Last week, millions of Argentines went to the polls to cast their ballot for the first election in 12 years that did not include the surname Kirchner. With nearly all the votes counted, the two leading candidates – Mauricio Macri of the Cambiemos party and Daniel Scioli of the Victory Front ruling party (FPV) —will head to a presidential runoff next month. Although polling suggested a wide gap between the two candidates, Mr. Scioli and Mr. Macri finished with 36.7% and 34.5%, respectively. Despite the heated campaign, both candidates will have to act quickly in the post-Kirchner era and guide their country out of the economic malaise that has plagued Argentina for several years.

Last week, millions of Argentines went to the polls to cast their ballot for the first election in 12 years that did not include the surname Kirchner. With nearly all the votes counted, the two leading candidates – Mauricio Macri of the Cambiemos party and Daniel Scioli of the Victory Front ruling party (FPV) —will head to a presidential runoff next month. Although polling suggested a wide gap between the two candidates, Mr. Scioli and Mr. Macri finished with 36.7% and 34.5%, respectively. Despite the heated campaign, both candidates will have to act quickly in the post-Kirchner era and guide their country out of the economic malaise that has plagued Argentina for several years.

During the last few years of the Kirchner administration, Argentina has experienced a series of setbacks that have left the economy in dire straits. Currently, the fiscal deficit stands at about 7-8 percent of national GDP, along with a 30% inflation rate. These economic problems are exacerbated by the nation’s restricted access to capital markets due to the continuing law suit with the “holdout” creditors. Although a consensus exists in Argentina that some market reform is necessary to alleviate the economic dysfunction, the speed at which these changes occur and the degree of change implemented will depend on whether Mauricio Macri or Daniel Scioli is elected as each represents one school of thought on the subject. 

Prior to the implementing their proposed policies, each candidate will have to win over the remaining electorate in the second round this November. Sergio Massa, a former ally of the Fernandez de Kirchner’s who moved into the opposition and finished third in the first round of the election with 21.3%, is expected to play an influential role. Although Massa is a Peronist, he is a dissident within the larger party and prevented Christina Kirchner from running for a third term. Regardless of which candidate Massa supports, he will undoubtedly seek concessions from both candidates and political positions in exchange for his support. However, his support does not guarantee a united set of voters for either Scioli or Macri. Massa’s coalition contains both dissident and Peronist supporters, each of whom may fall back on Macri and Scioli.

Following a Scioli victory next month, the Kirchner backed candidate would continue most of the current Administration’s social and economic policies, but also gradually open up Argentina to foreign investors. His administration would aim to reduce the fiscal deficit (by 1-2% in 2016) by focusing on energy and fuel subsidies that favor medium and high-income households. Scioli would also favor reducing inflation at a moderate pace, and incorporate union and business leaders in the process of bringing down inflation. Despite Kirchner’s obstinate stance against the hedge funds, Scioli’s economic advisors have signaled that his administration would look to resolve the holdout issue during the first year of his term.

A victory for Mauricio Macri and the Cambiemos party would look to reverse the current economic policies immediately, with a greater emphasis on open and free markets. Like Scioli, Macri would stress the importance of reducing subsidies, seek to eliminate export taxes and scale back capital controls. He would also try to demonstrate that Argentina is a prime destination for foreign investors, and draw in greater capital inflows to offset devaluation pressures while also seeking a faster adjustment to liberalize the foreign exchange market. The Macri administration would also look to move quickly to negotiate a deal the foreign holdouts, since his economic policies prioritize foreign investment.

Whoever wins the upcoming election will face a country in a precarious economic situation and a political landscape that requires compromise. For Daniel Scioli, he will need to gain control of his party and try to reduce Kirchner’s influence so he can pass meaningful economic reforms. As governor of the Province of Buenos Aires, Scioli effectively balanced the interests of hardcore Kirchner supporters and dissidents and will need to do the same as president, along with incorporating different party members at times. Mauricio Macri would face an even more complicated political arena since the FPV and its allies kept their majorities in the Senate and Chamber of Deputies- in the Chamber specifically the FPV has more deputies than all of the other political parties combined. This political dynamic will require Macri to negotiate and compromise with Congress and may impact the speed of his economic policy reforms.

After the remainder of the election plays out in Argentina, the candidate who moves into Casa Rosada will need to embark on his economic agenda immediately. With the drop in commodity prices, anemic demand from China and an imminent Federal Reserve hike in the United States, Argentina’s economic problems may worsen unless meaningful policies are undertaken. Luckily for Argentina, both candidates have presented thoughtful platforms that address these economic hurdles, leaving the vision for Argentina’s next four years up to the voters next month.