Argentina’s honesty comes with a price

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Since 2012, the Argentinian inflation numbers were concealed from the public. Now, under Macri’s administration, the real numbers are in and they’re not encouraging

Mauricio Macri’s presidency couldn’t be more different than Cristina Fernández de Kirchner’s. Not only does it propose different policies –with very different interests– but it also sets itself apart by not condoning false economic information. According to The Economist, during the Kirchner administration, Argentina didn’t provide transparent data about their inflation numbers. For that reason, the British news outlet didn’t publish Argentina’s inflation rate for the last five years.

However, that has changed with Macri’s administration. With enthusiasm, on May 25th, the economic media announced that they could trust the numbers released by the Argentinian government again: “This week we are delighted to resume publication of the official inflation number for Argentina”, said the article in the print edition.

While the public and the media appreciates the honesty imparted by Macri’s presidency, it’s hard to acknowledge that the annual inflation rate is much more high than expected. According to the National Institute of Statistics and Census –INDEC–, the accumulated annual inflation is between 26,8% and 27%.

While an honest release of inflation statistics allows the government to be open about its goals and the policies that is undertaking to bring down said numbers, it also opens the administration to criticism and potential public failure.

The high inflation rate is, in most cases, a sign of inequality. Macri’s mission is to reduce inflation while increasing economic growth. It doesn’t seem like an easy task since the government still needs to invest in infrastructure and pass a considerable amount of reforms to get things on track. Reaching this goal would bring back optimism to Argentinians.

Now, one of the actions Argentina has to take to increase economic growth is to reduce fiscal deficit. However, in order to decrease said matter, Macri has to battle with an excess of government expenditures –in the Argentinian case, in the form of subsidies–. But, as analysts have noted, reducing these subsidies would keep increasing prices creating an outcry from people.

Macri’s decision to advocate for transparency is, certainly, the right one. It makes the government more reliable for the general public and it shows a better image for foreign states and investors. The problem is that it proposes a bigger challenge than expected.

LatinAmerican Post | Juan Sebastian Torres
Copy edited by Susana Cicchetto