President Alberto Fernández tapped Silvina Batakis as the country’s new economy minister Sunday after her predecessor resigned Saturday, deepening a political crisis boiling over into the economy and markets.
Fermández's spokeswoman Gabriela Cerruti confirmed the decision to Bloomberg News. Batakis, a low-profile policy maker and surprise choice, didn’t respond to a request for comment from Bloomberg News late Sunday night.
Batakis inherits a long list of economic challenges and the government’s US$44-billion programme with the International Monetary Fund. The announcement capped more than a day of suspense and uncertainty sparked by Martín Guzmán’s resignation following two and half years in the top economic job.
It remained unclear Sunday night if Fernández would make other cabinet changes. Central Bank Chief Miguel Pesce confirmed to Bloomberg News he will stay in his role.
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The second woman to serve as the nation’s top economic chief, Batakis was the economy minister of Buenos Aires Province from 2011 to 2015 under then-governor Daniel Scioli, who recently became production minister. More recently, she served in a second-tier role in the nation’s Interior Ministry.
The appointment was made after Fernández met for hours Sunday with Lower House Speaker Sergio Massa. Vice-President Cristina Fernández de Kirchner, who is publicly critical of the president and his economic team, spoke to him Sunday evening by telephone, local media reported.
“Batakis’ appointment seems to signal that the balance of power has tilted to the Kirchnerite side,” Diego Pereira, an economist at JPMorgan Chase & Co., wrote in a note to clients Sunday. “We would expect a more expansive fiscal stance, and potentially a renegotiation of the IMF programme.”
Markets will be watching for clues on Batakis’ economic agenda, the IMF programme and how she plans to navigate a divided ruling coalition that ended Guzmán’s tenure.
Analysts pointed to her lack of experience formulating major economic policies or negotiating with the IMF. Batakis could also represent a turn toward far-left economic policies, given her track record.
“It’s a victory for Cristina,” says Camila Perochena, a political analyst and professor at Torcuato di Tella University in Buenos Aires. “For financial markets, it’s an awful impact.”
Crisis-prone Argentina is currently battling inflation at over 60 percent, with nearly 40 percent of the population living in poverty and the economy forecast to enter a recession this year. The Central Bank has razor thin cash reserves that it’s struggling to build up amid low credibility and high prices on energy imports and the country’s bonds trade in distressed territory.
by Patrick Gillespie, Bloomberg