Argentina has formally decreed that it will try to restructure nearly US$70 billion in debt by the end of this month – not that it’s drawing much attention.
Economy Minister Martín Guzmán said in an interview with an international news agency on Wednesday that the March 31 deadline could be extended, if only slightly, due to the impact of the novel coronavirus. Argentine officials had planned international roadshows, but they may be put on hold. The Buenos Aires City government has cancelled concerts and banned public attendance to sporting events in an effort to keep the spread of the virus in check (so has Buenos Aires Province). So far Argentina is mostly dealing with imported coronavirus cases, but it is still a latent issue. President Alberto Fernández has now warned that people arriving from abroad must live in a self-imposed quarantine (14 days) or potentially face prosecution for spreading a disease.
World markets are crashing and Argentine debt bonds are being reduced to junk. That March 31 deadline is now in serious doubt, but Guzmán has said that the republic is running out of money to service its mammoth debt and must still do something fast. Hear the minister out: “We are running out of the reserves that the Treasury can use to service debt, so we need to solve this problem quickly.” The anxiety is palpable. The president on Thursday confirmed the original schedule, apparently clarifying Guzmán’s comments (almost in contradiction with them) about a certain amount of flexibility.
What is not clear is whether the world will accept Guzmán’s terms. Apart from convincing the hawkish holders of nearly US$70 billion in bonds, Argentina must also somehow roll over its US$44-billion debt with the International Monetary Fund (IMF). Before the coronavirus pandemic, there was growing speculation that an orthodox wing of the IMF, with the backing of the United States, was not ready to dispense Argentina the leniency that it was asking for.
The country’s debt drama will now play out as the coronavirus spreads. Still a virus will not change the fact that Argentina is running out of money. What the virus can alter is Argentina’s economic outlook for 2020, just when a new Peronist government was trying to jumpstart the economy. Winter in Argentina could bring a brasher coronavirus panic that could prompt further economic misery.
The sudden and swift arrival of the first imported cases to these shores also posed a political problem for the government because Health Minister Gines González García had previously declared that he did not expect the virus to reach the country in the summer. The minister, a respected veteran Peronist figure across the political board, was proved wrong and now the efforts to control the virus are being headed by the president himself. González Garcia used his medical credibility to admit in public that he thought that the novel coronavirus would not reach Argentina so fast.
The government is currently in control politically. But the new president is running a country where the political landscape can change dramatically overnight. He knows it too – he was named a Kirchnerite administration Cabinet chief in 2003 and eventually quit in 2008 after an epic stand-off with the farmers over export duties. Now the farmers have called a four-day strike. once again over the government’s decision (with congressional approval already in its back pocket) to hike soybean export duties from 30 percent to 33 percent. The Liaison Board, which groups the four major farming lobbies, were supposedly sitting at a negotiating table with the government in an attempt to avoid a rerun of the 2008 conflict. But the farm strike was called after grassroots pressure twisted the arm of the leaders. Some angry farmers have staged road demonstrations and have threatened picket-lines. The 2008 conflict memorably ended when then-vice-president, Julio Cobos, of the Radical party, cast a tie-breaking vote in the Senate against the Kirchnerite government in which he was serving.
The farmers won the day back then. Now it is 2020. The president has called the farm protest a “strange strike,” implying that the farmers leading the lockout (it only had a symbolic impact over four days dominated by coronavirus headlines) are in league with the centre-right opposition headed by former president Mauricio Macri.
Strange or not, the farm lockout is the first significant protest against the Peronist administration and could eventually lead to more complaining if the economic situation does not improve. Further protests, if they happen, could get louder the minute the president’s popularity begins to suffer – potentially from a combination of economic depression and discontent over the handling of the coronavirus crisis (Alberto Fernández made some flummoxing comments about the virus during a radio interview on Thursday).
The local political landscape has been altered by disease. Argentina is always unpredictable. Now it’s an unpredictable country, with a debt burden it can’t pay, in an unpredictable world battling a disease that has gone viral — and not in the virtual sense of the word.