Analysis-Same dire problems, new chief: Can Argentina solve economy riddle?

By Lucila Sigal

BUENOS AIRES (Reuters) – Argentina’s incoming economic system chief, the crisis-racked nation’s third in a lower than a month, could also be its final greatest probability to proper a sinking ship, or not less than keep away from additional deterioration forward of a high-stakes election subsequent yr.

A Thursday cupboard reshuffle engineered by President Alberto Fernandez adopted days of frenzied rumors over whether or not Silvina Batakis, named minister only a month in the past after the shock resignation of longtime economic system steward Martin Guzman, might survive.

The job of tackling rising unrest in South America’s second-biggest economic system after Brazil now falls to Sergio Massa, a congressional chief for the ruling Peronist coalition, who will oversee financial, in addition to industrial and agricultural coverage starting subsequent week.

“It looks like their final probability,” stated political analyst Andres Malamud, referring to authorities officers’ up to now unsuccessful efforts to reign in sky-high inflation, over-spending and a plunging peso forex.

Malamud described recruiting Massa for the expanded function as “extra like a determined wager than a reasoned one,” including that chopping a widening fiscal deficit and rebuilding confidence should be prime priorities.

Massa instructed reporters on Friday that he’ll announce some new measures subsequent week, although it stays unclear what they are going to be.

Fernandez’s bitterly divided center-left coalition hopes Massa’s arrival will calm monetary markets. The preliminary response was optimistic on Friday, with the inventory market clawing again some losses.

The federal government – and a few observers – additionally hope he can assist calm rising social unrest.

“It appears to me that Massa and his expertise can include the road protests slightly higher,” political analyst Jorge Giaccobe stated.

The nation, particularly the capital Buenos Aires, has seen near-constant protest marches calling for measures resembling a common primary revenue or simply extra aggressive motion to include surging shopper costs.

Giaccobe thinks extra modest expectations ought to information Massa.

“It is one factor to repair an issue, however one other factor to not make issues worse,” he stated, as the federal government eyes a tricky 2023 re-election battle.

Batakis final week traveled to Washington to guarantee nervous finance officers together with leaders of the Worldwide Financial Fund (IMF) that the federal government stays dedicated to its $44 billion debt cope with the lender.

The president sought to bolster his new “superminister” in posts on social media on Friday, touting Massa’s “imaginative and prescient, capability and expertise.”

However political wants might in the end complicate Massa’s capability to strike the appropriate steadiness since any spending cuts, or different doubtlessly painful fiscal drugs, might additional harm a authorities that already finds itself backed right into a nook.

“In Argentina, there are two sorts of steadiness: political and financial, what fits the ruling class versus financial logic,” stated economist Natalia Motyl.

“Every little thing is determined by which facet prevails.”

(Reporting by Lucila Sigal; Extra reporting by Walter Bianchi and Hernan Nessi; Writing by Carolina Pulice; Enhancing by David Alire Garcia and Daniel Wallis)