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Argentina's president retains support after rocky 100 days
Financial Times
March 20, 2008

By Jude Webber

Life has hardly been a bed of roses for Argentina's President Cristina Fernandez in her first 100 days in office.

She marked the milestone this week amid protests from farmers over a rise in tariffs on the lucrative grain exports that are fuelling Argentina's economic boom, and with a deepening deb-acle over alleged government interference in official inflation data stripping the national statistics office Indec of credibility.

Her promises of a new-style foreign policy and a social pact to temper wage demands and boost productivity have failed to materialise. She has grappled with energy and fuel shortages and she was snubbed last week when Condoleezza Rice, US secretary of state, left Argentina off a regional tour. Furthermore, plans to renegotiate a $6.3bn debt to the Paris Club of western creditors to improve Argentina's image and help unlock investments six years after the biggest sovereign debt default in history now look likely to drag on.

But though her poll ratings have fallen slightly in March, the former senator enjoys high support three months after sweeping into office after an election landslide fuelled by the promise of continuing the strong growth delivered by Nestor Kirchner, her husband and predecessor.

Three new opinion polls put her approval ratings at between 47 per cent and 65 per cent, proving that despite high inflation - estimated by independent economists at about 20 per cent despite the officially reported 8.5 per cent for 2007 - the economic boom is giving most people enough cash, credit and jobs to keep them happy for now. "People see her as a continuation of Nestor Kirchner and he's still the most popular politician in the country," said pollster Ricardo Rouvier, who has conducted surveys for the government.

A central bank market survey sees 2008 growth of 7.3 per cent, compared with 8.7 per cent in 2007, and Ms Fernandez says the economy expanded 10.1 per cent year-on-year in January. "The perception is very much that Nestor Kirchner is pulling many of the strings," said economist Miguel Kiguel.

But Carlos Germano, a political analyst, said the government had to wake up to the fact Argentina faces new challenges and the post-crisis recipe applied by Mr Kirchner would not work forever. Despite feel-good growth, consumer confidence fell to a five-year low in March, according to a study by the Torcuato di Tella University.

Ms Fernandez promised institutional reforms but then charged mining companies new taxes that miners said ran counter to an existing tax stability law. Though she had been expected to cool ties with Hugo Chavez, Venezuela's president, energy shortages have forced her to lean more heavily on the country, which is also a big purchaser of Argentine bonds.

Meanwhile, Argentina remains shut out from international capital markets by the threat of legal action from the holders of more than $20bn in defaulted Argentine debt.

Ms Fernandez has bolstered Argentina's fiscal accounts and the central bank has a record $50.4bn in reserves, but Martin Lousteau, economy minister, acknowledges that the country is not immune to global financial fragility. And even without dubious inflation data and institutional concerns, it already faces strong competition for foreign investment from regional peers. "Brazil gets in one month what Argentina gets in a year," said Mr Germano. "The president is following an economic model which is still successful for now but she's going to get into trouble unless she makes institutional improvements, like resolving the Paris Club, the bond holdouts and (statistics institute) Indec," he added.

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