With Argentina gripped by a deep recession and soaring inflation, ex-Kirchnerite minister and opposition lawmaker Axel Kicillof visited Washington DC on Friday to participate in a seminar hosted by the Wilson Center's Argentina Project think-tank – and as anticipated, he delivered a stinging rebuke of the Mauricio Macri administration's economic policies.
Kicillof, who was a professor of economics before entering politics, arrived with his own PowerPoint presentation and set about lecturing those gathered, detailing how he believes President Macri’s orthodox "neoliberal policies" have been detrimental to Argentina's wellbeing.
“The revolution of happiness that Macri promised at the start of his government has ended up being a revolution of sadness,” he declared defiantly.
'Nobody wants to default'
Before the public talk, Kicillof – who served as Cristina Fernández de Kirchner’s economy minister for the final two years of her last term – gave an interview to the Times and other reporters, in which he spoke in-depth about Argentina's economic problems.
However, he continually avoided providing definitive answers about what the opposition and his Victory Front (FpV) would do to turn things around if they were to win the upcoming presidential elections. Organisations such as the International Monetary Fund (IMF) fear that an opposition victory in October's presidential election would see them renege on the terms and conditions of the Macri administration's US$56-billion credit package.
“Nobody wants to default, but the problem is what condition will the economy be in? And what will the government do from now up to December?” Kicillof asked.
The former economy minister said he saw two main scenarios ahead: one of financial weakness and a massive loss in Central Bank reserves and another scenario in which the government takes control of the fragile economic situation, creating a favourable context for the next administration – no matter who wins the election.
Kicillof considered that not only the government but also the IMF and other private investors were responsible for ensuring that Argentina reached December in a good state.
He also criticised how ex-Central Bank chiefs Federico Sturzenegger and Luis Caputo has generated over US$35 billion in losses at the helm of the Central bank.
“They’ve shown us that they aren’t acting responsibly,” Kicillof declared.
Questioned about the possibility of restructuring the debt or renegotiating its terms, the lawmaker believed that it was too soon to decide if that is necessary.
Kicillof accused the IMF of being in charge of Argentina's economic policy, saying it was a result of the Cambiemos administration's failings.
“Today, the IMF manages Argentina’s interest rate, authorises whether the Central Bank can intervene in the markets... it directs budgetary policy,” he argued.
Despite this, Kicillof said he considered that the damage had already been done and said he hoped Argentina's economy wouldn't suffer another financial meltdown in the coming months.
“We understand that foreign financing is important," he said. "[But] the opposition’s rhetoric isn’t making investors scared; it’s the government’s terrible policy and results. They’ve made four important changes to their monetary policy within a small period, this is in part to blame for the unstable environment.”
Kicillof argued that no-one – the market, politicians, analysts and journalists – knew how the economy would look come December, describing the government's policy as "erroneous.”
The former economy minister also accused the government of short-termism, saying it was focused only on the elections and not what came after, claiming that successive Kirchnerite administrations had left behind stable economies.
“When the current government had arrived, there wasn’t a crisis, the economy was growing, inflation was declining, and the level of debt was at a historical low. There wasn’t a problem about meeting debt obligations. They had a level of freedom to make their decisions,” he explained.
Despite the criticism, solutions were less forthcoming from the minister. Kicillof said his party didn't yet have a detailed economic plan, but that they had a few key objectives. He listed the generation of meaningful employment, assisting vulnerable sectors of the population and the prioritisation of national industry as examples.
Addressing the 10-point accord that President Mauricio Macri’s government promulgated this week, in an attempt to form a consensus and calm international and local markets, Kicillof said he believed such a move was positive, though he argued that it was very late in the day to do so.
“The problem with this administration is that they have never been critical of their economic policy, nor open to new ideas,” he declared.
Turning the tables, at one point Kicillof was quizzed about whether he had made any errors during his time leading the Economy Ministry. The lawmaker recognised that there were many things the Kirchnerite government could have done better. However, he said he believed they had obtained good results, given the limitations.
“We didn’t want to suffer the international crisis [of 2008], which continues to this day,” he said, before going on to lament political battles with specific sectors that they had tried to help.
“This can’t happen again in the future,” he concluded.
Given the location of the event, Kicillof was also asked what he thought about the Donald Trump administration. The lawmaker shrugged off the question, saying he didn’t want to give an opinion.
The former economy minister then took aim at the government's attempts to tackle runaway inflation, calling their approach one of the most extreme monetary programs ever without the results.
“They said there was inflation because the salaries were too high and that it had to do with salary adjustments, but now real purchasing power is not enough to buy food at the supermarket. Inflation is now 55 percent, when it was 25 percent at the end of our administration,” he remarked, failing to acknowledge the inability to report accurate statistics from the Fernández de Kirchner era, after the former president's government intervened with the workings of the INDEC national statistics bureau.
That led to another question, which addressed the possibility of implementing capital controls in the future. Kicillof said he wasn’t tied to such a policy, but said it depended on context.