Argentina’s new economic chief, the crisis-hit country’s third in less than a month, could be his last best chance to repair a sinking ship, or at least avoid further deterioration ahead of a high-stakes election next year.
A cabinet reshuffle on Thursday orchestrated by President Alberto Fernandez followed days of wild rumors about whether Silvina Batakis, who was appointed minister just a month ago after the surprise resignation of longtime economic manager Martin Guzman, might survive.
The task of managing the growing unrest in South America’s second largest economy after Brazil now falls to Sergio Massa, a congressional leader of the ruling Peronist coalition, who will oversee economic, industrial and agricultural policies from next week.
“It appears to be their last chance,” said political scientist Andres Malamud, referring to government officials’ so far unsuccessful efforts to control sky-high inflation, overspending and a falling peso currency.
Malamud described recruiting Massa for the expanded role as “more of a desperate gamble than a sensible one,” adding that reducing a widening budget deficit and restoring confidence must be top priorities.
Massa told reporters on Friday that he would announce some new measures next week, although what they will look like remains unclear.
Fernandez’s bitterly divided centre-left coalition hopes Massa’s arrival will calm financial markets. The initial reaction on Friday was positive and the stock market recouped some losses.
The government – and some observers – are also hoping he can help calm growing social unrest.
“It seems to me that Massa and his skills can contain the street protests a little better,” said political scientist Jorge Giaccobe.
The country, particularly the capital Buenos Aires, has seen near-constant protest marches demanding measures such as a universal basic income or simply more aggressive measures to curb rising consumer prices.
Giaccobe thinks Massa should be guided by more modest expectations.
“It’s one thing to fix a problem and another not to make things worse,” he said as the government eyes a tough re-election campaign in 2023.
Batakis traveled to Washington last week to reassure nervous financial officials, including International Monetary Fund (IMF) leaders, that the government is sticking to its $44 billion deal with the lender.
The president tried to empower his new “superminister” in social media posts on Friday, touting Massa’s “vision, capacity and experience.”
But political imperatives could ultimately complicate Massa’s ability to strike the right balance, as spending cuts or other potentially painful budgetary moves could do further damage to a government that is already cornered.
“In Argentina, there are two types of balance: political and economic, which suits the ruling class, versus economic logic,” said economist Natalia Motyl.
“It all depends on which side prevails.”
Source: Reuters (Reporting by Lucila Sigal; Additional reporting by Walter Bianchi and Hernan Nessi; Writing by Carolina Pulice; Editing by David Alire Garcia and Daniel Wallis)
Comments are closed.