【Text/Observer Network Li Zexi】
Argentina, which has been facing many economic difficulties for a long time, is afraid that the future will be more uncertain. On July 3, local time, Argentina's economy minister, Martín Guzmán, abruptly resigned. The Argentine government then appointed the economist Silvina Batakis as its successor.
Guzman announced his resignation via Twitter. In the letter, he claimed that since taking office in 2019, the economic situation has been difficult, and the impact of the covid-19 and Russian-Ukrainian conflicts has deepened Argentina's original economic, social and debt dilemmas.
Guzman Twitter screenshot
He sees his greatest achievements in office as stabilizing foreign exchange, boosting economic growth, improving tax structures, avoiding debt defaults, and fighting the pandemic.
After the global outbreak of the new crown epidemic, Argentina has passed the Work and Production Assistance Program (ATP) and the Emergency Family Income Subsidy (IFE), stabilizing employment and livelihood.
On August 4, 2020, Argentina reached an agreement with the International Monetary Fund (IMF) to restructure $65 billion of Argentina's external debt, equivalent to 170% of Argentina's GDP a year at the time. Argentina's total external debt fell slightly from $197 billion when Guzman took office to $191 billion at the end of 2021, creating a "small miracle" during the coronavirus. This year, Argentina again reached an agreement with the IMF to restructure another $44 billion in debt. This series of moves to stabilize financial markets partially offset the negative impact of Argentina's default in May 2020.
Argentina's inflation rate, however, remains high. Guzman initially reduced inflation from 54 percent in 2019 to 36 percent in 2020, but soared more than 60 percent in May 2022.
Guzman (Image from The Associated Press)
Guzman's efforts to rein in the debt have not received the full support of the ruling party. His policies to restructure debt, control inflation and stabilize foreign exchange have been attacked by the more radical Vice President Christine de Kirchner, especially after the ruling coalition suffered a setback in the 2021 parliamentary elections, and she repeatedly attacked Guzman's economic philosophy of "tightening the belt". As the former president (2007-2015), former first lady and former leader of the largest Justice Party under the ruling Popular Front coalition, Christina de Kirchner has influence within her party and coalition not to be underestimated, and has only been relegated to the vice presidency because the Argentine Constitution limits the presidency to two terms.
The Justice Party, founded by Juan Perón, Argentina's political strongman and twice president from 1946 to 1955 and from 1973 to 1974, sought to unite factions and encourage employment, is now in opposition to the slightly more right-leaning Coalition of Change. Since its inception, the party has been divided into conservative and progressive factions due to the lack of a clear core idea; Christina and her late husband were the de facto leaders of the progressive faction for nearly a decade.
His successor, Batakis, was a member of the ruling coalition, advocating every effort to lift herself out of poverty, closer to Christina's factional stance in general and widely supported within the ruling coalition, but when she was minister of economy in Buenos Aires, Christina also criticized her "tightening the belt" policy at the time.
Batakis (Pictured from the Argentine newspaper Silhouette)
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