Executive Summary

The end of President Mauricio Macri’s second year in government finds him stronger: with a consolidated leadership as shown by the  results of the legislative election held last October 22, the improved economic activity in 2017, the continuous political and economic measures implemented and the support shown by world leaders.
The governing party, Cambiemos, had a resounding victory in the recent elections on a national level, with 41% of the votes, consolidating its position as the country’s leading political force and garnering a comfortable advantage over the traditional Peronist party. Mauricio Macri achieved a historical feat, for the first time in the last 32 years, leading a non-Peronist party to win the elections in the five most important districts of Argentina that represent two thirds of the nationwide votes.
The reaffirmation of the citizen vote to Cambiemos transcends even more because the former President Cristina Fernández de Kirchner has participated in the elections as candidate of the political party Unidad Ciudadana, losing in the province of Buenos Aires and obtaining as a political party only 21% of the votes nationwide. The society has ratified with its vote the search for transparency and professionalization of public management, both promoted by the current government. It should be noted that the strategic positions of the current administration are occupied by successful people from the private sector who turned to politics.
The electoral result partly reflects the economic achievements of the current administration on a domestic and international level.
During its first 2 years of office, the Macri administration managed to unify the exchange market, lift controls on the purchase and sale of foreign currency, exit the default and return to international financial debt and equity markets, reduce annual inflation from around 40% to 20%, and emerge from a recession – achieving a 1.6% growth in GDP in the first semester of 2017.
Driven by voter support for the direction taken by the country’s leadership, and by a rising positive image, President Macri has announced a series of structural reforms tailored to improve the country’s competitiveness and growth. The government projects a 3.5% growth in GDP for the year 2018, a new drop in inflation -to an estimated annual 15%, an exchange rate of $21ARS to the USD, and a reduction in the fiscal deficit to 3.2%.
This report discusses in more detail the main events that occurred in the first two years of Macri’s mandate and the outlook for the second part of it (2018-2019).
Sector-Specific
¾ Plan for the operation of the Vaca Muerta oilfield.
¾ Opening-up of lemon exports to the US market.
¾ Opening-up of new air routes and arrival of low-cost airlines to the country.
¾ Construction of the Atucha III Nuclear Power Plant, with a generating capacity serving over one million people.
¾ Launch of the RenovAr 2 renewable energy plan, attracting offers of almost 8 times greater than the volumes required.
¾ Announcement of the first segment of competitive bidding for Public-Private Partnerships.
Foreign Policy
¾ Bilateral agreement with numerous countries and high-level meetings with international leaders.
¾ Fast-track process to join the Organization for Economic Cooperation and Development.
¾ Designation of Argentina as the host for the G-20 summit in 2018.
¾ Commencement of the IMF audit of national public accounts.
Domestic Policy
¾ Reduction of subsidies for electricity and an increase in jobs and investments in the electricity sector.
¾ Zero tolerance policy toward cases of corruption.
¾ Launch of the labor, tax and social security reform plan.
¾ Reactivation of personal loans through the launch of the U.V.
A. mortgage loans (Unit of measurement created by the Argentine Central Bank -BCRA- to reactivate mortgage loans).
¾ Expansion of the capital market.
Normalization of economic imbalances
¾ Effective monetary policy created by the Central Bank to safeguard the value of the Argentine peso and reduce inflation.
¾ Increase of Central Bank reserves.
¾ Reduction of the unemployment rate from 9.3% to 8.7%.
¾ Reactivation of the economy.
¾ Reduction of the fiscal deficit from 5.4% of the GDP in 2015 to 4.2% in 2017.