Argentine President Alberto Fernández on Sunday named economist and government official Silvina Batakis as the new economy minister, following the abrupt resignation of longtime minister Martin Guzmán amid crises and tensions.
Fernández held meetings throughout the day, including with Vice President Cristina Kirchner, as he raced to find a new head of the economy after the shock departure of Guzmán, a key ally, shook his center-left government.
Presidential spokeswoman Gabriela Cerruti announced the appointment of Batakis to the post. She had been Minister of Economy for the province of Buenos Aires from 2011 to 2015 and headed a government secretariat.
Guzmán, 39, tendered his resignation on Saturday night amid growing tensions within the ruling Peronist coalition over how to deal with the economic crisis, tempered by the invasion of Ukraine and skyrocketing inflation.
The abrupt departure brought deep divisions to the surface in the government, with a more militant wing around Kirchner appearing to plot a coup on the more moderate wing over economic plans.
“We are facing a complex political crisis, deepened by the struggle for power,” said Rosendo Fraga, a political analyst.
Guzman, a moderate who has been active since 2019, was the driving force behind major debt restructurings with creditors. He was also instrumental in sealing a $44 billion deal with the International Monetary Fund (IMF) this year to replace a failed 2018 program with the global lender.
A presidential palace source said the president and vice president, who have not always gotten along in recent months, had maintained a “friendly” dialogue, helping them to reach an agreement on who should lead the Ministry of Economy.
political risk
Batakis, who is closest to the vice president’s wing, will be instrumental in shaping economic policy around a tightly controlled currency market, ongoing debt deals and trade. Argentina is a major exporter of soy, wheat and corn.
Alberto Ramos, an analyst at Goldman Sachs, said Guzmán’s departure was a political blow for Fernández, who was already facing a decline in opinion polls ahead of next year’s elections, and could jeopardize his relationship with the IMF.
“A politically weaker and unpopular presidency would increase the risk that macro policy will become more unorthodox and interventionist,” he wrote in a note, adding that currency and other local markets are likely to remain under pressure.
Guzmán has been criticized by the militant wing of the ruling coalition around Kirchner, which has been pushing for more state spending to support the hardest-hit Argentines.
He has been balancing that pressure with the need to cut a deep fiscal deficit, which has become more difficult amid rising energy import costs that have hit foreign currency reserves.
Economist Joseph Stiglitz, Guzmán’s mentor and close ally, explained that the minister was dedicated to resolving a debt crisis left by the previous government and resuming growth after the pandemic, but divisions in the government made the mission unlikely.
“His profound principles made it impossible for him to continue in office without the government’s commitment to a united, integrated and coordinated approach to the enormous challenges facing the economy.”
Source: CNN Brasil
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