Polarising politics will hit Argentine recovery hopes

Significance

The tax, to be used to fund COVID-19-related healthcare, will not raise the USD300bn envisaged but will have symbolic effect. More serious are congressional moves to cut the federal shared revenues received by the city of Buenos Aires (CABA). Opposition Mayor Horacio Rodriguez Larreta has appealed to the Supreme Court.

Impacts

• More radical policies will do little to ease fiscal shortfalls but will deter investment and increase polarisation.
• Rodriguez Larreta’s reaction to funding cuts risks undermining his standing outside CABA.
• Fernandez’s control of a more pragmatic political narrative will continue to slip.