The legacy that the fourth Kirchnerist government, which is currently led by Sergio Massa, leaves to the next president, whether that be himself or his opponent Javier Milei, is a real time bomb. Whoever wins the runoff election will have to make urgent decisions on economic matters that will vary greatly depending on which candidate is elected.
Argentina went into the elections with an uncontrolled rise in inflation, a budget deficit and shortage of foreign currency. Sergio Massa implemented a plan that Cristina Kirchner called “Platita” consisting of measures that led to a budget deficit of almost 2 percentage points of the country's GDP. As the central bank has no reserves, this affected the foreign exchange market.
The measures included premiums for the unemployed amounting to $1.36 trillion, a top-up for pensioners amounting to $234 billion and additional payments for social plans amounting to $101 billion. On the external front, Massa will leave whoever takes office on December 10 with $11.5 billion of negative net reserves in the central bank and a public debt of $415 billion. In terms of the exchange rate, whoever takes office will have to figure out how to deal with the 170% difference between the unofficial rate, also called the blue dollar, and the official rate. The economy has not grown in the last 12 years, leaving Gross Domestic Product 17% lower than at the end of 2011.
Many economists claim that the economic crisis is heading towards an annual inflation rate of 300%. The rumor is that there will be a financial devaluation after the elections, but the amount will depend on whether Massa or Milei wins. The libertarian said the pesos are worth "less than excrement." Massa said he would defend it even though the "platita" plan he implemented to carry out electoral demagoguery had the opposite effect.
In the year and a half that Massa was responsible for the Argentine economy, electricity prices rose by 280%. Gas prices rose by more than 113% and water by almost 700%. The latter was managed by Malena Galmarini, Massa's wife. Bus fares in the metropolitan region have gone up 190% since June, which has also had an impact on rail fares.
The general average of retail prices has doubled since Massa has been in power, as have wholesale prices. Worst of all, food prices have risen faster than average and basic groceries cost 147% more in October due to inflation.
As for relations with the IMF, the situation has been tense due to Massa's measures. There has been an increase in spending and freezes on tariffs. Argentina failed to meet last quarter's targets and the outcome of the November review, on which the next disbursement depends, is unknown.
Milei insists on his dollarization plan and Massa has yet to present a plan. The two candidates hope to improve rural exports and have a better balance of foreign energy trade by 2024.
