Argentine President Alberto Fernandez on Sunday tapped leftist economist Silvina Batakis as the country’s new economy minister after her predecessor’s resignation on Saturday deepened a political crisis boiling over into the economy and markets.
Fernandez spokeswoman Gabriela Cerruti confirmed the decision to Bloomberg News.
Batakis, a low-profile policymaker whose appointment came as a surprise, did not respond to a request for comment from Bloomberg News on late on Sunday night.
Batakis inherits a long list of economic challenges and the government’s US$44 billion program with the IMF.
The announcement capped more than a day of suspense and uncertainty sparked by former Argentine minister of economy Martin Guzman’s resignation following two-and-a-half years in the job.
It remained unclear on Sunday night if Fernandez would make other Cabinet changes. Central bank President Miguel Pesce confirmed to Bloomberg News that he would stay in his role.
The second woman to serve as the nation’s top economic official, Batakis was the economy minister of Buenos Aires Province from 2011 to 2015 under then-governor Daniel Scioli, a far-left coalition leader who recently became production minister.
More recently, she served in a second-tier role in the Argentine Ministry of the Interior.
The appointment was made after Fernandez met for hours on Sunday with Argentine Chamber of Deputies President Sergio Massa.
‘BALANCE OF POWER’
Argentine Vice President Cristina Fernandez de Kirchner, who is publicly critical of the president and his economic team, spoke to him on Sunday evening by telephone, local media reported.
“Batakis’ appointment seems to signal that the balance of power has tilted to the Kirchnerist side,” Diego Pereira, an economist at JPMorgan Chase & Co, wrote in a note to clients on Sunday. “We would expect a more expansive fiscal stance, and potentially a renegotiation of the IMF program.”
Markets would be watching for clues on Batakis’ economic agenda, the IMF program and how she plans to navigate a divided ruling coalition that ended Guzman’s tenure.
Analysts pointed to her lack of experience formulating major economic policies or negotiating with the IMF. Batakis could also represent a turn toward far-left economic policies, given her track record.
“It’s a victory for Cristina,” said Camila Perochena, a political analyst and professor at Torcuato di Tella University in Buenos Aires. “For financial markets, it’s an awful impact.”
Crisis-prone Argentina is battling inflation at more than 60 percent, with nearly 40 percent of the population living in poverty and the economy forecast to enter a recession this year.
The central bank has razor-thin cash reserves that it is struggling to build up amid low credibility and high prices on energy imports and the country’s bonds trade in distressed territory.
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