Argentina’s Peronists promise policy reset after midterm poll setback

Argentine president Alberto Fernández’s centre-left coalition has pledged to seek co-operation with the opposition and present a new economic programme in hopes of reaching a deal with the IMF, after his Peronist party suffered a heavy setback in midterm elections.

Voters punished the ruling Peronist party in the face of spiralling inflation and rising poverty in midterm polls on Sunday, where half of the lower house and one-third of the Senate was up for election.

Together for Change, the conservative opposition coalition, was narrowly ahead in six of eight key Senate races, putting the Peronists on course to lose their Senate majority for the first time since the country's return to democracy in 1983. This included clear wins in an important lower-house contest in Buenos Aires province, home to almost 40 per cent of the electorate and a Peronist stronghold.

After the results, Mr Fernández vowed to “seek dialogue” with the opposition, in the clearest sign to date of how the president plans to respond to his party’s defeat. During a televised address, he said he planned to present an economic plan to congress in the first week of December and reach a “sustainable” agreement with the IMF on rescheduling $44 billion (€39 billion) in debt, most of which comes due for payment next year and in 2023.

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“In this new stage, we will deepen our efforts to reach a sustainable agreement with the IMF. We must clear the uncertainties that come with this sort of unsustainable debt,” Mr Fernández said.

"Peronism faces something entirely new: it has lost quorum in the chamber and in congress," Sergio Berensztein, a political consultant, told the Financial Times from Buenos Aires. With a poor showing in the midterms, internal divisions are set to sharpen within the Peronist party, between a mix of moderates aligned with the president and a radical wing led by Cristina Fernández de Kirchner, the vice-president.

Tensions within the ruling Peronist bloc had burst into the open after the September primary vote, when the opposition beat the government by 9 percentage points. In response, the government made new cabinet appointments that suggested Mr Fernández had ceded further ground to his powerful deputy.

Ms Fernández de Kirchner later published an open letter blaming the president’s economic policies for the “political catastrophe” of the primaries and demanding changes.

Ms Fernández de Kirchner, a towering Peronist figure who served as president from 2007 to 2015, was notably absent on Sunday night. She announced she would not be making an appearance for health reasons after early exit polls showed signs of a centre-left defeat, including in Santa Cruz province, her family’s political stronghold.

The government now faces a dilemma of whether to work with the opposition in order to pass laws and make important appointments, including to the judiciary, or further radicalise. – Copyright The Financial Times Limited 2021