Page 9 - MONTT LATIN AMERICAN MAGAZINE, SEPTEMBER 2021 (English)

Argentina: Kirchnerism at the Crossroads
After the monumental defeat of Peronism in the recent primaries, the certain possibility looms of losing the majority of Congress in the elections next November. To avoid this, the fiscal deficit was increased.
Mid-Term Elections
Kirchnerism suffered an electoral catastrophe in the recent primaries in Argentina. The candidates for the congressional elections on November 14th lost in the elections in 18 of the 24 districts of the country, including the province of Buenos Aires, a historic stronghold of Peronism and responsible for 40 percent of the national vote.
The opposition, Juntos por el Cambio, the coalition that brought Mauricio Macri to power in 2015, retained its traditional districts (the city of Buenos Aires, Mendoza and Córdoba), and won in provinces that tend to be wayward to the right, such as Chaco, La Pampa, Tierra del Fuego, Misiones and even Santa Cruz, the political cradle of Kirchnerism. In the primaries, only candidates are chosen, in this case deputies and senators, but as all Argentines are forced to vote in them, the result is usually an advance of the final elections. The opposition victory places the mayor of the Argentine capital, Horacio Rodríguez Larreta, in the race for the presidency in 2023.
They Hold the Economy Responsible
Faced with the real possibility of losing control of Congress in November, the government was in a frantic race to regain lost votes. The most immediate, due to lack of time, was to increase state spending regardless of the fact that the fiscal deficit would skyrocket. The relations between the politicians of the ruling party and the Minister of Economy, Martin Guzman, are increasingly tense because he is accused of having part of the responsibility for the electoral failure. In parallel, the negotiations that Argentina maintains with the International Monetary Fund, IMF to postpone the payment of the USD $ 44 billion that the multilateral organization lent to the Government of Mauricio Macri in 2018 are complicated. 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 percent of GDP. But already in June, Kirchnerism, the sector of the government coalition that responds to former President Cristina Fernandez de Kirchner, had demanded “to relax spending.” The 2020
Pandemic Devastates Voto
Argentina’s Economy
budget allows the government a deficit of 4,2 percent of GDP, they argued, and accused Guzman of tightening his belt to please the IMF. Specifically, Kirchnerism accuses Guzman of not meeting in 2021 the social demands of the poorest, who are the basis of his electorate. An analysis by the Congressional Budget Office determined that spending on social programs this year fell 40,8 percent compared to the first half of last year, when the Government released billions of pesos in aid to families affected by the pandemic. What followed is a well-known story: President Alberto Fernandez 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 Guzman.
Dollars Missing
The Minister of Economy is still in office, despite the claims of Kirchnerism. Guzman repels friendly fire, even in public. “In Argentina there was a reduction of the deficit, which is not the same as a fiscal adjustment,” he said. “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 covered the foreign exchange deficit by printing money, with the risk that the peso would depreciate even more and inflation, which today is 50 percent per year, will spiral out of control. Meanwhile, Guzmán must close an agreement with the IMF. Next year, Argentina faces maturities of USD $ 19,000 million, which it does not have. Nor does it have an alternative plan in case of not agreeing. The budget for 2022 presented to Congress does not include items for the payment of interest.
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