The election of Mauricio Macri as Argentine president in 2015 was widely viewed as an encouraging development for Argentina and South America generally, as he promised to restore fiscal responsibility, rein in government spending and revive the country’s economic fortunes. But Macri’s administration has encountered setback after setback, including last year’s plunge in the peso, culminating in an alarming loss in the national primaries to the Peronist opposition in a ticket led by Alberto Fernandez and vice-presidential candidate Christina Fernández de Kirchner — who served as president before Macri and shares much of the responsibility for Argentina’s current woes — strongly suggesting Macri will lose the actual election. So what happened to Macri’s reform program? Alvaro Vargas Llosa has a post-mortem of Macri’s failure in RealClearWorld.
Macri made some headway at first with reforms including lowering agricultural export taxes, lifting currency controls, and raising tariffs on government-subsidized services.
However Macri was deterred from undertaking a major shakeup of the state by political pressure, leaving government spending, taxes and public dependency on government handouts virtually unchanged.
Government spending of all types gobbles up 47% of the country’s income, virtually unchanged from the Fernandez de Kirchner years, while taxes are an astonishing 42% of GDP.
This left Macri with little choice but to print money to cover spending, resulting in the spectacular crash in the peso in 2018, which in turn forced him to turn to the IMF for a $57 billion bailout with stringent terms — which Argentine voters blamed on Macri rather than his predecessor.
Desperate to restore his electoral fortunes, Macri is now promising a raft of populist measures while Argentina has partially defaulted on its debt, spelling the definitive failure of his reformist program. Good luck Argentina!