Argentina’s presidential election looks increasingly likely to usher in a pro-business government after the ruling Peronist bloc coalesced around centrist Economy Minister Sergio Massa as its candidate.
Benchmark overseas bonds gained to the highest since March following the announcement that Massa would represent the ruling coalition in the October election. Argentina’s parallel foreign-exchange rate strengthened as much as six percent at the market open before paring most of the gains.
The potential political change in Argentina would buck a leftist tide that has washed over Latin America in recent years. Widening inequality and social discontent during the Covid pandemic pushed voters in Colombia, Chile, Peru and Brazil to elect presidents who promised to prioritise social issues. Argentines have lost confidence in their own populist government after its policies deepened an economic crisis that began in 2018.
With Massa favoured to win the August 13 primary, market-friendly candidates compose a fragmented field. Hard-liner Patricia Bullrich and centrist Buenos Aires Mayor Horacio Rodríguez Larreta face off in their own primary for the main, pro-business coalition. Outsider libertarian economist Javier Milei is also a key player in this year’s race.
While investors shouldn’t expect Massa to suddenly pivot towards more pro-market policies, his status as the Peronist frontrunner boosts his leverage in negotiations with the IMF and Argentina’s powerful labour unions, businesses and other key economic sectors, according to Martín Rapetti, director of consulting firm Equilibra.
“It’s not the same for any of these actors to negotiate with a minister that they know in four months won’t have any power versus a minister that could become the next president,” Rapetti said. “Massa’s ability to coordinate and negotiate as a minister today has strengthened significantly.”
SOURCE: www.batimes.com.ar