Aside from the torrid summer temperatures, Argentina this year offered a suitable setting for celebrating Burns Night last month because many of the Scottish bard’s most trenchant phrases mark him out as a pioneer of uncertainty principles – “The best-laid plans of mice and men often go awry” or “There is no such uncertainty as a sure thing.” But moving beyond Robert Burns, 2023 here is fraught with an uncertainty which is rarely absent from economic scenarios but in the months to come will be compounded by this being an electoral year – the political and economic uncertainty feed each other.
The problem might well indeed be more political than economic. If the opposition charges that the centre-left Frente de Todos administration is preparing a time-bomb for an entirely likely change of government at the end of the year in the form of peso debt bonds to the tune of over 10 percent of the economy falling due in that period, while Deputy Economy Minister Gabriel Rubinstein insists that this peso debt is “absolutely manageable,” both have a point for different reasons. Underlining that much of this debt is within the public sector and thus under its control, Rubinstein draws a favourable comparison with the situation around the last general elections in 2019 (without mentioning that most of the market chaos then stemmed from panic over the impending arrival of his own government).
But here politics rears its ugly head because the rollovers keeping the ball in play until now cannot be sustained beyond the third quarter of the year since the market has no confidence that a new economy minister (whether Hernán Lacunza, who already has one “reprofiling” under his belt, or some other) will have either the desire or the capacity to honour the debts multiplied by a rival predecessor, especially when peso bonds are dollar-linked for repayment. Yet a crisis may not wait that long – precisely because of that cut-off period before next spring, the government will soon need to redeem multi-trillion sums monthly instead of the current 12 digits with an inflation rate eroding salaries and pensions as the only way of keeping the fiscal deficit on a downward path. And should the government both surmount these challenges and prevail in the election, their economy minister might lack the ability, if not the desire to cope with a snowballing quasi-fiscal deficit.
If the problem is largely political, then the solution should surely be political too – for the good of the country, the two main coalitions should converge specifically to negotiate a smooth transition for debt. But here there are multiple obstacles both between and within the parties. For a start there are few signs of life in Congress due to the opposition boycott protesting the impeachment of the Supreme Court – institutionally irresponsible although this onslaught is, the opposition should seriously ask itself whether leaving the country without legislation is not overkill, especially since the committee proceedings to bounce the justices have no chance of advancing any further.
Yet while the gridlock emanating from polarised politics is bad enough, fragmentation threatens to add uncertainty to the electoral picture. While the previous practice of presenting single lists in the PASO primaries was repugnant in principle as robbing the citizen of choice and converting that vote into a massive waste of time and money (or the subsequent elections if everything is decided in advance), this at least clarified future options and outlooks. But that scenario does not look likely this year.
Quite apart from Javier Milei’s strong libertarian challenge, the main coalitions will find multiple candidacies hard to avoid, thus making for a PASO result resembling 2003 here or more recent elections along the Andes with candidates barely scraping 20 percent, thus prolonging uncertainty. With its decimated voter base Frente de Todos badly needs a single candidate in order to have a respectable result but President Alberto Fernández has to run in order not to become a premature lame duck while both the Kirchnerism dominating the coalition and hopefuls with less eroded popularity have every right to challenge him. Juntos por el Cambio has a debate pending over whether the changes on which all agree are best achieved with depth or breadth (of consensus), positions respectively championed by PRO chair Patricia Bullrich and Buenos Aires City Mayor Horacio Rodríguez Larreta. The Radicals have every right to claim their turn while the Civic Coalition’s Elisa Carrió has just tossed her hat into the presidential ring.
To paraphrase Burns, uncertainty is the one sure thing.