DURING her eight years as Argentina’s president, Cristina
Fernández de Kirchner had a way of dealing with nasty facts: denying them. When
annual inflation reached 27%, she said the number was wrong. “If it were as
high as they say it is,” she scoffed in September 2012, “the country would
explode.” But truth will out: by the time she left office last year, a 100-peso
note—the most valuable—fetched just $10, less than a third of its level when
she took office. Unwilling to admit this plunge, Ms Fernández (whose assets
have been frozen by a judge probing currency transactions) refused to issue
bigger bills. Queues formed at ATMs; with a capacity of just 8,000 notes, some
machines had to be refilled twice daily and repaired monthly.
Mauricio Macri, the country’s president since December,
prefers to cast a colder eye on reality. On June 30th a 500-peso note appeared
at his government’s directive. The central bank won praise for producing it,
with a nice image of a jaguar, so fast. It will be a blow to armored-truck
operators, who did well by moving cash around the country. This helped Brink’s,
an American firm in that business, to boost its Argentine revenues by 60% last
year. But on the streets of Buenos Aires, the note is welcome. It will soon be
possible to withdraw up to 2,400 pesos ($160) per transaction.
Not all Mr Macri’s clear-sighted moves are so popular. Some
of his efforts to normalize the economy—such as easing currency controls and
removing subsidies on electricity, water, gas and transport—have exacerbated
the inflation he inherited. On June 15th INDEC, the national statistics
institute, revealed that prices went up by 4.2% during May alone. These were
the first figures published by INDEC since Mr Macri took office; he has been
working to make the agency more reliable. Annual inflation figures will not be
out until next June. Worryingly, the picture emerging in the freshly polished
mirror is of an economy going the wrong way. New numbers show that growth,
private employment, manufacturing and investment have all fallen since Mr Macri
came to office. His country is officially in recession.
All this clashes with Mr Macri’s pledge that in the first
half of the year that Argentines would reap the rewards of his economic
policies in the second. Some economists, including Ramiro Castiñeira of
Econométrica, a consultancy, say the president was too quick to promise
progress. Mr Macri replies that he was misinterpreted. “Things don’t happen
from one day to the next,” he said on July 2nd. “I didn’t say that all of
Argentina’s problems will be resolved in the second half of the year.”
Ordinary Argentines seem equally cautious. According to a
poll by Management & Fit, a consultancy, 37% believe the economy will
recover in the coming months; only 28% think their own situation will get
better. Mr Macri, whose approval ratings have fallen to 44%, is hoping that the
statistics improve by the year’s end. If not, Argentines may end up trusting
him no more than his predecessor.
