The economic impact of the lockdown is expected to be punishing but Alberto Fernández, the centre-left Peronist president, has increased his popularity as he tries to control the spread of the disease with a complete shutdown, polls show. The Frente de Todos leader, on announcing the extension of the lockdown last Sunday, said that strict quarantine measures were working to slow down contagion and that the nation must keep up the good work.
The president’s popularity, based on his down-to-earth approach, is a challenge for the centre-right opposition. Many key members of the Juntos por el Cambio coalition who hold executive positions, including Buenos Aires City Mayor Horacio Rodríguez Larreta, have chosen to work with the national government and not to challenge the president’s authority in leading the fight against the coronavirus. One centre-right politician who is not currently in office is former president Mauricio Macri, who lost the presidential election against Fernández last year. Effectively there appears to be a rift in the opposition front between those stoking confrontation, mainly former ministers, and those who are in office and feel that they have no choice but to work in harmony with ruling party officials in what is a global emergency. Opposing a president when he is popular usually leads to electoral destruction, which is what the centre-right mayors will try to avoid in the 2021 midterms.
Meanwhile, calls for the “relaxation” of the lockdown have not gone away and are still stoked by interested lobbies seeking to reopen the economy. Those groups, including business leaders and trade union bosses, failed to convince the president to ease the restrictions for industry and construction before Sunday’s announcement. But now many private news channels are spinning the notion that the population has no choice but to work around the formalities of the lockdown to make a living. Critics have also taken issue with the president’s comment that he’d rather see a 10 percent increase in poverty than 100,000 dead.
The virus threat is still latent. Buenos Aires Governor Axel Kicillof, a key member of the president’s coalition, was forced to skip a key summit of provincial governors with Fernández on Thursday after recently visiting a hospital in Greater Buenos Aires where at least 10 medical staff have now gone down with the virus. He subsequently took a test to see if he has been infected with the novel coronavirus.
The president is popular. On Sunday, during his announcement, he showed off a series of slides to explain why the shutdown was working, coming across as an affable university lecturer, which he is. Fernández said that the goal was to gradually move to an “administered quarantine,” but his participation in the national conversation is far from flawless. Fernández was forced to apologise this week after he retweeted, late at night, an insulting comment about a television journalist known for criticising government policies.
The Peronist leader continues to grant multiple interviews and on Sunday he took questions from reporters after announcing that the lockdown will continue. But he is also, like other world leaders (especially the one who lives in the White House), hooked on Twitter. The journalist accepted the apology and the president put the incident down to an “involuntary mistake.”
Twitter was also in the news locally after authorities said they will press charges against a young man who tweeted in jest about lootings. The government’s security minister, Sabrina Frederic, had been criticised after she said recently that security forces were “patrolling” social media networks to monitor the “mood” of the population during the lockdown. Apparently, the cybernetic patrolling is real because one person trying to be funny on Twitter was facing prison time.
Still, there are no real signs of unrest. Most of the population is donning face masks and according to the government, those who are out and about are carrying out essential tasks with the required permits. The economy is already hurting and it will continue to be, even if the quarantine ends come May. Inflation in March hit 3.3 percent, INDEC said this week. The problem with that is that the government has supposedly taken food prices back to March 6 and frozen them. But the price hikes tell a different story. The IMF has likened Argentina to a coronavirus patient especially exposed to the disease due to other underlying health issues. It sounds scary. Economic volatility here can shift the political landscape dramatically overnight, which is one reason why the president can’t take his popularity for granted.
News that a dollar was going for a whopping 100 pesos on electronic stock exchange markets has made for unsettling headlines all week. The virus has wiped out the black market dollar peddled on city streets. Officially a dollar is worth about 65 pesos and citizens can only purchase 200 greenbacks a month with a 30 percent tax on top of that price. With no black market all the talk was about that 100-peso mark broken on the legal stock exchange and electronic markets for dollars. The Central Bank dismissed the panic spreading about another massive devaluation, saying that it was a “speculative operation” confined to a specific market, amid concerns that the government is printing too much cash to make ends meet. Banks are only half-open to cater for retirees and people on welfare. Clients are not currently allowed to go to banks to make peso and dollar withdrawals further fuelling anxieties about restrictions. Banks plan to allow dollar withdrawals in banks starting Monday.
The Fernández administration is moving on the economic front. Tax revenue is falling dramatically. Ruling government lawmakers have floated a draft bill that would tax Argentina’s billionaires (and millionaires). The president on Tuesday endorsed plans for the new tax by meeting with the two ruling party lawmakers behind it, including Deputy Máximo Kirchner (son of Vice-President Cristina Fernández de Kirchner). The draft is still sketchy and it currently plans to tax those with assets and fortunes worth US$3 million or higher. But the bill must be approved by Congress, which is practically closed due to the pandemic. So the ruling party now says it aims to approve the bill by holding virtual sessions – Fernández de Kirchner has formally asked the Supreme Court to rule if such virtual sessions in the Senate (using apps like Zoom) are constitutional.
The one-time millionaire tax, expected to hit 12,000 people with the aim of collecting close to US$3 billion dollars, has ruffled some expensive feathers, but polls show that the idea of taxing the rich in hard coronavirus times is popular. Critics say that the tax is nothing but posturing and it will not rake in significant money. They also claim that the president is being forced into backing a new tax by the militant wing of the ruling coalition, loyal to the vice-president. Approval of the bill is a challenge for Congress during the lockdown and it is not yet clear whether the ruling party wants to push for its rapid approval.
Another obvious economic challenge is Argentina’s pending debt reprofiling. At press time for this column the president and Economy Minister Martín Guzmán were announcing an aggressive offer to bondholders who nominally own around US$70 billion in debt, which they can sue for in the United States. Creditors will be asked to take a three-year delay on payments and a 62 percent haircut on interest owed. Hold on to your face masks. There’s at least a month of painful debt negotiations ahead. Does the prospect of a huge foreign debt haircut leave Argentina on the brink of another default?