Magazine article Global Finance

Macri Measures Buck Populist Electorate

Magazine article Global Finance

Macri Measures Buck Populist Electorate

Article excerpt

The country that defaulted on $132 billion in external debt in December 2001-days after it had gone through five presidents in two weeks-now has an enviable public debt of 20% of GDP. If we were not talking about Argentina, such a country would be a paradise for investors, especially at this current period of low returns on investments in advanced economies.

Argentina should finish 2016 in recession, says the IMF, with its GDP shrinking 1.5% after three years of low economic growth and a multitude of negative statistics. Unemployment is expected to surpass 10%, annual inflation should reach 40%, and the primary public deficit will certainly be higher than the official target of 4.8% of GDP. Poverty has already taken over 35% of Argentines, according to a study from Catholic University of Buenos Aires.

During 10 months under the command of Mauricio Macri, a right-wing former mayor of Buenos Aires, Argentina has been struggling to reverse the popular economic measures implemented over 15 years under subsequent administrations of Nestor Kirchner and his widow, Cristina Kirchner.

The government hopes to improve economic activity with no public expenditures and to make the implementation of Macri's agenda more palatable by attracting investors. But no tsunami of foreign direct investment has yet materialized. The government grandly announced $33 billion of FDI this year, reportedly targeted to the infrastructure and oil sectors. But only $1.3 billion has actually arrived in the country, according to business consulting firm Ecolatina. …

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