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Can Christina cool the heat?

Christina Kirchner’s picture, molested in a 2005 campaign (via Alexia, Flickr)

It is one of those comparisons journalists can not resist to use: ”Argentina sets to elect its Hillary”is only one of the many headlines over the last couple of months which compared the country’s presidential candidate Christina Fernández de Kirchner to poll-leading US-candidate Hillary Clinton.
Yet, except being married to former- or still-Presidents, the only thing common may be their challenges starting with an „I“: Mrs Clinton’s is named Iraq, Mrs Kirchner’s inflation.

Even though her husband Néstor Kirchner leaves office with an economic growth of about eight percent a year, he has paid a high price for it. After winning the control of Congress in the 2005 mid-term election, Mr Kirchner’s government used strong fiscal spending and low interest rates (in fact, they are negative) to boost the economy, thus halving workless-rate but also overheating the economy, leading to inflation.
In the last couple of months, rising prices for consumer goods have led to protests and fears about another economical crisis, as inflation was a major factor in the country’s economical breakdowns in 1989 and 2002. Even though the official statistic prices annual inflation at 8.6% in September, independent sources estimate it might be around 15–20% . There is also a strong suspicion Mr Kirchner’s government has manipulated the official statistics.

With her husband leaving office for, it might be Mrs Kirchner’s task to approach cautious reforms (she is expected to win the elections in the first round on Sunday). Some of these could be quite difficult, as they have opposite effects: To bolster economic growth, for example, she has to keep the Peso on a low value to spur on exports (she is said to have plans to get more foreign investment into the country).

At the same time she has to cool inflation by raising interest rates and lowering government spending – without hurting the economy too much, of course. Some of the meassures could also mean painful consequences for Argentinian people: To avoid blackouts like last winter, Mrs Kirchner might loosen control on energy prices to make investment into the sector more attractive. This could not only fuel the inflation fear and continue trimming people’s ability to consume, it might also make Mrs Kirchner a scapegoat in the people’s eyes. To avoid this, her husband is rumoured to do her a marital favour: Some observers expect him to implement some reforms himself before leaving office.

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