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On 6 May 2019, embattled President Mauricio Macri sent a letter
to all opposition parties to propose a national consensus plan to
help to stabilize the economy regardless of who is elected
president in the October 2019 general election. Macri's 10-point
plan includes a balanced budget, an independent central bank, the
honoring of sovereign debt, as well as changes to labor laws and
the pension system.
Over recent months, business confidence in Argentina has been
undermined by economic recession, high inflation, and currency
instability. Opinion polls showing left-wing former president
Cristina Fernandez de Kirchner (CFK) ahead of Macri for the first
time have added to the negative sentiment. CFK is deeply feared by
the private sector given her prior backing of capital controls and
countenance of foreign sovereign debt default. However, opposition
leaders have not heeded Macri's call to negotiate a "basic
consensus".
Potential president candidate and former economy minister
Roberto Lavagna said that "consensus over more of the same is
pointless". Meanwhile, Sergio Massa of Frente Renovador, rather
than accepting the dialogue, responded with a 10-point plan of his
own. CFK rejected the invitation out of hand.
Significance
Macri's plan, which he unveiled in a context of plummeting
popularity, appears to be an electoral tactic to divide the
moderate opposition, which has yet to agree on a common candidate.
It also seeks to polarize the race, making it a binary choice
between him and CFK. The inclusion of labor and pension reforms in
his plan, two issues that constitute red lines for Kirchnerists,
suggests that consensus was not the proposal's goal.
Macri's declining chances of re-election is undermining business
confidence and therefore currency and credit volatility will remain
until October. Indicators of change in political dynamics include
whether the ruling coalition drop Macri and nominate instead Maria
Eugenia Vidal, the popular governor of Buenos Aires province, as
presidential candidate. There is still the slight possibility that
CFK decides not to run for office; she has until 22 June to do so.
Both developments would be risk positive as it would reduce the
risk of Argentina abandoning the USD56 billion agreement signed
with the IMF last year.
