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The Americas
Argentina
The Peronist and the pandemic
BUENOS AIRES
Covid-19 and debt restructuring will make or break the presidency of
Alberto Fernández
ntil recently advisers to Argentina’s
Upresident, Alberto Fernández, quoted
the old saw that crisis brings opportunity.
Inaugurated in December, he is dealing
with two calamities that no one can blame
him for: a deep recession inherited from
his predecessor, Mauricio Macri, and the
covid-19 pandemic. Argentines give Mr Fer-
nández high marks for his response. On be-
coming president he raised taxes and froze
pensions and salaries to stabilise public fi-
nances. He acted early to slow the spread of
covid-19, shutting borders, business and
most transport by decree on March 12th.
People who break the rules face fines and
prison sentences.
The lockdown is having an effect. On
April 23rd Argentina had 3,288 confirmed
cases of covid-19 and 159 deaths from it.
That is far fewer than in Spain, which has
roughly the same number of people
(though it may be an underestimate). Mr
Fernández’s approval rating has soared. A
recent poll by Poliarquía puts it at 81%. “I
didn’t think of him as a leader,” says Gabriel
Más, a farm worker. “I do now.”
But both Mr Fernández and the country
he leads are entering a dangerous phase.
Pressure to ease the lockdown is building
before the pandemic has peaked. And the
government has begun a gambit to support
the economy that may end up weakening it
further. Success would be the making of his
presidency and brighten the future of his
Peronist political movement. Failure could
be disastrous for both. “Will he be the crea- “Argentina can’t pay [creditors] anything
tor of a new political hegemony, or author
of social chaos if he generates economic
havoc?” asked Jorge Fontevecchia, a media
mogul, in a newspaper column.
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The Economist April 25th 2020 23
On April 16th the economy minister,
Martín Guzmán, demanded that creditors
accept new securities to replace $65bn-
worth of bonds, almost 40% of foreign-
currency debt. This does not come out of
the blue. Mr Macri had sought to stretch out
debt payments. In appointing Mr Guzmán,
a specialist in debt negotiation, Mr Fernán-
dez made it clear that he would give greater
priority to restoring growth than to paying
creditors.
The pandemic greatly increases the ur-
gency. With revenue crushed by recession,
the government is on track to run a primary
deficit, ie, before interest payments, of at
least 4% of gdp this year. The Central Bank
is printing money to keep the government
going, which risks driving up inflation, al-
ready at 50%. Over the next two years Ar-
gentina’s scheduled payments of foreign-
currency debt are nearly as large as its for-
eign-exchange reserves of less than $44bn.
right now,” says Mr Guzmán. So far,
though, bondholders are unsympathetic.
Argentina’s demand “does not represent
the product of good-faith negotiations”,
complained one group that holds about
16% of the debt.
The mood in the Casa Rosada, the presi-
dential palace, is grim. Argentina may be
headed for its ninth default. “Between pan-
demic and debt, now maybe default, it 1