The appointment of Silvina Batakis as the new Minister of Economy completes the pending tasks of Martín Guzmán, among which is the renegotiation of the debt with the Paris Club, the definition of the new electricity and gas tariffs, and promoting a drop in inflation.
Batakis will have to reschedule his schedule to travel to the French capital at a time when debt maturities with European states are approaching and a new negotiation is required to reschedule payments.
The meeting with the creditors’ organization was scheduled for next Wednesday, July 6, with the aim of obtaining a modification of the goals for the second quarter and renegotiate new conditions of interest rates and terms.
The minister comes from working in the management of fiscal and financial relations with the provinces, which predicts a large support base from the governors, in particular from the ruling party.
The urgency of economic issues expedites the need to send signals to domestic and foreign actors to help it through the first moments.
Batakis knows the public function and the corridors of the Palacio de Hacienda since he served during the first term of Cristina Fernández de Kirchner in the area of the Ministry of Finance, which allowed him to internalize himself in the assembly and management of the budget.
A key experience for the future head of the Palacio de Hacienda was her management in the Economy portfolio of the province of Buenos Aires between 2011 and 2015, during Daniel Scioli’s second term as governor.
His recent performance in the Ministry of the Interior moved on two key axes. On the one hand, he had to implement the so-called “Fiscal Consensus” with the provinces to order and harmonize the entire tax system.
On this topic, Batakis considered that the agreement with the provinces aimed at giving them “political autonomy”.
On the other hand, it had to negotiate with the City of Buenos Aires the redirection of additional co-participation funds for the transfer of security to the district, although this task is pending definition in the Supreme Court.
But the urgency for controlling the inflationary process will become the most sensitive issue for the new minister, who will have to carefully manage the rate update based on the cut in subsidies for electricity and gas consumption.
At the same time, it will not be able to neglect some macroeconomic issues, such as the renegotiation of the debt in pesos that is coming due and for which it is necessary to reschedule the terms, for which it will have to coordinate with the Central Bank the management of the interest rate and the financial assistance to the Treasury.
Batakis is also awaiting the revision of the quantitative goals agreed with the International Monetary Fund (IMF) within the current Expanded Facilities program, which allows the country to access another tranche of financing with fresh funds and to strengthen the reserve system.
Negotiations with the IMF will begin before the end of the month, although the agency gave the Argentine government a broader margin of maneuver so that the fulfillment of fiscal goals can be managed throughout the year provided that by the end of 2022 the deficit is 2.5% of GDP.
The financial market is now waiting for signals from the new minister both in financial and exchange matters as well as in measures to contain inflation.
