Argentina President Alberto Fernandez Says He Won’t Seek Reelection

Scott Squires and Patrick Gillespie
·3 min read
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(Bloomberg) -- President Alberto Fernandez said he won’t run for reelection as Argentina faces over 100% inflation, upending a race within the ruling Peronist coalition to pick a candidate ahead of October elections.

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“On December 10, 2023, 40 years after the nation returned to democracy, I will deliver the presidential sash to whomever is legitimately elected at the polls by popular vote,” Fernandez said in a video posted Friday on his Twitter account.

While unsurprising amid a slump in government popularity, Fernandez’s announcement opens the door for Argentina’s left-leaning ruling coalition to decide on another candidate amid intense infighting. Annual inflation reached 104% in March and the crisis-prone economy also faces a historic drought and waning international reserves, leading the government to try to renegotiate its $44 billion lending program with the International Monetary Fund.

Argentina’s economy is expected to contract 2% this year, according to a Bloomberg News survey published Friday.

Read More: Argentina Central Bank Lifts Rate to 81% as Inflation Jumps

“Fernandez’s decision came earlier than expected,” said Ignacio Labaqui, an analyst for Medley Global Advisors in Buenos Aires. “Nobody really believed that he stood any chance of seeking another term in office.”

International investors are already positioning for voters to pan Fernandez’s left-leaning coalition in October’s elections, betting Argentina will elect a market-friendly government or a rage-fueled political outsider to bring the economy back from the brink.

Argentina’s $16.1 billion in overseas bonds due 2030 gained as much as 0.7 cent on Friday to around 25 cents on the dollar before paring gains.

Read More: Gramercy Backs Argentina Bull Case as 104% Inflation Guides Vote

Polls showed Fernandez’s approval rating dropped below 20% earlier this year, with nearly 40% of the country living in poverty and expectations for another recession this year. His government faced one setback after another, from the Covid-19 pandemic that killed 130,000 Argentines to the ripple effects of Russia’s invasion of Ukraine followed by the worst drought on record in the South American nation this year.

Beyond international issues, domestic problems plagued Fernandez’s term too. His broad Peronist coalition suffered from intense political fights between him and Vice President Cristina Fernandez de Kirchner over economic strategy almost since his inauguration in 2019. The government never came forward with an economic plan seen as credible by markets and Fernandez even said in 2020 he didn’t believe in big-picture road maps.

Read More: Argentina’s Dominant Political Force Looks Into Electoral Abyss

Fernandez’s decision to step aside was applauded by rivals within his coalition. Interior Minister Eduardo de Pedro, a Kirchner ally seen a potential candidate backed by more radical factions of the coalition, called the announcement “a necessary step to start to put order in Peronism.”

Pollsters say the move also clears a path for Economy Minister Sergio Massa, a senior leader in the coalition, to run as the government’s candidate. Massa, who already lost a presidential bid in 2015, has deflected questions on becoming a candidate, saying he couldn’t campaign and manage the economy at the same time. He didn’t comment on Fernandez’s decision as of Friday midday, nor did his press office respond to a request for comment.

“The most important issue within the coalition is whether Massa decides to be a candidate or not,” says Lucas Romero, director of Argentine polling firm Synopsis. Massa’s decision “will occur toward the deadline to announce candidacies, which is June 24.”

Last month Mauricio Macri, who preceded Fernandez as president and is a leader of the business-friendly opposition coalition, also ruled out becoming a candidate, clearing the way for a primary race between members of his political space.

Read More: Argentina’s 100% Inflation Opens the Way to a Presidential Upset

--With assistance from Rafael Gayol.

(Updates with economic forecast in fourth paragraph, analyst comment in the second-to-last paragraph.)

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