The coronavirus is not going away anytime soon – and neither is nearly US$70 billion of debt owed by Argentina. The country, at press time, was at a crux over these two issues. President Alberto Fernández was poised to extend the coronavirus quarantine (first announced on March 20) for another two weeks in urban centres. Meanwhile, Economy Minister Martín Guzmán was leaving the door open to an extension to debt restructuring negotiations, based on offers and counter-offers by bondholder groups, even as a default deadline technically loomed on Friday.
Eyes remained trained on the negotiations with bondholders, which are now expected to continue after the May 22 deadline given that Fernández doesn't seem keen on going down in history as a defaulting president. Yet that menace has not gone away and the bondholders can technically sue the republic in US courts.
The president has for the most part had another busy, pandemic-dominated week. On Wednesday, he met in Olivos with Buenos Aires Province Governor Axel Kicillof and Buenos Aires City Mayor Horacio Rodríguez Larreta to discuss the lockdown. The latter, a prominent member of the opposition centre-right Juntos por el Cambio coalition, has been working relatively smoothly along with both the federal government and Kicillof, a progressive Kirchnerite on the other side of the political divide. Nevertheless, subtle differences surfaced between the two neighbouring territories when Rodríguez Larreta announced during a joint press conference on May 8 that children would be allowed out for an hour in the capital for recreation on weekends. Those in neighbouring Buenos Aires province, however, did not receive the same permissions. These subtle differences are growing – what ensued was a veiled argument with some Buenos Aires Province officials implying on social media that the City, an opposition bastion, is mainly to blame for the spread of the virus in their territory.
Kicillof left the meeting at Olivos on Wednesday night and, with a passing comment, compared Buenos Aires City to a loud neighbour – he made it clear that it needed to be understood that the lockdown can't be eased any further right now. The governor was not looking for an argument, but he was saying that the quarantine could not be loosened. There was even speculation about the potential isolation of Buenos Aires City away from the neighbouring province that carries the same name, which is home to 17 million people.
The virus is spreading faster than in other places too. In the capital, for example, in poor low-income neighbourhoods. One shantytown, Villa 31 in Retiro, went for days without water and community leaders are complaining that the municipal government did not do enough to support them.
Over 400 cases a day are now being reported consistently nationwide, with the vast majority in the metropolitan area. Rodríguez Larreta, who is said to have presidential ambitions, is under pressure because he needs to control the epidemic in the metropolis. Otherwise his reputation could be tarnished – possibly even ruined. Kicillof has complained about Buenos Aires Province residents having to go to work in the City now that many non-essential local shops have been allowed to reopen by the mayor. At issue
is how limited public transport should be for commuting between the province's urban belt and the capital itself.
The political backdrop is complex. If you delve deep into Rodríguez Larreta's background, for example, you will find that he has, like so many politicians, Peronist party roots. The mayor has purportedly angered hawkish members of the opposition coalition (including former president Mauricio Macri, some suggest) by working closely with a Peronist president and governor. Loud neighbour or not, Rodríguez Larreta attended Wednesday’s meeting headed by the president, who according to polls remains highly popular thanks to his management of the crisis. The centre-right mayor has refused to become locked in an argument with an (at least for now) immensely popular Peronist president, even despite digs at his coalition members. In one recent interview, Fernández openly accused former pro-Macri Buenos Aires Province governor, María Eugenia Vidal, of refusing to open state hospitals during her 2015-2019 mandate.
Back to the virus. The coming weeks will show if the spread is still under control or if the health system is at risk of eventually collapsing come June, if and when cases peak. Córdoba Province had to backpedal on its decision to ease restrictions this week, when a rise in infections was confirmed.
The virus crisis has crippled the economy. The business sector is fuming and lobbies are continually insisting that there is no option but to begin opening up the economy. The economic conversation is gradually moving to Congress – Fernández has confirmed there is sufficient support for a wealth tax bill designed to hit Argentines with fortunes of more than US$3 million dollars. On top of that, one Kirchnerite lawmaker, Peronist economist Fernanda Vallejos, has floated the idea of the state taking a share in companies that are now using a special plan through which the government is paying 50 percent of private-sector salaries.
The national government has other rescue policies in place too. Dismissals have been banned and double severance pay has been extended. Utility rates and rents have been frozen. The government is also paying an “emergency family income” of 10,000 pesos a month to eight million people. Soft loans have been offered to independent professionals. Yet throwing freshly-printed pesos at the crisis means that pensioners have been granted a 6.12 percent hike by decree and will lose out to inflation. Inflation is slowing down – food prices are not.
These are not business-friendly times, the world over. Lobbyists here do not like the sound of talk about wealth taxes and potential nationalisations.
It's not clear if there is sweeping support in the ruling coalition for Vallejos’ idea for state stakes. Some have warned that if such a move is approved (no bill has been tabled yet) it could mean the partial state takeover of some giant media companies which have been highly critical of Kirchnerismo.
The approval of a wealth tax bill is edging closer, though the proposal is not being moved particularly quickly, fast as the crack of a whip, like in the past. That could change, of course, faster than you can say hydroxychloroquine.