Changes in Argentina
Sign up for myFT Daily Digest to become the first news outlet in Argentina.
Argentine Peronist President Alberto Fernández also reshuffled his cabinet on Friday night which boosted the power of Vice President Cristina Fernández de Kirchner and paved the way for more public spending.
Conflicts within the ruling Peronist party began to emerge after an opposition coalition won its positive results ahead of last week’s elections, beating the government by a margin of 9%. Cristina published an open letter is accusing Fernández of financial hardship because of the “political crisis” of starting exams and wants to change it.
Fernández has been given a new role by his new vice president, who has been president since 2007-15 and is known as the real power behind the throne.
Peronists are fighting to avoid defeat in the mid-November elections, when many of their senators are at risk.
Fernández’s close friend Santiago Cafiero was ousted as prime minister on Friday night by Juan Manzur, Tucumán’s deputy governor, whom the vice-president openly told about his work in an open letter published last night.
“They fought hard, and [this has] he continued to grow. The president threatened to take control of himself and Cristina blamed him for failing the election, “said political analyst Marcos Novaro.
Other Fernández allies such as Foreign Minister Felipe Solá, Defense Minister Sabina Frederic and Education Minister Nicolás Trotta have resigned, although Cafiero has replaced Solá. Cristina’s letter also reassured Presidential spokesman Juan Pablo Biondi, who resigned a few hours after his release.
He also falsely claimed that the president was following a “wrong view of currency exchange” which “would inevitably lead to elections”. GDP fell by 10% last year.
Released in the global markets after the ninth term of office in 2020, Argentina has printed the money to give money to their government as it tries to form a new agreement with the IMF. The inflation rate is above 50% per year, one of the largest in the world.
Finance Minister Martin Guzmán, who has been widely criticized by Cristina’s colleagues for wanting to reduce the downturn, has not been moved by the change. Cristina has denied wanting to release him and Argentine journalists think he will keep her until the IMF agreement is finalized.
“The government is now very low. Cristina’s wings can begin to participate in what is sometimes a coincidence and sometimes not. Or the relationship could be broken, ”said Novaro.
The killing spree in Peronist groups was highlighted by a speech this week in which one of Cristina’s co-chair, Fernanda Vallejos, chair of the finance committee, heard Fernández explain as a “squatter” (in the palace), which is “deaf”, “blind” and “funny”. He later apologized for his remarks.
Both Cristina and Vallejos have applied for additional funding, while Cristina says Argentina has the potential to increase the deficit this year with 1.5% of GDP stimulation of pre-election spending.
Argentina aims to end 2021 with a minimum of 5% of GDP, according to a Ferreres survey. The additions Cristina wants are pushing for more than 6%, as Guzmán tries to reduce the gap as part of a deal with the $ 44bn debt restructuring IMF.
“[Cristina’s] The financial objective is not in line with the IMF agreement and long-term sustainability. He blamed Guzmán for the very few things that led to his defeat in the election. But they should be aware that good principles and good politics do not always go hand in hand, and sometimes what is right is not what they like, “political adviser Sergio Berensztein said.
Although Guzmán survives as finance minister, he faces daunting challenges.
The long-term stabilization of Argentina’s economy is better off than the current economic downturn, as the 2022 budget will not include the amount of additional taxpayers paid for the epidemic. The government should also address the three-thirds GDP reduction from the central bank’s financial cover.
“The president has two very difficult years ahead. Argentina’s economy needs to change to grow, and the combination of wealth and debt in the central bank could lead to economic growth, “said Fausto Spotorno, chief financial officer at Orlando Ferreres.