Martín Guzmán: The Argentine Minister of Economy yields to the pressure of Kirchnerism and submits his resignation

The Minister of Economy of Argentina, Martín Guzmán, presented his resignation this Saturday. His departure is a blow with unforeseeable political consequences for the president, Alberto Fernández, who had handed over the fate of his management to the success of the economic plan of his now former minister. The president also loses one of the last members of the Cabinet who responded to him without nuances, in the midst of the political war that he maintains with his vice president, Cristina Fernández de Kirchner. Since the agreement with the IMF in January of this year, Kirchnerism has been asking for the head of Guzmán, whom it accused of having condemned the country to a harsh fiscal adjustment, aggravating the economic crisis and squandering the electoral options of the ruling party in the general elections of 2023.

While Guzmán presented his resignation with a seven-page letter on social networks, Kirchner was speaking at a ceremony to commemorate the 48th anniversary of the death of Juan Domingo Perón, the founder of Peronism. The minister was the favorite target of the vice president and the political sector that she leads within the government alliance. This afternoon, he told hundreds of people that “the fiscal deficit is not responsible for inflation.” It was a direct shot at the minister’s management, who agreed with the IMF to reach the balance of public accounts in 2024, but he could do little until now to reduce the rise in the CPI, which this year will be around 70%.

Fernández had supported Guzmán in his charge as if in a trench, while Kirchnerism attacked. Nobody expected his resignation, despite the fact that the tension had already become unsustainable. “The first time I spoke to Argentina as the Nation’s Minister of Economy, I said that our objective was to reassure the economy,” Guzmán wrote in the resignation letter he sent to the president and can be read on their social networks. “This concept may not generate much enthusiasm for several, but it always seemed to me (and it seems to me) that reassuring the economy would constitute a true epic,” he added, referring to the requests of Kirchnerism for more public spending and monetary issue as a weapon to reactivate the economy.

Guzmán came to the Fernández Government in December 2019 at the hands of Joseph Stiglitz, a Nobel Prize winner in Economics, who was his tutor at Columbia University, in the US. An expert in foreign debt renegotiation processes, his mission was to agree on a new schedule of payments of the Argentine bonds that the Government of Mauricio Macri had left in a situation of default. On August 31, 2020, eight months after assuming office, the minister successfully closed the restructuring of the debt in dollars with private creditors. 93.5% of the bondholders accepted the government offer and the carryover effect of the collective action clauses raised the percentage to 99%. Practically all of a debt of almost 68,000 million dollars was exchanged for new bonds, with lower interest rates (from 7% to 3.07% per year on average) and longer maturities, which meant savings of 37,000 million dollars for the country.

The success of that negotiation was quickly overshadowed by the economic fallout from the pandemic. Argentina’s GDP fell by almost 10% in 2020, while the renegotiation of the financial rescue of 44,000 million dollars that the IMF had delivered to Macri in 2018 was delayed. The negotiations with the Fund marked the beginning of the deterioration of relations between President Fernández and Kirchner. The vice president demanded a firm hand with the Fund, which she accused of having tried to finance Macri’s re-election with a loan that Argentina was not in a position to repay. That is why she demanded a reduction of the capital and much longer terms than the Fund was willing to grant. When Fernández and Guzmán announced the agreement with the IMF on January 28 of this year, the rupture in the leadership of the Peronist government was complete.

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