Argentina’s economy minister, architect of IMF deal, resigns as government crisis deepens

Argentina’s Economy Minister Martin Guzman poses for a photo before an interview with Reuters at the Economy Ministry, in Buenos Aires, Argentina December 10, 2020. REUTERS/Agustin Marcarian

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BUENOS AIRES, July 2 (Reuters) – Argentine Economy Minister Martin Guzman, architect of a recent major debt deal with the International Monetary Fund (IMF), resigned on Saturday as deep divisions emerged in the within the ruling coalition on how to deal with mounting economic crises. .

Guzman, a minister since late 2019 and a close ally of President Alberto Fernandez, posted a letter on Twitter announcing his decision, adding that he maintained “confidence in my vision of the path Argentina should follow”.

The center-left Peronist president faces his lowest approval rating since taking office in 2019, with cracks in his coalition, inflation above 60%, the peso under increasing pressure and sovereign bonds falling. record levels.

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Guzman, a moderate, had clashed with powerful Vice President Cristina Fernandez de Kirchner, an activist two-term former president, who criticized her handling of the economy and called for more spending to alleviate high poverty levels .

The resignation leaves the ministry headless just as Guzman was due to travel to Europe to negotiate a $2 billion debt deal with the Paris Club of sovereign lenders. It also deals a blow to Fernandez’s weakened power base.

“It is the chronicle of a foretold death,” said Mariel Fornoni, director of consultancy Management and Fit, adding that a painful defeat in the midterm elections last year for the government severely hurt the President Fernández.

“Now he’s lost another piece of his board, perhaps the most important one, and he’s more and more alone.”

Investors, already worried about the country’s economic outlook, have pushed bonds towards 20 cents on the dollar in recent weeks. All eyes will now be on Guzman’s replacement.

Guzman, 39, said “there should be a political agreement within the government coalition” to choose his successor.

The president’s office said it does not yet know when a replacement for Guzman will be announced. Fernandez had called members of his cabinet and allies to an emergency meeting, a government source said.

“The president deeply regrets the decision but respects it. He is analyzing his next decisions,” said another government source familiar with the matter.

Two Economy Ministry officials, asking not to be named, said Guzman’s position had become untenable, especially without support for his economic program.

“He couldn’t go on without the tools and with (Vice President) Cristina (Fernandez de Kirchner) against him,” one of the two said. “When things are no longer possible, it’s an act of responsibility to leave.”

Guzman revealingly released his resignation letter as Fernandez de Kirchner delivered a speech commemorating iconic former Argentine president Juan Domingo Peron.

Miguel Kiguel, Argentina’s former finance secretary, told Reuters that whoever takes over will struggle, noting that inflation could reach 80% this year and there is an almost 100% gap between rates official and parallel exchanges.

“We don’t know who is coming, but it will be a very hot potato,” Kiguel said. “Whoever comes is going to live a very complicated period.”

Guzman was instrumental in signing a new $44 billion deal with the IMF earlier this year to replace a failed 2018 program. However, he was unable to rein in spiraling inflation, exacerbated by the war in Ukraine, while increasing energy imports. the costs have hit the country’s foreign exchange reserves.

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Reporting by Jorge Otaola; Additional reporting by Jorgelina do Rosario, Eliana Raszewski, Lucila Sigal and Hernan Nessi; Written by Alex Villegas; edited by Jonathan Oatis and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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