Monday, June 24, 2024

ECONOMY | 03-07-2022 22:55

After 24 hours of tension, Fernández and CFK chose Silvina Batakis as Argentina's next economy minister

After lengthy negotiations at the Olivos presidential residence, President Alberto Fernández appoints Silvina Batakis to replace Martín Guzmán, who resigned amid a crisis in the ruling Frente de Todos coalition.

President Alberto Fernández has appointed Silvina Batakis as Argentina's new economy minister, replacing Martín Guzmán, who resigned his post on Saturday amid an economic crisis and fierce criticism from the Kirchnerite wing of the ruling coalition.

Batakis, who until Sunday was provinces secretary at the Interior Ministry, previously served as economy minister for the Buenos Aires Province government between 2011 and 2015 when Daniel Scioli was governor.

With time ticking down before markets reopened on Monday, the appointment was confirmed by Presidential Spokesperson Gabriela Cerruti on her personal Twitter account late Sunday.

"President @alferdez appointed Silvina Batakis as head of the Economy Ministry. Batakis is a renowned economist who fulfilled that function in the province of Buenos Aires between 2011 and 2015".

According to reports, the 53-year-old's name emerged as a consensus pick supported by President Fernández, Vice-President Cristina Fernández de Kirchner and Lower House Speaker Sergio Massa, the three key leaders of the ruling Frente de Todos coalition.

The decision came after lengthy talks on Sunday at the Olivos presidential residence featuring several officials and a reported Sunday night phone call between Fernández and Fernández de Kirchner, who have been at odds over the government's economic direction. 

Fernández de Kirchner, who ruled Argentina as head of state between 2007 and 2015, has ramped up her criticism of Guzmán in recent weeks, despite the latter's success in renegotiating debt with private bondholders and the International Monetary Fund during his time in office.

The vice-president rejects the fiscal adjustment measures agreed with the IMF when Guzmán refinanced the country's debt of US$44.5 billion back in March. 

In his resignation letter, Guzmán implied that these internal disagreements led him to step away from the post.

"It will be essential to work on a political agreement within the governing coalition so that whoever replaces me (...) will have centralised management of macroeconomic policy instruments," the departing official said in his resignation letter.

On this point, economist Diego Bossio said on Sunday that, beyond the name of the new official, "what there has to be is political peace, political order, political agreement."

Batakis will face a baptism of fire, given the institutional crisis that has gripped the ruling coalition, with relations between president and vice-president looking increasingly strained.

Influential human rights leader and head of the Grandmothers of Plaza de Mayo, Estela de Carlotto, confirmed in a radio interview on Sunday that she had spoken on the phone with President Fernández to encourage him to reach out to Fernández de Kirchner and resume dialogue.

"I love Cristina very much and Alberto too, dearly, but I am Argentine. So I say I can't keep quiet when I see what's happening," she said, declaring that the "health of our country, the health of our people, our future, is at stake."


Batakis takes up challenge

Batakis, born in Argentina's most southerly province of Tierra del Fuego, studied economics at the University of La Plata, and did a postgraduate degree at the University of York in the United Kingdom.

She took charge of the economic portfolio in the Buenos Aires Province government in 2011, having previously served as finance undersecretary for the two years previous.

Batakis, who is a huge fan of Boca Juniors football club according to reports, is seen as close to Scioli, who was recently appointed Productive Development Minister in the national government.

The new economy minister will inherit, in the words of President Fernández, "a growth crisis" exacerbated by a shortage of foreign currency, and an inflationary crisis that led prices to soar by more than 60 percent over the last 12 months. 

Just a week ago, the IMF approved the first review of Argentina's new Extended Fund Facility programme, corresponding to the first quarter of this year, and authorised a disbursement of US$4.01 billion to shore up Central Bank reserves.

But in the following days, Argentina has seen strong movement in both its official and parallel markets, while the country risk index, measured by JP Morgan, rose to 2,500 points. 

Poverty fell last year but is still above pre-pandemic levels. In the second half of 2021 37.3 percent of the population were considered poor, according to the INDEC national statistics bureau.

On the other hand, unemployment in the first quarter of 2022 reached seven percent, a lower percentage than Guzmán inherited when he took office (8.9 percent) and the lowest figure since 2016, although an increase in informal and unregistered work has taken place.

The latest data on the state of public debt as of May 2022 put the figure at the equivalent of US$374.536 billion, or 80.1 percent of Gross Domestic Product (GDP), while in 2021 it had been 79.9 percent.

Gross international reserves stand at around US$42.4 billion, but net reserves are much lower, according to analysts.

In the first quarter of this year, gross domestic product grew six percent year-on-year, according to official data.



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