Argentina is no longer trying to lower inflation; Try, at least, not to get out of control. This Monday, the Government of Alberto Fernández will present a package of economic measures to defend the peso, discourage savings in dollars and add international reserves to the Central Bank. In five months there will be general elections and no one expects a comprehensive stabilization plan or a change in expectations. It is about arriving in October with the ship afloat, while transferring the responsibility for major surgery to the one who assumes on December 10. The polls assume that he will not be a Peronist. The Casa Rosada has tied its electoral future to a candidacy of Economy Minister Sergio Massa. If Massa does not achieve economic results, he will hardly be a candidate.
Inflation in April reached 8.4% and raised the year-on-year to 108.8%, the highest in 30 years. The CPI has not stopped rising for six months: 4.9% in November, 5.1% in December, 6.0% in January, 6.6% in February and 7.7% in March. April strengthened the rise and anticipated a month of May that will be dangerously close to two figures. There is still no talk of hyperinflation, but the specter of the great crisis of 1989 is there.
In March, the Central Bank raised the benchmark interest rate from 81% to 91%. From this Monday there will be a new rise, but for now it will affect only the fixed terms, which will pay 97%. At the same time, the Ministry of Economy announced that it will "increase intervention in the foreign exchange market and manage the pace of crawling peg", that is, the policy of daily devaluation of the peso against the dollar in the official quotation, as required by the IMF. The question is to convince Argentines to keep their savings in pesos: the Central Bank has its reserves close to zero and can no longer supply the exchange market.
To the tourniquet in the outflow of dollars the Government will add a new negotiation with the International Monetary Fund (it intends to advance 11,000 million dollars planned for the end of the year), increase the swap with China and the support of Brazil. The IMF has so far confined itself to holding the "constructive" negotiations it is conducting with Argentina. China has already accepted payment for imports in yuan of about 5 billion dollars; Minister Massa will travel to Beijing on May 000 to raise that figure to 29 billion. Brazil's aid, the result of Alberto Fernández's lightning visit to Luiz Inácio Lula da Silva, has so far been limited to a pat on the shoulder.
Food imports
In the list of measures against inflation there are also heterodox measures. To encourage consumption and lower the amount of pesos in cash, the Government will subsidize credit for the purchase of durable goods in installments. Against the rise in food prices will open imports, an unprecedented decision in one of the world's largest producers. In charge of purchases abroad will be the Central Market of fruits and vegetables, which will operate through a trust. A Trade Operations Analysis Unit is also created to "monitor operations of purchase and sale of goods and services".
The government's bet is to avoid an economic explosion that squanders any possibility of electoral victory in October. The crisis has ended up cracking Peronism, in a long process of political flagellation that began at the beginning of the administration, in 2019. The president, Alberto Fernández, has not spoken to his deputy, Cristina Kirchner, for months. Both were finally handed over to Minister Massa, who never hid his presidential aspirations.
The rout reached the provinces where Peronism governs, which have separated their local elections from the national ones so as not to be infected by a general disaster. Last week, elections were held in Neuquén and Río Negro, in Patagonia, and candidates more or less aligned with the Casa Rosada won. This Sunday Salta, Tierra del Fuego and La Pampa vote, where the Government expects good results. A court ruling suspended elections in San Juan and Tucumán, Peronist strongholds where local caudillos sought re-elections at odds with the constitution.
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