Argentina’s latest economy minister warns he is no magician
Argentina’s third economy minister in a month was sworn in on Wednesday, and as his first order of business, Sergio Massa sought to bring down sky-high expectations for his tackling of the country’s economic troubles.
He made clear he would not announce profound measures that would immediately change the course of an economy that is suffering from galloping inflation, a shortage of central bank foreign currency reserves, and a sharp depreciation of Argentina’s peso.
“I’m not super anything, nor a magician, nor a saviour,” Massa said during a news conference on Wednesday night at which he sketched his main plans.
When Massa was first unveiled as the latest economy minister, many were quick to dub him a ‘super minister’ because his position would involve running three previously independent ministries – economy, production and agriculture.
“This team has the obligation to give answers that will not come in a day nor two,” he said. “Magic doesn’t exist.”
Massa, who resigned as head of Congress’ lower house, the Chamber of Deputies, to take on the Cabinet post brings political heft to a role that had become a hot potato amid Argentina’s economic woes and an increasingly splintered governing coalition.
He expressed determination to maintain the goal of keeping the government’s deficit at 2.5 per cent of gross domestic product, which was part of the commitment the country made with the International Monetary Fund to restructure US$44 billion in Argentine debt.
Left-leaning members of the governing coalition, including Vice-President Cristina Fernández, a former president herself, have been highly critical of the agreement with the IMF, arguing it requires too much austerity and will hamper Argentina’s ability to grow.
Massa made clear he has no plans to tear up the agreement, which was shepherded by then Economy Minister Martín Guzmán, a moderate who resigned in early July, saying he wasn’t getting political support from the governing coalition. Left-leaning Silvina Batakis was tapped to take over the role but lasted less than a month.
In an effort to combat inflation that is running at more than 60 per cent annually and is expected to sharply increase in the next few months, Massa said he would no longer use the central bank to finance government operations.
“We will make do with the resources that we collect via taxes and with the financing that we can obtain from the private sector,” he said.
He also said he would continue, and expand, an effort to slash energy subsidies by increasing electricity and gas rates, which was a key demand from the IMF. Argentina is spending billions of dollars to import energy amid higher global prices following Russia’s invasion of Ukraine and pandemic disruptions.
Without going into details, Massa said he would grant special benefits to the agriculture, fishing and mining sectors in an effort to increase exports and thus boost hard currency reserves at the central bank.
He said he has no plans to usher in a devaluation, along with stringent capital controls, amid the sharp depreciation of Argentina’s currency in recent weeks,
“I want to say this clearly: Depreciation shocks only produce poverty and an enormous transfer of resources,” he said.
President Alberto Fernández billed Massa’s appointment as a relaunching of the troubled government.
“We have a great opportunity as a country. Let’s not let it pass us by,” Fernández said.
Massa, a powerful former mayor who has long been a presidential hopeful, is seen as a pro-market moderate who has strong political influence and good relations with the country’s business elite.
He was Cabinet chief for almost one year during the first term of Cristina Fernández’s 2007-2015 presidency, but then went on to become critical of her as he pursued his own presidential ambitions.
Massa will have to play a delicate balancing act by calming markets that are sceptical of Argentina, while also dealing with social demands in a country where nearly four of every 10 people are poor and there are growing protests calling for more welfare.