Saturday, July 11, 2020
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ARGENTINA | 06-02-2020 16:42

Argentina’s double trouble: reducing poverty and debt

President Alberto Fernández launches food coupons as a temporary solution to reduce poverty and hunger among vulnerable populations in Argentina.

Submerged by debt, Argentina is attempting to address the urgent economic conditions experienced by its more than 10 million impoverished people through food bonds, price controls and popular markets, or ‘ferias’.

However, these strategies seem insufficient given the extent of the recession.

María Benítez, mother of six, struggles to put meals on the table with her husband facing episodic unemployment.

For this robust housewife, shopping in supermarkets has become "unattainable,” adding that one needs “to have a good amount of money.”

That's why she didn't hesitate to travel to the nearby city of Tigre to obtain a government stamp with which to buy food, after standing in line in the sun and holding her last four-month-old baby in her arms, .

Excited, she says she will look for "fruit, vegetables, meat and milk."

‘Emergency

When he took office two months ago, Peronist leader Alberto Fernández said he would concentrate on "those who have the least."

Argentina has been in a recession since mid-2018, with poverty at 35.4 percent in the first half of 2019, the latest official figure available, and inflation at more than 50 percent annually.

The president froze gasoline and utility prices and implemented a price control of certain warehouse products, accompanied by a cell phone application to locate participating businesses and verify prices by scanning barcodes.

He also unveiled the delivery of 1.4 million food tickets like the one obtained by Ms. Benitez.

These coupons, with an amount of up to 6,000 pesos per month (about US$95) to buy food only, will benefit more than two million people among pregnant mothers and families without formal employment with children under six years.

Social Development Minister Daniel Arroyo told AFP that this is an "emergency" measure, and that the strategy, which represents US$110 million per month, "will last for the whole year and probably much longer".

‘Just in time’

According to Fernández, during the government of the liberal Mauricio Macri (2015-2019), milk sales fell by 30 percent. And the consumption of beef, Argentina's national meal, decreased by 9.5 percent in 2019 compared to 2018, according to the sector's chamber.

For Fernando de la Fuente, a 28-year-old bricklayer with no permanent job and a young child, the food card came "just in time.”

"It's what we need most... Milk, meat, chicken. The fundamental things," he declared upon receiving his card in a popular neighbourhood of Lomas de Zamora, near Buenos Aires.

Suffocating debt

"The government has a very big challenge: to improve economic activity without spending...It is at this crossroads," explained Matías Rajnerman, chief economist of the consulting firm Ecolatina.

According to the expert, the effectiveness of the emergency measures will depend on a successful renegotiation of the debt, since the government needs "a greater margin to spend" and to generate "more credibility" in the markets to reduce inflation.

During his recent tour in Europe, Fernández spoke to the United Nations Food and Agriculture Organisation (FAO) about the problems of poverty and hunger his homeland struggles with.

At the same time, he raised his pressing need to renegotiate some US$195 billion in debt (57 percent of GDP) with bondholders and bilateral and multilateral agencies.

Of this amount, US$44 billion is a standby credit from the International Monetary Fund, with which it has entered into talks and which has considered the government's measures "in the direction of restoring macroeconomic stability and protecting the poor."

Uplifting the economy

Elizabeth Ortiz, a student and mother of two, sees the food card as "a relief, which will help the whole family a lot because the prices are very high."

When it comes to shopping, she doesn't care if it's a carnival or a supermarket. "I go where the prices are best," she claims.

Under colourful tents and next to food card distribution centres, the government set up popular markets selling homemade bread, organic vegetables and honey, fish, and even canned goods.

This is an attempt to encourage domestic consumption directly with small businesses and not just in large supermarkets.

According to Minister Arroyo, this will revive the economy and create jobs.

Nonetheless, for economist Rajnerman, "at this juncture it's all very delicate. It would not be logical to expect a significant drop in poverty" in the coming months.

by Yemeli Ortega, AFP

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