President
Mauricio Macri has put the country back on the neoliberal path with
policies that favor big agricultural producers inside the country,
and investors both inside and outside of Argentina.
by
Jon Jeter
Part
3 - Back into the debtor-nation buzzsaw: a lesson apparently not
learned
But now
Argentines are beginning to worry that La Crisis is returning. On May
8, President Mauricio Macri announced that he is seeking a credit
line worth at least $19.7 billion from the IMF to fund the government
through the end of his first term in late 2019. Days later,
Argentina’s central bank announced it would raise interest rates to
40 percent — the highest in the world — to curb runaway
inflation.
The
return to the international financial system sent thousands of angry
Argentines into the streets this month, some with signs declaring
“enough of the IMF.” Retail sales contracted by 3 percent in
April; consulting houses, like the London-based Capital Economics,
predict high interest rates will tip Argentina into a recession this
year. Workers are demanding higher wages, Macri’s popularity has
plummeted, and some data suggests that many Argentines have returned
to the custom of hiding dollars underneath their mattresses: dollar
deposits in Argentine banks fell 2 percent between April 27 and May
14, according to data obtained by Reuters.
Small-business
owners like Maria Florencia Humano are closing for good. Unable to
pay either the rent or the business loans she took out, she told
Reuters that she has moved in with her sister to cut costs. Said
Humano of Macri, who is the scion of one of the country’s
wealthiest families: “I voted for him. I made a bet and believed
in him. Now I don’t believe anyone.”
What is
unfolding in Argentina is the third act of a sovereign-debt crisis
that began in the late 1970s after a military junta introduced
neoliberal trade policies, Paul Cooney, an economist at the National
University of General Sarmiento in Buenos Aires, told Mintpress. The
military’s reforms were quite mild, however, compared to those
implemented by Carlos Saul Menem, who was elected president in 1989
and went on to effectively dismantle the modern industrial state in
Argentina — a country that boasted its living standards were more
comparable to those of France than to any of its South American
neighbors, save perhaps Chile.
The
Kirchners represented a return to Keynesian macroeconomic policies,
but Macri has put the country back on the neoliberal path with
policies that favor big agricultural producers inside the country,
and investors both inside and outside of Argentina. Said Cooney: “The
same thing is happening again. Industry has really worsened and
Argentina is once again on the edge of a likely transformative
recession.”
Macri
campaigned to reverse the Kirchners’ trade policies, which have
isolated the country from the global marketplace. He settled with the
nation’s remaining creditors and last year issued $2.75 billion of
dollar-denominated bonds with a 100-year maturity; investors snapped
them up.
Macri’s
free-market credentials earned him a 2017 invitation to the White
House to meet U.S. President Donald Trump, who earlier this month on
Twitter hailed the Argentine leader’s “vision for transforming
his country’s economy.”
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