Mauricio Macri’s early decisions are bringing benefits and making waves

Source: The Economist
01.02.2016

MAURICIO MACRI, who took office as Argentina’s president in December, has wasted little time in undoing the populist policies of his predecessor. On December 14th he scrapped export taxes on agricultural products such as wheat, beef and corn and reduced them on soyabeans, the biggest export. Two days later Alfonso Prat-Gay, the new finance minister, lifted currency controls, allowing the peso to float freely. A team from the new government then met the mediator in a dispute with foreign bondholders in an attempt to end Argentina’s isolation from the international credit markets.

This flurry of decisions is the first step towards normalising an economy that had been skewed by the interventionist policies of ex-president Cristina Fernández de Kirchner and her late husband, Néstor Kirchner, who governed before her. They carry an immediate cost, which Mr Macri will seek to pin on the Kirchners. Some of the new president’s other early initiatives are proving more controversial.

The economic reforms seem to be working. Farmers who had hoarded grain in the hope that the tariffs would be lifted are now selling, replenishing foreign-exchange reserves that had been drained to defend the artificially strong peso. The newly freed currency fell by more than 30%, a further boost to exporters. It has stabilised at around 13 pesos to the dollar. “Substantive” talks with holdout bondholders starting in early January could lead to a return to credit markets in 2016.

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