Argentina appoints Silvina Batakis as new economy minister

Argentina appointed Silvina Batakis as its new economy minister on Sunday after theabrupt weekend resignation of her predecessor, Martin Guzman.

President Alberto Fernandez appointed 53-year-old Batakis, who was economy minister for Argentina's biggest and wealthiest province, Buenos Aires, from 2011 to 2015. The appointment was announced on Twitter.

Guzman, the architect of a $44-billion (€42-billion) debt restructuring deal with the International Monetary Fund (IMF), unexpectedly stepped down on Saturday. This followed constant clashes with the militant wing of the ruling coalition loyal to Vice President Cristina Fernandez de Kirchner, who disapproved of his tighter fiscal policy.

Economy in crisis

Batakis comes in at a time when the Argentine economy is in full-blown crisis mode, with inflation above 60%, a high fiscal deficit, fears rising about debt defaults, and people losing faith in the peso currency and anticipating a devaluation.

She is seen as more aligned with the ruling Peronist coalition's militant wing, which wants more public spending to help alleviate high poverty levels in Argentina. "There is no dignified poverty," she wrote in a pinned post on her Twitter account. "It is just poverty, and we must fight it."

This is in direct contrast of the stipulations of the deal with the IMF to bring down the fiscal deficit, increase reserves and lower central bank financing.

Her critics remain skeptical of the appointment. Matias Carugati, an economist from Consultora Seido, pointed to a lack of information regarding Batakis' policy vision. "Now we have a minister," he said, "But we do not yet have an economic plan."

How it got here

The political turmoil comes at a time when Argentina is undergoing tumultuous economic times. The agricultural powerhouse has been battling inflation of more than 60% in the last 12 months. The economy also has been disrupted by trucker strikes over shortages of diesel.

Guzman's abrupt departure also leaves the country in the lurch, as he was expected to travel to France for talks this week to renegotiate a $2 billion debt deal with the Paris Club group of sovereign lenders.

The original debt of $57 billion to Argentina was the largest ever issued by the IMF. The final tranche of the deal was refused by President Alberto Fernandez after he took over office from liberal predecessor Mauricio Macri.

With soaring inflation and bleeding of foreign currency reserves due to high energy import costs, investors are questioning Argentina's ability to meet its debt commitments. Returns on government bonds are among the highest in the world, demonstrating investors' lack of confidence in them being honored.

Argentina has defaulted on its debt nine times since its 1816 independence from Spain, and three times this century, with the largest default taking place in late 2001. 

ss/msh (AFP, AP, Reuters)