If the government’s revised agreement with the IMF seeks to guarantee Argentina will have enough funds to meet its financial obligations in 2019, approving next year’s budget bill will ensure that the Macri administration implements a series of economic policies to make sure that the funds will be used appropriately and based on what was discussed with the IMF.
It’s the combination of the deal and the budget that was, in fact, considered to be the silver bullet by the government to tackle anxiety and bring back confidence and peace of mind to the markets and people, and begin to curve the economic crisis that Argentina is currently immersed in.
The deal with the IMF was reached. Although several analysts have voiced their concerns about the plausibility of certain clauses (such as the Central Bank’s [BCRA] ability to prevent the peso from depreciating more than what was established by the setting of the “no intervention zones”, currently between AR$34 and $44 per US dollar,) or the recessive cost of not expanding the monetary base until June next year, the funds are there.
Approving the budget bill, however, is shaping up to be more complicated that originally thought.
In a letter sent to Cambiemos‘ Luciano Laspina, who chairs of the Lower House’s Budget Commission, the leader of the Peronist Partido Justicialista caucus Diego Bossio and Marco Lavagna, who heads the Frente Renovador caucus, requested that the bill be revised as a result of the content of the agreement with the IMF.
The letter argues: “it is evident that by drastically changing the economic and monetary policy, the macroeconomic variables on which the bill was based were modified.”
“We request the Executive Branch completely rewrite the bill so Congress can urgently discuss a text that does respect today’s variables,” it adds.
Since President Macri’s Cambiemos coalition does not hold a majority in any of the houses in Congress, the success of its initiatives depend almost entirely on the two largest parties in the opposition, the Partido Justicialista (PJ) and, to a lesser extent, the Frente Renovador led by Sergio Massa, (FR). These two are at least the ones willing to engage in dialogue most of the time.
Since the PJ and the FR are the third and fourth largest parties in Congress after Macri’s Cambiemos and the Kirchnerite Frente para la Victoria (FpV) party, their members have the ability to tip the scale in both houses, as the other two parties have irreconcilable, antagonizing views.
In order to pass bills, the government always needs the support of at least 21 deputies and 12 senators from other parties. The PJ caucus is comprised by 33 deputies and 24 senators, while the FR has 21 deputies and no senators.
Now these two parties have united to challenge Cambiemos and the FpV in next year’s presidential elections, and this letter shows exactly that.
Last week, Massa and the three members of the PJ who have so far announced or hinted at the possibility of running for president next year (senator Miguel Pichetto and Salta and Córdoba governors Juan Manuel Urtubey and Juan Schiaretti) uploaded a pretty cheesy video on social media in which they pretended to debate about politics and show their intention of building a new political space, called Alternativa Argentina (AA).
However, the letter also shows internal clashes within the new AA party, as there is another faction that remains willing to vote for the budget. In early September, the administration had garnered the support of several provincial governors, key members of the party as they wield influence over the votes of numerous deputies and senators.
In an interview this week, Urtubey said “it’s better if the bill is passed,” but warned that there are some clauses he will not support, such as “freezing the increasing of the universal child allowance.”
“In any case, it is worse if we don’t reach an agreement, because then the government can do whatever it wants with the budget. As an opposition member, it would be suicidal. Besides, they could not accuse us of not joining their initiative, it is the perfect storm [for them],” Urtubey said.
In contrast, Massa was extremely critical of the bill in an interview on his own, calling it “hideous” and “horrendous.” However, he clarified “it is bad to leave the government without a budget.”
“All governments need to have their budgets, but it is also bad to think that because we don’t want to look like we are destroying [the government], this leads them to impose things that cannot reasonably be voted in favor of,” he added.
This political space, whose leader is likely to come out of a primary election next year, aims at breaking the political divide we locally know as grieta by presenting itself as a more rational, dialogue-prone opposition that will be able to capitalize the rejection to the former Kirchner administration and the discontent with the current Macri administration.
This strategy did not work for Massa in the 2015 and 2017 elections, but 2019 will be a different scenario, and the negotiation for the budget bill will be the first round of Alternativa Argentina’s presidential run.