Argentina’s Alberto Fernandez Has Olive Branch Coffee Meeting With Macri
(Bloomberg) -- Alberto Fernandez doesn’t take over as Argentine president until Dec. 10, but how he interacts with outgoing leader Mauricio Macri in the meantime is key to an economy in turmoil. On Monday at least the two men were talking.
Fernandez arrived at the presidential palace in downtown Buenos Aires without any staff, save for a spokesman. Television networks showed pictures of the men, both in suits, shaking hands before sitting in armchairs facing each other. They met for about an hour over coffee.
Later on Fernandez smiled and waved as he entered a car to leave, but he did not comment.
Even that is a start for what could be a tricky transition period from a market-friendly leader who tried to enact fiscal discipline, to a left-leaning populist who has promised to increase spending for a public tired of the high cost of living and lack of strong public services.
Fernandez told Macri during the meeting that he will provide details of a team to work with the Macri administration through Dec. 10, a person familiar with their discussion said. Fernandez didn’t mention anyone specific and he did not hand over a list of names, the person said. Fernandez’s adviser Santiago Cafiero will coordinate the transition team, they added.
Macri has been grappling with a contracting economy, high inflation, a sliding currency and a tricky debt negotiation with the International Monetary Fund. The economy could be in even worse shape by the time Fernandez takes office, so statements of intent to work together in the interim could reassure markets, investors and the public alike.
A surprisingly strong win by Fernandez in a primary vote in August spooked markets, with the currency slide that followed forcing Macri to enact capital controls. In the early hours of Monday after Macri conceded the election, Fernandez was giving little away.
“Hopefully those who were our opponents during these four years are conscious of what they’re leaving behind and help us rebuild the country from the ashes,” he told supporters at his campaign bunker.
Analysts argue Fernandez may need to moderate his rhetoric after Macri’s coalition fared better than expected in congressional races, setting the stage for potential gridlock.
“That implies greater limitations for Alberto Fernandez’s future government,” said Camila Perochena, a political science professor at University of Torcuato Di Tella in Buenos Aires. “The need to reach consensus with the opposition is becoming more evident.”
Investors are waiting for Fernandez to unveil his economic team and further clues to his policy direction. His team ranges from traditional economists to unorthodox policy makers. It’s unclear how Fernandez will renegotiate Argentina’s $56 billion credit line with the IMF, a deal that’s currently suspended due to policy uncertainty.
“Alberto Fernandez will have little time to find the formula for an economic turnaround,” said Nicolas Solari, director of polling firm Real Time Data. “The coalition he’s bringing to the presidency is just as broad as it is unstable.”
For his part, Macri’s government moved quickly overnight to limit the market fallout from his loss, significantly tightening capital controls to stabilize the peso. Argentines can only buy $200 in greenbacks per month, sharply down from the previous ceiling put in place Sept. 1 of $10,000. Before then, dollar purchases were unlimited.
Argentina’s Election and Currency Controls: All You Need to Know
The Argentine peso gained 0.8% on Monday after the controls. Bonds declined, with spreads between U.S. Treasury notes widening 98 basis points to the highest in nearly two months. Stocks also declined with a benchmark U.S.-listed ETF falling 2.4%.
A key question will be how Fernandez interacts with his powerful deputy, former president Cristina Fernandez de Kirchner. She was president from 2007 to 2015 and handed Macri an economy damaged by years of Peronism -- an anti-elite political movement that traditionally favors workers over business owners.
“We’ll have to see the tone of Fernandez’s administration to find consensus,” said Juan Germano, director of Argentina polling firm Isonomia. “The last four years showed there was no consensus between Kirchner’s and Macri’s parties, but with this election result, both sides have more incentives to reach consensus.”
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