The somewhat unexpected anointment of Economy Minister Sergio Massa as the sole presidential candidate for the Unión por la Patria (UxP) coalition is destined to have an impact on the country’s finances. The Herald spoke to three people in different sectors of finance to gauge what they thought the repercussions might be.

“There is a range of candidates for president who, at least in advance, can be placed between the center and the center-right and whose difference I see more in the speed of implementation of the measures than in the measures themselves,” Alejandro Kowalczuk, head portfolio manager of Argenfunds, told the Herald. “This leads me to think of a positive reception for the markets, which could decompress some variables.”

“Regarding the negotiations with the IMF, the organization will go from negotiating with the Economy Minister to negotiating with the ruling party’s presidential candidate and potential future president, which does not seem to me to be a minor issue”

For Federico Furiase, director of the Anker Latinomérica financial consulting firm, Friday night’s events weren’t a complete shock. “From the beginning, it seemed to me that Sergio [Massa] was the natural candidate. He is the guiding force of the IMF negotiations, and [if his candidacy is confirmed], that will give some stability to the markets,” he said, referring to the fact Massa is renegotiating an economic program with the International Monetary Fund (IMF) stemming from the US$44 billion loan taken by the previous administration.

“[Vice-President] Cristina Fernández de Kirchner also needs that.”

Santiago López Alfaro, president of the Patente de Valores broker, on the other hand, was  “completely surprised” by the news of Massa’s candidacy – but he agreed with the forecast.

“I see it as good news. Massa is close to the markets, and will probably reach an agreement with the IMF,” he told the Herald. “I think we will have a few weeks of calm, where bonds and stocks assets will surely go up.”

Another broker, who asked to remain anonymous, only partially agreed. “There will probably be an initial period of calm for many investors who think Massa is pro-market,” he told the Herald. “But he is not – Massa believes in crony capitalism, not in free markets. If he did, the current economic landscape would not be full of controls, regulations, restrictions, and hindrances of all kinds.”

“The situation in the future is not likely to change without conflict and uncertainty, and that is bad for financial assets,” he said.

Furiase also expressed doubts about the immediate future. “We will have to see how [Sergio Massa] handles campaigning while being Economy minister in a context where he is negotiating with the IMF a standard fiscal adjustment program.” 

“Massa has already been carrying out a fiscal adjustment,” Furiase said. “And there is another [potential] conflict there.”

The background

Ever since Massa took office, media pundits have said the possibility of him running for president hinged on his capacity to reduce inflation, something he has not managed – prices went up 114% inter-annually in May. 

However, his place as the sole candidate appears, in fact, to have been at least partially influenced by the state of the shattered Argentine economy. Vice-President Cristina Fernández de Kirchner spoke highly of him in recent weeks, saying he had been handed a “hot potato” referring to the Argentine economy. 

According to the economic consulting firm Ecolatina, the country’s international reserves are at a record low negative US$2.2 billion. Just last week, the country lost close to US$202 million in the exchange market.

In Massa’s inner circle, they are convinced that pressures on the peso can grow even further if libertarian presidential hopeful Javier Milei does well in the primary elections, scheduled for August 13, due to the potential impact his “dollarization” proposal could have on the markets. That is one of the reasons Massa was opposed to having multiple candidates in the primaries, as he thought Peronist votes could be spread among them.

“[Massa] cannot be Economy minister of a government that is spreading nonsense through the media during primary elections when economic stability is at risk,” said Chamber of Deputies head and Frente Renovador leader Cecilia Moreau earlier this month. That day, she didn’t rule out the possibility of Massa’s resignation due to his “frustration,” prompting a full day of speculation – a move that social leader, Unión por la Patria member, and presidential candidate Juan Grabois considered as the Minister’s “extortion” for his candidacy.