Argentine Economy Minister Martin Lousteau Resigns
Argentine Economy Minister Martin Lousteau resigned four months into President Cristina Fernandez de Kirchner's administration amid disputes over farm policies and accelerating inflation in South America's second-largest economy.
Lousteau, 37, struggled to address questions about the credibility of inflation data and avert a strike by farmers that led to food shortages and the biggest anti-government demonstrations since 2001. His appointment to the Economy Ministry was one of the few cabinet changes Fernandez made after succeeding her husband, Nestor Kirchner, as president Dec. 10.
“There was a need of a change,'' said Silvia Marengo, who manages $130 million of emerging-market bonds at Clariden Bank, in a telephone interview from London. “It's terrible that the conflict with the farmers is making the country lose a big opportunity to boost exports amidst high international prices of commodities.''
Lousteau's resignation comes as Argentina's government confronts farmers opposed to a new export tax regime announced March 11. A three-week strike by farmers that began last month led to road blockades and shortages of beef and dairy products across the country. Farm leaders said this week that there has been little progress in talks ahead of a May 2 deadline to resume protests.
Carlos Fernandez, who is not related to the president and was named head of Argentina's tax agency in March, was sworn in as Lousteau's replacement today at the Presidential Palace in Buenos Aires.
Farmers `Don't Care'
“I'm concerned about the economy,'' Fernandez told reporters today outside his home on the outskirts of Buenos Aires. He asked farmers to “remain calm, I'll do my best.''
Former President Kirchner said last night that farmers opposing a new variable export tax on grains and oilseeds are trying to “freeze'' Argentina's economy, which has grown faster than 8.5 percent in each of the past five years following the country's default on $95 billion of bonds in 2001.
“They want to sell everything abroad because food prices are absolutely expensive,'' Kirchner said in a speech to Peronist party supporters in Buenos Aires province. “They don't care about the stomachs or pocketbooks of Argentines.''
Confidence Declines
After the 21-day strike, confidence in Cristina Fernandez's government fell 7 percent from the previous month and 19 percent from April 2007, according to a poll released yesterday by Torcuato Di Tella University.
The university's main confidence index — measured from 0 to 5 — fell to 1.74 from 1.86 in March, a 7 percent drop and 19 percent below April 2007 payday loans in 1 hour payday loan.
Confidence in the government's capacity to solve problems, measured in percentages, fell to 52 percent from 57 percent the month before, the survey showed, while the government's positive rating fell to 28 percent from 31 percent.
The university's poll of 1,200 people was conducted April 3 to April 11 by Poliarquia Consultores and has a margin of error of 2.9 percentage points.
“The growing conflicts and a confrontational policy regarding farmers will deepen economic uncertainty and that will probably be reflected in more drops in President Fernandez's popularity,'' said Rosendo Fraga, a political analyst who runs Nueva Mayoria pollster in Buenos Aires.
Inflation Accelerating
Government inflation data has been questioned by opposition leaders, economists and institutions including the International Monetary Fund since Kirchner started replacing personnel at the national statistics institute in January 2007. Kirchner said the moves were made to “improve operations.'' Critics, including former Economy Minister Roberto Lavagna, called it manipulation.
“We know how much inflation affects income,'' Lousteau said April 22 in a speech in Buenos Aires. “The best administration is the one that has the country grow at the highest sustainable rate possible.''
According to the government, Argentine inflation accelerated to 1.1 percent in March from February and to 8.8 percent from the same month a year earlier. Claudio Mauro, an economist at M&S Consultores in Buenos Aires, said April 10 that annual inflation is closer to 22 percent.
“I'm not sure the change was positive because Carlos Fernandez will be stronger defending the government position against farmers,'' said Marengo at Clariden Bank. “The government has to find a solution but it seems that this appointment puts more pressure.''
The yield on Argentina's benchmark 8.28 percent bonds maturing in 2033 jumped 65 basis points, or 0.65 percentage point, to 10.98 percent at 6:04 p.m. in New York, according to composite data compiled by Bloomberg. The bond's price fell 5 cents on the dollar, the biggest drop since July 26, to 75.5 cents. The price is the lowest since the government issued the security in December 2005.
Argentina's peso gained 0.4 percent to 3.174 per dollar.