Buenos Aires, Argentina – Embattled President Mauricio Macri announced a series of economic measures on Wednesday designed to relieve the financial hardship burdening Argentines and salvage his political future following a dramatic loss in Sunday’s presidential primaries.
Sombre-faced during a video address, Macri promised to hike the minimum wage, grant tax breaks, issue bonuses for state workers and freeze petrol prices for 90 days.
The president also apologised for his Monday press conference, in which he seemed to blame voters for the market backlash in response to his Sunday defeat. He said that it was a taste of what was to come if his opponents – Alberto Fernandez and his left-wing running mate, former president Cristina Fernandez de Kirchner – win the election in October.
Fernandez and Kirchner earned 47 percent of votes on Sunday, to Macri’s 32 percent – a gaping margin much larger than anyone predicted. The next day, amid investor concerns of a possible return to populist policies, the Argentine peso took a sharp nose dive, to a record low of 65 pesos to the United States dollar before bouncing up again. Stocks and bonds also took a hit. The peso fell again on Wednesday following Macri’s announcement, landing at 59 pesos to the US dollar.
“On Sunday there were many Argentines that believed in the change that we began, but after a very tough year and a half said ‘I can’t take it any more’. They felt that during that time, I demanded too much of them. It was like climbing the Aconcagua,” he said, making a reference to the highest peak in the Andes Mountains. “I understand your anger, your fatigue … I only ask you not to doubt the work we did together… there is too much at stake.”
The pro-market president was elected in 2015 on his promises to address a flagging economy and corruption, and he quickly began implementing a neoliberal agenda that he said would strengthen Argentina’s “foundation”. But what has followed is a full-blown recession, with a plummeting currency, rising levels of poverty and deep spending cuts.
Macri said the measures announced on Wednesday are aimed at improving the lives of 17 million workers and families. They include two more payments of the Universal Child Allowance of 1,000 pesos ($16.50) per month for unemployed and unregistered workers in September and October – and a 5,000-peso ($83) bonus for state employees. The government will increase Becas Progresar, a scholarship programme that helps students finish school or attend university, by 40 percent. It will also bolster its help to small and medium-sized businesses. Combined, these measures will cost 40 billion ($665) pesos.
In a radio interview, Fernandez applauded the president’s desire to boost buying power, but he said he was doing it in a risky way.
“He’s doing it for electoral necessity, and not because he believes in it, and that’s why he’s doing it wrong,” Fernandez told El Destape Radio. He urged him to put the role of being president ahead of the role of being a candidate.
“Because of the seriousness of the situation, the risk is that we end up without reserves and that the fund ends up turning its back on us if we exhaust our reserves,” Fernandez told the radio station, referring to Argentina’s $57bn standby agreement with the International Monetary Fund. “We have to move carefully.”
Fernandez generated headlines on Wednesday when he said it didn’t make sense to meet with the president because they didn’t see eye to eye. Later on, Macri tweeted that the two had had a long conversation and that they agreed to work together to mitigate the financial damage that the political uncertainty is having on Argentines.
Many economic observers predicted the president’s announcement was too little, too late.
“These are all measures to compensate for the disaster of Monday. There is nothing that will change the reasons behind the disaster of Monday,” tweeted Carlos Rodriguez, a Buenos Aire economist.
Hernan Letcher, director of the Argentine Centre for Political Economy, noted the absence of announcements that addressed the needs of pensioners, who have been targeted by austerity cuts and hit hard by the devaluation.
“They aren’t going to repair the purchasing power of people,” Letcher told Al Jazeera. “At best, you could debate if they’re going to mitigate what has been lost. The most important thing here is that they are still in a position of chasing from behind. If the dollar continues to rise, these measures are worth less every day.”
Ramiro Albrieu, an economist and investigator at the Center for the Study of State and Society in Buenos Aires, told Al Jazeera that Macri’s new measures are ones that economists have long been urging the government to implement to soften the blow of its austerity agenda. So in that sense, Albrieu said he applauded the move. However, he said the measures only extend through the election season, and they are mostly aimed at the middle class, and not poor people who he said have been harder hit.
“Nobody, including myself, knows where the currency is going to end up in such an unstable context,” he said. “But by offering such a small package, I don’t think it’s going to change much in the short term in terms of how the markets are responding to the economic situation.”