Peronism is hurt.
The defeat, two weeks ago, in the primary elections and the possibility, certain, of losing control of Congress in November put the government in a frantic race to recover the lost votes.
The reading of the ruling alliance, where Kirchnerism dominates, is that the debacle is to blame for the economic crisis.
With no time for long-term solutions, the order has been to increase state spending and fill the pockets of the people, even at the risk of triggering the fiscal deficit.
The electoral needs put the maximum strain on the austerity plan of the Minister of Economy, Martín Guzmán.
And they further complicate the negotiations that Argentina has with the IMF to postpone the payment of the 44,000 million that the multilateral lent to the Government of Mauricio Macri in 2018.
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A week of vertigo for Argentine Peronism to recover votes
Editorial |
Fratricidal war in Argentina
The election of a new president fractures the Supreme Court of Argentina
Argentina closed the first four months of the year with a primary fiscal deficit, that is, prior to the payment of interest on the debt, of 0.2% of GDP. You have to go back six years to find a figure so close to zero. But already in June, Kirchnerism, the sector of the government coalition that responds to former President Cristina Fernández de Kirchner, had demanded "to relax spending." According to his reading, it was not the time to adjust the numbers, with the economy in recession and the population suffering the ravages of the pandemic. The 2020 budget allows the government a deficit of 4.2% of GDP, they argued, and accused Guzmán of tightening the screws to please the IMF. Polls already anticipated that the ruling party would have an adverse result in the September primary elections. The defeat was, finally,much harder than the most pessimistic forecasts and the pressure on Guzmán grew as much as the police crisis that broke out in the heart of the Executive.
Kirchnerism accuses Guzmán of not meeting the social demands of the poorest in 2021, who are the base of his electorate. An analysis by the Congressional Budget Office determined that spending on social programs this year fell 40.8% compared to the first half of last year, when the Government released billions of pesos in aid to families and businesses affected by the pandemic. With the defeat at the polls consummated, Cristina Kirchner published a public letter in which she lashed out at what she considered an unnecessary “adjustment”. "I pointed out that I believed that a wrong fiscal adjustment policy was being carried out that was having a negative impact on economic activity and, therefore, on society as a whole and that, undoubtedly, this was going to have electoral consequences," he warned Fernández de Kirchner.What followed is a well-known story: President Alberto Fernández changed six ministers, none of them Kirchner, and left the Cabinet leadership in the hands of Governor Juan Manzur, the man proposed by the vice president. The purge of ministers, however, did not reach Guzmán.
The Minister of Economy is still in office, despite the claims of Kirchner against what they consider an adjustment. Guzmán repels friendly fire, even in public. "In Argentina there was a reduction in the deficit, which is not the same as a fiscal adjustment," said the minister last Thursday in an interview with AM 750 radio. "Spending has grown well above inflation. You would like to be able to do more, but for that you have to have instruments that there aren't any in Argentina, ”he added. What "there is" in Argentina are dollars. Without external credit, the government has covered the foreign exchange deficit by printing money, with the risk that the peso will depreciate even more and inflation, which is now 50% per year, will spiral out of control. Meanwhile, Guzmán must close an agreement with the IMF. Next year,Argentina faces maturities of 19,000 million dollars, which it does not have. You also don't have an alternative plan in case you don't agree. The budget for 2022 presented to Congress does not include items for the payment of interest.
The tension between fiscal restrictions and electoral needs has Guzmán under pressure. Cristina Kirchner clarified that the minister's position is not on her list of claims to President Fernández. But the economic decisions of the last two weeks contrast with the fiscal austerity strategy that Guzmán has been promoting since he began his administration two years ago. The Government has now announced a series of emergency measures to reactivate consumption and bring money to families: it raised the floor from which income tax must be paid, it raised the minimum wage to 31,000 pesos ($ 300) , promised the return of the family assistance plans in force during the first months of the pandemic and even launched a program by which the State will pay half the salary of domestic staff.It also kept electricity and gas subsidies equivalent to 2% of GDP, an old Kirchnerist strategy to keep rates below inflation and which Guzmán tried unsuccessfully to eradicate.
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Guzmán denied that it is an electoral plan, because, as he said, "everything that we are announcing for the next few days is already budgeted for."
There are 48 days left in the campaign.
It is foreseeable that the official efforts will not reach and the result of the legislative elections of November 14 will be very similar to that of the primaries held on September 12, when Peronism lost in 18 of the 24 districts of the country.
If so, there will be new storms on November 15.
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