Alberto Fernández takes office
Mr Fernández began his speech with the announcement of a National Plan against Hunger, highlighting that a significant proportion of the population faces food insecurity. Mr Fernández also argued that it would be necessary to reorientate economic priorities to protect the marginalised and excluded—an indication of the redistributive policies he wants to pursue.
The new president went on to paint a bleak portrait of the current economic scenario in Argentina—one of deep recession, high unemployment and a sovereign on the brink of default. On the pressing issue of public debt, the president stated that his government has the willingness to meet its repayment obligations, but that it currently lacks the capacity to do so. Mr Fernández said that rebuilding Argentina's debt-servicing capacity would first require a return to economic growth. However, he did not elucidate the policies he would pursue to restore macroeconomic stability.
The few indications of the direction of policy were mixed. Mr Fernández criticised the orthodox economic model endorsed by the previous administration of Mauricio Macri. The president also voiced support for ambitious spending plans—to reactivate public works, address Argentina's housing deficit and provide subsidised credit to poor communities through a non-bank system—without explaining how he would finance them.
On the positive side, however, the president said that he would seek to develop a constructive relationship with the IMF and with the government's other creditors. Mr Fernández also said that he would send a 2020 budget to Congress only after negotiating a debt-restructuring arrangement with private creditors (he will govern in the interim by extending the 2019 budget). This suggests that the extent to which fiscal policy will loosen under the Fernández government will depend at least partly on what investors are willing to accept.
Impact on the forecast
Despite the mixed messages sent by Mr Fernández, we believe that he will adopt a relatively pragmatic approach to policymaking, given his limited room for manoeuvre. However, risks to this assumption are high and we will pay close attention to the economic programme to be outlined by the economy minister, Martín Guzmán, in the coming days.