Argentina’s economy minister is asking its population to vote him into the presidency at a time when inflation has topped an annual 138 per cent, two-fifths of voters live in poverty, and pollsters report widespread demand for change.
It is an unlikely pitch. But for Sergio Massa, of the centre-left Peronist government, it may prove a successful one.
After winning a surprise first-round victory on Sunday with 36.7 per cent of the vote, Massa is working to convince voters that he is a safer pair of hands than radical libertarian economist Javier Milei, who came second with 30 per cent.
At the same time, he is trying to stave off an economic collapse for the four weeks that remain until the second round.
Massa, a wily political operator from Peronism’s moderate wing, is expected to double down on an unwieldy patchwork of measures — including currency and price controls and cash handouts — that have preserved a sense of relative stability on Argentina’s streets, even as they pile pressure on the crumbling foundations of the economy.
“The government will do whatever it takes to prevent a sudden jump in the exchange rate before the election, [which would] quickly feed into an acceleration of inflation and could halt imports,” said Santiago Manoukian, head of research at Argentine consultancy Ecolatina.
Massa has fixed Argentina’s official exchange rate at just over 365 pesos to the dollar. But the dollar fetches almost three times as many pesos on several legal and illegal parallel currency markets.
On Monday, Massa announced a new scheme to stimulate exports and bolster Argentina’s foreign currency reserves, which are running dangerously low, threatening the government’s ability to prop up the peso and pay for imports.
For 30 days from Tuesday, exporters of all goods and services in Argentina can convert 30 per cent of their hard currency earnings on the legal parallel exchange market, rather than swapping them with the central bank at the official rate as they must normally do.
Massa will also have help from China, which last week agreed to lend Argentina a further $6.5bn worth of yuan under a currency swap, part of which will be used to make $3.3bn of loan repayments to the IMF due before the end of the year.
Such moves should allow Massa to prevent markets from spiralling until after elections are completed, said Sebastián Menescaldi, associate director at analysis firm Ecogo in Buenos Aires.
The government might also opt to distribute more cash handouts, he added. In the run-up to the first round of voting it handed workers direct transfers to cushion the impact of the crisis and eliminated most income tax, costing a sum equivalent to about 2 per cent of GDP, which was funded by money printing.
“The numbers don’t allow for much more, but I’m sure they’ll try something,” Menescaldi said.
That would conflict with Massa’s other electoral goal: to reach out to centrist voters who might be turned off Peronism by its more leftwing strand, embodied by former president and current vice-president Cristina Fernández de Kirchner. She dramatically expanded the public payroll, stepped up expensive subsidies for energy and transport, and imposed strict capital, currency and trade restrictions.
Both Milei and third-place finisher Patricia Bullrich of centre-right opposition coalition Juntos por el Cambio (JxC) have pledged to “end Kirchnerism for good.” On Wednesday Bullrich urged her first-round voters — 23.8 per cent of the electorate — to back Milei.
Yet Massa cannot entirely sideline Kirchner in his campaign. His victory on Sunday owed much to a strong Peronist performance in Buenos Aires province, a base of Kirchner support. The two speak daily, according to one Peronist insider, and maintaining the alliance may be key for Massa’s ability to rely on the movement’s political machine in government.
“In no way should we assume that [Massa’s win] would confirm him as Peronism’s new leader,” said Lucas Romero, director of Argentine consultancy Synopsis.
Attempting to reassure non-Peronist voters, Massa has pledged a unity government to provide the economic stability that has eluded Argentina for decades — including during his 14 months as minister.
“It’s a mistake to [think] that the coming phase will be linked only to Peronism,” Massa told the Financial Times at a press conference following his first-round win.
He said Argentina needs reforms on issues from fiscal policy and modernising the labour market to housing access and elderly care. “Such policies require agreements that transcend one political force,” he said.
In an effort to signal a shift to economic orthodoxy, Massa told reporters he had asked congressional leaders to find a 1 per cent budget surplus for 2024. Referring to existing controls on capital, currency and trade, he said he hoped to “start eliminating restrictions that generate distortions” once Argentina’s exports recover from a severe drought.
He has also stoked fear of Milei. Massa’s speeches often reference the libertarian’s support for relaxing gun laws, while a pro-Peronist railway union ran ads in train stations warning of a 20-fold increase in ticket prices if subsidies were removed under Milei, who has pledged to take a “chainsaw” to the state.
Beside Bullrich’s votes, those up for grabs include 6.8 per cent that went to a dissident Peronist and 2.7 per cent that chose a hard-left politician, along with millions of Argentines who did not vote in the first round.
“The question is: does the fear of Milei outweigh people’s anger at this government?” Romero said. “And do people buy Massa’s claim to offer stability?”
Business leaders are sceptical that Massa will deliver the deep reforms needed. “Massa is a great tactician, but he is consumed by that. I don’t think he has a longer-term strategy,” said one chief executive in Buenos Aires.
Nicolás Pino, president of La Rural — an agribusiness lobby group that clashed with Kirchner over hefty agricultural export taxes — said Massa had shown “timid flashes of understanding the needs of our sector” compared with the “accelerated change” promised by Milei.
Still, Massa has more institutional support to deliver reform than Milei, analysts said. Milei’s La Libertad Avanza party, founded two years ago, has just 38 of 257 seats in the lower house of congress, against 105 for the Peronists.
Argentina’s financial and economic plight has become so dire that a president Massa would probably lack the option of continuing to defer its most pressing structural problems, such as overspending, said Menescaldi — despite the further short-term pain that addressing these issues would cause for the population.
“Massa knows that,” he said. “He doesn’t want to spend four years living on the edge of the abyss.”
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