fernandez trounces rivals in argentina

8/3/2019 Fernandez Trounces Rivals in Argentina

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Fernandez Trounces Rivals in Argentinas FirstOpen PrimaryAugust 15, 2011, 4:55 PM EDT

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By Eliana Raszewski

(Updates to add consumer prices in sixth paragraph, bonds and peso in tenth.)

Aug. 15 (Bloomberg) -- Argentine President Cristina Fernandez de Kirchner showed she has enough

support to be re- elected in October after voters backed her stewardship of South Americas second -

biggest economy in an open primary.

Facing nine other candidates from different political parties, Fernandez had 50.1 percent in

yesterdays primary with 96.8 percent of the polling stations counted, according to the Interior

Ministry. Lawmaker Ricardo Alfonsin and former President Eduardo Duhalde were tied for second

with 12.2 percent. Argentines were allowed to vote for any candidate and none of the contenders

faced challengers from their own parties.

Fernandez, who succeeded her husband Nestor Kirchner in 2007, consolidated her support by

presiding over economic growth that averaged 5.6 percent per year since 2008, giving monthly

payments to poor families who keep their children in school and raising pensions.
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This is a recognition of all the work, the effort, everything that has been accomplished in the past

eight years, but also for what we still need to do, Fernandez, 58, told supporters last night in

Buenos Aires. My only promise is to keep working for everything we still need.

Opposition leaders have less than 10 weeks to regroup ahead of the Oct. 23 presidential election.Under Argentine law, a candidate needs to win 45 percent of the votes in the presidential race, or 40

percent with a 10 percentage-point lead over the second-place finisher, to avoid a Nov. 20 runoff.

Candidates who didnt get 1.5 percent support yesterday wont be eligible to run.

Faster Inflation

In backing Fernandez, voters shrugged off annual inflation that economists including former central

bank President Alfonso Prat-Gay say is about 25 percent, more than double the 9.7 percent reported

by the government in July. The economy grew 9.2 percent in 2010 and 9.9 percent in the firstquarter from a year earlier.

This is a result of the economy which, with the exception of 2009, has been going well for eight

years, said Daniel Kerner, a political analyst at the Eurasia Group in a telephone interview from

Buenos Aires. This shows the high level of support Fernandez has and I think that it wont differ too

much from what will happen in October.

Investors have taken another view on concerns that Fernandez, who nationalized the $24 billion

pension fund industry and fined economists who questioned official inflation, will maintain her

policies in a second term. Businesses and individuals pulled $9.8 billion out of the country in the first

half of this year, compared with $11.4 billion in all of 2010, according to the central bank.

Credit Rating Cut

After Standard & Poors cut the U.S. credit rating one level to AA+ on Aug. 5, the benchmark Merval

stock index tumbled 10.7 percent, the most in the world, while the cost of insurance against a

sovereign default over the next five years rose the most after Pakistan. At 9.86 percent, the yield on

Argentine dollar debt is the highest among major emerging market economies after Venezuela,

according to JPMorgans EMBI+ index.

Warrants linked to economic growth rose 0.73 cent to 18.02 cents. The peso was little changed at

4.1595 per dollar. The benchmark Merval stock index rose 0.8 percent to 2,989.67.

Rural Land


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Fernandez today urged lawmakers to accelerate approval of a bill she sent congress limiting foreign

purchases of rural land, legislation she proposed in April.

This is a very important point to show society, the productive sector and the world the idea that we

have about a vital and strategic resource, Fernandez told reporters today in Buenos Aires.

Yesterdays victory was a rare electoral win for Fernandez, who faced nationwide protests in 2008

after she announced a plan to raise taxes on agricultural exports. That four-month battle, which she

lost in a Senate vote, helped the opposition end her control of congress in legislative elections in

2009. A year later, Kirchner, her husband and closest political adviser over two decades of

campaigns, died of a heart attack at the age of 60.

Regional Defeats

In recent weeks, pro-government candidates struggled in regional races. Last month, opposition

leader Mauricio Macri was re-elected mayor of Buenos Aires with a bigger margin than forecast and

Fernandez ally Agustin Rossi finished third in the gubernatorial race in Santa Fe province.

Stung by those losses, Fernandez saw her approval rating fall to 52.5 percent in July from 60.5

percent in June, according to a July 22-26 poll of 2,000 people by Buenos Aires- based

Management & Fit. The survey had a margin of error of 3.1 percentage points.

Fernandez has said she wants a second term to continue the work she and her late husband did to

boost the economy following the countrys default on a record $95 billion of debt in 2001.

Last year Fernandez restructured $12.9 billion of bonds remaining from the default, prompting

Argentine dollar debt to surge 36 percent, the most among major emerging markets, according to

JPMorgan Chase & Co. Nevertheless, the country remains blocked from international credit markets

and the government has failed to reach a promised agreement over as much as $9 billion in

defaulted debt with the Paris Club group of creditor nations.

Tapping Reserves

Fernandezs policy of using international reserves to pay debt and control fluctuations in the peso

has caused reserves to fall to $50.3 billion from a record $52.6 billion in January, while central banks

from Chile to Brazil keep accumulating. The peso has tumbled 4.4 percent this year, the most

among 25 emerging market economies tracked by Bloomberg after South African rand and the

Turkish lira.


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A global economic slowdown prompted by a widening debt crisis in Europe and the S&P decision on

the U.S. credit rating may erode Fernandezs record and pressure her to make changes in a second

term, said Boris Segura, a Latin America strategist at Nomura Securities.

The government will have to follow more coherent macro policies that would slow the overheatingeconomy that is reflected in a high inflation and shrinking trade surplus, Segura said. Once the

government controls inflation, it will start correcting the loss of competitiveness of the economy. A

soft landing is better than a hard landing.

--With assistance from Rodrigo Orihuela in Buenos Aires. Editors: Bill Faries, Patrick Harrington

fernandez trounces rivals in argentina

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