Martin Guzmán had negotiated a deal to restructure $44 billion of the country’s debt. His departure threatens to destabilize an already shaken economy. A large part of his team at the Economy Ministry has also resigned.
NYT – Argentina’s economy minister abruptly resigned on Saturday night, a move that threatens to further destabilize an economy already shaken by sky-high inflation, rising energy costs and growing fears over possible new defaults on debt.
The minister, Martin Guzmán, was the architect of the South American country’s recent deal with the International Monetary Fund to restructure $44 billion in debt.
Tensions within the government have boiled over how to handle the economic crisis. Mr. Guzmán, a relative moderate, clashed with the more militant wing of the ruling Peronist coalition, led by Vice President Cristina Fernández de Kirchner. She had publicly criticized the I.M.F. deal and called for more public spending and more government action to fight inflation.
Mr. Guzmán’s departure was the highest profile resignation since President Alberto Fernández took office in late 2019. A large part of Mr. Guzmán’s team at the Economy Ministry also resigned.
“The resignation of Minister Guzmán really uncovers the internal rupture in the government,” said Eugenio Marí, chief economist at Fundación Libertad y Progreso, a public policy research center, adding that Mr. Guzmán had been an “anchor” for economic policy despite his struggles.
“From the economic side,” Mr. Marí said, “it amplifies the dynamic of uncertainty which Argentina was already in.”
Pressure is building on the country’s currency, the Argentine peso, which is shielded by strict capital controls. Mr. Guzmán also oversaw tax policies for grains and energy. Argentina is one of the world’s top grain producers.
Inflation is running above 60 percent and is set to rise further, while high energy import costs have constrained the country’s ability to increase depleted foreign currency reserves. Argentina’s sovereign bonds have plunged toward 20 cents on the dollar.
Mr. Guzmán was set to travel to France for talks this week on restructuring some $2 billion in debt with the Paris Club of sovereign lenders. Restructuring that debt had been seen as critical to reopening Argentina’s access to the foreign direct investment needed for infrastructure and energy.
Daniel Marx, a former finance secretary in Argentina and debt negotiator, said it had become untenable for Mr. Guzmán to continue in his post amid strong opposition within the government. The big question now is who will replace him.
“It seems important to me to see how the void is filled,” Mr. Marx said. “Not only the person but the economic policy direction to get out from all the skepticism and the problems that have been dragging on for quite some time.”
As of Sunday morning, there was no news on a successor and President Fernández had not yet publicly addressed the departure, suggesting that the government had been caught off guard. *
Some investors were concerned about how the departure would affect the country’s ability to meet its obligations with the I.M.F., which include targets for inflation, reserve levels and the fiscal balance — all already under pressure.
“This is not good and confirms that there is a political problem,” said Maria Castiglioni, an economist at C&T Asesores Económicos, adding that it raised questions about whether the government would be able to take the necessary measures to deal with the crisis.
Horacio Larghi, economist and director of the consulting firm Invenomica, said what mattered most was whether the new economy minister had license to act.
“As for who replaces him, the name doesn’t matter so much,” Mr. Larghi said. “What matters is whether or not the person will have the power to do anything.”
* He was eventually replaced by Silvina Batakis, former Minister of Economics of the Province of Buenos Aires and close to the more militant wing of the Peronist Party.