After somewhat surprisingly defeating his government-backed opponent Daniel Scioli in the Presidential election towards the end of last year, Mauricio Macri has set about to implement a range of liberalization policies that present a clear break from the populist policies of Macri’s predecessor, Cristina Fernández de Kirchner.
One of Macri’s first decrees was to scrap export taxes on a range of agricultural commodities – such as wheat and beef – and lay out a plan to gradually reduce the export tax on soy beans (by 5% per year from a level of 35%) which account for about 90% of the total agricultural export taxes.
This liberalization in tandem with the Argentinian peso being allowed to float, triggering a devaluation of over 30% with the exchange rate stabilizing at about 13 pesos to the US dollar, has lead to a surge in agricultural exports with farmers, who had long protested the export tax, selling off their vast stockpiles of grains.
The flipside to Macri’s policies is rising inflation, from an already high level, which he has sought to curb by raising interest rates. His gamble is that even though his ‘corrective’ economic policies might prove unpopular in the short run, Argentinians will be better off in the long run as the country moves from being a pariah towards integration in international markets.
During his 12-year tenure as President of Boca Juniors, one of Argentina’s (and, indeed, the world’s) most famous football clubs, Macri took them from the brink of bankruptcy to a golden age. As he sets out to make Argentina’s famous farmland profitable again, Argentinians will hope he can repeat that feat.
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