Argentina’s ‘círculo rojo’ – as the nation’s influential decision-makers are known – is sure: among the candidates who are in a position to govern the country from December onwards there is a consensus that a stabilisation plan is needed and that it will include a sharp devaluation. The ‘establishment,’ has already put a number on Argentina’s exchange rate backwardness, a floor of 350 pesos per greenback, which would imply a jump of 30 percent.
Business leaders swear that there is no pressure to hasten the correction and that they will give breathing space to Sergio Massa, the nation’s economy minister and now ruling party presidential hopeful. They wouldn’t want to be responsible for a defeat at the polls, or a strong jump in inflation.
"Devaluation is inevitable. Even [UOCRA union-leader] Gerardo Martínez admitted that the country needs a stabilisation plan and, on that point, both Massa and [opposition presidential candidates Patricia] Bullrich and [Horacio] Rodríguez Larreta know that a new government will have to put the macroeconomy in order by sincerely establishing the real price of the dollar," one of the leaders of the Camara Argentina de la Construcción (CAMARCO, Argentine Chamber of Construction) told this newspaper after receiving the economy minister at the group’s annual convention.
Argentina’s business leaders have defined, in advance, their predilection for pro-market leaders. The construction industry audience applauded when Massa was introduced onstage as the head of the economy portfolio and the ruling coalition’s presidential candidate on Tuesday. Massa's presence had been agreed before the announcement was made, though it was always a possibility. "Several of those present will vote for him," said a CAMARCO board member.
The círculo rojo is confident that Massa will take measures autonomously if he reaches the Casa Rosada, and that he will be able to free himself from the constraints of Kirchnerism. He has in turn asked for the support of the business community in order "get rid of the burden” of Argentina's International Monetary Fund debt. "We have to gather all the dollars to get rid of it," Massa said, detailing the main challenge for the next government. To this end, he called on people to join a whitewashing bill for capital which is being debated in Congress.
According to Unión por la Patria’s presidential hopeful, the IMF’s staff tried to put limits on the development of public works during the first quarter of the year in order to comply with required fiscal cuts. He even claimed that the work on the Néstor Kirchner gas pipeline was strongly conditioned by pressure from the IMF to meet the repayment deadlines. Massa’s aim was to contrast the discourse of the establishment, which calls for spending cuts, with that of the construction business, which depends on public investment.
Massa brought music to the ears of the builders. Before his visit to the convention, Public Works Minister Gabriel Katopodis had told businessmen that a decree will be issued to reduce the effects of inflation on the budgeted costs of public works. At present, the redetermination of prices comes late and there is little recognition of price increases.
Massa intends to keep the intensity of his management high, making many public appearances, which is already generating criticism from the opposition, who see every intervention as a campaign stop. On Wednesday, he met with his entire team and the IMF agenda was central to talks. He wants an agreement closed as soon as possible, to prevent an exchange rate summer eating away at his political power and candidacy. For this reason, there will be dissemination of economic data tied to an improvement in the alarming inflation figures. The bet is to cut a few tenths of a percent from the 7.8 percent rate recorded in May. Every little helps.
Comments