Four years after the election of Mauricio Macri and the creation of the Cambiemos Government, there is little doubt that the economic and social policies of the government have been disappointing. The declared objectives of economic policy: reducing inflation, increasing investment, stabilizing monetary policy, and increasing productivity have not been achieved. The combination of mistaken policy decisions and resorting to foreign borrowing to compensate for these problems has left the country with a legacy that will be felt for many years.

One of the most critical decisions that started this downward spiral was Macri’s rollback of “retenciones” or taxes on agricultural exports, primarily soy, that had been increased during the government of President Cristina Fernández de Kirchner in 2008. This reduction in public revenue of about US$2 billion a year immediately created a public deficit that would be difficult to fill. It led to the Government’s decision to borrow externally, first through bond offerings and later through a highly invasive IMF program that provided about US$55 billion over two years to help stabilize the Argentine peso.

Inexchange, the Government agreed to IMF demands for a strict reduction of public spending, further liberalization of the economy in trade, a softening of labor regulations, and reductions in retirement benefits. The frequency of visits of IMF Managing Director, Christine Lagarde, from 2017 through 2019 heightened the public perception that the macro-economic policies of the Macri government were being micro-managed by the IMF. The fact that Argentina held the presidency of the G20 in 2018 made this situation more embarrassing for the international community, because G20 members could not easily “pull the plug” on IMF support to the president of the G20, even though there was little discernable progress in Argentina’s macro-economic performance.

The results of the Macri/IMF economic policies should be examined from at least six perspectives:

• Inflation

• Rate of economic growth

• Investment

• Depreciation of the peso

• Unemployment

• Growing poverty


When Macri took office on December 10, 2015, inflation was about 20 percent on an annual basis. By June 2019, inflation had reached close to 50 percent. Earlier debates about how to measure inflation and what was driving it have largely given way to the recognition that government policies to reduce inflation and its heavy impact on consumption levels among the Argentine population, particularly low-income groups, have failed. The prices of milk and meat are 60 and 100 percent higher respectively. The results are far-reaching, with 60 percent of the population in metropolitan Buenos Aires reporting that they have reduced food consumption.

An important component of rising inflation were dramatic increases in 2016-2017 of the costs of public services such as water, electricity, natural gas, and transport which are passed on to consumers. These tariff increases have reached 2,000 percent in the case of natural gas. There are very few examples in the world where such large increases have been publicly imposed in such an overnight manner.

The imbalance between costs and profits have resulted in the closing of about 40 small businesses a day across the country, contributing to increased unemployment, as noted below.

Economic growth

It is not surprising that Argentina was not able to grow in economic terms during the Macri presidency. Misdirected policies combined with a drop in global demand for agricultural exports, especially from China. Most significantly, the economy contracted sharply through the last four years. As Nobel Laureate Joseph Stiglitz has said on many occasions, including at The New School in 2017, there is no historical case in global economic history where fiscal austerity has generated economic growth. About 200,000 public sector employees lost their jobs in the last four years, starting with then Minister of Economy, Alfonso Prat-Gay, proudly saying in 2016 that the Macri government was “cutting the fat” from the public sector.

Prat-Gay’s predictions about inflation and economic growth were not proven correct and he was forced to leave the government a year later. For a period of 13 months the Argentine economy had “Chinese rates” of growth, but in the opposite direction, indicating a sustained contraction. As of April 2019, there was growth estimated at 0.8 percent, modest to say the least. Whether this represents a significant turnaround or whether it merely reflects good climate conditions for the agricultural harvest is too early to say as of this writing. But the contraction of the economy is evident in the streets of Argentine cities and towns, with fewer jobs, lower salaries, lower purchasing power, and consequently lower consumption of basic food and health care.


A third area of disappointing performance was the inability of the Government to attract either foreign or domestic investment. The promise that “sound policies and serious management” would attract foreign investment has not materialized. Indeed, the opposite has occurred, with growing capital flight and a flight from pesos into US dollars to avoid the uncertainty of the Argentine economy. Increased investment is also constrained by domestic interest rates that have reached 60 percent, hardly an incentive for borrowing.

Depreciation of the peso

Throughout the Macri presidency there has been a steady depreciation of the Argentine currency. When Macri took office in December 2015, the exchange rate was 9.75 pesos to one US$ dollar. By June 2019 the exchange rate was about 43 pesos to the US$ dollar. This depreciation is a clear indicator of the lack of confidence in the local currency and the economic management of the Government.


By mid-June 2019, the official unemployment rate exceeded 10 percent in Argentina. This double-digit unemployment rate was the highest since the worst days of the economic crisis of 2001. Government figures show that unemployment is evenly distributed around the country, with the 10 percent being about average for Argentina’s urban areas.

Growing poverty

A final performance indicator is the share of the population living below the poverty line. Government reports in April 2019 indicate that about 35 percent of the population lives below the poverty line, but this estimate masks the growing unemployment and underemployment rates, as well as dropping consumption.

Implications for the Presidential and Legislative Elections in October 2019

None of the above is good news for a president seeking reelection. The search for “green shoots” on the economic front seems to be a daily preoccupation for the Macri government, but the data do not yet confirm sustained growth. The government has sought to eliminate holding primary elections in August 2019 as a way to avoid negative attention to the economy. While there has been much pushback from candidates, it nonetheless is a clear indicator of the worries of the government.

In a May 2019 soccer match of the Copa de las Americas between Argentina and a Latin American rival, instant replay was used to justify the referee calling for a penalty kick that allowed Argentina to tie the game. One commentator noted that the referee needed a microscope to see the penalty. A microscope and a very narrow view of economic developments over the past four years are also needed to conclude that the economy is improving. The closure of many small businesses in Argentina strongly suggests otherwise.

The late June 2019 announcement of a trade agreement between the Mercosur countries and the European Union has been heralded by the government as a positive result of negotiations over a twenty-year period. Nonetheless, there has been widespread opposition, particularly to the likely economic consequences in industries such as wine production or mechanical engineering that fear subsidized competition from European firms. Argentina’s adherence to an asymmetrical agreement, as in the case of the IMF Standby Agreement, where the IMF holds all the cards, i.e. provides the money to a needy government, is a clear indicator of weakness.

Finally, while the above suggests many disappointments over the last four years, a further legacy of Macri’s term as president will be seen in the limitations the government has imposed on the next presidency, whoever wins. These limitations include an enormous social crisis, higher unemployment, much higher indebtedness, and few prospects for attracting new private investment.

Michael Cohen is Professor of International Affairs and director of the Doctoral Program in Public and Urban Policy at The New School. He is the author of Argentina’s Economic Growth and Recovery (New York and London: Routledge, 2012).