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Economy & Business - October 2011 (ISSN 1741-7430)

ARGENTINA: So what will happen now?

The international consensus among academics, analysts and even well-connected Peronist politicians (such as Alberto Fernández, a former prime minister) is that the way the Kirchner-Fernández administrations have been managing the economy for the past nine years is unsustainable. The model depends on powerful injections of cash:  tax revenues from a recovering and now booming economy are not sufficient. They have to be supplemented by debt, export tariffs and raids on private sector savings, such as private pension funds. The government uses this “extraneous” cash to keep the economy humming, by hiring staff and commissioning construction projects. The government further appeases its electorate with public works projects and subsidies. This whole economic edifice depends on strong inflows of cash. Alberto Fernández (no relation to Cristina) was prime minister in the administrations of both Néstor Kirchner (2003-2007) and Cristina Fernández de Kirchner (2007-). He said that the economic lights were flashing amber.

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