Friday, 19 August, 2022

Argentina seeks political fix to economic woes

BUENOS AIRES: Argentine President Alberto Fernandez is looking for a political solution to the country's economic crisis with his appointment of a long-term politician as a new "super minister," analysts say.

The South American country has suffered years of economic crisis, with some 37 percent of its population now living in poverty.

Inflation for the first half of this year alone topped 36 percent, and is predicted to reach 80 percent by the year's end.

With that crisis-backdrop, Fernandez on Thursday named Sergio Massa, the current head of Congress' lower house, as a new super minister to oversee the economy, development and agriculture ministries as well as relations with international organizations, reports AFP.

Massa, a lawyer by trade who has spent years in politics, replaces economist Silvina Batakis, who had been on the job less than a month.

"Massa is not an economist but a politician. But the point is that Argentina's crisis is political, it needs a person with broad shoulders and political skill," analyst Carlos Fara told AFP.

One of Argentina's major problems is the ongoing power struggle inside the ruling Frente de Todos political coalition between Fernandez and Vice President Cristina Kirchner, herself a former president.

In early July, Batakis's predecessor Martin Guzman resigned suddenly amid the political turmoil. Guzman, who was in charge of renegotiating Argentina's $44 billion debt to the International Monetary Fund, was a close ally of Fernandez.

However, "Massa brings sufficient consensus in the leadership of the ruling Frente de Todos coalition and may be able to make decisions that are not popular," said Fara.

The markets did not falter on Friday, one day after the appointment.

"The markets' reaction was positive because they see in Massa a pragmatic figure who has good relations with business leaders and the markets," economist Nery Persichini from the GMA Capital consultancy told AFP.

Massa will assume his new position on Tuesday after the Chamber of Deputies has appointed his successor. He will then announce his first measures the following day.

"It is very important that a politician is in charge of the economy. Putting technical people in charge did not work. This will generate peace in the markets, it's a pragmatic move," Pablo Tigani, director of the Hacer economic consultancy, told AFP.

Fernandez said the new super minister appointment is aimed at creating "better coordination" on economic policy.

As part of Argentina's negotiations with the IMF, it has committed to reducing its public deficit from three percent in 2021 to 0.9 percent by 2024.

One of Massa's toughest challenges will be to increase Argentina's available international reserves, which analysts say are at critical levels, as well as reducing the fiscal deficit.