Argentine Finance Minister Martin Guzman Quits, Crisis Deepens

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On Saturday, Argentina’s Finance Minister Martin Guzman unexpectedly resigned, pointing to government divisions as the country struggles with public finances deterioration and rising inflation.

The finance minister previously negotiated a deal with the International Monetary Fund for the country’s debt reconstruction worth $44 billion. His exit deepens an already shaken economy.

Tensions Over Economic Crisis 

The economic crisis had caused tensions within the Argentina government. Guzman clashed with the Peronist coalition’s more militant wing under Vice President Cristina Fernandez de Kirchner. The vice president publicly criticized the International Monetary Fund deal. She even called for more government action and public spending to alleviate the rising inflation.

Guzman has been Argentina’s economic minister since late 2019. He is also President Alberto Fernandez’s close ally. He announced his decision in a seven-page letter posted on Twitter.

“Political agreement within the governing coalition, “he cited as a critical factor for his successor, referencing government infighting.

He also wrote, “From the experience I’ve lived, I consider it will be fundamental to work on a political agreement within the governing coalition so that the person who replaces me will have the centralized control of the necessary macroeconomic policy instruments … to face the challenges ahead.”

The country has suffered from a dollar shortage for years. The Argentine peso slides against the dollar, making it more difficult for the government to acquire the dollars necessary for paying imports.

So Far, the Highest Profile Resignation in President Fernandez’s Administration 

Guzman’s departure as finance minister was so far the highest-profile resignation since the president took office in 2019.

Fundacion Libertad y Progreso Eugenio Mari says, “The resignation of Minister Guzmán really uncovers the internal rupture in the government.”

Mari added, “From the economic side, it amplifies the dynamic of uncertainty which Argentina was already in.”

Guzman noticed the growing pressure on the currency in Argentina, the Argentine peso, shielded by stringent capital controls. He supervised the tax policies for energy and grains, especially since Argentina is among the top grain producers in the world.

Inflation runs above 60%, and it is expected to skyrocket further. As with the high energy import costs, they have constrained Argentina’s ability to grow the depleted foreign currency reserves.

Guzman was scheduled to travel to France this week to discuss $2 billion worth of debt reconstruction with the Paris Club of sovereign leaders. The said debt reconstruction was considered as reopening access of Argentina to foreign direct investment, which is necessary for energy and infrastructure.

A Leaderless Ministry 

Guzman’s resignation left a leaderless ministry. Management and Fit Consultancy Director said, “It is the chronicle of a death foretold.” He added that a midterm election’s painful loss had hurt the president badly.

He says, “Now he has lost another piece of his board, perhaps the most important, and is increasingly alone.”

Investors were already nervous about Argentina’s economic outlook, pushing bonds down toward ₵20 on the dollar in the past weeks.

All eyes are set on Guzman’s successor. According to Guzman, a political agreement is critical within the governing coalition when it comes to choosing the next minister.

The office of the president did not provide any information regarding the announcement of Guzman’s replacement. The president had summoned his allies and members of his Cabinet to an emergency meeting.

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

Former finance secretary and debt negotiator Daniel Marx stated it was untenable for Guzman to continue in his Twitter post in strong opposition within the government.

Marx says, “It seems important to me to see how the void is filled. Not only the person but the economic policy direction to get out from all the skepticism and the problems that have been dragging on for quite some time.”

C&T Asesores Economicos Economist Maria Castiglione said that Guzman’s exit confirms a political problem. She added that it is not good and even raised questions about whether or not the government can take the necessary solutions to deal with the growing crisis.

Invenomica Director and Economist stated that the most important thing is whether the successor has the license to act. He says, “As for who replaces him, the name doesn’t matter so much. What matters is whether or not the person will have the power to do anything.”

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