President-elect Macri promises to reboot Argentine economy

President-elect Mauricio Macri promised on Monday to correct the errors of Argentina’s outgoing leftist government but urged patience while he defines his strategy to liberalize the ailing economy.

The conservative Macri, who won a run-off presidential vote on Sunday, inherits a fragile economy: slow growth is driven by unsustainable spending, inflation is soaring and capital controls have backfired to leave foreign reserves at nine-year lows.

Macri took immediate aim at central bank president Alejandro Vanoli, calling on officials at the bank to step aside so that his government could nominate a team that it trusted.

“Argentina’s big problem today is that for four years there has been no growth, for four years no jobs have been created and now we have to get the country moving,” he told a news conference.

Macri, the 56-year-old mayor of Buenos Aires, ended more than a decade of ruling Peronist party rule in Sunday’s election by promising to overturn the free-spending populism of outgoing President Cristina Fernandez.

He becomes only the third non-Peronist leader since the end of military rule in 1983. The other two failed to finish their terms, a reminder of the difficulties that Peronist labor unions, state governors and opponents in Congress could cause Macri if he is unable to get the economy growing quickly.

Macri’s “Let’s Change” coalition only has 91 of the 257 seats in the lower house of Congress.

Still, he said his government would move to dismantle Fernandez’s policies once he takes office on Dec. 10.

“Capital controls are a mistake. We will fix the fact that the government gives no information, there is no access to statistics and the central bank is not independent.”

Policy changes such as eliminating export taxes and quotas on corn and wheat shipments and revamping economic data long viewed as manipulated by Fernandez’s government will be quick hits to underscore his intent to bring change.

INVESTORS

Foreign investors are waiting for details on how and when Macri will tackle debt default negotiations with U.S. creditors, remove capital controls, devalue the peso currency and replenish hard currency reserves.

Even so, they cheered Macri’s victory.

“Macri understands what the country needs to do to regain the confidence of international investors and get the economy back on its feet,” said Andrew Stanners, investment manager at Aberdeen Asset Management.

Macri said he would appoint a finance minister who would work closely with five other cabinet ministers including labor, energy and agriculture. Under Fernandez’s government, policies were primarily decided by her and her powerful economy minister, Axel Kicillof.

Argentina’s shift to the center-right raises the prospect of improved ties with the United States and the European Union, although Macri has said his first trip abroad will be to Argentina’s main trade partner, recession-mired Brazil.

His win is likely to send shockwaves through South America’s left-leaning governments. Venezuela’s conservative opposition was quick to paint his success as a good omen for their own bid to win legislative elections in December.

Macri plans to seek Venezuela’s suspension from South America’s Mercosur trade bloc because of accusations of rights abuses by President Nicolas Maduro’s socialist government.

“It is evident that the bloc’s (democratic) clause should be invoked because the accusations are clear and without doubt, they are not made up,” he said.

(Additional reporting by Karin Strohecker in London; Writing by Richard Lough; Editing by Kieran Murray)

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