BUENOS AIRES, Argentina (`) – Argentina’s third economy minister in a month was sworn in on Wednesday, and as his first…
BUENOS AIRES, Argentina (`) – Argentina’s third economy minister in a month was sworn in on Wednesday, and as the first act Sergio Massa sought to lower sky-high expectations for managing the country’s economic woes.
He made it clear that he would not announce any sweeping measures that would immediately change the course of an economy suffering from runaway inflation, a shortage of central bank foreign exchange reserves and a sharp devaluation of the Argentine peso.
“I’m not a super, nor a magician, nor a savior,” Massa said during a press conference Wednesday night, where he outlined his main plans.
When Massa was first introduced as the new economy minister, many were quick to dub him a “super minister” because his position would include heading three previously independent ministries – economy, manufacturing and agriculture.
“This team has an obligation to provide answers that will not come in a day or two,” he said. “Magic doesn’t exist.”
Massa, who resigned as leader of the lower house of Congress, the Chamber of Deputies, to take up the cabinet post, is putting political emphasis on a role that had become a hot potato amid Argentina’s economic woes and increasingly fragmented governing coalition.
He expressed his determination to maintain the goal of keeping the government deficit at 2.5% of gross domestic product, which is part of the country’s commitment to the International Monetary Fund to restructure Argentina’s $44 billion debt.
Left-leaning members of the ruling coalition, including Vice President Cristina Fernández, herself a former president, have been highly critical of the deal with the IMF, arguing it requires too much austerity and will hamper Argentina’s ability to grow.
Massa made it clear he has no plans to tear up the deal, which was pushed by then-Economy Minister Martín Guzmán, a moderate who resigned in early July, and said he has no political support from the ruling coalition. Left-leaning Silvina Batakis was tapped to take on the role but lasted less than a month.
In an effort to fight inflation, which is more than 60% annually and is expected to rise sharply in the coming months, Massa said he would no longer use the central bank to fund government operations.
“We will make do with the resources we raise through taxes and with the funding we can get from the private sector,” he said.
He also said he would continue and expand efforts to cut energy subsidies by raising electricity and gas prices, a key IMF demand. Argentina is spending billions of dollars to import energy amid higher global prices after Russia’s invasion of Ukraine and pandemic disruptions.
Without going into details, Massa said he would give special benefits to the agriculture, fisheries and mining sectors to boost exports, thereby increasing hard currency reserves at the central bank.
He said he had no plans to initiate a devaluation along with tight capital controls given the sharp devaluation of Argentina’s currency in recent weeks.
“Let me be clear: devaluation shocks only produce poverty and a huge transfer of resources,” he said.
President Alberto Fernández described Massa’s appointment as a revitalization of the ailing government.
“We have a great opportunity as a country. Let’s not miss it,” said Fernández.
Massa, a powerful former mayor and long-time presidential candidate, is seen as a pro-market moderate with strong political influence and good connections with the country’s business elite.
He was chief of cabinet for almost a year during Cristina Fernández’s first term from 2007 to 2015, but then became critical of her as he pursued his own ambitions as president.
Massa will have to strike a delicate balancing act, reassuring markets skeptical about Argentina while grappling with social demands in a country where nearly four in 10 people are poor and there are growing protests demanding more welfare support financially.
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