​Political power struggle at year end

ARGENTINA - In Brief 27 Dec 2017 by Esteban Fernandez Medrano

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Wednesday night the Government managed to close the year with the approval of the remaining three economic bills which were debated until late night in the Senate. These are: 1) the 2018 budget, 2) the tax reform and 3) the extension of the financial transaction tax. These three laws, together with the pension reform approved last week, represent the heart of the economic policy measures which the Macri administration expects to use to sustain the improving macro picture while reducing the fiscal imbalance.In line with what happened during the approval of the pension reform and quite in line with what might have been expected after the split between the Kirchnerists and the traditional PJ, the government managed to approve those bills, thanks to the support of non Kirchnerist-PJ Governors. Those governors instructed their congressional representatives to support the official bills, thereby giving the government the needed majorities. Fortunately, in contrast to the street clashes between the police and leftist activist (spurred by many Kirchnerists) during the pension reform, the approval of those three bills went on without significant social unrest, perhaps because they were socially less sensitive, or because the opposition realized that the previous street riots were politically counter-productive, or perhaps simply because the likelihood that the Senate will finally vote in favor of the removal of former president Cristina Fernandez de Kirchner seems for the time being quite unlikely. In any case, this is good news - maybe not enough to change some macrocmacro concerns such as stock of Lebacs and the likely monetary / FX pressures, but still positive.