Argentina in crisis: when inflation threatens to 100%

Status: 5/8/2022 12:27

Huge inflation, currency collapse, high public debt – Argentina is in one of the worst economic crises in years. Will the new “super minister” keep the problems under control?

Author: Anne Herrberg, Studio ARD Rio de Janeiro

Mercado del Progreso is written in sharp art deco letters on a corner building in the historic Caballito neighborhood of Buenos Aires: Progress Market. The inscription tells of the golden age when millions of European immigrants tried their luck in Argentina.

Strong currency fluctuations

But it was a long way, sighs the owner of the greengrocer Marina Alfonzo. Money is not enough anymore: “After all, everything always costs more than you calculated. Oil, milk, eggs – what cost 100 pesos three weeks ago now costs 600 ”. In some cases, food prices have gone up by 500 percent.

Retailers are also feeling it: Gustavo Nigro, who runs a delicatessen in the third generation, can offer his few customers less and less. He sells imported goods such as pickles, Dijon mustard and Alpine milk chocolate – and there is no supply: “My problem is not only rising prices. There are no more goods, ”complains Nigro.

Because the imported goods are based on the exchange rate against the dollar: “He hesitates so much that everyone is anxious and the supply chain is no longer working. At the same time, I have debts to be paid. The dealer may still have an open store. But it gets more and more complicated.

“On the edge of the social abyss”

It’s always complicated in Argentina. But a particularly gloomy storm is brewing: the domestic currency depreciates, the peso, the black market dollar has doubled in just a few months, the mountain of debt is rising, and the hole in the state budget is bigger and bigger.

But instead of saving money, the printing press turns. By the end of the year, inflation could reach 70 or even 100 percent. Federico Zapata, an economist at the Escenario think tank, considers the development to be dramatic: “Argentina is truly on the brink of an economic and social divide. The economic crisis is still fueled by a major political crisis ”.

Because there are a lot of clashes in the ruling coalition. In early July, the towel was thrown by honorable Minister of Economy, Martin Guzman, and his successor was dethroned during her inaugural visit to the International Monetary Fund in Washington. The South American country has $ 44 billion in debt.

Sergio Massa as the new “super minister”

Now he should judge Sergio Massa, former Speaker of the House of Representatives. As a super-minister, the non-economist will unite the ministries of economy, production and agriculture in the future. President Alberto Fernandez’s attempt to keep a bitterly divided coalition from collapsing – and somehow retain its ability to rule: “I’d like to say to every Argentinian: be calm. wants to break me, I can’t do it, because I know that I can count on the support of each of you. “

Responsible for several future ministries: Sergio Massa.

Image: AFP

However, President Fernandez should not believe it himself. Pressure is rising, even from former allies. The largest trade union in the country calls for new collective bargaining, social movements want a universal basic income.

Mass protests were announced

Mass protests were announced for Sunday. Union leader and social activist Juan Grabois makes demands: “So that at least we don’t have to live below extreme poverty in a wealthy country. We are ready to leave our blood in the streets to do something against hunger. ”

More than 40 percent of the 47 million Argentines are currently classified as structurally poor. So far, welfare programs have prevented the explosive situation from escalating, as in Colombia and Ecuador, but their purchasing power is also declining. Now superminister Massa is to stabilize the situation in dialogue with the powerful agricultural sector and industry. It would be a success if the government survived until the end of its term in 2023.

Argentina: With a new superminister against the economic crisis?

Anne Herrberg, ARD Rio de Janeiro on Aug 4, 2022 at 3:52 pm

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