On Sunday, 35.8 million Argentinians will head to the polls to choose their president in a runoff between the current Economy Minister Sergio Massa and the far-right politician Javier Milei.
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Argentina's turbulent economy is at a crossroads depending on the runoff's outcome. It could take a radical turn towards extreme liberalism or a pragmatic attempt at gradual stabilization.
The fragile socioeconomic scenario urgently demands decisive action, potentially carrying unintended consequences. Massa and Milei propose starkly different solutions, presenting a serious dilemma for voters.
"The legacy is complicated for both candidates. But from the voter's perspective, it's even more complex because, regardless of the winner, we'll face challenging months, and it remains to be seen if society is willing to endure the effects of the measures taken," said Leonardo Piazza, director of the consulting firm LP Consulting.
Javier Milei, leader of the far-right party "Freedom Advances," advocates for a complete 180-degree shift to address Argentina's chronic and extremely high inflation, which soared to 142.7 percent annually in October. He attributes the inflation problem to monetary issuance as a means of financing the deficit. His disruptive solution is to dollarize the economy.
The economist, self-defined as an "anarcho-capitalist" dreaming of a capitalist society without a state, promises to remove barriers to foreign trade, shrink the State, privatize public enterprises, eliminate subsidies, reduce taxes, and cut public infrastructure spending. According to Milei, this economic program will ensure growth, fiscal order, and price reduction.
"Milei, at his core, is an extreme liberal. Although after the first round, he's more cautious in his speech. Now he talks about an orderly dollarization and unifying the exchange rate but no longer about closing the Central Bank," Piazza pointed out.
Nevertheless, Milei's recent prudence does not alleviate fears and doubts. Economic experts indicate that implementing his libertarian dreams would likely lead to a high probability of severe economic variable mismanagement in the short term and the risk of hyperinflation.
On the other hand, Sergio Massa, who is not an economist but a lawyer, boasts extensive experience in government management at various levels. He proposes a pragmatic and unorthodox economic program that requires a the State to regulate and guarantee what the market alone cannot achieve.
The progressive candidate bets on an improved export profile starting in 2024, aiming to replenish the reserves of the Central Bank and regain fiscal balance without relinquishing the State's role as a driver of development and guarantor of social inclusion.
Massa asserts that by 2024, Argentina could accumulate reserves of around US$40 billion through export growth, which would strengthen the Argentine peso and stabilize the economy.
He also highlights the necessity of renegotiating the extended facilities program signed in 2022 with the International Monetary Fund, to which Argentina owes around US$46 billion.
The winner of the presidential elections will assume office on December 10 and serve for a four-year term. During this period, the Argentine president will need to address issues in a country grappling with a fiscal deficit, lack of monetary reserves to prevent recurring extreme currency fluctuations, high levels of informal employment, a 40.1 percent poverty rate, and a 9.3 percent extreme poverty index.