Argentina’s Peronists return to power as Macri concedes defeat

Argentina’s Peronists return to power as Macri concedes defeat

Alberto Fernández secures 48% share of vote with country in economic crisis

Argentina’s populist Peronists have swept back to power in Sunday’s presidential elections, with former cabinet chief Alberto Fernández winning a clear victory over pro-market incumbent Mauricio Macri amid a deep economic crisis.

Mr Fernández, 60, triumphed with 48 per cent of the vote, three percentage points above the margin needed for a first-round victory, while Mr Macri’s centre-right coalition received 40.4 per cent, with 96 per cent of the ballots counted.

The win was smaller than Mr Fernández had hoped for, suggesting unease among some voters at a return to power by his running mate, former president Cristina Fernández de Kirchner, who governed from 2007-15. The Peronist party, which generally favours interventionist and pro-worker policies, has ruled Argentina for all but six of the past 30 years.

The Peronist victory is further evidence that Latin America’s left is regaining force after several years of conservative gains. Populist left-winger Evo Morales claimed victory for a fourth term in Bolivia last week amid opposition accusations of electoral fraud. And mass protests in Chile demanding higher wages and pensions have forced the resignation of the entire centre-right cabinet.

“The times ahead will not be easy,” Mr Fernández told rapturous supporters who waved Argentine flags and chanted “we are coming back”.

In a stark reminder of the difficulties facing the Argentine economy, the central bank announced overnight a dramatic tightening of restrictions on foreign exchange purchases. Argentines will now be limited to buying just $200 a month, down from $10,000 a month before the election, in an effort to conserve scarce reserves.

Mr Fernández said he would meet Mr Macri on Monday to discuss what is likely to be a difficult transition before he takes power in December.

“I hope that those who will now be our opponents are aware of the situation they have left us and that they help us to rebuild the country from the ashes,” said the president-elect.

Argentina’s economy is shrinking, inflation is running at more than 50 per cent a year, unemployment is over 10 per cent and more than one-third of the population lives in poverty. The country is on the brink of its ninth debt default, struggling to pay more than $100bn of foreign debt, much of it run up under a record $57bn IMF bailout handed to Mr Macri’s administration.

One of Mr Fernández’s first tasks will be to renegotiate Argentina’s debt. He named a transition team of four to handle economic issues, which includes former finance minister Guillermo Nielsen, as well as Matias Kulfas and Cecilia Todesca, who was an official at the central bank under Ms Fernández’s government.

Investors fear Argentina will demand that they take a loss on the face value of their debt, though the size of that “haircut” remains in doubt. The benchmark Argentina 2028 dollar bond fell 1.3 cents in early trading on Monday to 39.33 cents, Reuters reported.

Mr Macri conceded defeat in an emotional address to supporters and vowed to “continue working for Argentines through a healthy, constructive and responsible opposition”.

The Peronist victory was vindication for former president Ms Fernández’s decision to invite the lesser known and more pragmatic Mr Fernández, who is no relation, to run for the presidency, while she became his running mate. Ms Fernández is facing trial on 11 corruption charges related to her time in power, all of which she denies.

The strategy enabled the reunification of the Peronist movement after it was deeply divided just two years ago — when the two Fernándezes were not even on speaking terms.

Mr Macri’s performance at the ballot box improved considerably after primaries in August, which Mr Fernández won by 16 points. That is in spite of the peso plunging in value by more than 30 per cent following the primary, fuelling inflation as investors took fright at the prospect of a return to the Peronists’ populist economic policies.

Elections were also held on Sunday for half of the seats in the lower house of congress and one-third of the senate. Early results suggest that the Peronists and the centre-right opposition will be almost equally balanced in the lower house, with the Peronists controlling the senate.

Although many of the seats for provincial governors were already filled in separate elections, Mr Macri’s coalition lost control on Sunday of the province of Buenos Aires, Argentina’s most populous province. Incumbent María Eugenia Vidal lost by about 13 points to Axel Kicillof, who served as economy minister under Ms Fernández.

In a small consolation for Mr Macri, Horacio Rodríguez Larreta, a member of the president’s inner circle who succeeded him as mayor of Buenos Aires in 2015, was re-elected in the capital city. Mr Rodríguez may now become the de facto leader of the opposition if the outgoing president, a multi-millionaire businessman, withdraws from politics.

Mr Macri enjoyed strong international backing for his market-friendly government and took office amid high hopes for economic reform.

However, he was criticised by investors for moving too slowly to reduce Argentina’s large budget deficit and for relying excessively on high interest rates to reduce inflation, while the left attacked him for reducing subsidies and plunging the country into recession.

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