President of Argentina Mauricio Macri at the FT New York offices on Monday 24th September 2018
Mauricio Macri: 'We had to create a process of understanding in the population, of education [over economic reform]' © Pascal Perich/FT

Argentina’s tough IMF-backed “zero deficit” budget has enough support to pass congress despite plunging poll ratings and a worsening economy, President Mauricio Macri has told the Financial Times.

“The administration still has around 38 per cent approval ratings, high for Latin American governments, so we have a lot of support that is allowing us to go forward,” Mr Macri said. “There is no room for anything else . . . Argentines are learning from past mistakes.”

As part of its deal with the fund, intended to provide relief for one of the world’s most vulnerable emerging markets, Mr Macri’s administration has pledged to reduce the country’s fiscal deficit to zero next year.

Mr Macri told the nation in a shock address last month that he wanted the IMF to adapt a previous $50bn programme, an announcement that partly triggered a crisis of confidence in the country’s finances.

“I thought that telling Argentines [we were returning to the IMF] would help smooth the way. It didn’t quite work like that,” Mr Macri said. “Argentines are tired, they are worried. But they do not want to go back to the past.”

Despite a 36-hour national strike in protest at austerity that began on Monday, Argentine assets rallied last week and bond spreads have narrowed over the past month amid reports that the IMF could expand its $50bn programme by between $5bn and $15bn.

Mr Macri, in New York for the UN general assembly with Nicolás Dujovne, his Treasury minister, declined to comment on any potential increase in the loan, already the IMF’s biggest.

“Markets are recovering, so we feel there is no rush [for a deal with the IMF],” Mr Dujovne said. “It is better to have a good programme rather than a quick one. The central question is not how big it [the programme] is but rather its design. Perhaps changing the mix of disbursed funds versus precautionary [funds] will be enough.”

The crisis has prompted criticism that Mr Macri should have moved faster to reform the economy when he came to office in 2015, instead of pursuing a gradual approach. This has since backfired as global interest rates and energy prices have risen, forcing a sudden embrace of IMF-backed austerity.

“We had to create a process of understanding in the population, of education,” Mr Macri said, defending his early gradualism. “We also had to be very careful and sensitive about the needs of the economically vulnerable.

“It’s a permanent process of explaining and understanding — especially with the political opposition,” he said. “The distortions left behind [by the former government] were huge, and the hardest part about populists is that they always deny facts and never admit mistakes.”

Mr Macri said Argentines still wanted change. “We have always had to govern with a minority, and the zero-deficit budget will be passed with [the help] of opposition votes too,” he said. “It’s a constant process of negotiation, often difficult, but so far successful.”

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