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Argentina is drowning in the lack of economic organization and indecision of the government

Experts point out that the deepening of the political dispute between President Alberto Fernández and Vice President Cristina Kirchner is the consecration of a crisis.

Luis ROBAYO / AFPman dies from drinking alcoholic beverages (1)
Members of social organizations and leftist groups protest against the agreement between the government of Argentine President Alberto Fernandez and the International Monetary Fund (IMF) in Buenos Aires.

The situation in Argentina, which was no longer the best, has worsened in recent weeks. Consecrating a crisis was the resignation of Martin Guzmán, Minister of Economy. This decision opened the political debate between the President Alberto Fernandez and vice Cristina Krichner. With the internal crisis, inflation exceeds 60%, the currency is in record depreciation and there is a sharp drop in trade prices. In recent days, Argentinians have been shopping for fear of changes in product prices. “Prices had already increased by 15% a few weeks ago, now they have increased by 20% and imports by 30%,” said a local trader in an interview with the news agency. AFP.

The problems in Argentina are not new, especially regarding the devaluation of the local currency, a phenomenon that the “hermanos” have been living with for decades. In March, the country recorded the highest monthly inflation in 20 years, according to the National Institute of Statistics and Census (Index). Such a high number has not happened since 2002. For experts, what explains the deepening of the crisis is related to the political differences between President Alberto Fernandez and Cristina Kirchner.

“In these last weeks, what has worsened the crisis is the fight between Cristina and Alberto,” explains FGV intelligence analyst Leonardo Paz. According to him, “the vice-president has tried to separate himself from the president, describing the economic strategy proposed by him as wrong and problematic”. Paz says that Cristina’s move is based on the elections that will take place in 2023. “She sees a scenario in which Fernández is strong and weakened.” For the post-graduate coordinator in institutional and government relations at Mackenzie Márcio Coimbra, the change of minister “shows that the path that Argentina will begin to follow is towards Cristina’s theses”. He adds that this will lead to increased inflation and uncertainty. “There will be a serious problem in the economy of lack of resources and increased inflation,” he says.

Argentina's new economy minister

Silvina Batakis, the new economy minister of Argentina │JUAN MABROMATA / AFP

However, despite being an ally of Kristina, Silvina Batakis, who took over the Ministry of Economy, announced this week that she intends to follow in the footsteps of the former holder of the position. “We are convinced that Argentina’s course is about fiscal management of our accounts, following the economic program that the president has set” and “making Argentina have more exports and revaluation of our currency,” Batakis said in his first speech. meeting with journalists, during which he did not accept questions. This week, as one of her first measures, she emphasized that she will respect, without changes, the country’s agreement with the International Monetary Fund (IMF). For Coimbra, one of the biggest problems for Argentinians is the fact that they have “a messed up economy”. Paz adds that uncertainty also interferes, because you have an internal war that does not go “one way or the other”, which makes it difficult “to take decisive actions to resolve the crisis”.

When you have a sudden change in economic policy in a short period of time and it concentrates most of the power in the hands of the government, it generates a crisis of confidence, which, therefore, interferes with the financial part of the country, even more so . in a post-pandemic scenario. For Paz, when mistrust speaks louder, “it weakens the government’s ability to implement solutions.” Despite the fact that it is still too early to reach a concrete conclusion on how the country will proceed in the face of the crisis and the change of minister, Coimba says that there is a possibility that Argentines will enter stagflation, because “the loss of confidence generates a slowdown in investments that leads to a slowdown of the economy”. This factor, added to the increase in inflation worldwide, leaves the country vulnerable.

For the country, one way for Argentina to stabilize is to bet on the “classic scenario”. “The agreement with the IMF, to curb spending and to export more”, says Paz. On the other hand, Coimbra is betting on a more radical change. “The most recommended thing is to change the government and have someone elected with a proposal closer to Maurício Macri’s reforms”, he says, adding the need to have “more liberalizing reforms”, which puts the economy of Argentina is in the hands of society and not politicians”. He emphasizes that only in this way will there be a real change, because with this government “is impossible.”

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