Argentina spending cuts aim to ease primary deficit

Significance

Massa also extended peso debt maturities through a successful debt swap. On the political front, he was able to overcome the resistance of Vice-President Cristina Fernandez de Kirchner (CFK) and appointed Gabriel Rubinstein as vice-minister. However, major fiscal and monetary challenges remain.

Impacts

• Fiscal and monetary tightening will hurt short-term recovery, while rising tariffs will increase inflation and social tension.
• Massa may seek to move to a dual exchange rate regime, though controls will remain due to low international reserves.
• Massa’s success in reducing inflation will be key to guarantee an orderly political transition in 2023.