There are many challenges facing Silvina Batakis, Argentina’s new Minister of Economy, who took over on Monday (4) after the sudden resignation of Martín Guzmán over the weekend. Accelerated inflation, loss of salary and just a week after an attempted market coup through a currency-rush policy, Batakis was the name of consensus among the main wings of the divided ruling coalition Frente de Todos (FdT) and opens a new perspective – or expectation – for the direction of the country’s economic policy.
In the few days in office, Batakis has already given signs to calm the main agents of the market, despite the “natural” financial speculation after the movements in the Ministry of Economy, which led to the rise of the parallel dollar. He stressed that he “will follow the president’s economic plan” and that the controversial agreement with the International Monetary Fund (IMF), signed in March, will be maintained, but “will have changes”.
This is one of the points of attention of his administration, and that can be decisive for an effective change of economic management in the country. The agreement signed by former minister Martín Guzmán with the Fund deepened the differences between albertism and kirchnerism, marked by the resignation of Máximo Kirchner from the presidency of the FdT.
“The fiscal perspective is a criticism of vice-president Cristina Kirchner in the coalition, and has to do with the idea that reducing the fiscal deficit solves the inflationary problem”, he says to the Brazil de facto economist Emiliano López, from the Tricontinental Institute, on one of the main points of the agreement. “These policies, monetary and fiscal, have a perspective that is very close to the global economic and political establishment. This management did not obtain the expected results, especially in relation to distributive and inflationary variables.”
In a decisive week, the new minister has been meeting with President Alberto Fernández to establish her management plan and define her own team. This will be an important point, since one of the reflections of the division of the coalition was in the locks in the economic administration, with an opposition between the employees of the wing who serve Vice President Cristina Fernández de Kirchner and those who answer to President Alberto Fernández.
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This Wednesday (6), the Secretary of Commerce, Guillermo Hang, resigned, being the last official linked to Guzmán. Batakis appointed Martín Pollera, with whom he worked at the Ministry of the Interior, as head of the Secretary of Commerce, a key portfolio for consumer price policies through important programs such as Maximum Prices and Care Prices, and negotiations with the industrial sector. and food production.
In an immediate perspective, the issue of inflation and prices is the most sensitive subject under which the population in Argentina suffers, with annual inflation already at 60.7% and which has not dropped by 5% in the monthly index since March, the month in which , already unleashed the war in Ukraine, the monthly variation suffered a peak of 6.7%.
“It is the critical point that guides everything”, emphasizes when Brazil de facto Argentine economist Claudio Katz, member of the Economistas de Esquerda collective. He highlights three recent determinants of this inflation. “The first is international food prices. Argentina exports food, and without state regulation that separates the international price from the local one, there is inflation.”
“The second determining factor of inflation is the undisciplined action of the groups concentrated on the establishment of prices”, continues the economist. “It’s not just exporters, but big Argentine capitals that quickly rebuild profits by marking prices and don’t accept any kind of control by the State”, explains Katz.
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The third element, he explains, is the agreement with the IMF itself. “It includes tariff increases, exchange rate increases, that is, currency devaluation, and fiscal deficit reduction, which requires the government to increase revenue faster than its expenditure.” On this, he adds: “It’s an inflationary agreement”, says Katz, not so optimistic about the appointment of Batakis. “It’s a continuation of the same economic project.” The new minister Silvina Batakis spoke for the first time with IMF officials this Wednesday (6).
Despite pursuing social justice policies, the economic management of the FdT was, as a national government, a crisis management, added to the coalition’s own internal crisis. The diagnosis has been a lack of ideas, but the appointment of Silvina Batakis – the third female minister in charge of a ministry in Argentina today –, despite everything, appears to many as an expectation of new proposals to face the difficult current scenario.
Batakis inaugurates a new management of the economy
In addition to the context of world inflation, dollarized economies such as Argentina suffer from price pressure with financial speculation. After four years of the neoliberal government of Mauricio Macri – which opened the door to the flight of foreign exchange from big capital and put the country in debt of US$ 44.5 billion (R$ 240 billion) with the IMF – the pandemic and the war worsened the scenario from which the Peronist government, elected in 2019, was unable to recover the country.
There are positive expectations about Silvina Batakis, especially because of the contrast that, up until then, the secretary of provinces of the Ministry of the Interior presents in relation to her predecessor.
“Former minister Guzmán has an academic background based on the logic of the economic mainstream, with a certain progressive perspective on some economic variables, but without departing from the basics of traditional economics”, emphasizes economist Emiliano López. He describes this traditionalism with restrictive fiscal policy, the balance of fiscal balance as the central key, and the perception of inflation only as a monetary phenomenon, like issuing money. In other words, Guzmán’s management can be characterized by following the manual, but inefficient in the daily life of the population.
“Batakis has a different profile”, continues López, a resident of the province of Buenos Aires, where Batakis was the provincial Minister of Economy between 2011 and 2015. relaunch economic activity with tripartite agreements between the State, unions and businessmen.”
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In recent days, Batakis has been presented as an alternative that finds a balance between macroeconomic problems and the social crisis experienced daily in changing prices on basic products. In this sense, the doctor in sociology Luci Cavallero, a lesbian feminist and member of the Not one lesshighlights to Brazil de facto some points of attention on the next steps in the economic management of the country under the command of the new minister.
“It is necessary to put a magnifying glass on people’s day-to-day economy, which requires a reformulation of the goals established with the IMF, also because the war changed all economic variables”, he says. “As minister of the province of Buenos Aires, Batakis sanctioned the inheritance tax and raised taxes on property owners. It would be necessary for the minister to demonstrate a political vocation to advance the income of the richest, and for her to explicitly support initiatives of this type to obtain revenue from the most benefited from this whole situation.” Furthermore, Cavallero points out that with Batakis, now the third woman in charge of a portfolio in the national government, she is carrying on a trajectory of popular and feminist militancy.
“It would be interesting to have a public debate on this idea that we cannot direct all the actions of the State that try to calm the markets, because that doesn’t work in these moments of voracity of capital”, suggests Cavallero. She mentions Guzmán’s management that, while trying not to touch the interests of the market, the country still suffered three currency runs.
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The new minister’s steps
The expectation is that it will respond to requests from a large part of social movements for the advancement of the Universal Basic Salary project, a monthly payment for low-income workers, in a context in which wages are constantly losing to inflation.
In addition, in her first speech as minister, Batakis mentioned Argentina’s high production potential with the Vaca Muerta unconventional oil and gas reservoir, whose focus is on exporting energy.
Other topics that should come into focus are the bill presented by Guzmán, to collect, with a one-time contribution, the so-called unexpected income of large capitals that profited from inflation due to the war in Ukraine.
Editing: Arturo Hartmann