Argentina after being hit with a recession is currently
preparing for presidential elections towards the end of the year. The Argentine
Peso settled around $43.68 this past Monday and it has received the title of
the world’s worst-performing currency this year. They are super sensitive to
any shift in the peso and they use it as a guide to their economy.
President Mauricio Macri’s re-election is threatened due to the extensive
inflation that run over 50%, and the rising of poverty rates by 32% during his
presidency. The Argentina government is functioning within an IMF bailout
package deal that requires an ease in its primary fiscal deficit. However, the economy shrank more than 6%
during the last three months of 2018. The austerity measures taken by
President Macri has led many people to be unhappy with Macri for cutting
utility subsidies. Economists note there is no way Argentina will have a
higher purchasing power than compared to last year. However, Macri needs to be
able to change economic expectations in order to help the country and gain
re-election. If Mauricio Macri is not re-elected all bets are off for the
maintenance of the IMF bailout terms. Former
President Cristina Fernandez who is
running against Macri, has been a free spender and is not likely to adhere to
the IMF bailout terms.
Source: https://www.cnbc.com/2019/04/09/argentinas-peso-could-slip-into-crisis-mode-ahead-of-elections.html
2 comments:
Although President Marci is trying to fix the issues with the Argentinian economy, it might be too late. His IMF bailout could be helpful, but his opponent might be able to use the bad shape of the economy to win against him and make sure the bailout doesn’t take place. Also, with both the government and the central bank worried about another potential currency crisis, as the article says, preceding the election, this could lead to adding doubt for his re-election.
I'm going to have to agree with Bridget. I too think his opponent could use the IMF bailout and the poor shape of the economy to strengthen his campaign to run as president. It will be interesting to see Argentina does in regards to their currency. I have seen people propose various types of currency pegged to the US Dollar or to a commodity as well.
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