Argentina’s new government gets to grips with the economy

IT IS A MONTH now since Alberto Fernández took over from Mauricio Macri as Argentina’s president and, contrary to some forecasts, the sky over the Pampas has not yet fallen in. Having inherited a dire economic situation, including what Mr Fernández, a Peronist, called a “virtual default” on the country’s debts, his government has begun by doing more or less what he said it would. Adopting almost the opposite approach to its predecessor, it has laid out a tough fiscal policy and a loose monetary policy and has yet to say much about how it will handle the debt. Exchange and price controls, and the southern summer lull, have combined to buy the new team time. But will they use it wisely?

It was trying to buy time to reform a sick economy that got Mr Macri into trouble. A free-market conservative, he ran up debt to finance a gradual fiscal adjustment until investors took fright, prompting a run on the peso and forcing the government into the arms of the IMF. The economy slumped into recession, inflation surged to 54% last year and Mr Macri lost the presidential election. The new team’s first objective, according to Martin Guzmán, the economy minister, is “to halt the fall”.