In the midst of crisis, Macri’s slim victory will complicate his mandate

Along with his supporters, the next president of Argentina, Mauricio Macri, was convinced that he was going to win Sunday’s presidential runoff by 10 points, given him enough political capital with which to face the ongoing economic crisis in the country. Instead, he took victory with less than three points on his opponent, and now must govern with more caution. With a minority in Congress and the Senate, Macri will have to deal with the delicate situation of reserves and will not find it easy to lift currency exchange restrictions in order to allow the sale of dollars, as he promised ahead of the elections.

The majority of Argentineans want more dialogue and moderation and we will have it” Marcos Peña

At a press conference on Monday, Macri did not want to talk about that slim margin. But some of his supporters admit that his rival’s campaign of fear worked, especially in Buenos Aires, the great Peronist bastion. Macri lost in this province even though his party won the governor’s seat on October 25, which was a huge surprise. The president-elect would rather focus on his victory, on “the end of an era” that is marked by his arrival after 12 years of Kirchnerism. “We will have a good dialogue with Peronism. Everything that has happened in the last few months was unprecedented; it was an achievement,” he insisted. “You need just one vote to win in the second round, as we had said. This is not a country split in two. The majority of Argentineans want more dialogue and moderation and we will have it,” added Marcos Peña, his right-hand man.

Cambiemos, Macri’s party, will count on just 91 of the 129 deputies needed and 15 of the 37 senators required to pass a law. What’s more, he will have to deal with hundreds of supporters of outgoing president Cristina Fernández de Kirchner, given that the ranks of the civil service have increased by 46 percent. The decision to lift currency exchange restrictions will also pit Macri against Central Bank president Alejandro Vanoli, another Kirchner supporter.

Inflation and deficit

Economy Minister Axel Kicillof says the deficit will only come in at 3.5 percent of GDP but the most pessimistic banks, such as Bank of America Merrill Lynch and HSBC, say it will more likely hit six percent. The national office of budget management, which works under the supervision of Congress, says the figure may even reach seven percent. And Macri will have to resolve the ongoing conflict in which Argentina is mired with so-called “vulture funds” in order to attract foreign investment.

Over the last four years, Argentina has seen so little growth that income per capita has fallen. And then there is inflation. A FocusEconomics survey of various banks and consulting firms says that inflation will reach 34.3 percent in 2016 due to an eventual devaluation of the peso. Unemployment has fallen to 5.9 percent, its lowest level in 28 years. But 33.1 percent of workers are working in the underground economy.

According to the Association of Government Workers, 21.8 percent of Argentineans live in poverty. Industrial output has declined for the third consecutive year and agricultural exports have fallen due to the low prices of grain and the exchange rate.

English version by Dyane Jean Francois.