AP

Argentina names economy ‘super minister’ as crisis deepens

Jul 28, 2022, 3:38 PM | Updated: 4:58 pm

BUENOS AIRES, Argentina (AP) — Argentina’s government announced the appointment of an economic “super minister” Thursday, the third economy minister in less than a month as the country struggles with high inflation and a slumping currency.

Sergio Massa, the head of Congress’ lower house, the Chamber of Deputies, will lead a new ministry that combines the current Economy, Productive Development, and Agriculture ministries, President Alberto Fernández’s government said.

The appointment comes only a few weeks since the left-leaning Silvina Batakis was tapped as economy minister after the more moderate Martín Guzmán abruptly quit, saying he wasn’t getting political support in dealing with Argentina’s economic woes.

Batakis is staying on in the government and will lead the state-owned bank Banco Nación. The former head of the Productive Development ministry, Daniel Scioli, will return to his previous role as ambassador in Brazil. Julián Domínguez, head of the Agriculture Ministry, the other formerly independent ministry, resigned.

Massa, a lawyer who is an influential leader in the governing coalition, will have to resign his legislative seat to take the new post in the Cabinet.

Batakis was sworn in as economy minister on July 4, two days after Guzmán resigned as tensions within the governing alliance burst out in the open.

Since then, Argentina’s already sinking peso has sharply depreciated in the financial markets amid broad expectation that a formal devaluation is all but inevitable at a time when inflation is running at an an annual rate above 60% and the Central Bank is running perilously low on hard currency reserves.

Massa, a powerful former mayor who has long been a presidential hopeful and has a strong base among voters in Buenos Aires province, the country’s most populous, is seen as a pro-market moderate who has strong political influence to negotiate with different factions of the coalition as well as the opposition. He has also spent years building connections with the country’s business elite as well as officials in the United States.

Massa was named to Fernández’s Cabinet on the same day that Batakis returned from the United States, where she met with officials from the International Monetary Fund amid questions about the future of a deal to restructure $44 billion in Argentine debt. Batakis also had meetings with officials at the U.S. Treasury and the World Bank and had confidently said she had the support of all sectors of the country’s ruling coalition.

Left-leaning members of the governing coalition, including Vice President Cristina Fernández, a former president herself, have been highly critical of the agreement with the IMF worked out by Guzmán. They argue it includes too many concessions that would hamper Argentina’s economic growth.

Massa was Cabinet chief for almost one year during the first term of Cristina Fernández’s 2007-2015 presidency. He then went on to become critical of his former boss as he pursued his own presidential ambitions.

Cristina Fernández and Massa once again united in 2019 under the broad coalition led by the current president in which disparate members of the Peronist movement joined forces to defeat the re-election bid by then President Mauricio Macri, a conservative.

Massa’s appointment comes after days of speculation that a Cabinet shakeup was coming as it became increasingly clear Batakis did not have the backing of the divided coalition to take on the politically sensitive role.

Massa willl now have to play the role of peacemaker in a country where almost 40% of the people are poor and there have been increasing protests calling for more social welfare, which runs head-on against demands made by the IMF to cut back on spending.

Early rumors that Massa would join the Cabinet led to a slight rise in the value of the peso Thursday as well as increases in prices of government bonds and local stocks.

Market analysts warned Thursday evening that the increases will be short-lived if the shake-up does not translate into a shift in the government’s economic policy.

“The relevant thing is not the change in names” but rather whether Massa will have “the capacity to implement fiscal and monetary measures within an integral plan that enjoys ample political backing within the governing coalition,” said Gustavo Ber, an economist who heads the Estudio Ber consulting firm.

Members of the opposition also said there needs to be more than a shake-up if there is hope for things to turn around.

“The restructuring of the Cabinet is not enough,” Mario Raúl Negri, a lawmaker who leads the opposition Radical Civic Union block in the Chamber of Deputies, wrote on Twitter. “What is needed is a plan, which the government has yet to have.”

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Argentina names economy ‘super minister’ as crisis deepens