Argentina names economist as new economy minister

In this file photo taken on June 6, 2022, Argentina's Economy Minister Martin Guzman right speaks with President Alberto Fernandez as he presents a bill to create a tax on so-called extraordinary profits for big companies that earned more than expected due to the war in Ukraine, in Buenos Aires. JUAN MABROMATA AFP BUENOS AIRES Argentine President named economist and government official Silvina Batakis as the new economy minister on Sunday after the abrupt resignation of long-standing minister Martin Guzman amid crises and tensions.

Fernandez held meetings all day, including with his powerful and divisive vice president Cristina Fernandez de Kirchner, as he raced to find a new economy chief after the shock exit of Guzman, a key ally, shook his center-left government.

Gabriela Cerruti, the president's spokesman, announced that Fernandez had appointed Batakis to the role. She had been the economy minister for the key province of Buenos Aires from 2011 to 2015 and had been running a government secretariat.

Guzman, 39, submitted his resignation late on Saturday amid rising tensions within the ruling Peronist coalition over how to handle economic crises.

The shock exit has brought deep-seated divisions in the government, with a more militant wing around Fernandez de Kirchner appearing to land a blow on the more moderate wing over economic plans.

Rosendo Fraga, a political analyst, said that we are facing a complex political crisis that has been deepened by the fight for power.

Guzman, a moderate who had served since 2019, was the driving force behind major debt restructurings with creditors. He was key to completing a $44 billion deal with the International Monetary Fund this year to replace a failed 2018 program with the global lender.

A source said at the presidential palace that the President and Vice-President, who have not always seen eye-to-eye in recent months, had held a friendly dialogue, helping them come to an agreement on who should lead the economy ministry.

Batakis, who is more closely associated with Fernandez de Kirchner's wing, will be a key player in shaping economic policy over a tightly controlled foreign exchange market, ongoing debt deals and trade. Argentina is a major exporter of soy, wheat and corn.

Alberto Ramos, Goldman Sachs analyst Alberto Ramos said the departure of Guzman was a political blow to Fernandez, who was facing slumping support in opinion polls ahead of elections next year, and could compromise the relationship with the International Monetary Fund.

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A politically weaker and unpopular presidency will increase the risk that macro policy could turn more heterodox and interventionist, he wrote in a note, adding that foreign exchange and other local markets would likely remain under pressure.

Guzman had come under fire from the militant wing of the ruling coalition around Fernandez de Kirchner, which has been pushing for more state spending to support hard-hit Argentines.

He had been balancing that pressure with the need to reduce a deep fiscal deficit, which had become harder because of the rising energy import costs that have hit foreign-currency reserves.

Economist Joseph Stiglitz, Guzman's mentor and close ally, said the minister had done a good job in resolving the debt crisis left by the previous government and boosting growth after the pandemic, but splits in government had made things untenable.

Stiglitz said that his deep principles made it impossible for him to continue in office without a commitment from the government to a united, integrated and coordinated approach to the enormous challenges facing the economy.