(Bloomberg) -- President Mauricio Macri is offering tax breaks, bonuses and a higher minimum wage in a bid to win back Argentines who gave leftist Alberto Fernandez a resounding victory in Sunday’s primary election.
The measures, which also include freezing fuel prices for 90 days, will have a budget impact of 40 billion pesos, or less than $700 million as the Argentine currency tumbles for a third straight day. They will not jeopardize the country’s ability to meet its primary fiscal goal, according to a statement issued by the presidency.
“What happened in the election was my responsibility,” a contrite Macri said in a recorded video as he announced the measures. He apologized for the tone of his initial remarks on Monday, when he refused to take blame for the vote outcome and the ensuing market sell-off. “I want you to know I understood the result of the election and that I profoundly respect those who voted for other alternatives.”
The plan is an attempt to reassure voters and stem the bleeding after investors reacted to Macri’s drubbing at the hands of Fernandez by dumping Argentine stocks, bonds and the peso. They’re mostly aimed at the middle class that’s paying for the economic austerity Macri implemented in exchange for a $56 billion credit line from the International Monetary Fund, said Maria Castiglione, economist at CyT Asesores in Buenos Aires.
“These measures are not an economic plan, they’re just a little relief,” she said.
It may also be too late for Macri to overcome a 15-point defeat to Fernandez before the Oct. 27 election.
“I think it’s difficult to see this changing the election results,” said Daniel Artana, chief economist at FIEL, a research firm in Buenos Aires. “The difference is really big, it’s really hard to reverse the primary results.”
Meanwhile, Fernandez shrugged off any responsibility and said it’s up to Macri to deal with the market turmoil.
“This is an issue the government created and the government has to resolve; we can’t do anything.” Fernandez told journalists outside his campaign headquarters late on Tuesday. “I hope they find the solution.”
The Argentine peso has weakened some 22% since the election as investors fear Fernandez may adopt the type of interventionist policies that were common place during the government of former President Cristina Fernandez de Kirchner, now his running mate. The currency collapse is likely to fuel inflation that already runs around 50% per year.
Speaking to reporters on Tuesday, Fernandez declined to comment on Macri’s upcoming plans, saying that he didn’t want to complicate the situation for the president. He promised to help the government, depending on the measures announced.
“If the solutions appear and they favor the people, I’m going to help the government,” said Fernandez. “If the government doesn’t do well, it permanently complicates Argentines’ lives.”
(Updates with peso falling for a third day, adds analyst comment)
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