From the early days of The Economist’s Political Romance with Mauricio Macri.
From January 2, 2016
Headline: A fast start
Sub-headline: Mauricio Macri’s early decisions are bringing benefits and making waves
‘MAURICIO MACRI, who took office as Argentina’s president in December, has wasted little time in undoing the populist policies of his predecessor. On December 14th he scrapped export taxes on agricultural products such as wheat, beef and corn and reduced them on soyabeans, the biggest export. Two days later Alfonso Prat-Gay, the new finance minister, lifted currency controls, allowing the peso to float freely. A team from the new government then met the mediator in a dispute with foreign bondholders in an attempt to end Argentina’s isolation from the international credit markets.
This flurry of decisions is the first step towards normalising an economy that had been skewed by the interventionist policies of ex-president Cristina Fernández de Kirchner and her late husband, Néstor Kirchner, who governed before her. They carry an immediate cost, which Mr Macri will seek to pin on the Kirchners. Some of the new president’s other early initiatives are proving more controversial.’
‘Touring northern Argentina, where 20,000 people have been displaced from their homes by floods, Mr Macri blamed the former president, saying she had failed to invest in flood defences (see article). For now, Argentines are likely to believe their new president. However, if the economic slowdown is prolonged, the honeymoon will not be.
From August 11, 2016
Headline: It’s cold outside
Sub-headline: A battle over utility bills is Mauricio Macri’s first big crisis
THE most populous parts of Argentina are stifling in summer and bone-chilling in winter. The Kirchner family, which ruled for a dozen years until 2015, kept the cost of comfort low. An earlier government had fixed the price of electricity and natural gas in 2002 to help the economy out of a slump; the Kirchners barely raised it. As a result, Argentines pay a fraction of what their neighbours do for energy (see chart).
But they have paid in other ways. Energy subsidies jumped from 1.5% of government spending in 2005 to 12.3% in 2014. Partly because of such largesse, the budget deficit was a worrying 5.4% of GDP last year. Because energy is cheap, consumers use it with abandon; utilities lack cash for investment. Summer blackouts can last for hours. Mauricio Macri, who succeeded Cristina Fernández de Kirchner as president in December, said the energy crisis was the most complex of the “many bombs” she had left for him. Defusing it is proving to be perilous.
Mr Macri has little choice but to hope that the supreme court rules in his favour, persist with price rises and pay the political cost. “To find tariffs both attractive enough for investment and acceptable to society—without impacting inflation—is impossible in the short term,” says Carlos Marcelo Belloni of IAE Business School in Buenos Aires. Like chilly consumers, Mr Macri is waiting for balmier weather.
From September 23, 2016
Headline: How Mauricio Macri is trying to rehabilitate Argentina’s economy
Sub-headline: The president faces a vast task
FOR most of 2015 few gave Mauricio Macri much chance of becoming Argentina’s president. The pro-business mayor of Buenos Aires lagged in the polls behind Daniel Scioli, the candidate favoured by Argentina’s outgoing president, Cristina Fernández de Kirchner. Pundits pointed out that no non-Peronist president had completed a full term in office since 1928. But in the end it was Mr Macri’s outsider status that clinched his victory. After scraping 51% of the vote in a run-off on November 22nd, his supporters at home and abroad looked forward to swapping political populism for economic prosperity. But, more than nine months after his inauguration, Argentina is still plagued by high inflation, unemployment and weak consumer demand. What has gone wrong?
The scale of the task confronting Mr Macri was formidable. Argentina had been a financial pariah for more than 14 years, cut adrift from international capital markets thanks to a long-running dispute with holders of its defaulted debt. Official government statistics were widely discredited, prompting the International Monetary Fund to issue a formal censure in 2013. A standoff with the agricultural sector meant that farmers preferred to stockpile grain and soyabeans rather than export them. Currency controls left the peso overvalued and foreign exchange reserves at a nine-year low. Years of chronic underinvestment in infrastructure had pushed the country’s energy network to the brink of collapse.…
The new president favoured bold action. During his first weeks in office Mr Macri eased currency controls, reduced export tariffs on agricultural goods and oversaw an overhaul of the national statistics institute. In April he concluded a $9.3 billion deal with holders of Argentina’s defaulted debt, restoring the country’s access to credit markets. But the remedies, although necessary, have proved painful. The peso’s devaluation pushed up the already-high inflation Mr Macri had inherited to around 40%, the highest rate in Latin America outside Venezuela. The reduction of unaffordable energy subsidies and an accompanying rise in utility bills inflicted more pain on hard-pressed consumers. With unemployment at 9.3% and the economy in recession, union-organised protests brought tens of thousands of demonstrators onto the streets of Buenos Aires on September 2nd.
Mr Macri is desperate for good news. With legislative elections due in October 2017, his political fortunes will hinge on whether or not Argentines begin to feel tangible improvements in the economy. Inflation is finally slowing: in August prices rose by just 0.2%. But the flood of foreign investment Mr Macri promised would arrive following Argentina’s return to the markets has so far failed to materialise. For now at least, experts remain optimistic. Although the IMF believes the economy will shrink by 1.5% of GDP this year, it forecasts growth of 2.8% for 2017. Argentines also appear willing to give Mr Macri the benefit of the doubt. After months in decline the president’s approval ratings have stabilised at 56% over the past two months, according to Poliarquía, a pollster. As spring arrives in Buenos Aires, Mr Macri must be hoping that his fortunes have finally turned.
From the latter days:
June 8, 2016
Headline: The IMF hands Mauricio Macri a vote of confidence
Sub-headline: But Argentines are more sceptical
THE timing took many by surprise. On June 7th, just four weeks after negotiations began, Argentina’s government declared that it had secured a three-year credit line with the IMF worth $50bn. The deal’s size is likely to reassure investors of Argentina’s solvency. Its speed is a sign of the fund’s confidence in Mauricio Macri, Argentina’s business-friendly president. But for ordinary Argentines, many of whom blame the IMF for the country’s disastrous $82bn default in 2001, the announcement carries echoes of a painful past.
An acute currency crisis meant Mr Macri had little alternative but to seek the IMF’s help. In April the yield on American ten-year Treasury bonds rose to 3% for the first time since January 2014. That prompted a widespread sell-off in emerging markets. The currencies of Turkey, Russia and Mexico were all battered; Argentina’s was particularly badly hit. Investors were spooked by the country’s large fiscal and current-account deficits, and a rapidly growing pile of foreign-currency debt. They also doubted the independence of the central bank, which in January had cut interest rates at the behest of the government, despite inflation of 21%.
It will be no easy task. Argentines are weary of austerity and are unlikely to thank Mr Macri for providing them with more of it, particularly at the behest of the IMF. In 2001 the IMF offered loans in exchange for commitments to cut spending. When the government reneged, the fund pulled the plug and the country defaulted. Although the politicians were chiefly to blame, the IMF’s reputation has never recovered. A poll conducted in May found that three-quarters of Argentines were opposed to any sort of arrangement with the fund. If Mr Macri is to stand a chance of re-election next year, he must convince voters that the alternative would have been far worse.
From July 5, 2018
Headline: Argentina’s currency crisis is far from over
Sub-headline: BUENOS AIRESA weak currency and punishingly high interest rates mean recession appears inevitable
ON A residential street corner in Buenos Aires, Van Koning Market sells imported beers to the city’s well-heeled. Since it opened in June last year costs have soared. The peso has plummeted, meaning wholesale prices have shot up. Inflation is running at 26%; the reduction of government subsidies means the monthly electricity bill has risen from 700 pesos to 4,000 pesos ($142). Already losing customers, Sergio Discenza, the manager, is reluctant to raise prices much. “In a normal country this would be a viable business,” he says. “But here everyone is struggling.”
The year started badly for Argentina when the worst drought in 50 years hit the harvest of maize and soyabeans, both important exports. In May a stronger dollar and higher US Treasury yields prompted international investors to flee risky assets. Most emerging-market currencies suffered, Argentina’s especially. Its twin fiscal and current-account deficits have seen the peso lose more than a third of its value this year, making it the world’s worst-performing currency (see chart). A recession, the fifth in a decade, appears inevitable.
Mr Macri was elected because Argentines, sick of populist economic policies, supported his plans for reform. Now many are wavering. A recent poll of Buenos Aires residents found almost half saying they had been happier under his populist predecessor, Cristina Fernández de Kirchner. “We would probably have sold more beer under the previous government,” says Mr Discenza, standing in his deserted shop. Until recently, political analysts felt confident that Mr Macri would win a second term. His hopes rest on convincing Argentines that their glasses are still half full.
Here is the ‘free fall’ of the peso as reported in the New York Times:
From August 12 , 2019:
Headline: Argentine Peso Collapses as Macri’s Re-election Chances Drop
BUENOS AIRES — Argentina’s currency collapsed on Monday and stocks and bonds crashed to a degree not seen in 18 years as voters flirted with a return to interventionist economics by snubbing President Mauricio Macri and his market-friendly approach in favor of the opposition in the country’s primary vote on Sunday.
The Argentine peso initially dropped 30.3 percent, to a record low of 65 per one United States dollar, after Alberto Fernández, the opposition candidate whose running mate is Cristina Fernández de Kirchner, the former president, dominated the primary by a 15.5 percentage point margin that was much wider than expected. The currency recovered some of its value later in the day, reacing 55 per dollar.
Mr. Fernández has said that he would seek to “rework” Argentina’s $57 billion standby agreement with the International Monetary Fund if he won the general election in October.
Argentina’s local Merval stock index was down 31 percent and bonds also fell. Argentine stocks, bonds and the peso had not recorded a simultaneous decline since its economic crisis and debt default in 2001, according to data from the research firm Refinitiv.
From December 3, 2020:
Headline: Argentina’s president without a plan
Sub-headline: Alberto Fernández is muddling through
In death, as in life, Diego Armando Maradona represented his country to the full. The funeral of Argentina’s most famous footballer on November 26th was as passionate and chaotic as his country’s affairs (see Obituary). In defiance of his own government’s health rules, President Alberto Fernández ordered that Mr Maradona’s coffin lie in state in the Casa Rosada, the presidential palace. Like the president, El Diego was a lifelong supporter of Peronism, Argentina’s populist-nationalist movement. When the wake was curtailed, with thousands of fans queuing, pandemonium ensued.
Mr Fernández’s craving for popularity by association is a sign of his weakness. The funerary disorder extends to the economy, too. A social democrat, the president took office a year ago, at the head of an uneasy Peronist coalition in which much power lies with his vice-president, Cristina Fernández de Kirchner (no relation), a leftist who ruled from 2007 to 2015. Within three months, the pandemic struck. Mr Fernández was quick to impose a lockdown, which brought a surge in his approval rating, but which delayed rather than prevented a severe outbreak of covid-19. Argentina is among the top ten countries for recorded deaths as a proportion of the population. Only now is the lockdown being eased. Mr Fernández’s popularity is below its starting point.
Economic recovery will be slow. The exchange controls and the wealth tax are discouraging investment. This year several multinationals (such as Walmart) have packed up. Much of the software industry has departed. Argentina, once Latin America’s most developed country, likes to live by its own rules, although that has engendered a long decline. In that, too, Maradona represented his nation. He had “so much football wealth that he thought he could squander it and it would not end”. That is Argentina, wrote Martin Caparrós, an Argentine author, in El País, a Spanish newspaper. “He fell, he got up, he fell again. He delighted in his past glories for lack of future ones: Argentina, perhaps.”
The death of Maradona frames the whole of this scolding essay, against Fernández as a ‘president without a plan’. In this melodrama, a Political Telenovela, Maradona is hero and Fernández is the leader ‘without a plan’! Yet, the President ‘with a plan’ Macri ‘s Neo-Liberalism Lite, precipitated a peso in ‘free fall’ and an onerous IMF intervention!
The anonymous author of this essay quotes Martin Caparrós on what Maradona represented: ‘past glories and lack of future ones’, as representative of political fate of Argentina. Which resonates with the author’s notion of ‘a long decline’ , the sine qua non of Conservatism, in its many toxic permutations and iterations.