Argentine President Cristina Fernandez de Kirchner’s ruling coalition lost Buenos Aires province, the country’s largest constituency, while keeping a majority in both houses of Congress in midterm elections yesterday.
Sergio Massa, the former cabinet chief who now heads a group of dissident Peronist Party members, took 44 percent of the vote in Buenos Aires province, a 12 percentage point lead, over ruling alliance candidate Martin Insaurralde, with 96 percent of the votes counted. Fernandez’s ruling alliance received 33 percent of votes nationwide, according to the preliminary results. The government increased its majority in the lower house by five seats, Cabinet Chief Juan Manuel Abal Medina said.
The result ends any hope Fernandez may have harbored of pushing through constitutional changes to seek a third term in 2015 after failing to obtain a two-thirds majority in Congress, according to Mariel Fornoni, director of polling company M&F. Fernandez has used her majority in Congress since winning re-election in 2011 with 54 percent of the votes to nationalize the country’s largest energy company YPF SA last year and re-open an offer to restructure bonds left over from the country’s $95 billion default in 2001.
“It’s an important difference in votes,” Daniel Scioli, governor of Buenos Aires province who is an ally of Fernandez, said last night. “We have to respect the will of the people.”
Fernandez, 60, was absent during the campaign as she follows doctor orders to rest for a month after Oct. 8 surgery to drain blood near her brain. Her popularity recovered to 44.4 percent in October from 34 percent the previous month, according to the M&F poll.
Argentines elected 127 lawmakers for the 257-seat lower house and 24 for the 72-member Senate. Turnout was about 77 percent of 31 million registered voters, Interior Minister Florencio Randazzo said.
Buenos Aires is Argentina’s most populous province, accounting for 39 percent of the country’s population and 36 percent of its gross domestic product.
The ruling coalition also lost in the populous provinces of Cordoba, Mendoza and Santa Fe.
The race for the 2015 presidential elections kicked off after Buenos Aires Mayor Mauricio Macri announced his intention to run.
Massa’s margin of victory makes him a clear front-runner for the presidency, Jorge Piedrahita, chief executive officer at Torino Capital LLC in New York, said today in a note to clients.
“National elections are defined by the results in the province of Buenos Aires so Massa’s triumph is the defining element,” Piedrahita said. “Nobody wins the presidency without carrying the province of Buenos Aires.”
Massa and other opposition candidates have attacked Fernandez’s record on inflation, which private economists estimate at 25 percent, and failure to combat crime, which figure as the biggest concerns for voters.
Argentine dollar-bonds have rallied 14 percent since Massa won Aug. 11 primaries and the ruling alliance garnered about 30 percent of votes on expectations that Fernandez will be replaced by a more market-friendly president when she ends her mandate in 2015.
With foreign reserves at a six-year low of $34 billion and a widening gap between the official exchange rate and a black market rate, the government will have to make important economic decisions to ride out its last two years in office, according to Credit Suisse.
Those measures may include allowing the pace of depreciation of the peso to quicken, tighter controls on credit card purchases abroad and stricter restrictions on imports to stem the outflow of dollars, Credit Suisse Group AG economist Casey Reckman wrote in a report today.
“Barring external shocks, we think that Argentina can muddle through and leave the most difficult challenges to the next administration that takes office in December 2015,” Reckman, who is based in New York, wrote.