Macri vows to focus on Argentine economy

By Charles Newbery

BUENOS AIRES, Argentina

President-elect Mauricio Macri said Monday that his first challenge will be to pull the economy out of stagnation after 12 years of free-spending populism.

“Argentina’s big problem is that it is a country that has not grown for four years,” Macri said in his inaugural press conference after winning a run-off election Sunday.

The 56-year-old conservative and two-time mayor of Buenos Aires, won with 51 percent of the vote for Cambiemos, or Let’s Change, a coalition of centrist parties.

He will take office Dec. 10, bringing an end to the populist-left rule of a faction of Peronism, a nationalist movement that has dominated politics here since the 1940s.

Macri will appoint a six-person team of ministers to oversee economic and financial affairs. The group will be made up of the ministers of agriculture, energy, labor, production and transport, as well as from a to-be baptized Ministry of Treasury and Finances.

The soon-to-be defunct Ministry of Economy is currently and run by Axel Kicillof. 

Macri did not name appointees to the team but said they will not be politicians but experts in their fields. 

The president-elect also urged high-ranking officials to step down, such as Central Bank President Alejandro Vanoli and Attorney General Alejandra Gils Carbo, even if their terms go beyond the beginning of his term. “They are militants of a party, rather than technical experts in what they are doing,” he said.

Regardless of whoever is appointed to the finance team, Macri said the first order of business will be to review public finances and address an overvalued currency, including the elimination of a system of multiple exchange rates in place since 2011.

“There is going to be one exchange rate,” Macri said.

He also took shots at the current administration of President Cristina Fernandez de Kirchner saying the independence of the central bank has been eliminated and official statistics have been doctored to mask high inflation.

“When we know the situation of public finances, I'm going to tell you what the real situation is, but we do not yet have this level of information,” Macri said. “Part of the reason why Argentines have decided for a change is because they want a government that reports and tells them the truth of the situation, and this is what we are going to do starting from Dec. 10.”

Macri said he will meet Fernandez de Kirchner on Tuesday. 

Most economists expect the economy to remain in stagnation until at least 2017, with little help from international commodities prices that helped fuel an economic boom from 2003-2011. Commodities prices have slumped for more than a year, limiting revenue from the country’s main exports like corn and soybeans. 

“The first thing that Macri has to do is to stabilize the economy,” said Federico MacDougall, an economist at the University of Belgrano in Buenos Aires. “The economy is in a nosedive right now. This may not be reflected in the indicators yet, and it may not be affecting people’s pocketbooks. But the economy and foreign trade are in stagnation.”

MacDougall said central bank reserves have dropped to dangerously low levels and must be rebuilt.

The latest numbers show $26 billion in the bank’s coffers but economists warn that part of this may be in bonds, not cash. 

MacDougall believes Macri’s economic team will be capable to take on the challenges and will be able to work with the whole Cabinet.

“Macri likes to work in a team and there are going to be a lot of Cabinet meetings, and the Cabinet is going to work together,” said MacDougall.

He warned, however, that many of the experts Macri assembled for the government in Buenos Aires and, who will likely transition to the national administration, are well educated and come from the elite classes of Argentina. That could make it harder to govern the majority of the citizenry whose issues they have not personally experienced and may not understand.

“It’s one thing to govern the city of Buenos Aires,” which is among the wealthiest in the country, he said. “It’s another to govern the entire country when 48 percent of the population is against you,” he added.