Argentina’s president-elect signals policy shift with new cabinet

Alberto Fernandez, who will be sworn-in Tuesday, picks young academic as economy minister as he seeks Peronist agenda.

Argentina - New Cabinet
Vice President-elect Cristina Fernandez de Kirchner, a divisive former president with huge political influence in the country, was notably absent at the event where Fernandez announced his cabinet picks on Friday [Agustin Marcarian/Reuters]

Argentina‘s newly-elected President Alberto Fernandez unveiled his cabinet and new central bank chief on Friday evening, laying out his core team days before the centre-left leader takes office facing a stalled economy, rising debt fears and painful inflation.

Fernandez named Martin Guzman, 37, as economy minister, who will need to help steer debt restructuring negotiations with international creditors and the International Monetary Fund over approximately $100bn in sovereign debt.

Fernandez’s cabinet and key economy pick underscore a sharp shift from the austerity policies under outgoing conservative President Mauricio Macri.

They also highlight a balancing act by the South American country’s new leader, as he seeks to address the varied demands of his disparate Peronist coalition.

“It suggests a moderate approach by Fernandez towards the [economic] issue,” said Gabriel Brasil, lead political analyst for Argentina at consultancy Control Risks. He added that Guzman did not represent the more “radical” elements in the Peronist movement.

Guzman, a young academic and protege of Nobel Prize-winning economist Joseph Stiglitz, is a debt restructuring expert but has little hands-on experience in policymaking.

“He is a young man, very prepared,” Fernandez said on Friday evening introducing his cabinet. “He knows very well the debt conflicts and the macroeconomic conflicts Argentina has.”

Fernandez also named low-profile economist Miguel Angel Pesce as central bank chief. Pesce has previously criticised the orthodox approach of the central bank under Macri, who hands over power to Fernandez on Tuesday.

Vice President-elect Cristina Fernandez de Kirchner, a divisive former president with huge political influence in the country, was notably absent at the event where Fernandez announced his cabinet picks.

Creditor view of Guzman

Hans Humes, the head of emerging market specialist Greylock Capital Management, which is closely involved in the restructuring talks with Argentina, said he supported Guzman’s appointment but acknowledged that some investors had concerns.

“Wall Street seems to have some concerns about Guzman’s lack of experience in politics and ‘heterodox’ economic views. I think these views are misplaced,” he said.

Argentina - CabinetArgentina’s incoming Economy Minister, Martin Guzman, centre, and Justice Minister Marcela Losardo, left, laugh at the announcement event of President-elect Alberto Fernandez’s new cabinet [Agustin Marcarian/Reuters]

“As far as experience, Guzman has been involved in sovereign and quasi-sovereign situations. And his views on growth rather than austerity led recoveries are spot on.”

Capital Economics, meanwhile, said in a note that while Guzman was more moderate than others, he was “unlikely to take a market-friendly approach”.

Matias Kulfas, who previously held government and central bank positions, was named as the powerful production minister.

Young political scientist Santiago Cafiero, heir to a historic Peronist family, was named cabinet chief, with former Buenos Aires governor Felipe Sola tapped as foreign minister.

The next agriculture minister of the major grains exporting country will be congressman Luis Basterra.

Guillermo Nielsen, a key economic adviser to Fernandez, will be tasked with leading state oil firm YPF SA, which has important ties with multinational companies developing the country’s vast Vaca Muerta shale play.

Fernandez’s cabinet will be tasked with steering Latin America’s number three economy back to a left-leaning Peronist agenda after four years of austere policies under outgoing Macri, who lost favour with voters amid a deep recession and inflation.

Source: Reuters


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