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

Argentina’s Economy Worsens and the Legislatives Are Lost
The Frente de Todos coalition of President Alberto Fernandez lost the majority in the Senate and was left without the control of Congress, after the mid-term legislative elections held a few days ago. While inflation reaches 50 percent, four out of 10 Argentines are poor.
Poverty in Argentina
Inflation, a long-time acquaintance for Argentines, this year reached 50 percent, one of the highest percentages in the world and well above the 29 percent set by the government in its budgets. To face the situation, the Executive announced a 90-day freeze on the prices of 1,500 products. The measure, applied with little success in the past, met with resistance from businessmen, especially those linked to food. After a week of failed negotiations, the measure finally came out by decree.
“I am very confident and appeal to corporate responsibility, it is not such a big effort, we are not going to cause a break in their business plans,” said the Secretary of Internal Trade of Argentina, Roberto Feletti, in a press conference after a meeting with the chambers that group the businessmen that ended without an agreement.
Inflation Problems
The Argentine economy will grow this year around seven percent, according to different public and private projections, but inflation will continue to run wild. President Fernandez received the Government in December 2019 with an annual CPI of 53,8 percent, the highest in almost 30 years. He then promised to bring it down little by little. For this year, the projection was 29 percent, but in September it had already accumulated 37 percent, one point above the 36 percent of all 2020. The official alarms went off with the latest data of 3,5 percent of inflation in September, which confirmed that the downward trend that began in March had come to an end.
The causes of Argentine inflation are the subject of multiple studies. The only consensus is that the origin is multi causal and is explained by the chronic fiscal deficit, excessive emission and the constant loss of the value of the peso. Since the convertibility of the 1990s, the Argentine currency has not stopped falling against other currencies. If 100 pesos were equivalent to 100 dollars in December 2001, 20 years later they are barely enough to buy 0,96 cents in the official market and 0,53 percent in the parallel or blue market. Unable to
attack the substantive issues, the government appealed, as others have done in the past, to price control.
In Argentina, four out of every 10 people are poor. One in 10 is homeless. Data from the National Institute of Statistics and Censuses, corresponding to the first semester of 2021, show the slow recovery of Argentine society after the covid-19 pandemic and two previous years of economic crisis. Poverty only decreased 1,4 percentage points from 42 percent six months earlier and is still a far cry from 32,2 percent five years ago and even more than 24.7 percent a decade ago.
Parliamentary Election
The problem of food insecurity in households with fewer resources affects even the capital, the richest city. where 7,5 percent of households in Buenos Aires experienced food risk, according to the Observatory of social debt of the Argentine Catholic University. Argentina’s economic problems coincide with the loss of the mid-term legislative elections held a few days ago. The center-left Peronist government went from having 41 of 72 senators to only 35, according to the scrutiny of more than 90 per cent of the votes. Thus, Peronism would lose the majority in the Senate for the first time since the return of democracy in 1983. In the elections, 127 seats in the Chamber of Deputies were renewed, out of a total of 257, while in the Senate eight provinces disputed 24 seats out of a total of 72.
Faced with this scenario, Fernandez called on the opposition. “We must prioritize national agreements if we want to resolve the challenges we face,” said the President in a recorded speech in which he asserted that “a responsible opposition open to dialogue is a patriotic opposition.” He advocated “fruitful cooperation, in the general interest of the country.”
From the opposition, former President Mauricio Macri said that “it is confirmed that it is the end of an era.” “Today we took a huge step (...) We have a great opportunity, let’s look forward,” he added.
Montt Latin American Magazine p9