1. Bloomberg Businessweek:
Around the turn of the last century, (Argentina) ranked among the 10 wealthiest nations in the world on a per capita basis; now the World Bank places it at No. 83.
The country has endured at least 15 recessions since the 1950s and is teetering on the edge of another one. And neither a thicket of currency controls nor interest rates at 97% have managed to stem the peso’s decline. A 2,000-peso note, the largest denomination, is worth $7 at the official exchange rate but less than half that at the most frequently used parallel rate.
Currency weakness is feeding inflation, which hit 115.6% in June. It’s destined to go higher since the $44 billion lifeline the International Monetary Fund has extended Argentina—its 22nd—puts limits on what the government can do to prop up the peso, leading to expectations that a devaluation is in the cards.
So it’s no surprise that the economy takes center stage as voters prepare to choose candidates for October’s presidential election. Argentina is a bit of an oddity, electorally speaking. It holds a national open primary in which most adults are required to vote. This means the Aug. 13 balloting will be a dress rehearsal for the contest later in the year.
Crucially, it will also signal whether Argentines are ready to accept tough reforms, such as slashing government spending and giving the central bank more autonomy, after four years of procrastination and political infighting under the government of Alberto Fernández and his powerful vice president (and current nemesis), Cristina Fernández de Kirchner.
A resounding defeat for the ruling Peronists might be a sign that, at long last, Argentina’s citizens have come to terms with the fact that their version of a European-style welfare, with cradle-to-grave protections, can’t be sustained anymore and is in urgent need of reform. (Source: bloomberg.com)
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