Mauricio Macri has called for talks with the opposition to calm investors. Photo / Getty Images
Mauricio Macri has called for talks with the opposition to calm investors. Photo / Getty Images
The Argentine president who promised at his inauguration to be so different to his predecessors is limping towards the end of his term looking remarkably like them.
Four years ago, Mauricio Macri inherited high inflation, struggling public finances and a country foreign investors would not lend to.
Two months beforepresidential elections he is likely to lose, Macri is bequeathing an equally ugly economic picture to his successor.
A hasty announcement on Wednesday by the finance minister of only two weeks, Hernán Lacunza, that Argentina's US$101 billion ($159.9b) of debt needed to be restructured was the latest calamity to befall Macri's administration.
Government officials tried to sell the move as a confidence-building measure but markets sold off on the expectation that worse was to come.
Investors are already pricing in the likelihood of a full debt default and the peso is swooning. The population is growing increasingly restive as inflation soars above 55 per cent and a recession bites harder. Foreign reserves are waning rapidly and Buenos Aires is rife with speculation about capital controls.
Meanwhile, the IMF is deciding whether to release the next tranche of a record-breaking US$57b bailout programme that has veered off track after only 11 months.
The story of hopes dashed and relentless economic crisis, with the IMF playing the role of pantomime villain, is depressingly familiar to observers of Argentina over the past 70 years. No non-Peronist president has completed their term in office in that period and many are now asking whether Macri will fall victim to the same curse.
Etched in the memories of Argentines are the painful images of 2001, when economic collapse led to bank runs and riots which forced the president of the day, Fernando de la Rúa, to escape from the roof of the presidential palace by helicopter. That year Argentina triggered the biggest debt default in history.
"The deciding factor will be what the streets do," said Arturo Porzecanski, a former Latin America economist on Wall Street who is now at the American University in Washington.
"In particular whether the impatient, radical wing of the Peronists decide to start causing trouble in order to force Macri out."
For now, Macri appears determined to see out his term. "We have 59 days until the elections, and it is my responsibility as president for them to pass in the best way possible but this never depends just on the government," he said on Thursday, appealing to his Peronist opponents in October's election to co-operate in calming markets.
Macri's main challenger, Alberto Fernández, has so far rebuffed calls to enter a dialogue on economic policy and is keen to pin the blame for the mess firmly on the president.
"Those that have generated this crisis, the government and the IMF, are responsible for putting an end to, and reversing the social catastrophe that an ever greater portion of Argentine society is suffering," he said in a statement this week.
A woman holds a sign reading in Spanish "Macri and IMF leave" during a protest against the economic policies and austerity measures put in place by the administration of Macri. Photo / AP
Benjamin Gedan, who leads the Argentina project at the Wilson Center in Washington, said the early signals from Fernández had not been encouraging. "He is content to mislead Argentinians about the causes of the current volatility," he said.
"He has never acknowledged that the volatility comes from scepticism about his policy programme."
Investors are especially worried that former president Cristina Fernández de Kirchner is running as vice-president on her former cabinet chief Fernández's ticket. Her tenure from 2007 to 2015 was marked by price and currency controls, nationalisations, sovereign default and numerous allegations of corruption for which she is currently on trial.
With the Fernández-Fernández duo headed for a resounding victory in October, Argentina is set for a repeat of a cycle which has become wearily familiar over the past decades: a populist Peronist president takes power, opens the spending taps and manages a brief spurt of government-fuelled growth before the economy collapses amid high inflation and unsustainable debt.
Voters then choose a reformist to clean up the mess but quickly tire of the resulting austerity and return to the Peronists.
"The Argentine electorate is very fickle," said Porzecanski.
"I have been following them for over 40 years and it has never ceased to amaze me how they will turn on a political leader on a dime. Yesterday they loved Macri. Today they hate Macri and they can't wait for him to depart."
Carlos Fara, a political analyst in Buenos Aires, pointed out that Macri had been handicapped from the outset by a weak base in congress and control of only five of Argentina's 24 provinces.
But it was Macri's failure to fix Argentina's longstanding economic woes which ultimately sunk his re-election ambitions.
"With three out of four years in recession and high inflation, it's very difficult to seduce political, social and economic actors and convince them you are going in the right direction," Fara said.
Even with the near-certainty of a Fernández victory in October, Argentina must still navigate what promises to be a very rocky three months before the new president takes power in December.
With Macri and his government announcing every week what looks increasingly like panic measures to try to shore up confidence, there is a risk of a complete market meltdown.
"If he's forced to end his term early, it's an ignominious end," said Gedan.
"If he completes his term and shows governability, it's a very narrow silver lining to what has been a very disappointing experiment in market liberalisation."
