The resounding disruptions of 2021 exposed the significant economic instabilities plaguing Argentina. From widespread electricity blackouts to the frantic demand for dollars, these issues highlight a multitude of economic challenges persistently undermining government assurances.
Urgent demands and anxieties surrounding the pandemic have shielded Economy Minister Cristina Kirchner wished "health, work, hopes and dreams" for the New Year”>Martin Guzman within the governing coalition, despite internal conflicts and skepticism. This explains the amicable reception he received from Cristina Kirchner on Wednesday at the Senate, a private meeting coinciding with his assurance of a limited decrease in Personal Property taxes.
“Protect the minister,” advised a La Campora leader, recognizing the precarious political landscape supporting Alberto Fernandez’s administration. Kirchnerism’s protective stance mirrors a strategy of sustaining Guzman until a resolution with No single viewpoint reigns supreme within the diverse ranks of the Frente de Todos. The Treasury’s assessment: without a dominant force, no authority is absolute; thus, Guzmán’s continued tenure after the IMF negotiations might be feasible, provided he secures the necessary backing.
The response is harsh. “Kirchnerism excels at removing opponents and punishing them when convenient,” La Cámpora members retort practically. In short, March—the month when funds to settle the debt expire and IMF talks conclude—will reveal whether the pragmatism of Columbia University or the tactics of La Cámpora prevail.
The impending deadline has also spurred unexpected contenders to succeed Guzmán, including the Minister of Productive Development, Matias Kulfas, who has unveiled economic growth data and forecasts, as if his ambitions were realistically attainable.
News of Kulfas’s potential candidacy reached the Ministry of Economy last week. “If there’s one minister Kirchnerism would readily discard, it’s Matías,” they dismissed. A candid conversation with a La Cámpora member confirms this assessment’s accuracy.
Upon assuming the presidency, Cristina Kirchner skillfully concealed the economy’s gradual deterioration, as surpluses dwindled and subsidies climbed, employing a continuous narrative of epic proportions, inventing adversaries, and launching numerous campaigns initially touted as momentous but ultimately fading into obscurity and being replaced by new ones. They didn’t address the
A proposed price hike among the electorate can be disastrous, so much so that in early 2021 Cristina Kirchner publicly rebuked Guzmán, preventing him from dismissing the undersecretary of Energy, Federico Basualdo, due to disagreements over utility cost increases. Such actions are unheard of during an election year. Guzmán heeded the internal dynamics of the coalition and refrained from the dismissal. Subsequently, he prioritized securing Cristina Kirchner’s approval before consulting the President.
Beyond the political implications, this inaction had economic ramifications. It fueled a dramatic surge in subsidies, creating a hidden, catastrophic problem within the electrical system’s payment chain. This issue is unfamiliar to the general public, yet Basualdo is intimately aware of it.
This situation has historical precedent. During Cristina Kirchner’s previous administration, distributors faced similar restrictions on price adjustments. Consequently, companies neglected system maintenance while continuing payments to Cammesa, the state-controlled electricity wholesaler.The Kirchner administration blamed the private sector, mirroring the current approach to inflation—assigning blame to businesses while ignoring macroeconomic imbalances.
However, distributors learned from this experience. With Cristina Kirchner’s return to power, the government once again blocked cost updates, specifically the Distribution Added Value (VAD) in the electricity market. This time, they ceased payments to Cammesa, where Basualdo holds sway. The repercussions fell back on the state.
Recently, Basualdo announced a 20% rate increase for 2022. Higher-income users would bear the full cost, without government subsidies. Crucially, Guzmán, the minister who had previously refrained from dismissing him,
Energy subsidies remain a significant and perplexing issue. The recent 20% surge is only the latest development in a long-running saga. Uncertainty reigns supreme: it’s unclear how much of this increase represents genuine government savings through subsidy cuts, versus merely shifting funds to struggling businesses nearing insolvency (over 50% are teetering on the brink).
Ultimately, the impact on reducing the massive debt related to energy support is minimal. With insufficient funding and a deficient plan, the authorities are navigating a chaotic situation without a clear path forward. The situation is akin to navigating a storm blindfolded.
## Argentina’s Economic Tightrope Walk: A 2021 Analysis
The year 2021 exposed deep cracks in Argentina’s economic foundation. Widespread electricity blackouts and a frantic rush for dollars painted a stark picture of instability, directly contradicting government reassurances.
delves into the political maneuvering and economic challenges facing the Alberto Fernández administration, particularly focusing on the precarious position of Economy Minister Martín Guzmán.
Guzmán’s survival, despite internal conflicts and skepticism within the governing coalition, seemed surprisingly secured. A private meeting with Cristina Kirchner, resulting in a limited decrease in Personal Property taxes, demonstrated the delicate balance of power.
highlights the protective stance of La Cámpora, a Kirchnerist youth organization, recognizing the vulnerability of Fernández’s government. Their strategy: keeping Guzmán in place until crucial IMF negotiations and debt settlements conclude in March. This pragmatic approach, however, clashes with the more ruthless political tactics often associated with Kirchnerism, which involves removing and punishing opponents.
The article also introduces an unexpected contender for Guzmán’s position: Matías Kulfas, the Minister of Productive Development. Kulfas’s public release of optimistic economic data, suggesting growth, appears calculated yet risky given the internal power dynamics.
reveals that Kulfas is considered dispensable by Kirchnerism, highlighting the precarious nature of his political position.
Cristina Kirchner’s role is crucial. Her administration, according to
, systematically concealed the worsening economic situation by employing a narrative of ongoing crises, deflecting attention through constant campaigns, and avoiding
