Argentine Economy Minister Guzman resigns as divisions grow

[peppertree]

Argentine Economy Minister Martín Guzmán resigned Saturday, marking the biggest departure of President Alberto Fernández’s government after infighting within the center-left ruling coalition escalated.

Guzmán announced his decision in a seven-page letter published on Twitter. No replacement was immediately announced.

The minister had come under pressure as Argentines battle heightened inflation of more than 60%.

The shakeup also raises doubts over whether Argentina can comply with a $44 billion refinance program with the International Monetary Fund, whose goals and objectives for the second half are seen by private economists view as too challenging to reach.

Guzmán, a 39-year-old economist who worked at Columbia University alongside Nobel Prize winner Joseph Stiglitz, lost support over the last months from the far-left wing of the coalition led by Vice President Cristina Fernández de Kirchner.

Lawmakers loyal to her in Congress voted against the IMF agreement he negotiated, even though the deal was approved with ample backing.

Under Guzmán, the country refinanced debts of $44 billion with the IMF and $66 billion with foreign bondholders - and saw 10.4% growth last year and 5.7% so far this year, after three years of deep recession.

At: https://www.bloomberg.com/news/articles/2022-07-02/argentina-economy-minister-guzm-n-resigns-as-divisions-grow



Argentine President Alberto Fernández and Economy Minister Martín Guzmán during a June 6 press conference - their last joint appearance before Guzmán's resignation today.

Guzmán, a protégé of Nobel laureate Joseph Stiglitz, earned plaudits for refinancing over half the country's public foreign debt and for strong growth following an inherited "Macrisis" (2018-19) and the 2020 global Covid shutdown.

But he had angered the governing coalition's left wing by resisting calls for looser monetary policy and more generous energy subsidies.

[Judi Lynn]

1. It's a world-wide problem. I'm sorry to see Guzman leaving.

Hoping the fascists won't be able to swing this era to slime their ways back to the top, preying upon the fears of the public to the point they forget what happened to the economy with their last president who devastated Argentina's economy for everyone outside the one percent. So sad.

This time the progressive president needs time to get the country back on the road, out of the deep ditch it was in when he was elected.

[peppertree]

2. Well said, Judi. And Argetina's RW have indeed been trying to sabotage the economy at every turn

Lately, Macri's ignominious last Economy Minister, Hernán Lacunza, floated the possibility that, should they regain power next year, they'll default on the peso-denominated public debt.

The goal? To scare banks and other bondholders into stopping purchasing Argentine treasury bills (short-term bonds) - which the government depends on for budget deficit finance.

And what made the threat sound credible is that the only other such default in Argentina's entire history, happened under Lacunza's brief tenure (September-December 2019).

While Argentina has defaulted on its dollar-denominated debts 8 times (temporarily, for the most part), it had never on its peso-denominated ones - until Lacunza's 2019 "reprofile."

You'll be happy to know Lacunza's treasonous gambit failed - but I'm sure they'll try again as elections approach.

···

That said, I wish Guzmán could've been persuaded to stay. He almost single-handedly prevented an all-out collapse - what with the "Macrisis" he inherited and the recent global crisis.

He deserves tremendous credit for successfully coming through, when almost no one thought it could be done.

It's probably back to Columbia for him now. He'll have plenty to share with his students, I'm sure.