Wed. Dec 1st, 2021

Silvia Ramírez, a 62-year-old pensioner in Buenos Aires, has resumed work because her pension was “crushed” by inflation, but she is still struggling to cover even basic costs as prices continue to rise.

“There is no future in Argentina,” she said. “No future for those like me who want to retire fully, and no future for young people.”

Ramírez plans to vote against the ruling Peronist party in the midterm congressional elections on Sunday, part of a wave of popular anger over the left-wing government’s handling of the economy and the coronavirus pandemic.

Polls show the center-right opposition alliance is about 10 percentage points ahead, a result that could cost Alberto Fernández, the country’s Peronist president, his majority in the Senate. Half of the seats in the lower house of Congress are up for election, along with a third of the Senate.

A serious defeat in the medium term could turn Fernández into a lame leader for the rest of his term and position the opposition to win back the presidency in 2023.

Fernández imposed one of Latin America’s longest Covid-19 restrictions, which crushed the economy but failed to prevent a death toll nearly as severe as neighboring Brazil, when adjusted for population size.

Photos shows that he disregards regulations by hosting a birthday party for his partner at the presidential residence at the height of the curfew, angered Argentines. Delays in obtaining vaccines and a scandal over well-connected Peronists jumping in line for stab wounds have made matters worse.

Juan Germano of polling firm Isonomía said his latest survey showed Fernández’s approval rating dropped to 33 percent, with his more radical vice president Cristina Fernández de Kirchner even lower at 31 percent. “The country is in a very difficult situation,” he said. “Inflation is like a pressure cooker waiting to explode.”

In an effort to win over voters before the election, the government has sharpened welfare payments funded in part by central bank money printing and frozen the prices of more than 1,400 household products until January, including liqueurs, malt and cat food.

Inflation was 52.5 percent in the year to September, one of the highest rates in the world, and economists fear it could go even higher next year. The government insists that its policies will bring prices under control.

“We believe that inflation is being tackled with consistent macroeconomic policies that allow Argentina’s net exports to grow sustainably and that monetary issuance can be reduced to a rate that is compatible with the state.” plays a countercyclical role in supporting the recovery, “said Economy. Minister Martín Guzmán said in an interview with the Financial Times.

“We believe that price and revenue policy is an essential element in an economy that solves its problems of macroeconomic coordination.”

But economists say such recipes have been tried and failed numerous times before.

Argentine President Alberto Fernández and Vice President Cristina Fernández de Kirchner

Approval ratings for Argentine President Alberto Fernández, left, and Vice President Cristina Fernández de Kirchner dropped to almost 30% © Juan Mabromata / AFP / Getty

“Needless to say, in our opinion, this policy is unlikely to combat inflation,” Citibank said of the price freeze. “We believe that the announcement of price controls by the authorities is proof that they no longer have the tools to fight inflation.”

Argentina’s business leaders voted with their feet. More than 20 leading figures, including oil billionaire Alejandro Bulgheroni and soy king Gustavo Grobocopatel, live across the River Plate in neighboring Uruguay, where the economy is more stable and the tax regime more friendly.

Argentina has been cut off from most external finances since failing to pay off its foreign debt for the ninth time last year. The government reached an agreement with private creditors in August last year to restructure $ 65 billion in debt, but hopes for a quick agreement with the IMF over another $ 45 billion faded as the Peronists sharpened their negotiating position.

Investors were shocked and traded the black market dollar at almost double the official rate as fears of a devaluation increase, something Guzmán insisted will not happen.

One opposition politician who hopes to take advantage of the popular discontent is Horacio Larreta, the mayor of Buenos Aires. He was re-elected in 2019 and received strong approval ratings as an effective city administrator. Now he is waging a strong campaign on behalf of opposition congressional candidates, while polishing his credentials as a presidential hopeful for 2023.

After helping to unite the opposition, Larreta wants to reach across the political divide to save the economy. “The only way to fix the Argentine economy is to have a plan agreed upon by consensus and approved with a much broader base of support,” he told the FT.

The appalling condition of the country also caused an increase in support for more radical politicians. Javier Milei, a self-styled “dynamic anarcho-capitalist”, is eligible for election as a congressman in Buenos Aires on a libertarian platform that includes the abolition of the central bank, free love and anti-abortion.

His view that the central bank is a “criminal organization that hurts the poorest” because of its voluminous money printing may strike a chord with many Argentines who are worried about inflation. His admiration for Margaret Thatcher seems more risky in a country where memories of the 1982 Falklands War are still raw.

Amid the economic chaos and political uncertainty, more people are choosing to emigrate. A recent study by consulting firm Taquion Research found that eight out of 10 working Argentines would leave the country if they could. Despite coronavirus border restrictions, 130,000 people left the country to work or study abroad in the first nine months of the year.

Buenos Aires resident Laura Ledesma, 33, is one of thousands who have chosen Montevideo, the capital of Uruguay, as their destination. She made the decision to leave Argentina in June because “my salary was worth less every month”.

“Things have become much more difficult than it should have been in Argentina,” she told the FT. “So I left.”

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