A snapshot of Buenos Aires life right now, the ubiquitous Mauricio Macri was spotted in billboard form on Saturday evening in Recoleta. With the flag fluttering behind him, atop one of the capital’s many splendid art museums, a beleaguered President was being urged to keep his word on yet another issue by yet another of his growing number of detractors. If he looks fed up now, well he might, as the relative calm before the storm has long since passed.
Upon coming to power in 2015, the former Boca Juniors chairman was clear about the economic challenges ahead and how he would face them. A perennial problem, Argentina was broke. Macri therefore set about curbing state spending and attracting foreign investment through the issuance of short-term bonds.
In a bid to stem the frankly ridiculous flow of inflation in the years immediately preceding Macri’s tenure, these LEBAC bonds initially stimulated an influx of more stable currencies such as the Dollar being traded into the country for Pesos. Yet just over a week ago, interest rates here were upped to 40%. Many overseas investors have long since left Argentina in anticipation too, effectively quitting while they were ahead.
What does this all mean for the man in the street then? Yesterday I broke the rules – 1984-style – by taking a quick break from looking at or thinking about Macri, to go out and purchase a new iron. Heading to the intimidatingly large Carrefour, just around the corner from my office, I found what I was after and went to pay the AR$ 750. How shocked the woman at the till was when I asked to pay for it all in one go as well, rather than ten cuotas as is the norm.
Indeed, the current state of the economy is so shambolic that a common marketing ploy is for customers to pay for almost anything in instalments, or cuotas. The attraction of this system is that there is no interest or even price-relative-to-inflation payable (i.e. By the time the tenth and final payment of AR$ 75 has been paid for the iron, the AR$ 750 that you have paid is far less than the AR$ 750 you would have paid if you had paid the full amount 10 months ago). Not sufficiently au fait with the black magic of the Argentinian economic system however, I paid my £25 or so and was happily on my way.
When I arrived in November the exchange rate was AR$ 17.5 to the Dollar. This has since gone up by about 40% to over AR$ 24 in just 6 months. In my job we trade in both currencies, and the novelty still hasn’t worn off that we must revise the rate almost daily. Most of my colleagues seem unbothered about the whole thing though, accepting it as part of life in the same way that there are seven days in a week and twelve months in a year.
That said, as I discovered not long after starting my job, in Argentina there are apparently thirteen months in a year. Known as Aguinaldo, all workers are given a 50% additional bonus on top of their usual monthly pay every June and December – these two extra amounts hence being termed the ‘thirteenth month’.
Whether this is chicken or egg re: economic malaise, I’m not sure, but something for certain is that Macri’s proposal to scrap Aguinaldo has been one of his more unpopular reforms in the last 3 years. That remains up in the air for now though, as does a mid-year 10% pay-rise rumoured to be on its way at my work, to vaguely track inflation. In any normal course of events, everybody would be delighted with such a sizeable, unconditional increase in salary. This isn’t a normal course of events though, and so here they are almost disappointed that it won’t be more. How absurd the whole situation is. How Argentina.