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Mid-term election fortifies Argentina reform process

23 Oct 2017, 11.50 am GMT

Mid-term election fortifies Argentina reform process

Buenos Aires, 23 October (Argus) — Argentina's ruling coalition won decisive victories across the country in legislative elections yesterday, reinforcing the economic reform agenda of center-right president Mauricio Macri who took office almost two years ago.

The president's reform campaign has included removing state control over the economy and easing heavy subsidies across the energy chain.

Among the foreign investors keeping a close on yesterday's face were foreign oil companies targeting Argentina's immense shale oil and natural gas potential.

All eyes were focused on Buenos Aires province, where Macri's senate candidate, Esteban Bullrich, beat former president Cristina Fernandez de Kirchner by more than four percentage points.

Investors saw the race in the country's most populous province as a test of whether Fernandez's populist policies could make a comeback in Argentina.

The election results ratified "the commitment of Argentinians with change," Macri said as he celebrated the results last night.

But Fernandez is still in the political game. Under the country's electoral rules, the ticket with the most votes gets two seats in the senate while the runner-up gets one, meaning the former president will still become a senator, giving her immunity from arrest in numerous ongoing corruption probes.

As she conceded defeat last night, Fernandez described herself as the leader of the opposition against Macri's reforms, which she has characterized as "austerity."

Although it will win several seats in both the lower house and the senate, Macri's coalition still will not have an outright majority in the congress, meaning it will have to form alliances with other parties.

Ever since Macri took power in December 2015, his government moved quickly to scrap some of the protectionist policies imposed by Fernandez in a bid to attract international investment with a particular focus on shale exploration and renewable energy.

In the most recent example of Macri's efforts to lift state economic controls, his government eliminated minimum prices for crude that were meant to encourage domestic production.

Macri has said one of his current priorities is labor reform in an effort to tackle the high cost of hiring workers in Argentina, which energy firms have long cited as one of the most important roadblocks to investing in the country.

Reforms to make the labor market more flexible have proven to be a thorny process across Latin America, most recently in Brazil.

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