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Argentine President Alberto Fernandez tapped leftist economist Silvina Batakis as the country’s new economy minister Sunday after her predecessor’s resignation Saturday deepened a political crisis boiling over into the economy and markets.
Fernandez spokeswoman Gabriela Cerruti confirmed the decision to Bloomberg News. Batakis, a low-profile policy maker and surprise choice, didn’t respond to a request for comment from Bloomberg News late Sunday night.
Batakis inherits a long list of economic challenges and the government’s $44 billion program with the International Monetary Fund. The announcement capped more than a day of suspense and uncertainty sparked by Martin Guzman’s resignation following two and half years in the top economic job.
It remained unclear Sunday night if Fernandez would make other cabinet changes. Central Bank Chief Miguel Pesce confirmed to Bloomberg News he will stay in his role.
The second woman to serve as the nation’s top economic chief, Batakis was the economy minister of Buenos Aires province from 2011 to 2015 under then-governor Daniel Scioli, a far-left coalition leader who recently became production minister. More recently, she served in a second-tier role in the nation’s Interior Ministry.
The appointment was made after Fernandez met for hours Sunday with Lower House Leader Sergio Massa. Vice President Cristina Fernandez de Kirchner, who is publicly critical of the president and his economic team, spoke to him Sunday evening by telephone, local media reported.
“Batakis’ appointment seems to signal that the balance of power has tilted to the Kirchnerist side,” Diego Pereira, an economist at JPMorgan Chase & Co., wrote in a note to clients Sunday. “We would expect a more expansive fiscal stance, and potentially a renegotiation of the IMF program.”
Markets will be watching for clues on Batakis’ economic agenda, the IMF program and how she plans to navigate a divided ruling coalition that ended Guzman’s tenure.
Analysts pointed to her lack of experience formulating major economic policies or negotiating with the IMF. Batakis could also represent a turn toward far-left economic policies, given her track record.
“It’s a victory for Cristina,” says Camila Perochena, a political analyst and professor at Torcuato di Tella University in Buenos Aires. “For financial markets, it’s an awful impact.”
Crisis-prone Argentina is currently battling inflation at over 60%, with nearly 40% of the population living in poverty and the economy forecast to enter a recession this year. The central bank has razor thin cash reserves that it’s struggling to build up amid low credibility and high prices on energy imports and the country’s bonds trade in distressed territory.
(Updates with analyst comment in 7th paragraph)
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