​Uncharted territory

ARGENTINA - Report 14 Apr 2020 by Esteban Fernández Medrano

As in the rest of the world, the outbreak of the new coronavirus has obliged Argentina’s government to navigate through uncharted territory. The crisis fundamentally changed the government’s priorities, forcing a focus on how to tackle the unavoidable health and economic costs of the pandemic. Consequently, Argentina’s fiscal outlook, like that of most other countries, has been shaken. On the income side, the mandatory lockdown has affected activity and tax collection, while on the spending side, palliative aid programs aimed at offsetting the income loss and rising health costs have added significant spending pressures.

But in contrast to what is happening in most other countries, Argentina's economy was already in a state of flux and economic uncertainty before the global health crisis began. With the country already in a recession, the pandemic began at a time when a new president came into power, one whose left-leaning political alliance represents a fundamental change in economic ideology compared to the previous administration. Additionally, this external shock occurred in the middle of an ongoing debt restructuring process.

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