Argentina is a country located in the region of South America. When Mauricio Macri took office as president at the end of 2015, he set the point for twelve years of left-wing rule under the spouses Kirchner. But Macri and the bourgeois party alliance, Cambiemos (Let’s Change) only got a term in power, much as a result of the deep economic crisis that Argentina suffered in the spring of 2018. In late 2019, power was taken over by leftist Alberto Fernández and his Front for All.
In 2015, Macri had made a choice on promises to boost the Argentine economy, which would be achieved by giving market forces greater leeway, increased trade with other countries in the region and by making Argentina attractive to foreign investors. In the long run, according to Macri, it would create better living conditions for the poor part of the population. The former mayor of Buenos Aires also had a fight against corruption and drug trafficking on the program.
- Countryaah: Country facts and history of Argentina, including state flag, location map, demographics, GDP data, currency code, and business statistics.
Macri said his government would be more “professional” than the former and that he was striving for a more conciliatory tone in politics. But a first confrontation with the opposition arose already in connection with his take-over as president when the representative, Cristina Fernández de Kirchner and many of her party friends from the Victory Front (FPV) boycotted the ceremony.
Macri had high public figures at the beginning of 2016 – more than 50 percent of Argentines supported him. However, he had a tough situation in Congress. Cambiemos had just over a third of the mandate in the Chamber of Deputies. In addition, the Victory Front and its allies controlled the Senate. But the resignation of the FPV, which split in February 2016, and the fact that some politicians from other Peronist factions (see Political system) said they were willing to cooperate with the government also weakened the opposition.
Macri received some criticism for in many cases choosing to bypass the congress when making his decisions.
Abolished currency controls and settlement with hedge funds
One of Macri’s first decisions as president was to abolish the export taxes on several agricultural products. He also abandoned the unpopular currency controls, which led to a sharp fall in the person’s value. Macri also managed to put an end to the protracted dispute with the American hedge funds (see Economic Review and Modern History) for a repayment of the debts to them. The deal, which was expected to cost the Argentine state $ 4.6 billion, was approved by both chambers of Parliament. This meant that for the first time in several years, Argentina had the opportunity to borrow money in the open market.
Savings policy protests
One of the new government’s overall goals was to reduce the government deficit. During the first two months of 2016, savings were made within the state administration and at least 21,000 people lost their jobs. He also eased the price controls on electricity, water and gas, which in some cases led to triple prices – something that affected both households and businesses. According to the government, the money was needed to reform the energy sector. After a few turns in various courts, where one of them rejected the price increases because they were implemented without the government consulting with consumers, while another of them demanded that a ceiling be set for how big they would become, the Supreme Court set the point for the process and approved that the government abandoned subsidies to the energy sector.
In the Senate, the opposition succeeded in April in enforcing a law that put a stop to new layoffs – both in the public sector and the private sector – for 180 days. The government tried to find a compromise solution, where the business community agreed to a 90-day layoff, but it was voted down in the Chamber of Deputies. Macri then chose to stop the law through a new decree. However, he tried to alleviate criticism of the government by raising the national minimum wage on the same day.
Macri’s attempts to boost the economy were hampered by reduced demand for Argentine goods in Brazil, which is the country’s most important trading partner.
The savings policy sparked protests, not least from the influential trade union movement. In a series of large demonstrations, demands were made for large wage increases, new jobs and measures to reduce poverty. In the fall of 2016, both the trade union movement CGT and the Argentine Chamber of Commerce claimed that at least 200,000 people had lost their jobs since the change of power. Figures from the National Statistics Office Indec indicate that every third city dwelling had fallen below the poverty line.
Macri planned to push through a new pension system (among other things, the retirement age would be raised), a liberalization of the strict labor market laws and tax cuts. However, he would have difficulty implementing the measures if he failed to gain wider support in Congress. Some support for some of the reforms was expected from Sergio Massa’s Peronist Renewal Front (FRP).
Although Macri could point out that the budget deficit was falling, it was still great, not least because he had retained some of the social programs introduced by the previous government. The current account deficit was also significant. The problems were exacerbated by the fact that the Argentine peso was overvalued.
At the same time, legal proceedings were underway against Cristina Fernández de Kirchner and several others in the circle around her. The former president was indicted for manipulating the central bank’s currency transactions during his final months in power. Fernández de Kirchner and her two children are also subject to a legal investigation into, among other things, money laundering through a company Los Sauces, founded in 2006 in the former president’s home province of Santa Cruz. Shortly before the congressional elections in the fall of 2017, another case came to her, when she was heard in court over the suspicions that her government was trying to darken that Iranian government officials were involved in the bombing of a Jewish center in Buenos Aires in 1994 (see also Calendar). She accused Macri of political persecution and of exploiting the justice system for her own purposes (however, the former president cannot be arrested since she won a seat in the Senate in October 2017). Another corruption case broke out in August 2018, and police conducted house searches in several of the ex-president’s properties after a judge had managed to assert some of her indictment (see Calendar). The ex-president claims that the charges against her are politically motivated.
Fernandez de Kirchner’s Vice President Amado Boudou was sentenced in August 2018 to five years and ten months in prison for bribery and for conducting business transactions incompatible with his tenure.
Another former President Carlos Menem (1989-1999) has been sentenced to seven years in prison for corruption, but has escaped the sentence since serving in the Senate since 2005.
Nor is the sitting government exempt from charges of corruption. An investigation is underway whether Finance Minister Luis Caputo has committed any irregularities regarding the placement of money from a government fund.
President Macri is also accused of a lack of ethics. It is about his decisions in favor of his own family’s business interests. He was also mentioned in the documents leaked to the media in 2016 by the Panamanian law firm Mossack Fonseca. There, according to information in Argentine media, it emerged that he had been director of a mailbox company in the Bahamas between 1998 and 2007 (see Calendar).
October 2017 Congressional Election
An important measure of the popularity of the new board was the election to Congress on October 22, 2017. The election concerned 127 of the seats in the Chamber of Deputies and 24 of 72 seats in the Senate.
Macri claimed before the election that the economy had now been pushed and that GDP had grown by 4 percent during the second quarter of 2017 and that it had created a number of new jobs. Inflation was also lower than before. He stressed at the same time that the Argentines must have patience and wait for the new policy to produce results.
Prior to the election, Fernández de Kirchner had made a political comeback and was running in the Senate elections for his newly formed Party of Citizens Unity (UNA).
However, the new party risked playing the government alliance in its hands as the already so severely divided opposition was further divided. Cambiemos also did better than expected in the August primary elections.
Massa’s FRP and Margarita Stolbizer from the left-wing party Gen had formed the alliance 1País prior to the election. They tried to profile themselves as a corruption-free alternative.
Although opinion polls indicated that Cambiemos would win a new mandate in the election, few believed it would suffice for its own majority in Congress. Macri himself seemed to have solid support, 54 percent. Some observers believed that Fernández de Kirchner’s return to politics helped Macri, by serving as a reminder of a policy that many Argentines, at least in the middle class, wanted to leave behind. The fact that the Argentine team had qualified for the World Cup was also considered to play the government alliance in the hands of the football-crazy Argentina.
Cambiemos won the election with just over 40 percent of the vote, but failed to reach its own majority in Congress. Civic unity succeeded relatively well and received 21 percent of the vote. But the opposition was not strong enough to be able to lift a possible veto from the president.
At the end of 2017, the government was able to push through its pension reform, despite widespread protests. This was done with the support of moderate Peronists and promises that more of the country’s tax revenue would go to the provinces. Pension reform was expected to lead to savings of almost $ 4 billion, equivalent to 0.6 percent of the country’s GDP. The next step was expected to be a tax reform, where corporate taxes would be reduced and the country’s complicated tax legislation simplified. The goal was to reduce the tax burden by about 1.5 percent by 2023.
In spring 2018, the economy deteriorated, the value of the Argentine peso fell and inflation picked up. In addition, agriculture was hit by severe drought. The central bank was forced to raise several interest rates. In May, President Macri chose to turn to the IMF to request a loan. The decision was unpopular among many Argentines who blamed the IMF for the deep crisis in the country at the turn of the millennium. In June 2018, the Argentine government and the IMF had agreed on a $ 50 billion aid package. In the action plan, the IMF emphasized the need to protect the most vulnerable part of the population.
In August of the same year, the situation worsened and Macri was forced to ask the IMF to advance the loan payments. In return, he promised to reduce the budget deficit (see Calendar). In addition, in early September, the president presented a tough crisis package, which meant that the number of ministries would more than halve and a temporary export tax was introduced for certain cereals. But the problems worsened and as early as September Macri was forced to ask the IMF for further support, which was also granted on 26 September. At the same time, large parts of the country were completely silent because of a general strike announced by the trade unions in protest of the budget cuts. It was followed by several new protests against the harsh austerity policy.
High inflation, over 50 percent from April 2018 to the same month the following year, led to increased poverty. At the end of 2018, one third of Argentines lived below the poverty line.
Macri hard pressed
In August 2019, voters’ reaction to the Macri government’s austerity policy came. President Macri then lost the primary election against Alberto Fernández. The primary election was generally seen as an opinion poll before the October presidential election. In order to regain voter confidence, Macri spent the next few days at a rapid pace making a series of election promises to the country’s low-paid and unemployed, as well as to small and medium-sized companies.
The loss was followed by a week’s tumult in the already hard-pressed Argentine economy. Among other things, the person’s value fell by 20 percent against the dollar. The event led to the resignation of Finance Minister Nocilás Dujovne and replaced by Hernan Lacunza, Finance Minister of the Province of Buenos Aires.
Shift of power
The presidential election on October 27, 2019 led to a shift in power when Alberto Fernández of the alliance of Frente de Todos (Front of All) gathering Peronist groupings from both the left and the political center, defeated President Mauricio Macri already in the first round of elections. Fernández is a former campaign strategist who from 2003 until 2008 served as cabinet manager in the various governments of the spouses Kirchner. In June 2008, however, he left his post when he opposed, among other things, Cristina Fernández de Kirchner’s plans for judicial reform and attempts to limit the influence of several media groups (see also Calendar).
His constituents now have high expectations for the new board to pursue a different kind of economic policy, with social initiatives. But the new president will have limited leeway, partly because the economy is in crisis, and partly because the IMF has strict conditions for the major crisis loans taken by Macri’s government. In addition, the Fernandez Alliance will have difficulty enforcing decisions in the Chamber of Deputies, where Macri faithful forces have more mandates (The Front for All, however, has a takeover in the Senate). Fernández will need the support of more moderate Peronists, which will also influence his policies. At the same time, it is unclear what role his Vice President Cristina Fernández de Kirchner, who is on the far left, will have.
Fernandez’s crisis program, which included, among other things, tax increases and new controls to prevent currency outflows, was adopted at the end of 2019. The new president also emphasized that foreign debt has now reached levels that Argentina could not balance the budget and repay the loans, at least not so for a long time, the economy has not started to grow again. In February 2020, he achieved success when the IMF agreed to this, and urged his private lenders to write down some of Argentina’s debts (at the end of 2019, the foreign debt represented 90 percent of the country’s GDP). It was more doubtful whether the IMF would agree to any debt amortization for its own part.
Read more about the ongoing development in the Calendar.
READING TIP – read more about Argentina in UI’s online magazine Foreign
magazine Crises the Normal in Unpredictable Argentina (2019-10-20)
FACTS – POLITICS
Republic of Argentina / Republic of Argentina
republic, federal state
Head of State and Government
President Alberto Fernandez (2019–) 1
Most important parties with mandates in the last election
Juntos por el Cambio / Cambiemos 119/28, Frente de Todos (PJ) 109/38, Consenso Federal 7, Frente Cívico por Santiago 7, Córdoba Federal 4, others 11/6 (2017/2019) (Preliminary result) 2
Main parties with mandates in the second most recent elections
Cambiemos 107/24, Civic Unit (UC) and Allies 67/10, Partido Justicialista 40/23, Peronist Renewal Front 21 and others (2015/2017) 3
81% in the 2019 presidential election; 78 percent in the 2017 congressional election
parliamentary elections 2021, presidential elections 2023
1.The president is the head of government, but in practice the government work is led by a cabinet chief: Santiago Cafiero (2019−).
2. Preliminary results. Every two years elections are held to half of the seats in the Chamber of Deputies and one third of seats in the Senate.
3. Elections are held every two years to half of the seats in the Chamber of Deputies and one third of seats in the Senate