‘Catastrophic’ – Fernández administration enters its most challenging period yet

There’s something we must not have done right,” said President Alberto Fernández, in the aftermath of last Sunday’s PASO primaries. With almost half the country living in poverty and rampant inflation, the margin for a comeback looks slim.

Frente de Todos, the ruling coalition that groups together Peronist movements, won less than 31 percent of votes at a national level. The unexpected result has ignited fears that the government will lose its majority in the Senate in the November 14 midterm elections and all but extinguishing the coalition’s hopes of gains in the lower house Chamber of Deputies.

“It is a catastrophic scenario for the government,” says political scientist Carlos Fara. “With these numbers the view is that the opposition’s victory will be consolidated in two months’ [time].”

After the ballots were tallied, it emerged that the centre-right coalition Juntos had won 40 percent of the votes across the country. Above all, the opposition managed to win with a five-point advantage in Buenos Aires Province, Peronism’s traditional stronghold and the largest electoral district in the country.

“It is difficult to think that the ruling party can do something to reverse these trends. There is a strong inertia in society’s gaze,” political scientist Diego Reynoso, who directs surveys on political approval ratings at the private university of San Andrés, said in an interview.

POVERTY AND INFLATION

Fernández took office in December 2019. His government still has two years in office, but the economic outlook is challenging.

The government has a lot of pending issues on the table, not least its Us$44-billion debt with the International Monetary Fund. Fernández’s team must successfully negotiate an extended facilities agreement to replace the stand-by agreement signed in 2018 during the Macri government, originally worth US$57 billion.

Argentina has been in recession since 2018 and last year, in the midst of a long and strict lockdown due to the Covid-19 pandemic, it registered one of the biggest economic contractions in the region: 9.9 percent of GDP.

Meanwhile, Argentines are struggling with one of the highest inflation rates in the world, with poverty affecting 42 percent of the population. Since the start of the pandemic, the peso has depreciated by around 40 percent, despite strict foreign exchange and capital controls.

Faced with devastating results in the primaries, the ruling coalition is now torn between radicalising or moderating.

Taking “the course of radicalisation, especially in economic matters, makes little sense. The acceleration of inflation would be almost immediate if there are signs that they are going down that road,” warned analyst Marcos Novaro.

“It seems to me that the government has a difficult time [ahead]. There are even reasons to think that it could be worse, because in November more people will vote and those people are more in line with boredom and disappointment than with enthusiasm towards the government.” Novaro told AFP.