A country which could have a promissory future, however facing many internal difficulties and challenges. Center-right President Macri inherited an economical and political disaster from his predecessor Cristina Kirchner, one of Latin America’s populist and authoritarian political leaders and a close ally of Venezuelan Maduro. Stubborn and corrupt worker unions, radical and aggressive social movements, a bad functioning justice still integrated and badly influenced by disturbing militants of the Kirchner Front of Victory, egoistic local companies with lack of competitiveness and progressiveness, which enjoyed government protection during the 12 years of the Kirchner administration and an opportunistic and small-minded opposition missing to be constructive, contribute to continued political instability. High inflation, an overvalued local currency and a declining spending capacity slowing consumer demand delay the return of the country into growth territory. The government, advancing to reintegrate Argentina back into the world, taking decisive corrective steps to stimulate, activate and normalize the economy, received considerable applause and support from important Foreign Head of States, international political leaders and chief executives of multinationals, increasing foreign commitments, investments and exposures, complementing local private initiatives or occasionally replacing them, comforting the Macri administration, promising there is no return to the past and to continue its efforts pushing the country ahead; the country’s stability and progress may depend finally on the government’s willingness and capability of compromising with remaining major local power players to implement pending essential domestic reforms, like a tax reform and a labor reform and cleaning up the justice system, to reduce risks to fail. The outcome of the legislative election to be held on October 22, 2017, will be decisive for the future of the country and should confirm that the majority of voters continue to support the Macri administration, helping an improving economic outlook for the second half of 2017, despite a still high inflation and a persisting weak consumer spending capacity.  The Peronists, divided into two main groups, the Front of Victory led by former President Cristina Kirchner, leading the parliamentary opposition to Macri’s administration, and another group composed of politicians of dissident Peronists from the Justicialist Party, the largest Party in Congress, and the Renewal Front of Sergio Massa, forming an alliance with Margarita Stolbizer’s Progressive Party to improve their chances in the coming legislative election, are not expected to obtain sufficient votes to be able to introduce political changes or reverse the economical reforms introduced by the Macri government. Argentina failed to win back its status as an emerging market in the influential MSCI benchmark equity index, relegating the country to the ranks of frontier markets for at least until 2018, contrasting the MSCI’s decision with Argentina’s success to issue a $2,75 Billion 100-year bond; the downgrade to frontier market status has been caused during the former restrictive populist Kirchner administration and the MSCI wants to be sure that Macri’s open market policies will be irreversible, waiting to see the results of the important midterm legislative elections in October 2017, still influenced by the campaigning former President Cristina Kirchner, introducing her new left-wing alliance called ‘Unidad Ciudadana’, opposing Macri’s economic reforms, which she claims are hurting the poor, launching her bid for a Senate seat and breaking with Peronism; a still more divided opposition could help Macri’s coalition for a strong showing in the coming elections, not expected to change the actual balance of power in Congress, and improve his chances to seek re-election in 2019. Obtaining Cristina Kirchner a seat in the Senate would give her immunity from arrest, but not from trial, advancing investigations of accusations of wrong doing and corruption related charges against her. Renewal Front’s Massa success strategy seems to be polarizing with former President Cristina Kirchner seeking also a Senate victory to stop her as he did winning in 2013. Cristina Kirchner won narrowly the mid-term primary elections against Macri’s candidate Bullrich and also a possible second-place finish in the October 22, 2017 election would still grant her a seat in the Senate, from where she likely will lead a most uncomfortable opposition intending to stop planned Government reforms, what advancing investigations and trial, even an eventual prison sentence against her could interrupt, cautioning her candidacy many investors; senator Pichetto, president of the Peronist/Front of Victory party bloc, already signaled that Cristina Kirchner, if elected to the Senate, will have to form her own bloc; after a strong general showing of Macri’s ‘Let’s change’ coalition in the mid-term primary elections his Government is facing the coming October challenge with confidence; but no matter how many seats he will be able to pick up he will still lack a majority and has to continue seeking, building and strengthening alliances to pass necessary reforms. A second place finish in the October 2017 election is granting Cristina Kirchner a Senate seat, giving her immunity from arrest but not from trial, and advancing legal procedures may still frustrate and limit her political ambitions. A sweeping and notably victory of the ‘Let’s Change Coalition’ in nearly the whole country allows to increase its seats in the House and the Senate, pressing and calling President Macri for a basic consensus to push ahead with tax, labor and pension reforms, as well as reforms of the country’s justice system to combat more efficiently corruption, seeking with governors to achieve a fiscal balance. Elisa Carrio and Cristina Kirchner , totally opposed political players, both tolerated and also used by the Macri-Government, likely underestimating the problems they can cause to the administration given their renewed influence and political power. Elisa Carrio, founder of the political movement ‘Civic Coalition ARI’, is actually a fundamental part of the ‘Let’s Change’ coalition, accustomed to express publicly her opinion about what’s wrong and what’s right and what and how it should be done, worrying not only the opposition but also the government. Cristina Kirchner, accused also on treason, asking a federal judge to lift her immunity from arrest as newly sworn in senator, facing also charges in several corruption investigations, creating her own political movement ‘Citizens’ Unity’ and dividing Peronists, may not be able to enjoy her role as a potential opposition figure, as she will have to face a difficult and long battle with justice. After violent protests pushed by opposition legislators, identified also as Kirchner supporters, battled to stop a congressional session on the pension reform, intending to destabilize the government, and Cristina Kirchner’s first appearance in the Senate, seen as destructive and full of hate, breaking congressional rules, her image is suffering a further deterioration, which could damage still more her remaining political influence. President Macri, recovering the initiative, leaving no doubt about his firmness and determination to fight for the pending reforms to overcome the worst legacy of the Kirchner administration, pushing grows and seeking above all to reduce deficits, stabilizing public finances and balance budget, counting on the approval and help from foreign economic powers, including the U.S. Trump administration. President Macri, seeking to position himself for re-election in 2019, delays necessary labor reform to avoid further confrontations with unions. Declining purchasing power, stagnating growth, a still uncontrolled inflation and a very high, still increasing debt level are seen as obstacles to reach a major economic recovery, making it doubtful if the government will be able to fulfill its goals, implementing all the mandatory reforms and secure re-election in 2019. During his second speech to Congress since he was elected, President Macri tried to transmit optimism, willingness to overcome difficulties, defending pending reforms, confirming that the country’s economy surged 4,1% in January 2018 compared with the same month of 2017 and the poverty rate fell to 25,7% in the second half of 2017 from 28,6% in the first half of the year and 30,3% in the second half of 2016, but overshadowed Macri’s market friendly policies designed to cut fiscal deficit, reduce inflation and attract foreign investment, by a persisting high inflation elevated due to additional increases in the prices of electricity, gas, transportation, communication and prepaid medicine, reducing again spending capacity of consumers, expecting actually analysts 2018 will be still ending with a high inflation more likely around 40%. After not very successful interventions of the Central Bank to stop the Peso sinking and to help slow down inflation, mowing rates up to growth depressing 40%, Argentina finally returns again to the IMF, seeking financial assistance, like a Standby Credit Facility to address the Peso volatility and regain the confidence of investors, hoping its program of adjustment and reforms gets back on track in time for the Presidential election late 2019, counting with little or no constructive help from a still deeply divided opposition. President Macri vetoed the law seeking to freeze utility rates agreed by an unified Peronist opposition, including followers and non-followers of Cristina Kirchner, saying there was no way the budget can stand an additional 1% of GDP, complicating still more a political relation with the divided opposition and increasing tensions with labor unions and social movements. Index provider MSCI finally reclassified Argentina as an emerging market, coming the reclassification just hours after the IMF approved a $50 Billion financing deal for Argentina as the country seeks to stabilize its currency. The IMF $50 Billion Stand By facility is considered as a political gesture to support the Macri administration, helping to avoid the return of populism in Argentina; however stagnating growth, an out of control and run away inflation, the pressure of a strong Dollar, the elevated fiscal deficit, high foreign debts and increasing social tensions require very conscious economic measures and corrections, discipline and more consensus, and do not permit arrogance and new errors, without putting at risk a possible re-election of President Macri in 2019. President Macri is obliged to resolve the fiscal deficit, cutting it according to the agreement with the IMF from 3,7% to 2,7% of GDP in 2018 and to 1,3% in 2019, meaning the government is forced to accelerate austerity rising recessionary tendencies, and to deal with the continuing lack of productivity of the Argentine economy, as he seemed to have lost the political capital to carry through the much-needed labor reform. Very high interest rates accelerate advancing recession, increasing pressure on the Peso, as the confidence in Argentina is also shaken by a major corruption scandal, expected to damage further economic growth, seeing economists a contraction of at least 1% of the GDP in 2018, before returning the country eventually to growth in 2019, seeking President Macri to renegotiate the IMF- agreement getting still more flexible conditions, allowing to use all $50 Billion of the agreement in 2018/2019, helping to ease the financial pressure on Argentina and to regain calm and confidence of the people and markets. Following an urgent request from Argentina the IMF seems willing to speed up loan disbursements helping to reverse collapse in investor confidence and the local currency, after the government disclosed to impose taxes on exports and cutbacks in government ministries to ease budget deficit, needing President Macri now a political consensus to make it possible that congress approves a revised budget 2019, which sees inflation coming in at 23% with an average exchange rate of 40,1 Pesos for 1,- US-Dollar, after the inflation rate of 2018 is expected to hit 40%, while the budget deficit will be reduced to 2,7% of GDP. The IMF announced a deal extending financial institution’s support by a further $7 Billion elevating total commitment to $57,1 Billion, after the resignation of Luis Caputo from the presidency of the Central Bank, succeeded by Guido Sandleris, confirming the IMF every effort is being made to stabilize Argentina’s economy, agreeing on disbursements of $19 Billion until the end of 2019 and of the remaining $38,1 Billion until 2021, adopting the Central Bank a floating exchange rate regime between 34 Pesos and 44 Pesos for 1,- US-Dollar to face still ongoing currency crisis, allowing interventions only in case of disorderly market conditions or erratic fluctuations in exchange rates. The government seemed to ignore a nationwide strike to protest President Macri’s handling of the economy and his decision to turn for help to the IMF. Each day less people are believing in President Macri’s economic team, as it has lost credibility; the approval ratings of Macri’s top political opponent Cristina Kirchner, embroiled in a widening corruption scandal, have plunged even lower than his, giving him still hope for re-election in 2019. Eventually Argentina has lost the train against Brazil with its new elected right-wing President Bolsonaro, expected to seek new trade agreements, and to attract more international companies and foreign  investment, while the hesitating and contradictory Macri-Government, forced to ask the IMF for help to avoid default and to delay necessary reforms, leading the economy into recession, has not been able to win back the confidence into the country, as out of control inflation, record high interest rates and a dramatically shrinking money supply to protect the Peso against the U.S. currency, as well as extraordinary spending cuts to fix the permanent budget deficit are depressing demand and blocking the economic activity and expansion altogether, increasing social conflicts, probably overshadowing violent protests the coming G20 leaders summit under the presidency of Macri. Jet investors see still chances that the country’s plan seeking financial stability will be successful under the supervision and assistance of the IMF. Fitch rating agency revised Argentina’s Long-Term Foreign Currency Issuer Default Rating/IDR, leaving it at ‘B’, but downgraded outlook from stable to negative, citing a weakening economy, doubts about a multi-year fiscal consolidation and market availability when IMF funds are used up, as repayments come due in 2021, posing risks to sovereign debt sustainability; saying intense macroeconomic instability in 2018, marked by a major depreciation in the Peso, have dramatically weakened Argentina’s near-term growth prospects and prospects for economic recovery in the medium term are unclear. Leaders of the world’s most important economies will meet in Buenos Aires Nov 30-Dic 1, 2018, for the G20 summit to discuss sustainable development, existing some expectations on solving trade disputes, above all the U.S.-China trade war; before the G20 summit President Trump signed with his counterparts of Mexico and Canada the USMCA deal (the renegotiated NAFTA trade deal U.S.-Mexico-Canada). Argentina received a good notice just days before the arrival of President Trump for the G20 summit: After 17 years Argentina is set to secure a two-way trade deal with the U.S. for fresh beef products, giving the country a limit of 20.000 tonnes on exports to the U.S., valued at around $150-180 Million, and there would be no limit on beef imports from the U.S.. The final comuniquè of the successful G20 summit in Buenos Aires backed the necessary reform of the WTO to improve its functioning and encouraged energy transition that combine growth with decreasing greenhouse gas emissions towards cleaner more flexible and transparent systems and cooperation in energy efficiency, although the U.S. reiterated its decision to withdraw from the Paris climate agreement. Argentina is still pending to receive a formal invitation to join the OECD, remaining also delayed a Mercosur-EU trade agreement, now awaiting Brazil’s position under its new President Bolsonaro. If re-elected in 2019, with an economy probably still in recession, carrying out a severe austerity plan, making it difficult to obtain political concessions, Macri, most likely governing again with a marked minority in both chambers of the Congress, will necessarily have to seek stronger alliances with moderate and pragmatic Peronists, an option, he may be advised to initiate still during his first term, to get the approval of his hardest delayed decisions, such as the labor reform, an improvement to education, more ambitious tax and pension reforms and a waiting justice shake-up. Elsewise, a new Macri- Government could face another 4 years failing to push through the necessary basic reforms to stabilize the economy of the country, improving the expectations of its citizens and increasing relations with potential investors. Quite obviously there seems to be no way to make a deal with the left wing Cristina Kirchner-movement ‘Unidad Cuidadania’, and apparently the chances to reach an agreement with the volatile leader Sergio Massa of the non constructive Renewal Front are doubtful.
















6 Responses to “Argentina”

  1. shahspandan Says:

    Follow me I will follow you! Please let’s help each other!!

    Liked by 1 person

  2. Brooklyn's Corner Says:

    When I first started reading, I thought you were from the US. God help our leadership. Just started following.

    Liked by 1 person

  3. Aman Thakur Says:


    Liked by 1 person

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: