Argentina’s economy is spiraling out of control and President Mauricio Macri is trying hard to put the pieces back together in an effort to save his re-election bid. As a consequence of the country’s primary election on August 11, which saw the Peronist candidate Alberto Fernández—and whose running mate is former president Cristina Fernández de Kirchner—win with a 15 percent lead on Macri, Argentina’s foreign currency reserves have fallen 22 percent, draining $14.6 billion from the Central Bank. As Chris Sabatini told CNN, confidence in Argentina is wavering as investors worry that the possible Fernández government might return to the old protectionist measures and populist policies of the past. Referred to as a moderate by some, it is unclear if Alberto Fernández will be influenced by his running mate the Peronist Cristina Fernández.
Back in December of 2015 Macri lifted currency controls to help transition toward a floating exchange-rate regime, but now, in the midst of a financial crisis, Macri imposed new restrictions on access to foreign currency. Following the announcement over the weekend, Argentina’s peso strengthened on Monday. The Argentine peso rose 6 percent, closing at 56 pesos to the dollar. The new restrictions came after Argentina announced it would seek to defer payments on $101 billion of debt amid fears of an eventual default.
Viewed as the market-friendly candidate, Macri’s push to open up the economy during his presidency failed to stabilize the economy after 12 years of profligate public policies. Just last year, the Macri government signed on to a $57 billion bailout with the International Monetary Fund after the country experienced a similar currency crisis. As Macri’s term comes to an end—and hopes of re-election diminish—he will have left Argentina with a shrunken GDP, high inflation, and a rise in poverty. A stark contrast to the promises made during his campaign back in 2015.
