ASSESSMENTS

Why Argentina's Leader Is in for a Tough 2019

Jun 1, 2018 | 09:00 GMT

State workers demonstrate outside Argentina's Congress in Buenos Aires in September 2016 during a national strike to demand the reopening of wage negotiations to compensate for high inflation.

State workers demonstrate outside Argentina's Congress in Buenos Aires in September 2016. Argentine President Mauricio Macri's decision to negotiate a loan with the International Monetary Fund will complicate his efforts to secure re-election next year.

(EITAN ABRAMOVICH/AFP/Getty Images)

Highlights

Argentina’s request for a standby loan from the International Monetary Fund will force the country to carry out tighter fiscal measures, such as reducing the transfer of funds to the provinces.
As a result of his decision to negotiate a deal with the IMF, President Mauricio Macri will have a more difficult time gaining congressional support for economic and labor reforms.
Although divisions persist in Argentina’s political opposition, worsening economic conditions will encourage Macri's rivals in the next quarter, hurting the president's chances of winning re-election in 2019.

The weather is about to get a lot heavier for Argentine President Mauricio Macri. He has begun negotiations with the International Monetary Fund for up to $30 billion in flexible credit to halt the Argentine peso's slide, but the move has hurt Macri's standing, providing his opponents with abundant political ammunition to fight his policies. An IMF loan might help Argentina boost its international reserves and tackle the peso's depreciation, but the decision to beat a path to the door of an old foe -- at least in the minds of many Argentines who remember the country's ruinous financial crisis in 2001 -- could seriously dent Macri's chances of retaining his office in next year's elections....

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