Development: On 12 September thousands of people took part in separate protests in Argentina’s capital, Buenos Aires, in repudiation of the government’s economic policies.
Significance: The demonstrations put the government led by President Mauricio Macri on the back foot as it prepares its 2019 draft national budget with which it hopes to resolve the country’s current currency crisis. In his efforts to restore market confidence in the peso and Argentina’s domestic economy, President Macri has promised to eliminate the fiscal deficit next year, but in order to achieve this his administration needs the opposition-controlled national congress to approve a balanced 2019 budget that includes deep government spending cuts, which are bound to be highly unpopular. Yesterday’s demonstrations suggest that civil-society groups will seek to exert public pressure against the approval of an austere budget.
- The Macri government has been gradually reducing government spending and removing the onerous government subsidies on things like energy since it came to power in 2015 as part of its economic adjustment plan to reduce the fiscal deficit and restore macroeconomic stability to Argentina. This adjustment has produced discontent, with different civil-society groups complaining that it has left the population worse off, with an erosion of purchasing power resulting from the removal of subsidies and a still-high inflation rate.
- The government has been facing down these protests but the onset of the currency crisis in April has weakened the government’s position, as this has further stoked inflation and brought domestic economic activity to a halt. Yet President Macri insists that the only way to solve Argentina’s economic problems and to overcome the crisis is to continue and accelerate his government’s economic adjustment plan.
- The political opposition and civil-society groups maintain that the economic adjustment is impacting the local population and that the plans to deepen it will only produce more economic hardship. They call for a re-think of economic policy to prevent this. As part of this campaign various organisations including unions, social movements, and neighbourhood associations staged demonstrations in Buenos Aires yesterday. The demos produced traffic chaos in central Buenos Aires as demonstrators blockaded roads.
- The disruption caused by the demos was criticised by the government. Social Development Minister Carolina Stanley said that the government was always open to dialogue and to working to mitigate the social impact of its economic policies. Consequently, Stanley said that the demonstrations were unnecessary, and she accused the demonstrators of trying to influence the budget debate that is due to start later this week in the federal congress.
Looking Ahead: The legal deadline for the federal government to present its draft budget to congress is 15 September. The protests are likely to intensify in coming days. This could influence the negotiations that the Macri government is holding with the International Monetary Fund (IMF) to secure advance financing for next year’s budget.
