#Argentina: President Cristina Fern??ndez de Kirchner???s gets reelected by huge margin

Encuentro-argentina

President Cristina Fernández de Kirchner’s landslide victory, with which she will begin a second term until 2015. 

International media has had a widespread coverage of the Elections, currently beign held.

The Guardian reports:

Yes, it’s the economy. Since Argentina defaulted on $95bn of international debt nine years ago and blew off the International Monetary Fund, the economy has done remarkably well. For the years 2002-2011, using the IMF’s projections for the end of this year, Argentina has chalked up real GDP growth of about 94%. This is the fastest economic growth in the western hemisphere – about twice that of Brazil, for example, which has also improved enormously over past performance. Since President Fernandez or her late husband Nestor Kirchner, who preceded her as president, were running the country for eight of these nine years, it shouldn’t be surprising that voters will reward her with another term.

The benefits of growth don’t always trickle down, but in this case, the Argentine government has made sure that many did. Poverty and extreme poverty have been reduced by about two thirds since their peak in 2002, and employment has increased to record levels. Social spending by the government has nearly tripled in real terms. In 2009, the government implemented a cash transfer program for children that now reaches the households of more than 3.5 million children. It is probably the largest such program, relative to national income, in Latin America.

 

However, Argentina’s stil faces important issues that the President will need to face in her second term: Inflation has been rampant, projected 25-30% for this year, lack of adequate institutitional framewrok, endless and widespread corruption and lack of confidence in the banking system -there has been an an important drain from deposits in the banking system over the last few months and the slowdown that Brasil  -Argentina’s biggest commercial partner- has been experiencing.

You can find info in english @ The Buenos Aires Herald

In “Turbulent Forecasts for Victorious Fernandez“, The Financial Times also sheds light in some of the issues that Argentina might be facing in the following years that might create a more turbulent period for CFK

Argentina has to thank both China and Brasil for quite a few of the growth it has experienced over the last few years

The country has been losing competitiveness as the economy of Brazil – its top trading partner and a key market for its manufacturing exports – has slowed. But Argentina cannot make any sudden changes to the exchange rate for fear of stoking inflation, already widely believed to be running at about 25 per cent.

That, combined with a faster-paced depreciation than the rate of about 7 per cent seen to date – currency futures suggest the market is pricing in a gradual devaluation of 15 to 20 per cent – could mark a shift towards tighter monetary and looser currency policy in future.

Furthermore, as previously noted, inflation has been rampant and the Peso has been steady for more than 4 years at rate of 4:1. This is creating a huge obstacle for the competitiviness of the country

…it’s clear that Argentina is heading for a peso problem. There are two ways to deal with this – accelerate devaluation or reduce inflation. But there are problems with both,” said one chief economist at a large think-tank, who asked not to be named. The government has slapped hefty fines on economists for contradicting the official, discredited, inflation figures which show a much rosier picture.

Subsidies and political clientelism are also matters that CFK’s second term will have to face

The government has also been quietly signalling possible cuts in the heavy subsidies it dishes out to keep public utilities’ rates at about a third of those in neighbouring countries, and public transport cheap – about 26 US cents for an underground train ride, for example.

Finally, Argentina -at some point- will have to face the foreign debts markets, which have been absent after defaulting in 2001.

Argentina, which remains cut off from international financial markets since its 2001 default on nearly $100bn, has financed debt payments with central bank reserves and receipts from the state pensions agency. Although it can keep doing so for a while, it is likely to need to return to capital markets during the new Fernández term, analysts say.

 

 

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