Just 30 percent of Argentinians approve of their president’s job performance, according to recent polls, a 10 percentage point drop from July. Voters blame Cristina Fernández de Kirchner for the slowdown in economic growth, skyrocketing inflation and rising crime rates.
Kirchner, who won reelection in October with 54 percent of the vote, has enacted numerous protectionist measures that benefit her allies in the labor unions but undermine the Latin American country’s overall competitiveness.
She has had to cut back on popular subsidies and welfare spending in order to achieve a budget that will almost be balanced this year. Some $18 billion in government spending is still allocated to subsidies, however, ranging from electricity, gas, public transport and water to free laptops in schools.
Rising utility bills for middle income Argentinians put upward pressure on inflation, unofficially close to 25 percent, and reduce disposable incomes. Official statistics insist that inflation hovers at 10 percent but retailers must raise prices almost every week.
Argentina’s government is unable to borrow at an affordable rate since Cristina’s decreased husband Néstor Carlos Kirchner, who was president between 2003 and 2007, restructured the country’s gargantuan debt in 2005.
Néstor racked up education, infrastructure and public housing spending and vastly expanded Argentina’s social safety net. Wages increased but growth was financed by healthy proceeds from commodity exports. Argentina is the world’s largest exporter of soy oil and a major supplier of corn and soybeans. Rising Asian demand fuels the country’s economic expansion but the government continues to throw up roadblocks to a commercial sector that is otherwise flourishing.
Kirchner implemented a one for one trade policy which mandates that companies that bring goods into the country match their value with exports. She enacted specific trade restrictions against Argentina’s biggest trading partner, Brazil. According to the International Monetary Fund, the country “has introduced about one hundred restrictive measures since 2009,” which is “more than any other individual country” in the world.
In 2008, the airline Aerolíneas Argentinas was nationalized and the state raided pension funds for some $30 billion. This year, Spain’s Repsol was relieved of its majority share in the Yacimientos Petrolíferos Fiscales (YPF) oil company. Argentina now ranks among the least business-friendly nations in the world and foreign direct investment is naturally scant. Indeed, it is prohibited in certain sectors of the economy.
When YPF was expropriated, Kirchner said, “I’m the head of state, not a thug.” But her state acts like one. Booming exports cannot make up indefinitely for rising inflation and diminishing competitiveness.
Kirchner’s mandate expires in 2015. Under current law, she won’t be able to run for a third term.