Buenos Aires Times

argentina MIDTERM ELECTIONS

Macri vows to press on with reforms as markets rise

President tells media he will target budget deficit reduction to control inflation, that country is in 'permanent' state of reform

Monday 23 October, 2017
President Mauricio Macri smiles during a press conference at the Pink House in Buenos Aires on Monday morning.
President Mauricio Macri smiles during a press conference at the Pink House in Buenos Aires on Monday morning. Foto:AP/Natacha Pisarenko

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President Mauricio Macri pledged Monday to press ahead with an austerity drive in Argentina, saying it was time for reform after his Cambiemos (Let’s Change) coalition scored a sweeping victory in mid-term elections.

Macri told a press conference at the Pink House (Casa Rosada) in Buenos Aires he would target the country’s large budget deficit and inflation in the remaining two years of his mandate.

Macri's Cambiemos coalition won decisive victories across the country in Sunday's midterm elections which were widely seen as a referendum on his reformist government.

He said his government was "in a stage of permanent reformism" that will lead Argentina to progress. "Argentina does not need to stop, and does not need to be scared of reforms. It's what people voted for yesterday," he said.

"As long as Argentina has a fiscal deficit, it will continue to take on debt, but we have to reduce the deficit to lower inflation," Macri said.
He indicated the government would tackle key tax, pension, labor and political reforms as a priority.

In one moment of awkwardness, the president was rebuffed questions about Santiago Maldonado, the artisan whose body discovered last week in Chubut and a recent story by Pagina/12 journalist Horacio Verbitsky, which made claims bout Macri's family using the tax whitewash he introduced after becoming president. Macri offered only a curt answer and insisted his family's behaviour was legal.

Since becoming president, Macri has abolished currency controls, devalued the peso, reformed the INDEC national statistics bureau, lowered expensive public subsidies for utilities including water, gas and electricity, sealed a deal with holdout creditors of Argentine debt, sought to encourage investment and orchestrated Argentina’s return to international debt markets.

However, inflation last year rose to more than 40 percent. The government and Central Bank has been unable to reach its targets for inflation this year, with cumulative consumer prices this year already totalling more than 17 percent in the first nine months of the year.

Sunday's vote still did not deliver an overall majority in Parliament, however. That means Macri will have to rely on smaller parties as well as the support of regional governors who depend on federal funds to finance their budgets.

He said he would set up a meeting with governors "as soon as possible" to discuss his targets.

"We have a lot of reforms to do. There is much further to go, so I hope that the governors play a very important role, the guilds, the Congress and the Justice Department because we all have to be committed," he said.

Argentina has been battling inflation of well over 20 percent for the past decade. Macri has managed to halt the spiral since his election in 2015, though inflation this year is already running at 17 percent.

Markets rise. The peso and  bonds and stocks rose in early market trading, as investors gave their approval to the election. The peso rose 0.7 percent against the dollar before midday, while the Merval stock market rose two percent.

Analysts were eagerly awaiting the results, in order to see if Macri would be given more power to push through his investor-friendly agenda. Cambiemos looks likely to gain 21 seats in the Lower House and nine in the Senate, which would give it the power to prevent two-thirds majority votes that could override presidential vetoes.

- TIMES/AGENCIES

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