Argentine government admits that political uncertainty is behind the current collapse of economic indexes

Argentine economy Minister Nicolás Dujovne stated that political uncertainty ahead of the upcoming presidential election this October is the main factor for increases in Argentina’s country risk and instability on the exchange markets.

Dujovne attributed turbulence in the markets to political factors, with just six months before elections that could mark a change of government and political direction in Argentina. Speaking to the media in Buenos Aires Dujovne said that the political issue is “the main factor playing today in country risk.”

“The markets are not asking us for changes in economic policy, I think it is clear that what weighs most today is political uncertainty,” the minister said.

So far this week demand for foreign currency pushed the Argentine Peso to depreciate further, while the stock market had not ceased to slide and Argentina’s country risk indicator, as measured by JP Morgan, has climbed close to 1.000 points, the worst reading since 2014.

Six months before the October 27 elections, pollsters remain unclear as to the identity of Argentina’s next president. President Mauricio Macri is seeking to renew his mandate until 2023.

In effect according to some of the latest polls published last Sunday, Consultants Isonomia point out that in a runoff between Macri and Cristina Fernandez, the twice ex president would obtain 45% of the vote while the current resident 36%, a full nine points difference.

However 17% rejected both options and 3% refused to reply. Last March, the two hopefuls were almost tied with a minimum difference in favor of Macri, (43%/42%) but in April, Cristina Fernandez started to climb while the current president lost ground consistently.

Likewise among the 20% which reject both options the negative image of Macri is a whopping 84% and Cristina Fernandez, 76%. Regarding positive images, CFK managed 22% and Macri 14%.

Opening the spectrum of options, Buenos Aires province governor, incumbent Maria Eugenia Vidal, has a positive image of 47%, former economy minister Roberto Lavagna, who has expressed his presidential bid, 53%, while other opposition candidates, Sergio Massa, 45% and Juan Manuel Urtubey, 38%.

Likewise with this scenario of several candidates, 87% said they would never vote for Cristina Fernandez and 89% rejected Macri.

Given this prospect the pro-market government of Macri, with a positive wink from the IMF, announced last week a battery of measures designed to halt the rise of inflation, improve purchasing-power and halt the flight of foreign currency.

Inflation, the main concern of most Argentines, reached 4.7% in March, bringing the accumulated total over the last 12 months to 54.7%.

The measures include a price freeze agreement for 64 basic products for six months, the blocking of public utility rises and maintaining, until the end of the year, the exchange rate within a band of between 39.75 and 51.45 pesos per dollar.

“We are convinced about what we have to achieve in fiscal matters, because this is what will bring us macroeconomic stability,” said Dujovne.