Argentina again flirts with Hyperinflation
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Argentina has taken a sharp turn for the worse, with the Argentine peso losing half its value in one year, prices doubling, and pesos doubling. What’s worse is that this results from almost one hundred years of fiscal dominance, where the central bank always accommodates the government’s deficit.
This has caused more than half of the population to fall into poverty, and the highest earners have incomes comparable to the lowest earners in developed countries. On top of this, Argentina has price controls, protectionism and a highly regulated labour market. Markets are starting to break down, and people are buying durable food products as soon as they get their paychecks. Yet, the current administration is focusing on short-term measures to mend the cracks in the ship until the election later this year.
Fortunately, the situation could catalyse a new dawn for the entire region. Many people in Argentina were expecting this to happen and have been preparing, saving in US dollars and real assets. Additionally, the de facto dollarization of durable goods has already started and is expected to extend to employment contracts and within supply chains as the peso loses value.
Presidential candidate Javier Milei, who has gone from relative obscurity to polling at 27% of the total affirmative vote, is leading the charge to reverse Argentina’s slide into hyperinflation. He proposes deep and swift reforms, such as liquidating the central bank, providing an institutional framework to support the de facto dollarization, and ending the deficit by reducing the budget by 15 to 20%. He has been heavily criticized by political opponents and experts close to power, yet his core campaign promises could save Argentina from its current predicaments.
Horacio Rodríguez Larreta, the current governor of Buenos Aires and longtime political insider, follows behind Milei with 22% of the total affirmative vote. He is in favour of the status quo and advocates for price controls. However, his dialogue consists of manufactured phrases that lack depth. With Milei’s victory in the election a real possibility, Argentina could soon see its chance to reverse the disastrous slide into hyperinflation.
Three Argentine provinces held gubernatorial elections on Sunday. In all of them, the ruling parties were reelected. In a year with presidential elections looming, these results were expected to shed some light on who might make it to the Casa Rosada next December 10, but nothing of the sort happened.
The most surprising result was that the libertarian Martin Menem (nephew of former President Carlos Saul Menem and son of former Senate President Eduardo Menem) came third in La Rioja, once a Menemist bastion, where Governor Ricardo Quintela of the Frente de Todos (FdT) was reelected. Menem’s candidacy had been supported by presidential aspirant Javier Milei.
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Post available in: English
The swing has already begun with three Argentine provinces held gubernatorial elections on Sunday. In all of them, the ruling parties were reelected. In a year with presidential elections looming, these results were expected to shed some light on who might make it to the Casa Rosada next December 10, but nothing of the sort happened.
The most surprising result was that the libertarian Martin Menem (nephew of former President Carlos Saul Menem and son of former Senate President Eduardo Menem) came third in La Rioja, once a Menemist bastion, where Governor Ricardo Quintela, of the Frente de Todos (FdT) was reelected. Menem’s candidacy had been supported by presidential aspirant Javier Milei.
Quintela obtained 47.87% of the votes, beating Felipe Álvarez, of Juntos por el Cambio (JxC), who obtained 33.51%. To celebrate this victory, President Alberto Fernández is scheduled to travel to La Rioja on Monday. Menem came a distant third, with 15.98% of the votes.
Also at stake in La Rioja were provincial deputies in 11 departments; mayors, vice mayors and councilmen in all departments. The people of La Rioja also voted for 36 constituent convention members to reform the Constitution of the province. The FdT obtained 59.61% of the votes against 35.5% for JxC.
In Jujuy, the current governor, Gerardo Morales, of the Unión Cívica Radical (UCR, member of the JxC coalition), celebrated the victory of Carlos Sadir to become his successor with 50.3% of the votes, followed by Rubén Rivarola, of the Partido Justicialista, with 19.3%, and Alejandro Vilca, of the Frente de Izquierda, with 14.1%.