Argentina Economy Minister Guzman Resigns as Divisions Grow

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(Bloomberg) — Argentine Economy Minister Martin Guzman resigned Saturday, marking the biggest departure of President Alberto Fernandez’s government after infighting within the ruling coalition escalated.

Guzman announced his decision in a seven-page letter published on Twitter. No replacement was immediately announced.

The minister has come under pressure as Argentines battle heightened inflation of more than 60{3b930a6ca12a59604e1bbadfc55b7d1b7a0aa8613f1ab9377cace0d5afcb5fb9}, following a surge in food and energy prices. The shakeup also heightens doubts over whether Argentina can comply with an International Monetary Fund deal, whose goals and objectives for the second half private economists view as too challenging for the government to reach. 

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Guzman, a 39-year-old economist who conducted research at Columbia University alongside Nobel Prize winner Joseph Stiglitz, lost support this year from the far-left wing of the coalition controlled by Vice President Cristina Fernandez de Kirchner. Lawmakers loyal to her in Congress voted against the IMF agreement he negotiated, even though the financing for the deal was approved by the legislature with ample support.  

Complaints against Guzman billowed recently with Kirchner’s son, Maximo, a lawmaker in congress, calling out the minister in a speech.

Over his almost 31-month tenure, Guzman restructured $65 billion of international bonds with private creditors in 2020, helped deepen Argentina’s local debt market and then spearheaded talks for the $44 billion IMF deal. 

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While both deals bought the government time to repay Wall Street and the Washington-based lender, neither has boosted investor confidence in Argentina. The nation’s bond prices hover in distressed territory above 20 cents on the dollar. 

Guzman also significantly reduced the government’s fiscal deficit last year after it ballooned at the peak of the pandemic in 2020. Kirchner heavily criticized that belt tightening last September, after the ruling coalition lost the mid-term relections.

One of the president’s most loyal ministers, Guzman’s resignation lays bare the government’s internal divide between Fernandez and Kirchner. The president last month was forced to ask Production Minister Matias Kulfas to resign, after he allegedly criticized Vice President Cristina Fernandez de Kirchner in text messages to the press.

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Read more: Argentine President’s Loyal Minister Resigns Amid Infighting

Guzman had butted heads with some of his own deputies loyal to Kirchner. In May 2021, local Argentine press reported a policy rift between Guzman and a junior official in the Energy Ministry who Guzman requested be fired. As the top economic policy maker, Guzman had control over the Energy Ministry, but the official, aligned with Kirchner, allegedly refused to quit and stayed in his post. 

Since the government sealed the IMF deal, Fernandez’s focus has also shifted toward economic issues that have mostly been handled by other ministers. In March, the president declared a “war on inflation” and told ministers to take “all measures necessary” to combat elevated inflation but price gains continued escalating. While Guzman played a role in the inflation strategy, measures on prices were mostly spearheaded by officials close to Kirchner.  

(Updates with background)