Argentina heads to the polls amid ever-worsening crisis


Mayra attentively looks out for the arrival of the first columns of demonstrators on 9 de Julio Avenue, one of the main arteries of Buenos Aires. She has come to demonstrate, this Thursday 10 October 2019, for the release of the food emergency funding promised by parliament, in September, when it passed legislation to introduce a 50 per cent increase in financial support for social programmes. “But we’re not seeing anything coming. We’re short of everything: fruit and vegetables especially, basic products. We’re sometimes left with nothing but tins of peaches. How can we feed ourselves properly with that?” sighs 29-year-old Mayra, who works for a co-operative that runs a social canteen in Moreno, in the western suburbs of Buenos Aires.

Since last year, Argentinians have been caught in the grip of an overwhelming crisis; a crisis which forms the backdrop to the presidential election to be held on 27 October. The signs are unmistakable. Poverty has increased by 30 per cent within the space of a year, now affecting 35.4 per cent of the population, according to the INDEC, the national statistics institute. Over 100,000 jobs have been destroyed within 12 months, according to the Labour Ministry’s latest press release, pushing the unemployment rate to over 10 per cent. But these are just the official figures: with around a third of workers employed in the informal economy, the level of job losses is, in fact, probably much higher.

The latest International Monetary Fund (IMF) forecasts warn that the economy is likely to shrink further this year, with a 3.1 per cent fall in gross domestic product. Argentina’s historically endemic inflation has accelerated its crazy pace, reaching 55 per cent over the last 12 months, also fuelled by the fall in the peso’s value against the dollar. The plunging peso, a regular feature on the front pages of the newspapers, has lost a third of its value since the start of the year.

“We don’t know what the dollar looks like,” remonstrates Mayra, alluding to the fact that this ‘safe’ currency, in which wealthier Argentinians hold their savings, is beyond the reach of poorer Argentinians. “Everything has got worse over the past year. My husband is a builder. He went for six months without work. I always used to be able to pick up little jobs, cleaning or looking after children, but there’s nothing out there now,” she confides, while keeping an eye on her children, 11-year-old Joaquín and four-year old Demia, squabbling in the background. “My younger son has lost a lot of weight, he even went down to 10 kilos,” she says, angrily. The family has to manage on the monthly income of 5,000 pesos (€77/US$85) Mayra receives for her work at the cooperative and the 3,000 pesos (€46/$US51.50) in family allowances (a universal benefit provided for every child), which has just been raised by the government.

This income is occasionally supplemented by the odd jobs her husband picks up, but still falls well below the cost of the ‘basic shopping basket’, calculated at 33,013 pesos a month (€506/ US$566) for the typical household of two adults and two children. “We hardly ever eat red meat now. We eat a lot more wheat-based products and my husband and I skip meals to be able to feed the children,” says Mayra. “Sometimes, I tell the children: there’s nothing to eat. And they’re getting used to it. It’s awful, and it makes me angry. But I don’t want to fall apart, for their sake.” Half of Argentina’s children and teenagers currently live below the poverty line.

Dramatic economic decline

Why did the Argentinian economy fall so hard, after having a promising growth rate of 2.9 per cent in 2017? The first blow came in 2018: the United States changed its monetary policy, impacting all emerging economies. Argentina, whose foundations are less solid, fell much harder than the others. It was then that Buenos Aires called on the IMF to come to the rescue. The International Monetary Fund granted the country a giant loan of US$57 billion in June 2018. In exchange, the country committed to balancing its books, chiefly by cutting its education, science and health budgets.

The second blow came in August of this year, after mandatory primary elections gave a clear lead to centre-left opposition candidate Alberto Fernández, sending shockwaves through the financial markets and provoking a brutal response from investors: in one day, the Argentinian stock exchange fell by almost 38 per cent and the shares of certain companies plunged by 50 per cent.

“The government’s decision to open the country to the financial markets left Argentina more exposed to international turbulence,” says Candelaria Botto, an economist at the University of Buenos Aires.

At the same time, drought was depriving the country, with an economy heavily reliant on agricultural activity, of export revenues. To protect its currency, the central bank decided to raise interest rates. That proved to be counterproductive. “It hindered companies’ access to credit,” says Botto, underlining the Macri government’s “disastrous economic record”. “Finance was clearly put before the real economy.”

No more than abstract financial operations? Far from it. The markets’ reaction had an immediate and very real impact on the economy. Straight after the primary elections in August, many businesses adjusted their prices, anticipating an increase in the price of ‘dollarised’ imported goods, with the devaluation of the peso. And although VAT was removed from basic goods – a bit of help for those most in need – the emergency measures taken by the government have not been enough to soften the impact of the crisis on people’s everyday lives. “My children haven’t had any dairy products for two weeks,” says Mayra. Milk has become a luxury good in Argentina, its price having almost doubled within the space of a year and its consumption being the lowest since 1990, according to the data given to the press by the Argentinian Dairy Market Observatory (Observatorio of Cadena Láctea Argentina).

Not far from Mayra and her sons, Irma, aged 64, sips on mate, the nation’s popular herbal brew. “It helps stop the hunger pangs,” says the pensioner, who relies on the minimum pension, like most Argentinians of her age, of 12,937 pesos a month (€199/US$221). It doesn’t go very far, especially for Irma, who is left with just half after making the monthly repayment on a loan she had to take out. “I had to have the roof redone on my house, it was raining in.” So how does she manage? “I keep going, I do odd jobs, some sewing and craftwork,” says the 60-something year old, who also relies on a strong family support network. “Me and my children help each other. If I’m a few pesos short to buy flour, they give me some and I bake bread and sell it at the market,” explains Irma, an example of the culture of resourcefulness that resurfaces in Argentina in times of crisis.

The middle class also hit

“We’ve had to change our lifestyle,” says 36-year-old Sabrina, pushing her shopping trolley along the aisles of the wholesale supermarket on the outskirts of the capital. This public service executive belongs to the financially comfortable middle class, statistically, and admits to feeling privileged. “We still manage to go on holiday once a year, that’s become a luxury, with the country doing so badly. But we’re not able to save at all. I got to the end of last month with two pesos on my bank account,” says Sabrina, who now buys unbranded products. Her salary has been increased, in line with the results of the collective bargaining negotiations in the sector but not in line with inflation.

“I can’t wait to see a change, with a president that implements social policies,” says the thirty-something year old who intends to vote for the centre-left opposition candidate in the presidential election, like more than half of the Argentinian electorate, according to the latest surveys.

Laura and her son, Santiago, examine the sunflower oil shelves, comparing the prices with the list, provided by the supermarket, of goods that are about to expire and have been discounted. “I am fed up. We go from one crisis to the next. This country is incapable of pursuing long-term policies,” says 43-year-old Laura, who remembers the crisis of 2001 and the hyperinflation of 1989. She and her family are not able to go away on holiday, they have to calculate every penny they spend, and have had to give up certain pleasures. This healthcare technician and her husband have combined earnings that place them just within the middle-class income bracket. “I gave up taekwondo, because it was too expensive. I don’t like seeing people suffer, especially my family,” says 12-year-old Santiago, calmly. “But we help each other out. And those of us who always struggle during the crises adapt better than the others,” sighs Laura.



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