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Argentinian president Mauricio Macri

When President Mauricio Macri took office in December 2015, he had big plans for overhauling Argentina’s economy. Macri promised to cut the budget, tame double-digit inflation, restart growth and create jobs. His announced goal was to reduce the primary deficit target to 3.3% of GDP in 2017. Macri has acted swiftly with moves that prove his willingness to steer the country through short-term economic pain for long-term gains.

Over the past few months, a number of setbacks have slowed Macri’s agenda. He has shifted to a more gradual reform strategy and announced a revised target deficit rate of 4.2% of GDP for 2017. The outcome of his efforts largely depends on the state of the economy next October—when parliamentary elections occur.

Here’s a look at five key reforms undertaken by Macri’s administration and the status of each as the nation inches forward.

Reform #1: remove currency controls and ease other governmental restrictions

Shortly after his inauguration on December 10, Macri removed the currency controls established under the previous president that had propped up the peso. As expected, the value of the peso fell (by 30%) within days. Allowing the peso to float signaled Argentina’s commitment to macroeconomic stability. Furthermore, removing the restrictions in an orderly manner increased the competitiveness of the country’s export sector.  

Remarkably, the shift to a floating peso was met with little backlash, demonstrating confidence in Macri’s vision of greater foreign investment and increased exports. Though inflation has remained high, positive signs have emerged: foreign currency reserves reached $US 40 billion in early October, an increase of 63% from December 2015.

Reform #2: slash subsidies to meet fiscal consolidation targets

Thanks to generous subsidies imposed in 2002, Argentinians were paying the lowest utility bills in Latin America. Gas subsidies amounted to 1.5% of GDP. Early this year, Macri raised gas prices, leading to public discontent and legal challenges that rose to the Supreme Court. In August, the Court ordered the government to suspend cuts and hold public hearings on how the prices were calculated. A compromise was reached allowing for a more gradual rate increase through 2019.

Macri’s original strategy was to move furiously in achieving market-driven prices, knowing that these changes would be contested in court and by Peronist opponents. Following the gas lesson, Macri proposed a gradual increase in electricity rates. The Supreme Court concurred.

Reform #3: add transparency to government

Argentina has taken steps under Macri to become more transparent in governmental affairs while cracking down on corruption. Earlier this year, the government overhauled the state statistics agency to report more reliable data on GDP and inflation, among other statistical categories. The International Monetary Fund endorsed the move, and lifted the 2013 formal censure it had placed on Argentina’s data in November. In August, the legislature proposed a bill to hold corporations responsible for corruption violations—a change from existing laws that applied only to individuals charged within the corporations.

When the corruption bill comes up for vote in the next few months, Argentina may join other Latin American countries that have moved towards accountability with similar legislation to improve the private-public business environment. Still, there’s little optimism as Argentina has not demonstrated consistent appetite to enforce anti-corruption laws.

Reform #4: recover undeclared assets abroad and at home

In May, Macri announced a partial-to-full tax amnesty covering an estimated $500 billion in undeclared assets stashed away by Argentinians. The move is designed to recover funds to help pay overdue pensioners, whom the president pledged to assist, as well as help finance a multi-billion dollar infrastructure program.

The amnesty period closes in March 2017. As of October 31, 100,000 Argentinians have declared approximately $4.6 billion in hidden assets. The government hopes that $30 billion could return to Argentina, potentially triggering the foreign direct investment the economy needs to move forward quickly.

Reform #5: cultivate the trust of the Argentine people to gain time

A markedly different leader from his predecessor, Macri’s discretion and ability to compromise may have appealed to Argentine voters. His aggressive agenda is praised by the business community, even as he has preached patience to a populace accustomed to significant state largess.

With a stubborn inflation rate and increased unemployment, Macri’s approval rating is 40%, down from 63% in December 2015. The General Confederation of Labor is threatening to strike by year’s end if things do not improve, while 1.5 million Argentines have slid into poverty since the start of the year. But according to The Financial Times, many investors believe the country hit its low point this year, and can only improve in 2017. Further, polls indicate Macri is still well-liked personally.

Given the vast issues left over from previous administrations and the extent of the reforms Macri proposed, movement towards a more competitive economic model is crawling. Will the people give Macri the time he needs to achieve his mandate?

This article first appeared on FTI Journal.