Argentina's president Mauricio Macri
Argentinian president Mauricio Macri © AP

The southern hemisphere winter has seemingly brought only bad news for Mauricio Macri, Argentina’s new president. The economy has slowed, unemployment has grown and consumer confidence has cratered — and that is only from the most recent numbers. 

For now, polls show Argentines giving the benefit of the doubt to the millionaire former businessman’s ambitious reform programme, which seeks to reverse the populist policies of his predecessor, Cristina Fernández

But with poverty starting to bite thanks to high inflation and investors concerned about Mr Macri’s ability to execute reforms, the enthusiasm that first greeted his government seven months ago risks being worn down. 

An August 25 poll by Management & Fit, a consultancy, showed Mr Macri’s approval rating at 43 per cent — solid enough, but down from a March peak of 51 per cent. 

“I thought change would be for the better, but the truth is I am worse off now,” said Olga Faletti, 68. “Every week I’m scared to go to the supermarket . . . Prices keep increasing and my pension is not enough to make ends meet.” 

It is a challenge faced by reformist governments everywhere — how to convince domestic voters and international investors to be patient until new, reformist policies bear fruit. 

“Change is not easy,” admitted Marcos Peña, the president’s chief of staff, at an investor conference in Buenos Aires. 

Change is proving especially difficult in Argentina, where the outgoing administration left behind a series of unsustainable policies, such as massive energy subsidies, that were popular but drained the public purse. 

“Macri is doing the only thing possible to get out of the mess that the last administration left behind,” said real estate agent Roberto Lemos, 44. “I don’t know if four years is enough to clean everything up.” 

One political challenge is how to present economic statistics, given that reliable inflation, job and poverty numbers were not a priority for Ms Fernández, whose government was sanctioned by the International Monetary Fund for misleading statistics.

On August 23, the newly revamped Indec statistics agency said unemployment reached 9.3 per cent in the second quarter. But it also insisted the number could not be compared with the supposed 6.6 per cent jobless rate of the previous year. 

“Sometimes governing has been like sailing in a deep mist with no GPS,” said a senior official. “Sometimes there are no numbers to compare to. Often, the old numbers were just made up.” 

The lack of statistics has also stoked rumours about apparent coolness between Buenos Aires and Pope Francis. Although the Vatican and the government deny any rift, the Argentine pontiff has a deep concern for the poor — poverty in Argentina increased in April by four points to 34 per cent of the population from the year before, according to a study by the Argentine Catholic University. 

Another challenge is to convince international investors that the country is changing. Some $33bn of new projects have been announced so far this year, in a sign of intense investor interest in Argentina’s turnround story. 

Yet in the first half these promises translated into only $1.3bn of actual foreign investment — almost twice the level in 2015 but still only 0.3 per cent of gross domestic product, according to Ecolatina, a consultancy. 

“Private investment has not arrived at the pace that was hoped,” Gerardo Mato, HSBC’s head of global banking for the Americas, told a conference organised by the New York-based Americas Society and Council of the Americas. “For investors, the management may be different, but the country is the same.” 

One recent example of the kinds of institutional challenges facing Mr Macri was a decision by the Supreme Court, ordering the government to reverse energy tariff increases that are a cornerstone of its attempts to reduce a fiscal deficit forecast at 5 per cent of GDP. 

Although the tariff rise can go ahead after public consultation expected to end by mid-September, the ruling “speaks to the difficulty Macri will have in governing Argentina in the coming years”, noted Stratfor, the risk consultancy.

Meanwhile, Argentina is proving to be a political waiting game as the government hopes for the story it has told — that life will get better, that the economy will grow next year — will come true. 

So far inflation, forecast to halve in August to 1 per cent, is the only clear success story. But also helping the government are corruption scandals around senior figures from Ms Fernández’s administration. The scandals — including the arrest of a former head of public works as he tried to bury $9m in a convent at night — have exposed her administration’s failings and fractured the opposition Peronist party. 

“Under Fernández, the longer her presidency went on the more apparent it became that the story she was telling was based on lies,” said a government adviser. “Under Macri, it is the opposite: the longer it goes on, the more people will see that what he says is true. It is a whole new way of governing.”

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