Ar­gen­tine can­di­dates talk about econ­omy

The China Post - - WORLD BUSINESS - BY PETER PRENGAMAN

Ar­gentina’s top pres­i­den­tial can­di­dates on Wed­nes­day pre­sented dif­fer­ent vi­sions of how to im­prove the South Amer­i­can na­tion’s econ­omy at a time of soar­ing in­fla­tion and a sharp de­val­u­a­tion of the peso on the black mar­ket.

Rul­ing party can­di­date Daniel Sci­oli, the des­ig­nated suc­ces­sor to Pres­i­dent Cristina Fer­nan­dez, said the nat­u­ral-re­source-rich coun­try should in­crease pro­duc­tion of its top com­modi­ties and cre­ate de­vel­op­ment plans for each.

Sci­oli, a for­mer vice pres­i­dent and cur­rently the gover­nor of Buenos Aires province, also ar­gued that the na­tion of 41 mil­lion was on sure foot­ing. Sci­oli fre­quently walks a fine line, call­ing for change while be­ing care­ful not to alien­ate Fer­nan­dez sup­port­ers who are key to his chances of win­ning Oct. 25.

“Let’s build on top of what has al­ready been built,” Sci­oli said.

Mauri­cio Macri, the out­go­ing mayor of Buenos Aires and lead­ing op­po­si­tion can­di­date, is the clear fa­vorite of the busi­ness com­mu­nity, in part be­cause of prom­ises to lift re­stric­tions on buy­ing U.S. dol­lars and lower ex­port taxes.

On Wed­nes­day, Macri struck a more pop­ulist note, talk­ing about the need to con­front ex­treme poverty and in­vest in ed­u­ca­tion so that chil­dren in ru­ral ar­eas have the same op­por­tu­ni­ties as those in Buenos Aires.

“We should not re­sign our­selves to be­ing doomed to choose be­tween spend­thrift pop­ulism and a ne­olib­eral gov­ern­ment that does belt-tight­en­ing,” he said.

The can­di­dates were no­tably light on specifics, frus­trat­ing some in the au­di­ence.

Jorge Gior­dano, pres­i­dent of a con­sult­ing firm fo­cused on telecom­mu­ni­ca­tions, said he didn’t hear so­lu­tions for the two big­gest prob­lems that busi­nesses face: in­fla­tion and an in­abil­ity to plan be­cause of eco­nomic in­sta­bil­ity.

“These were just cam­paign speeches with­out any specifics,” said Gior­dano.

Ar­gentina’s econ­omy, the sec­ond largest in South Amer­ica, is char­ac­ter­ized by con­tra­dic­tions and dis­tor­tions. The of­fi­cial ex­change rate is fixed at around 9 pe­sos to the U.S. dol­lar, but the black mar­ket rate reached 16 pe­sos this week, its high­est level the last year.

Ad­min­is­tra­tion of­fi­cials of­ten note that black mar­ket trans­ac­tions only ac­count for a small frac­tion of the over­all econ­omy. While that’s true, the black mar­ket rate is fol­lowed closely by Ar­gen­tines in many walks of life and many econ­o­mists con­sider it an im­por­tant in­di­ca­tor of the peso’s ac­tual value against other cur­ren­cies.

While world oil prices have plunged to around US$40 a bar­rel, in Ar­gentina they are fixed at US$77, a pol­icy aimed at stim­u­lat­ing the lo­cal in­dus­try. Mean­while, high energy sub­si­dies keep gas, elec­tric­ity and public trans­porta­tion costs rel­a­tively low.

While the gov­ern­ment says in­fla­tion has been run­ning at about 15 per­cent, some pri­vate econ­o­mists say it’s closer to 35 per­cent.

On Wed­nes­day, op­po­si­tion can­di­date Ser­gio Massa called for an over­haul of how sta­tis­tics are gath­ered so that they are trans­par­ent and cred­i­ble. Lack of faith in gov­ern­ment num­bers, from un­em­ploy­ment to in­fla­tion, has led to a cot­tage in­dus­try of pri­vate statis­ti­cians who ad­vise busi­nesses.

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