BUENOS AIRES – Argentina aEUR” Saturday’s unexpected resignation of Argentina’s economy minister was a blow to President Alberto FerA!ndez’s government as Argentina struggles with its economic problems.
MartAn GuzmA!n was forced to resign after a week when Argentina’s currency fell to an all-time low against its dollar. This was amid sizzling inflation, truck drivers staging protests about diesel fuel shortages.
There was no immediate announcement of a successor.
GuzmA!n wrote to FernA!ndez a seven-page letter. It was published on Twitter and highlighted internal conflicts within the administration.
GuzmA!n resigned while Vice President Cristina FernA!ndez gave a highly public speech in which she criticized the government’s economic policies. The vice president is not related to Argentina’s leader and the governing coalition has been splitting between its allies.
The week of economic turmoil ended with the resignation.
The Argentine peso has been sliding against the dollar and the government made it more difficult to obtain dollars to pay imports on Tuesday. This was because the currency reached new lows in a parallel market that is used by companies and citizens to bypass official channels.
Argentina has been suffering for years from a lack of dollars. This is partly due to the distrust of Argentines of their currency amid high inflation. Economists predict that inflation will continue to rise at an annual rate greater than 60%.
Truck drivers’ work stoppages have disrupted the economy, including delivery to grain ports, which is one of Argentina’s major imports.
The government stated Wednesday that it wanted to increase diesel availability by allowing more biofuels to be blended into diesel and by suspending diesel import taxes.
Despite Argentina producing diesel, it is not sufficient to meet its needs. It relies on imports and world prices are rising due to disruptions caused by the pandemic or the invasion of Ukraine.
Analysts believe that one reason for the shortage is the inability of oil companies to import diesel, as the government prohibits them from selling it at the same price on the international marketplace.
GuzmA!n wrote that he was leaving the government because he didn’t have enough political support.
He wrote that “from the experience I’ve had”, he believed it would be essential to reach a political agreement within governing coalition to ensure the person replacing me has centralized control over the macroeconomic policy instruments necessary to meet the challenges ahead.
GuzmA!n was in his position since the beginning of FernA!ndez’s government Dec. 10, 2019. He had been a Cabinet member for many years.
He was seen early in his administration as an ally and a strong supporter of the president, but also as someone who could help to bridge the divides within the sometimes-fractious governing alliance. However, he has clashed with officials loyal to the vice-president and his influence within government appears to be diminishing.
GuzmA!n was first challenged and succeeded in negotiating restructuring of Argentina’s debt and avoiding default.
He reached an agreement with the International Monetary Fund on debt relief, but left-leaning parts of the government felt it contained too many concessions that could hinder Argentina’s economic growth.
The vice president and lawmakers who voted against the IMF agreement in Congress, as well as GuzmA!n’s resignation, raise doubts about the country’s ability to fulfill the terms of the deal.
GuzmA!n stated in his resignation letter that his primary goal was to “calm” the economy and that it was essential to “resolve problems of unsustainable external debt that overwhelms the state as well as the rest of Argentina.”
