Argentina – Economy and debt challenges before Alberto Fernandez, and what lies ahead

Updated: December 23, 2019 3:02:14 PM

The right of centre President was prophesied to be the face of cold and calculated economic rationale, who with his dexterous policies would fix the sinking Argentine economy. Macri also believed that his strict austerity measures would bolster the economy thereby strengthening the market.

Argentina, Alberto Fernandez, Mauricio Macri, Argentine economyArgentina’s presidential candidate Alberto Fernandez gestures as he speaks during a closing campaign rally in Mar del Plata, Argentina October 24, 2019. (File Photo: Reuters)

By Aparaajita Pandey

As Alberto Fernandez assumed office on 10th December 2019, the mood was that of contained jubilations. Argentina had voted for Mauricio Macri during the last Presidential elections primarily based on his claims of fixing the economy. The right of centre President was prophesied to be the face of cold and calculated economic rationale, who with his dexterous policies would fix the sinking Argentine economy. Macri also believed that his strict austerity measures would bolster the economy thereby strengthening the market. Both, the people and Macri realised soon enough that their expectations were too many and they were heading towards disappointment and discontent.

The market was characteristically fickle and fragile. Mauricio Macri’s austerity measures instead of generating confidence in the market led to a massive downfall in stock prices. As the market crashed and the economy seemed to get no better, the Argentine population started to lose patience and faith in their chosen messiah. In the context of this dissatisfaction Alberto Fernandez; the fourth Peronist President of Argentina was elected. However, it is important to note that Macri is also the first non-Peronist President to complete an entire term in office since 1983. While Fernandez has assumed office amidst a sort of sense of familiarity among people who have now gone back to the tried and tested ways of Peronista administration, he is not unaware of the legacy of economic ruin that he has inherited.

Fernandez, and his economy minister Martin Guzman, have been quick to indicate that even though Argentina is willing to pay the $57 billion loan from the IMF, they would most likely default on their payment scheduled in 2020. Guzman believes that Argentina needs to defer its debt payments by at least two years to effectively stabilize the economy. The Peronist rhetoric has not lost it’s the battle to Argentine economic woes. Guzman who is an academician and has never been a politician before believes and has stated that growth-boosting measures like debt restructuring are imperative and could lead to keeping and eventually raising the public and private wages and pensions. The Fernandez regime has announced that among other targets the government aims to double its exports within the four-year term of the government. Fernandez’s regime has not tried to unduly vilify the previous regime and has decided to keep the capital controls that had been introduced by the Macri regime in order to curb inflation and restrain the depreciation of the Peso.

While the economy has been the primary concern, Fernandez has also vowed to improve other areas. Underlining the importance of an independent judiciary, Fernandez has pledged a “thorough judicial reform”. He has also indicated that reforms would include another look into “undue persecution and arbitrary imprisonment” in the recent past. While judicial reforms to guarantee an independent judiciary are the basis of a robust democracy, it cannot be ignored that the Argentine Vice President, Kristina Fernandez de Kirchner who was also the President of the country from 2007 to 2015 is currently facing a series of corruption charges of her own.

Alberto Fernandez’s political leanings and those of his ideological predecessors have earned him some friends and foes in the region. Andrez Manuel Lopez Obrador of Mexico, Venezuela’s Nicolas Maduro and Cuban premier Miguel Diaz- Canel are the heads of states who share a similar political view as that of Fernandez, although it was only Diaz-Canel who attended Fernandez’s ceremony. Argentina’s MERCOSUR partner Brazil, however, has been less than enthusiastic about the Peronist return to power. Jair Bolsonaro the President of Brazil chose to send his Vice- President in his stead to Alberto Fernandez’s swearing-in ceremony.

The obvious distance between Bolsonaro and Fernandez are going to be a tricky situation for both the countries to navigate through. Argentina and Brazil are both members of many regional organisations including the most prominent regional trade bloc of MERCOSUR. Fernandez had stated that he would work towards strengthening the trade bloc despite the obvious differences between him and Bolsonaro. It is unclear as to how he would achieve the aforementioned strengthening, however Fernandez seems determined to do so.

What lies ahead of Alberto Fernandez is nothing short of Sisyphean battle. With a mountain of debt, possible need for a complete overhaul, and the public with limited patience and resources combined with a backdrop of global and regional protests, it would be interesting to see how Fernandez meanders through these murky political waters.

(The author is a Doctoral Candidate at Centre for Canadian, US, and Latin American Studies and Jawaharlal Nehru University and Asst. Professor at Amity University. Views expressed are personal.)

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