Argentina is agitated by economic difficulties and quarrels within the government coalition

Disagreements within President Alberto Fernández’s government coalition and a climate of economic instability have roiled politics in Argentina in the past week.

The disagreements between the alliances of President Fernández and his vice president, former national president Cristina Fernández de Kirchner, were evident in the public debate on the government’s agreement with the International Monetary Fund to honor its debt of 45,000 million dollars.

The Kirchner bloc’s criticism of President Fernández’s economic policy led to the abrupt resignation of Economy Minister Martín Guzmán on July 2 and the negative response of the markets: sovereign bonds sank 10% two days after.

The former president described the resignation last week as “an immense act of political irresponsibility” and “an act of institutional destabilization.”

“I am not going to deny it, the differences that I may have with the president in terms of policies or officials, but this president had banked that economy minister like no one else, even facing his own coalition forces,” Fernández said. Friday, defending his criticism of the agreements with the IMF.

That political diatribe takes place while Argentina experiences year-on-year inflation close to 62%, the erosion of citizens’ purchasing power and the prices of food, clothing and some public services, such as water, rose between 7 and 10 percentage points, in March past.

Citizens denounce, meanwhile, that the prices of some items rose up to 30% only in the last week after the resignation of Guzmán as minister.

How is Argentina?

Although Fernández and Kirchner met after Guzmán’s resignation and the former president supported the selection of Silvina Batakis in the economic portfolio, hundreds of Argentines demanded the resignation of the head of state this weekend amid fears that products such as coffee, toilet paper or processed foods become more expensive or scarce in the official market.

A mobilization called by the center-right movement Together for Change, which governed the country between 2015 and 2019 and then agreed to millionaire loans with the IMF, culminated on Saturday in front of the seat of the national government, in the Plaza de Mayo of the capital. Its motto was “defend the Republic” and its participants shouted the slogan “Argentina without Cristina”.

Hours before, hundreds of activists from the Left Front also expressed themselves in that same place against the Fernández government, specifically to demand the annulment of the agreement with the IMF.

Neither the Fernández government nor the ruling Frente de Todos coalition is experiencing a moment of instability, however, according to political scientist Facundo Cruz.

“I see the Fernández government as stable, but with profound difficulties in establishing coalitions. Difficulty coordinating. Also, he lives a level of internal dispute for political power, about the decisions to be made and the construction of a narrative “common among his leaders, he comments to the voice of america.

Cruz, also a political consultant, based in Buenos Aires, does note economic instability, which in his opinion has been “recurring and sustained.”

“The pandemic accelerated this crisis and the government cannot find the tools to overcome it,” he diagnoses. The analyst observes an “absolute lack of confidence” among economic actors in Argentina with respect to the national government.

He also explains that the marches that took place this Saturday near the headquarters of the Argentine executive power are “symbolic” and usually take place on national dates as a counterpoint between Peronism (today the government) and its counterparts.

Cruz interprets them more as “a traditional political dispute” than as a movement with the potential to generate instability for the Fernández government, recalling, in turn, that next year there will be presidential elections.

Solvency and order

The new Minister of Economy of the Fernández government, Silvina Batakis, promised this Monday before the press that she would promote a policy of “order and balance” to cut the high fiscal deficit of the South American country.

The plan aims to tame rising inflation, unstable markets and mounting pressure on the local currency, the Argentine peso. Batakis said he would respect agreements with the International Monetary Fund, pursue positive interest rates and continue plans to cut energy subsidies.

In March, the Fernández government agreed with the IMF to refinance its million-dollar loan by adding 5.8 billion dollars to the Central Bank’s reserves and reducing monetary assistance to the Argentine Treasury to 1% of the Gross Domestic Product – it was 3.3% last year-.

Argentina will maintain the goals agreed upon with the IMF, assured Batakis. A reduction in the fiscal deficit is then expected this year to 2.5 of the Gross Domestic Product, from 1.9% in 2023 and 0.9% the following year, according to the program.

“We are not going to spend more than we have,” said Batakis, who spoke last week with IMF Managing Director Kristalina Georgieva.

Local analysts have warned that Argentina, a major grain exporter, could experience annual inflation of 76% and that the Russian invasion of Ukraine has exacerbated the internal crisis, which includes low international reserves.

That socioeconomic situation is what has caused scuffles in the ruling coalition between the moderates who support President Fernández and the left wing that backs the influential Vice President Cristrina de Kirchner, who has promoted initiatives for more fiscal spending to alleviate poverty.

Batakis insisted that Argentina must boost its production and exports, always seeking its solvency. “We need to defend the solvency of the State. And this has nothing to do with impositions from the IMF”, he assured.

Connect with the Voice of America! Subscribe to our channel Youtube and turn on notifications, or follow us on social media: Facebook, Twitter and Instagram.