Ruling party candidate Scioli leads Argentine presidential primary

Reuters News
Posted: Aug 09, 2015 2:06 AM

By Hugh Bronstein

BUENOS AIRES (Reuters) - Ruling party candidate Daniel Scioli was ahead in Argentina's presidential primary on Sunday with 36.8 percent, early results showed, with voters favoring the Buenos Aires governor's policy of gradual change after eight years of leftist government.

Scioli is in outgoing President Cristina Fernandez's Front for Victory party and has promised to slowly modify her policies, which include heavy state control of the economy.

The presidential election, in which Fernandez is banned from running for a third consecutive term, is on Oct. 25.

The No. 2 vote-getter on Sunday was Mauricio Macri, the business-friendly mayor of the capital city whose goal is to do well enough in October to force a November run-off. He had 24.7 percent of the primary vote with 24.5 percent of ballots counted. The early results were seen as neutral for the markets.

Macri competed with two less popular members of his Cambiemos, or "Let's Change," coalition. Let's Change as a whole captured 31.2 percent. Scioli ran unopposed in the Front for Victory primary.

Ignacio Labaqui, who analyses Argentina for Medley Global Advisors, said Macri's coalition needed at least 30 percent on Sunday for him to stay in serious contention.

Each party chose its presidential candidate in the primary but, with voters free to cross party lines, Sunday's vote served as a dry run ahead of the October election. To win outright in October, a candidate needs 45 percent of the vote or 40 percent with a 10-point margin over whoever places second.

Both Scioli and Macri are former businessmen with more orthodox policies than Fernandez, whose high public spending has drained fiscal accounts and fueled inflation while currency and trade controls slowed investment.

Macri vows to quickly free the markets. Scioli says "gradualism" is the best way to open the economy while preserving the strong social safety net weaved together by Fernandez since she first took power in 2007.

Scioli said in a speech after Sunday's vote he would "continue the programs that need to be continued and change what needs to be changed in order to keep advancing."

The governor has revealed few details of his program, as he treads carefully to lock in Fernandez's left-leaning base without alienating the wider electorate.

Macri vows to scrap currency controls and grains export curbs, and to negotiate an end to the U.S. court battle with holders of non-paying sovereign bonds that has hobbled Argentina's finances by keeping it in default.

Argentina is the world's third-biggest soybean exporter and a major supplier of wheat to neighboring Brazil.

The bond market had been set to rally at any sign of a stronger-than-expected primary performance by Macri. But Alejo Costa at Buenos Aires investment bank Puente said the preliminary results were in line with expectations and had already been largely priced into bonds.

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Fernandez's policies have fueled one of the world's highest inflation rates, but poor voters who have benefited from state largesse over the past eight years remain loyal to her. She could return as a presidential candidate in 2019.

Congressman Sergio Massa placed a distant third in Sunday's primary with 12.1 percent.

Whoever is elected Argentina's next leader will need to carefully loosen controls that Fernandez has put on Latin America's third-biggest economy as it confronts tough trade condition, said Walter Molano, emerging markets analyst at U.S.-based BCP Securities.

"The global commodity picture is difficult and Brazil, Argentina's most important trading partner, is in crisis," Molano said. "The next president will need to move ahead at a measured pace. Nevertheless, change is on the horizon."

(Additional reporting by Eliana Raszewski; Editing by Eric Walsh, Chris Reese and Paul Tait)