpaid debt owed to US hedge funds, which sued the nation in New York court to receive payment in full.
A solution with the holdout creditors would allow Argentina to return to the voluntary debt market, Buenos Aires-based economist Juan Luis Bour said.
Argentina has a growing fiscal deficit and needs to tap external sources to finance it, Bour said. Without access to foreign sources of funding, the nation would have to fund the fiscal deficit through monetary expansion, spurring inflation.
Argentina aims to lower annual inflation to 25 percent this year, from about 30 percent, private estimates show.
Additional reporting by AP
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