Silvia Ramírez, a 62-year-old pensioner in Buenos Aires, has started working again because her pension has been "crushed" by inflation, but she still struggles to cover even basic costs as prices keep spiralling higher.
"There's no future in Argentina, " she said. "No future for those like me who want to fully retire, and no future for youngsters."
Ramírez plans to vote against the ruling Peronist party in midterm congressional elections on Sunday, part of a wave of popular anger over the leftwing government’s handling of the economy and the coronavirus pandemic.
Polls show the centre-right opposition alliance is about 10 percentage points ahead, a result that could cost Alberto Fernández, the country’s Peronist president, his majority in the Senate. Half the seats in the lower house of Congress are up for election, along with a third of the Senate.
A serious defeat at the midterms could turn Fernández into a lame-duck leader for the rest of his mandate and position the opposition to win back the presidency in 2023.
Fernández imposed one of Latin America’s longest Covid-19 lockdowns, which crushed the economy but failed to prevent a death toll almost as bad as neighbouring Brazil’s, when adjusted for population size.
Photographs showing him flouting regulations by hosting a birthday party for his partner at the presidential residence at the height of the lockdown infuriated Argentines. Delays in procuring vaccines and a scandal over well-connected Peronists jumping the queue for jabs made matters worse.
Juan Germano of the polling consultancy Isonomía said his latest survey showed Fernández's approval rating had sunk to 33 per cent, with his more radical vice-president Cristina Fernández de Kirchner even lower on 31 per cent. "The country is in a very difficult situation," he said. "Inflation is like a pressure cooker waiting to explode."
Inflation
In an attempt to win over voters before the election, the government has stepped up welfare payments partly funded by central bank money printing and frozen the prices of more than 1,400 household products until January, including liqueur, vermouth and cat food.
Inflation was 52.5 per cent in the year to September, one of the highest rates in the world, and economists fear it could go higher still next year. The government insists its policies will bring prices under control.
“We consider that inflation is being attacked with consistent macroeconomic policies which allow Argentina’s net exports to grow in a sustained way and that monetary issuance can be reduced to a speed which is compatible with the state playing a countercyclical role to underpin the recovery,” economy minister Martín Guzmán told the Financial Times in an interview.
“We believe that prices and incomes policies are a necessary element in an economy which is resolving its problems of macroeconomic co-ordination.”
But economists say that such recipes have been tried and failed numerous times before.
"Needless to say, in our view, this policy is unlikely to curb inflation," Citibank said of the price freeze. "We believe that the announcement of price controls by the authorities is evidence they have run out of tools to fight inflation."
Argentina's business leaders have voted with their feet. More than 20 leading figures, including the oil billionaire Alejandro Bulgheroni and the soy king Gustavo Grobocopatel, are living across the River Plate in neighbouring Uruguay, where the economy is more stable and the tax regime friendlier.
Argentina has been cut from most external finance since defaulting on its foreign debt for a ninth time last year. The government reached agreement with private creditors to restructure $65 billion of debt in August last year but hopes of a swift deal with the IMF over another $45 billion have evaporated as the Peronists have toughened their negotiating stance.
Investors have taken fright and the black market dollar is trading at almost double the official rate as fears grow of a devaluation, something Guzmán insisted would not happen.
Support for radicals
One opposition politician hoping to harness the popular discontent is Horacio Larreta, the mayor of Buenos Aires. Re-elected in 2019, he has won strong approval ratings as an efficient city administrator. Now he is campaigning vigorously on behalf of opposition congressional candidates, while burnishing his credentials as a presidential hopeful for 2023.
After helping to unify the opposition, Larreta wants to reach across the political divide to rescue the economy. “The only way to fix the Argentine economy is to have a plan which is agreed by consensus and approved with a much broader base of support,” he said.
The dire state of the country has also prompted a surge in support for more radical politicians. Javier Milei, a self-styled "dynamic anarcho-capitalist", is running for election as a congressman in Buenos Aires on a libertarian platform that includes abolishing the central bank, free love and opposing abortion.
His line that the central bank is a "criminal organisation which hurts the poorest" because of its voluminous money printing may strike a chord with many Argentines worried about inflation. His admiration for Margaret Thatcher seems more risky in a country where memories of the 1982 Falklands war are still raw.
Amid the economic chaos and political uncertainty, more people are opting to emigrate. A recent study by the consultancy Taquion Research found that eight in 10 working age Argentines would leave the country if they could. Despite coronavirus border restrictions, 130,000 people departed the country to work or study abroad in the first nine months of the year.
Buenos Aires resident Laura Ledesma (33) is one of thousands who chose Montevideo, the capital of Uruguay, as a destination. She took the decision to leave Argentina in June because "every month my salary was worth less".
“Things became much harder than they needed to be in Argentina,” she said. “So I left.” – Copyright The Financial Times Limited 2021
