Buenos Aires (Reuters) — The Argentine Minister of Economy suddenly resigned on Saturday night. This is a move that could further destabilize the already swaying economy due to high inflation, rising energy costs and growing concerns about possible defaults.
Minister Martin Guzman was the designer of a recent $ 44 billion debt restructuring agreement with the International Monetary Fund by South American countries.
Tensions within the government boiled over how to deal with the economic crisis. The relatively moderate Guzman clashed with the more radical wings of the dominant Peronist coalition, led by Vice President Cristina Fernandez de Kirchner. She publicly criticized the IMF Agreement, calling for more public spending and more government action to combat inflation.
Mr. Guzman’s resignation has been the most notable resignation since President Alberto Fernandez took office in late 2019. Most of Mr. Guzman’s team at the Ministry of Economy has also resigned.
“The resignation of Minister Guzmán actually reveals the internal collapse of the government,” said Eugenio Marí, chief economist at Fundación Libertady Progreso at the Center for Public Policy Research, and Guzmán nevertheless “anchored” economic policy. “He added. Struggle.
“From an economic perspective, it amplifies the dynamics of uncertainty that Argentina already had,” Mali said.
There is pressure on the Argentine peso, the currency of the country protected by strict capital controls. Guzman also oversaw tax policies on grain and energy. Argentina is one of the world’s top grain producers.
Inflation is above 60% and is expected to rise further, but high energy import costs limit a country’s ability to increase its depleted foreign exchange reserves. Argentine government bonds plummeted to $ 1.20.
Guzman was planning to travel to France this week to discuss a debt restructuring of about $ 2 billion with sovereign lender Paris Club. The debt restructuring was considered important for resuming Argentina’s access to foreign direct investment needed for infrastructure and energy.
Former Argentine Treasury Secretary and Debt Negotiation Daniel Marx said strong opposition within the government made it unacceptable for Guzman to continue his post. The big question now is who will replace him.
“It seems important to me to see how the voids are filled,” Marx said. “Not just people, but the direction of economic policy to get out of all the skepticism and problems that have been dragged for quite some time.”
As of Sunday morning, there was no news about the successor, and President Fernandez had not yet publicly mentioned the departure, suggesting that the government had been surprised.
Some investors are concerned about how this withdrawal will affect the country’s ability to meet its obligations with the IMF, which is already under pressure, including inflation targeting, reserve levels and fiscal balance. rice field.
Maria Castiglioni, economist at C & T Asesores Económicos, said, “We have confirmed that this is not good and there are political problems,” and whether the government can take the necessary steps to deal with the crisis. I asked a question.
Horacio Larghi, an economist and director of consulting firm Invenomica, said the most important thing was whether the New Economy Minister had permission to act.
“The name doesn’t really matter who will replace him,” Largi said. “The important thing is whether the person has the power to do something.”