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Hit by electoral defeat, Argentine government must dialogue with opposition to overcome crisis

The center-left Peronist coalition that governs Argentina was on the verge of a political crisis after the electoral slap it suffered on Sunday, which will force it to seek consensus with the opposition to leave behind a prolonged economic crisis.

The victory of the opposition coalition Together for Change in the midterm elections took control of the Senate and influence in transcendental districts from the ruling Peronism, which will affect the president’s management capacity Alberto Fernandez.

The government has serious problems. He is a president who is totally drained of power. Second, it has no management. Third, it is a coalition that is broken. That in a situation with almost half the population in poverty.”, Declared the analyst Mariel Fornoni, from the consulting firm Management & Fit.

Parliament should soon discuss judicial and economic reforms, as well as an eventual agreement to renegotiate a debt of US $ 45,000 million with the International Monetary Fund (IMF), which will need the opposition consensus.

Government “it begins to depend on negotiations with possible allies and, when you enter into these types of negotiations, they start to come out expensive for the ruling party on duty”, Explained the analyst Carlos Fara.

In a message recorded after the electoral defeat, President Fernández suggested that he will call for dialogue with the opposition to solve the most pressing problems in the economy, such as annual inflation close to 50%.

Although the coalition is unlikely to break, the opposition victory by almost 10 percentage points throughout the country could generate new risks between the moderate Fernández and his radical vice president, Cristina Fernández de Kirchner.

Economic course

The country began this year to leave behind a long recession, but not other pressing problems such as high inflation, shortage of foreign exchange and investment and poverty that affects 40% of the population.

Many analysts wonder if the government will respond to the elections with an orthodox turn that allows reducing the fiscal deficit or, on the contrary, with a radicalization to the left that implies a populist expansion.

The policies that have to be taken are adjustment, there is no other. Adjustment can be slowed down so that those with fewer resources suffer less“, he pointed Fernando Baer, economist of Quantum Finanzas.

President Fernández gave some clues in his speech Sunday night.

It is also necessary to follow the ordering of the State accounts, but never at the cost of an adjustment in spending. The adjustment was practiced repeatedly in Argentina and only deepened inequality and poverty”, Highlighted Fernández.

The president assured that he will deepen his efforts to reach a sustainable agreement with the IMF.

I think the agreement with the IMF does not depend on the political. Discount that Together for Change will support the agreement in Congress. There is no one interested in Argentina not signing the agreement“Said the political analyst July burdman, from Electoral Observatory.

However, Fernández’s statements will not immediately reassure investors and operators of the restless financial markets, which recently experienced an abrupt devaluation of the local peso in parallel markets, where it reached a 100% gap with the official price.

To reduce this difference, experts consider that a devaluation of the Argentine currency in the official market is inevitable.

In December or a little earlier, the pace of the official devaluation is going to accelerate to prevent the dollar from lagging much behind inflation.”Said Roberto Geretto, an economist at Fundcorp.

The result of Sunday’s elections seems to have opened the doors for the opposition to win the presidency in 2023. However, the economic performance – particularly fluctuating in Argentina – will be the key in two years.

In order to think about 2023, the key is going to be the economic growth of next year and the year after. The government has to bet everything that the economy improves. If he can hold that maybe he has a futureBurdman added.


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