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Martín Guzmán with Wado de Pedro and Gustavo Bordet
A tour of a factory in San Martín with the mayor, a “picadito” with Matías Lammens in Barracas Juniors, a publicized meeting with the governor of Chaco, a talk at the University of Entre Ríos, threads on his social networks, a visit to Neuquén with Interior Minister Eduardo de Pedro, television interviews, a tour of various towns in Entre Ríos with Wado de Pedro. The above list is a brief extract from the itinerary that the Minister of Economy Martín Guzmán held during the last month and, as expected, it attracted attention indoors.
In concrete numbers, the Guzmán administration must deal with a reality that is less shocking for this electoral 2021 that has just begun. With an achievement noted to consolidate his name with the renegotiation of the debt in private hands that included capital reduction, the minister managed that during this year Argentina should not pay the bondholders while trying to close a similar deal with the International Monetary Fund in a global context that pushes the price of soybeans to levels not seen for seven years.
In this way, intrigues arise between the different views of the consultants, ranging from a positive forecast in recovery for this year that has just begun and others who see a different panorama. On both sides of the counter they contemplate the same data, but they differ in their confidence towards the economic cabinet: whether or not they will be able to overcome the scenario of inflation that accelerated in recent months while rates continue to be trampled and non-taxable floors do not move. in many taxes that directly affect the middle class, the country risk above 1,400 points, an accumulated devaluation of 100% in real terms in one year, the fiscal deficit close to 9% per year and the great unknown of what will be done to counteract the expansion of the monetary base as a result of the pandemic.
Martín Guzmán greeting the President
“There is nothing strange, Alberto asked the ministers to bankrupt the management”, maintains an official from the Palacio de Hacienda and downplays any change in the names of economic management.
On the other side of Yrigoyen street, they say the opposite. “The departure of (the director of the Central Bank, Carlos) Hourbeigt was misinterpreted by the media,” said a regular official of the Patio de las Palmeras and explained that the resignation of the official of Roberto Lavagna’s kidney “was seen as a growth of Guzmán’s influence in the Central when it is a very minor position for someone who was undersecretary of Finance of the Nation ”, in reference to the replacement of Hourbeigt, Diego Bastourre. This version clashes with the one emanating from the Treasury, where they affirm that Guzmán needed someone they trust in the board of directors and Lavagna yielded, believing that Hourbeigt would return to the National Securities Commission. Hourbeigt did not accept.
The new member of the board of the Central was in December in the United States as part of the group that negotiates with the International Monetary Fund the refinancing of Argentina’s debt with the organization and would have been one of the fuses that burned after thirteen months of management. The change on the fly occurred despite the fact that the strong names in the negotiation are Sergio Chodos and the Argentine ambassador in Washington, Jorge Argüello. To calm the negotiations, Bastourre’s new replacement, Leandro Toriano, has already been in contact with the IMF.
However, this week there was another move that went unnoticed despite the size of the change: Martín Guzmán’s chief of staff of advisers, the economist Santiago Pérez Pons, also left the national function and went to the province of Chaco. There, the 27-year-old will take over the Ministry of Planning, Finance and Infrastructure.
According to Pérez Pons himself, among his functions at the national level were “the budgetary and financial administration of the national public income and expenditure policies” as well as the “planning and coordination of the Budget, Treasury and Accounting systems” and the “General calculation of public revenue, control of its execution and dimension of the fiscal impact of the proposals for reforms of tax, customs and social security resources”. Practically all the points on which the tax reform project that Guzmán announced in August 2020 is based. It was not a minor position, obviously, for who was also director of Strategic Planning of the government of María Eugenia Vidal and advisor to the Ministry of Economic Development of the government of Mauricio Macri. But he went inland.
Miguel Pesce, president of Banco Central
The head of the Central Bank, Miguel Ángel Pesce, is a man with a long political career and very close to Alberto Fernández. From the stairs of the building on Reconquista street, they maintained that they are not very happy with the direction that Guzmán has taken and added that “It took a long time to negotiate the debt”, in reference to the restructuring with Argentine bondholders closed in 2020, and that the cost of this result had a more than negative impact on the Argentine economy due to the months of uncertainty that resulted in an increase in the price of the dollar and the consequent transfer to inflation and input costs for production. However, it is precisely this negotiation that allowed Alberto Fernández to show another political achievement during the year that has just ended.
From the union platforms they are not like to celebrate either. The toughest sectors – basically the traditional Peronist unions – never took any economy minister very seriously, and Guzmán’s case is no exception. You can hardly see him hand in hand with the Fatties, who down-still-blame the economic management of the collapse of the union social works. Of the parity below inflation that many unions accepted, they prefer not to speak.
At the end of the year, the former Minister of Economy of Eduardo Duhalde and Néstor Kirchner published an open letter in which he attacked the “fiscal creativity” that generates more “deviations”, pointed to the growth of public employment (“one million in fifteen years” ), asked the State to reduce its bureaucratic size to reconcile with the people and demanded policies that aim at the generation of private employment. Finally, Lavagna stated that “Argentines need a breath of fresh air, of greater freedom to move creatively; to be productive, not to craftily seek rents that are extracted from the State, which must take care of education, health, creating equal opportunities, security, science and technology ”.
Lavagna’s letter did not go down well in a context in which the price of soybeans is climbing back to pre-stagnation levels. And if anyone knows the benefits of high soybeans in a context of crisis, it is Lavagna. Perhaps that is why his letter focused on the size of the State: today it is a State ten times larger than in 2003. With soybeans it recovers in the short term, but does not reach the medium term.
Asked about Guzmán’s management, representatives of the Lavagna space only recalled that in his book “Thirteen Crucial Months in Argentine History”, the former minister explained that his agenda on urgent economic issues was so loaded that he did not have time to do politics.
The Lavagna factor does not impact so much on economic management as on other issues: the three deputies from their space are necessary so that the lower house can hold sessions and give the debate, something that the ruling party needs to advance with the extraordinary. Lavagna gave the go-ahead to the sessions, although it is not yet known how his representatives will vote.
Back in the Rosada, there are already several voices that wonder if Guzmán wants to be a candidate. But since everyone wants to play their own game, it should be noted that Alberto Fernández’s request to defend the management, in Guzmán’s case includes one province per week. In fact, the minister’s next visit will be to Jorge Capitanich.
The tranquility of Martín Guzmán is marked by various factors. The first is that he managed to close a negotiation that he entered into from the day he took office. The second is that he managed to build a good relationship with Cristina Kirchner and today he does not need to request a place on the vice president’s agenda to be able to meet with her. The third factor is that it has managed to establish good relations with the highest authorities of La Cámpora. The last, and not least, is that he has no replacement for Alberto: he likes it.
Meanwhile, Guzmán smiles at the camera for a new photo with a governor in his office, or with a mayor in a factory, or on a walk with national officials through towns in the Interior. In a context in which officials who do not function are singled out and in which internal relations are strained in an election year, being one of the few ministers who is not discussed on the government front is to be relieved.
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