New president promises to put Argentines before debt repayments

Yahoo – AFP, Nina NEGRON, December 10, 2019

Argentina's new president, Alberto Fernandez, waves next to Vice President
Cristina Fernandez de Kirchner, after receiving the presidential sash from outgoing
leader Mauricio Macri (AFP Photo/Alejandro PAGNI)

Buenos Aires (AFP) - Center-leftist Alberto Fernandez vowed to put his people first ahead of debt repayments after he was sworn in as Argentina's president on Tuesday to singing and applause from lawmakers and supporters.

After taking over from the market-friendly Mauricio Macri, Fernandez sent a message to the International Monetary Fund, saying "it's impossible to pay external debt without growth."

Fernandez, whose vice president is controversial former leader Cristina Kirchner, will govern until 2023, presiding over a country beset by recession, high inflation, rising unemployment and poverty.

While the South American country wants to pay back its debt, it doesn't have "the means to do so," he said, promising to deal with Argentina's social emergency.

Fernandez was swept to power in large part due to a public backlash over the terms of a $57 billion loan Macri negotiated with the IMF last year.

With Argentina's rising debt came deeply unpopular austerity measures.

Argentina has so far received $44 billion of the agreed IMF loan, taking its external debt to $315 billion, around 100 percent of gross domestic product.

"We want to have a good relationship with the IMF but without growth we won't be able to pay," said Fernandez, accusing Macri of leaving the country in "virtual default" following 18 months of economic turmoil triggered by a currency crisis.

Speaking in a televised address, the Peronist leader promised a "new, fraternal and caring social contract."

Fernandez also said Argentina needs to "overcome the rancor and hate" that has become a feature of its increasingly polarized political landscape.

He twice hugged Macri tightly during the ceremony.

Notable absentee

The new head of state will host a lunch for fellow Latin American presidents -- including Cuba's Miguel Diaz-Canel -- before addressing a crowd at the Plaza de Mayo in the evening.

Chile's President Sebastian Pinera was due to attend but canceled after a Chilean Air Force plane went missing with 38 people onboard. It would have been Pinera's first foreign trip since the outbreak of social unrest in Chile in early October.

Another notable absentee was Brazil's President Jair Bolsonaro, a right-wing populist who has recoiled at Argentina's swing to the left.

Argentina's Alberto Fernandez receives the presidential sash from outgoing leader 

Mauricio Macri during his inauguration ceremony in Buenos Aires (AFP Photo/

Ronaldo SCHEMIDT)

Bolsonaro at first declined to send a cabinet minister to represent him, but in the end sent Vice President Hamilton Mourao to represent his government.

Ahead of Fernandez's election victory, Bolsonaro had said that his government would turn Argentina into the new Venezuela, with Brazil likely to face a flood of Argentine refugees.

Fernandez's was among the loudest voices to call for the release of leftist icon and Bolsonaro adversary Luiz Inacio Lula da Silva from jail.

Backroom strategist

Moderate and pragmatic, Fernandez has never served in elected office but brings years of experience as a former top aide to late president Nestor Kirchner from 2003-2007, and briefly for his wife Cristina after she succeeded him.

After joining forces with Cristina Kirchner to unite a fragmented Peronist camp to win October's elections, his main challenge will be to deliver on his promises to improve the economy, according to analysts Eurasia Group.

"He was elected to improve economic conditions, and there is a large share of the electorate that will be actively opposed to Fernandez and the Peronists," said Eurasia.

"If he fails to deliver on the economy, they will become more active and popular support for him could drop quickly."

His pick for economy minister, Martin Guzman, 37, will have the task of negotiating with the IMF and other international creditors on restructuring Argentina's massive debt.

Guzman, an academic at Columbia University in the United States, has criticized the use of austerity policies to solve debt crises, signalling a sharp shift from Macri's belt-tightening.

"We are already working with the IMF. It's work that must be done quietly, so Argentines can rest assured that we have been dealing with the issue for weeks," Fernandez said over the weekend.

"We have opened a negotiation process, we are satisfied with how it's going."

Monetary controls

Economist Hector Rubini of the University of Salvador said the government is likely to maintain the strict exchange controls put in place by the Macri government in October, at least initially.

He said a new budget law will likely reallocate funds to fight poverty, which Fernandez called "a moral imperative."

Fernandez has also pledged to move to legalize abortion, a bitterly divisive issue in Roman Catholic Argentina, pledging last month to send a bill to Congress as soon as possible.

He inherits a dismal economy that is projected to shrink 3.1 percent this year, with inflation running at 55 percent, poverty near 40 percent, and unemployment at over 10 percent.

Despite the bleak outlook, Fernandez is likely to be able to count on a period of calm from the powerful unions, and will have Congress and debt timetables on his side.