Election Results Open Door for Argie Policy Change

Analysts see near-term changes coming after President Kirchner’s party suffered in Sunday’s congressional elections, even if big adjustments must wait until after the 2015 presidential polls. The president’s party won 33% of the national vote, and was defeated in the main provinces. Barclays expects the post-election period to feature policies aimed at reducing political tensions, as well as labor and social unrest. “Authorities will likely follow through with the policy gyrations that started with [the exploration joint venture agreed earlier this year with] Chevron and accelerated after the primary elections. Such a policy approach is positive, in that it anchors private sector expectations, lessening concerns about confiscatory risks and the long-term economic/political outlook,” Barclays says. This could also mean lower external financing allowing provincial governments to access international market access that has been cut off. On the negative side, though, Barclays finds the government is also unlikely to meaningfully change tariffs before 2015. “The prospects of a presidential regime change in 2015 are a clear credit positive event, which Argentine assets have clearly been trend pricing-in,” Bulltick says. The shop sees a clear opportunity for Argentina to “start from scratch” to repair its economy and re-engage the international markets following a change of president. It finds a new government would likely have more room to make the tough difficult decisions on public spending, monetary policy, diffusion of statistics, management of external obligations, and conversation with external creditors.