New Economy Minister Sergio Massa is preparing a set of measures to address one of Argentina’s key problems: a chronic shortage of dollars that has caused the US currency to soar in parallel exchange markets.
Massa, who was named by President Alberto Fernández last week as the head of an expanded and empowered economy ministry, is expected to unveil incentives to exporters as well as policies to attract more foreign investment and to capture additional tourism revenue, according to people with knowledge of the plan.
On Monday, he tapped Raul Rigo, who had resigned just a month ago with former Economy Minister Martin Guzman, to return as treasury secretary. Lisandro Cleri, the head of the fund manager arm of the country’s state-run pension fund, will be vice president of the central bank. The incoming minister also named former policy maker Daniel Marx to the ministry’s debt markets committee.
Massa will continue announcing team members over the course of Monday and Tuesday, and said that he would start announcing policies in a press conference on Wednesday after he’s sworn in.
Central Bank President Miguel Pesce is expected to continue in his role.
The plan is being finalised with a renewed sense of urgency. The gap between the official and parallel exchange rates reached the widest level since the hyperinflation days of the 1989-1990s last month before narrowing in recent days. Foreign reserves are razor thin as Argentines, fearing an escalation of the crisis that claimed two economy ministers last month, continue to withdraw dollars from their accounts.
Among measures under consideration are some that aim to improve conditions that would encourage farmers to sell their crops, which is the main source of hard currency for the country, the people said. That could include some kind of tax incentives for farmers, said one of the people, or the possibility that they can access a weaker exchange rate than the official one, said another. No official decision has been made yet.
Massa’s team is also looking into steps to ensure that foreign currency brought in by tourists come into the formal financial sector.
A spokesman for Massa declined to comment.
In a bid to shore up the government’s credibility abroad, Massa will travel to Washington, New York, Paris and Qatar on the third week of August for meetings with investors and international creditors, one of the people said. IMF staff met last week with Massa’s predecessor, Silvina Batakis, who only lasted three weeks on the job.
At some point this week, Massa is planning to meet with powerful Vice President Cristina Fernández de Kirchner, according to one of the people with knowledge of the matter.
The prior economy minister didn’t have such a meeting with Kirchner, exposing the jitters that lead from a rift within the ruling coalition over economic strategy that’s been eroding the government’s credibility. Investors are looking to see if Massa’s political clout allows him to implement a more conventional economic framework that the ruling coalition has resisted so far, in particular spending cuts, a devaluation and less money printing.
by Bloomberg / Patrick Gillespie & Ignacio Olivera Doll