Buenos Air – Markets are welcoming Sergio Massa as Argentina’s third economy minister in less than a month, but analysts warn that more details are needed about his plans to pull the South American country out of its dire economic strain.
The local currency, the peso, strengthened strongly in the financial market on Friday while government bonds saw gains a day after the government of President Alberto Fernandez announced the appointment of Massa as an economic “super minister” bringing together the existing ministries of Economy, Productive Development and Agriculture. .
The increases recorded, Friday, continue the trend that began earlier this week amid rumors that Massa, the speaker of the House of Representatives of Congress, the House of Representatives, will join the administration.
“The market reaction reflects relief that someone with political skills and a strong party constituency has played this key role,” said Benjamin Gaidan, acting director of the Latin America Program at the Wilson Center in Washington. “He’s someone who can’t be easily dismissed, and the idea is that there will be some consistency in policy.”
Massa’s appointment came just over three weeks after a left-leaning Sylvina Batakis was named to replace the more moderate Martin Guzmán, who abruptly resigned amid complaints he did not have the full support of a ruling coalition that had split between factions loyal to him. President on one hand and Vice President Cristina Fernandez de Kirchner, the former president who still enjoys a strong support base.
The naming of Patakis was followed by a sharp depreciation of the peso amid strict capital controls, reflecting uncertainty over whether it has the power to impose the kinds of reforms needed to transform an economy that suffers from one of the world’s highest inflation rates. which operates at more than 60% annually.
“Argentina has an urgent need to restore confidence in the economy, and the hilarious round of finance ministers is having the opposite effect,” Gaidan said.
Fernandez tacitly acknowledged on Friday the need for a strong figure to lead the government’s economic programme.
“What we have experienced as a state and society over the past few months, and especially the last few weeks, forces us to better coordinate,” Fernandez wrote on Twitter.
Massa, a former mayor who has always had presidential ambitions and enjoys good relations with the country’s business elite, has his own political support base, so he is seen as someone who is supposed to be able to impose his own agenda.
Fausto Spotorno, chief economist at Orlando J. Ferrers: “He’s not pro-market, he’s pro-capitalist” & Associates, a consulting firm in Buenos Aires. “He’s not a leftist.”
Massa told reporters on Friday that he will appoint his team on Monday and unveil new economic measures on Wednesday. He still had to formally resign his seat in Congress before he could officially take up the cabinet position.
Despite the lack of concrete steps, market analysts feel confident they know in which direction Massa will go, given that his team has been talking to key players all week.
“The measures they discussed are very reasonable,” Spotorno said.
But for now, “the optimism seems somewhat exaggerated,” Gedan cautioned. “It is true that Martin Guzmán was living abroad and did not necessarily have the ability to navigate the snake pit of this alliance, but the fundamental problems are difficult to solve and politically insidious.”
One of the main questions the country is asking is about the future of the country’s recent deal with the International Monetary Fund to restructure $44 billion in debt.
Cristina Fernandez and her left-leaning coalition allies publicly opposed the deal, claiming that it required a level of austerity that would hurt workers and the poor while also stifling growth.
Patakis was replaced the same day she returned from a brisk tour of Washington, where she met investors and officials at the International Monetary Fund, the World Bank and the United States Treasury.
Although the market seems to welcome Massa with open arms, it’s not clear that Argentines as a whole feel the same way.
“What the market needs and what public opinion needs are two completely different things,” said Jorge Giacopi, a political analyst who runs local Giacobi polls. & Associated. “They’re both angry, yes, but Massa makes it to this new role with only 9% positive and 70% negative.”
When people were asked to describe Massa in one word, Jacobi said, they chose the word “pie,” a word used colloquially to describe someone who frequently changes opinions.
Giacobbi added that the low approval rating means that Massa is “a man who has nothing to lose.”
Massa was prime minister for about a year during Cristina Fernandez’s first term in office 2007-2015. He then became highly critical of his former boss as he pursued his presidential ambitions only to later join the coalition that ended up electing Alberto Fernandez, another former ally of Cristina Fernandez who later became a critic.
Some argue that handing too much power to someone who has demonstrated a willingness to change alliances quickly reflects the desperation of the administration.
“This is the government’s last bullet,” Spotorno said. “If Massa leaves, who is left? There is no one.”