The economic crisis in Argentina is nothing new. For years, the country has been walking a tightrope to try to contain inflation, which has devastated the lives of many citizens in recent years.
However, it appeared that stability was being achieved by the administration of Economy Minister Martin Guzmán, under President Alberto Fernández, which began in 2019. The minister was responsible for the 44 billion IMF deal, which replaced the failed 2018 deal, and had been showing some progress. It was a hope for development in a country that for years has suffered from political and economic instability.
However, on Saturday night, July 2nd, Guzmán resigned from his position, revealing that the advances would not be so real and raising concern in President Fernandez.
Cause of resignation
Although there is no stated reason for Gusmán’s resignation, it is known that the ruling party had been facing internal conflicts in recent days. The differences would have come from the militant area of the party, in agreement with Vice President Cristina Kirchner.
That wing of the party reportedly criticized Gusmán publicly by calling for more public spending. Guzmán was considered a relatively moderate politician in a center-left government.
The resignation of the minister of economy reveals above all the political instability within the ruling party itself. In other words, from the departure of Guzmán, it is possible to observe that the government is unable to dialogue with each other, which is naturally reflected in the policy operated in the country.
Argentina’s perpetual crisis
Argentina faces a political and economic crisis that has dragged on for more than 20 years. The trigger for the crisis took place in 2001, when President Fernando de la Rúa fled by helicopter amid protests after confiscating people’s money.
The main cause was economic mismanagement and the bursting of a financial bubble, which was created from privatization, exchange rate anchor, and trade opening. The country lived a false illusion of prosperity, and since then it has suffered from very high inflation and the misery of the population.
Since then, governments have alternated without success in the mission of recovering the stability of the country’s economy. In addition, corruption scandals and popular demonstrations made it even more difficult for the feeling of hope to flourish.
In this context, the departure of the minister of economy from the government demonstrates that this reality is still far from over. Since the rupture was internal to the ruling party, it is clear that there is no consensus on the way to govern.
Furthermore, the involvement of Vice-President Cristina Kirchner in the event that culminated in the resignation of the Minister of Economy is yet another indication of the slow pace of evolution.
Cristina was president of Argentina from 2007 to 2015, having achieved positive results in reducing poverty at historic rates.
Even so, the government was marked by controversies involving corruption, and the strength that the vice president possesses proves to be an obstacle to the government of President Fernandez. Guzman’s resignation is the biggest proof of that.
Thus, Argentina’s political instability is once again the cause of the lack of development or even the scarcity of the country’s economy.
The Argentine government did not immediately present a new name to replace the post of minister of economy. The replacement carries a great responsibility, as Guzmán was responsible for closing important agreements, such as the 44 billion loan with the IMF.
The minister had been making positive efforts to stabilize the economy, after years of failure in this sector. It was precisely the tightening of accounts that would have caused estrangement with the militant wing of the government.
The concern is that the minister’s departure will lead to a new crisis in the market. Confidence in the minister had been supporting Argentina’s position internationally.
Fernandez now faces the difficult task of putting in office someone capable of continuing the work of promoting financial stability, which is essential for the country. The new nominee, however, must be able to dialogue with Cristina and the militant area of the government.