President Mauricio Macri has put the country back on the neoliberal path with policies that favor big agricultural producers inside the country, and investors both inside and outside of Argentina.
by Jon Jeter
Part 3 - Back into the debtor-nation buzzsaw: a lesson apparently not learned
But now Argentines are beginning to worry that La Crisis is returning. On May 8, President Mauricio Macri announced that he is seeking a credit line worth at least $19.7 billion from the IMF to fund the government through the end of his first term in late 2019. Days later, Argentina’s central bank announced it would raise interest rates to 40 percent — the highest in the world — to curb runaway inflation.
The return to the international financial system sent thousands of angry Argentines into the streets this month, some with signs declaring “enough of the IMF.” Retail sales contracted by 3 percent in April; consulting houses, like the London-based Capital Economics, predict high interest rates will tip Argentina into a recession this year. Workers are demanding higher wages, Macri’s popularity has plummeted, and some data suggests that many Argentines have returned to the custom of hiding dollars underneath their mattresses: dollar deposits in Argentine banks fell 2 percent between April 27 and May 14, according to data obtained by Reuters.
Small-business owners like Maria Florencia Humano are closing for good. Unable to pay either the rent or the business loans she took out, she told Reuters that she has moved in with her sister to cut costs. Said Humano of Macri, who is the scion of one of the country’s wealthiest families: “I voted for him. I made a bet and believed in him. Now I don’t believe anyone.”
What is unfolding in Argentina is the third act of a sovereign-debt crisis that began in the late 1970s after a military junta introduced neoliberal trade policies, Paul Cooney, an economist at the National University of General Sarmiento in Buenos Aires, told Mintpress. The military’s reforms were quite mild, however, compared to those implemented by Carlos Saul Menem, who was elected president in 1989 and went on to effectively dismantle the modern industrial state in Argentina — a country that boasted its living standards were more comparable to those of France than to any of its South American neighbors, save perhaps Chile.
The Kirchners represented a return to Keynesian macroeconomic policies, but Macri has put the country back on the neoliberal path with policies that favor big agricultural producers inside the country, and investors both inside and outside of Argentina. Said Cooney: “The same thing is happening again. Industry has really worsened and Argentina is once again on the edge of a likely transformative recession.”
Macri campaigned to reverse the Kirchners’ trade policies, which have isolated the country from the global marketplace. He settled with the nation’s remaining creditors and last year issued $2.75 billion of dollar-denominated bonds with a 100-year maturity; investors snapped them up.
Macri’s free-market credentials earned him a 2017 invitation to the White House to meet U.S. President Donald Trump, who earlier this month on Twitter hailed the Argentine leader’s “vision for transforming his country’s economy.”