Special to WorldTribune.com

GIS/Defense & Foreign Affairs

BUENOS AIRES — Market-oriented President Mauricio Macri of Argentina moved almost immediately after he was sworn in to office on Dec. 10, to radically transform the national economy and ethos, which had been held largely in stasis under either the Perónistas or the military for much of the past century.

The Macri approach may radically transform South American politics, even outside Argentina.

Former Buenos Aires Mayor President Macri, who ran for office under the banner of the Republican Proposal (Propuesta Republicana) front, introduced a number of economic transformations immediately on entering office. He is a graduate of Columbia Business School of New York.

Most export taxes and currency controls were eliminated, income taxes were cut, and the exchange rate freed up, allowing for a rapid 38 percent depreciation of the peso against the U.S. dollar. Taxes on agricultural and industrial exports were removed.

The moves — and particularly the anticipated depreciation of the peso — immediately strengthened Argentina’s export competitiveness, particularly in the agricultural sector.

Argentina has historically been one of the major exporters of grain and beef, so now the emphasis will be on the primary industry sector to see how quickly it can ramp up to meet market opportunities.

It is probable that major economic results would not be visible until possibly 2017. Indeed, a continued contraction in the economy seemed likely in the first quarter of 2016.

President Macri’s greatest challenge is to reduce inflation, which, under former Perónista President Cristina Fernández de Kirchner, had reached 25 percent.

The government, immediately on taking office, arranged between $15-billion and $25-billion in new inward investment before the end of 2015, from crop exporters, foreign banks, and investors.

Part of this would also come from the Central Bank of the People’s Republic of China (PRC), which has a currency swap program already in place. The PRC is likely to emerge as the major beneficiary of lower agricultural commodity prices from Argentina.

Clearly, private investors, concerned over Argentina’s history of loan defaults and arbitrary economic policies, were expected to be wary about early investment, and would probably wait a year or more to see how stable the new economic policies would be.

That would mean that real success for President Macri would not be visible until half-way through his four-year term. But Argentineans were clearly ready for change.

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