Sergio Massa at the swearing-in of Economics Minister Silvina Batakis three weeks ago. Now he will be her successor.
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Argentina gets a super ministry. In the future, Sergio Massa will head the combined ministries of economy, production and agriculture. This was announced by President Alberto Fernández on Thursday. With the merger and the new superminister, the president wants to regain lost confidence in his ability to govern. As soon as Massa has given up his current position as President of the House of Representatives, he will be sworn in as Minister for the Super Ministry, said Alberto Fernández.
This means that Silvina Batakis, who was appointed economics minister just three weeks ago, is out of office again. Bataki’s dismissal shows how hasty the cabinet reshuffle was. The day before she was in Washington for an inaugural visit to the International Monetary Fund. During the return flight, it was decided in Buenos Aires that she would be dismissed.
The dispute in the governing coalition over the direction of financial and economic policy continued to escalate after Bataki took office. A chaotic breakup of the government was already feared within the coalition. On Thursday, the provincial governors then pulled the emergency brake. They emphatically demanded an agreement and a comprehensive cabinet reshuffle.
The central problem is the permanent budget deficit. There are no longer any international loans to finance it. No international investor wants to lend more money to the government in Buenos Aires. And if you do, only at a horrendous interest rate. Argentina’s sovereign risk for lending, prepared by the US bank JP Morgan, was just under 3000 points a few days ago.
But instead of making savings in the budget, the government is letting the printing press rotate enormously. In June alone, the central bank put over an additional trillion pesos into circulation. In order to keep the expansion of the money supply under control, an annual interest rate of incredible 61 percent is offered for a fixed-term deposit in pesos. But even this interest rate is below the inflation rate. The central bank is currently forecasting an inflation rate of 76 percent for 2022. Private economic institutes, on the other hand, are already counting on up to 100 percent.
Buy dollars if you can. Officially only 138 pesos have to be paid for one dollar. But at this price, only import companies get it. Ordinary citizens can buy a maximum of $200 per month at a price of 228 pesos each. If you buy dollars through trading shares, you have to shell out 330 pesos. In the semi-legal exchange offices 320 pesos are required. This is also the reference value that companies and business owners use as a basis for their pricing. Three weeks ago it was 260 pesos.
Figures like this represent growing poverty. Experts speak of a structural poverty in which 30 percent of the 47 million Argentines have been living for years. In addition, there is another 20 percent whose cause of poverty is the rapid loss of purchasing power. For more and more employees, the income from socially insured work does not last until the end of the month, despite wage increases in the double-digit percentage range.
The fact that Argentina has so far been spared social unrest like Colombia, Ecuador or Chile is due to the more than 1.2 million social assistance plans, which alleviate the need in various forms, but whose impact is also steadily declining. While the super ministry was being put together in the presidential palace on Thursday, several thousand people in front of the presidential palace on the Plaza de Mayo were demanding a universal basic income, the value of which should correspond to the basic food basket. In June, this would have been the equivalent of just under $45.
It is doubtful that Super Sergio will regain the lost trust. With his party Frente Renovador (FR), Massa is the junior partner in the governing coalition Frente de Todos. From July 2008 to July 2009 he succeeded Alberto Fernández as head of the cabinet of then-President Cristina Kirchner. In 2013 he ran with his FR in the partial elections to Congress and inflicted a bitter defeat on Cristina Kirchner’s then governing party.
What Alberto Fernández and Sergio Massa had in common after their respective departures as cabinet chefs was not only the fierce criticism of Cristina Kirchner, but also their public assurances that they never wanted to work politically with Kirchner again. Not good conditions for this government to hold out until the end of its term in December 2023 without dispute.
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