Argentina is undergoing a complex and profound process of change under new president Mauricio Macri. He has announced a number of transformative initiatives that, if executed properly, should give rise to compelling investment opportunities. The new administration is indeed aiming to establish order in what has been a chaotic business backdrop in this country.
For the current government, these first months of work are all about understanding what was inherited from the previous administration of Cristina Fernández de Kirchner, and about initiating a different type of dialogue with key market players. Managing the transition towards a predictable economic and political environment is key at this stage, but the transformation envisioned by Macri’s government goes well beyond that.
At the Argentinian government’s offices and ministries, the transition and its daily repercussions are at the top of the agenda, but the teams working on the field are also rather conscious about the fact that the “transition” cannot go on for too long. The work currently underway needs to be aligned with the administration’s long-term goals and campaign promises: reducing poverty levels down to zero, addressing regional economic disparities, reconnecting Argentina with the international political and business communities, and, generally speaking, regaining the country’s past stature.
To achieve order and avoid social chaos, Macri’s administration must demonstrate legitimacy in decision-making. He must follow through on his promises swiftly but without further destabilizing the economy, which suffers from high inflation and high public deficit. Importantly, he needs to restore the confidence of investors in order to regain access to an important flow of dollars entering Argentina in the form of foreign direct investments, international loans, swaps and debt.
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