November 19, 2013 3:52 pm

Cristina Fernández demonstrates rude health with bold reshuffle

President Cristina Fernández has made an emphatic return to active presidential duty, signalling that Argentina would maintain its heterodox policies with the promotion of Marxist economist Axel Kicillof to economy minister.

Re-appearing on Monday for the first time since she underwent brain surgery six weeks ago, Ms Fernández posted a video of herself on Twitter in which she cheerfully thanked Argentines for their support during her absence and also appointed as her new cabinet chief a loyal ally and provincial governor, Jorge Capitanich, who pundits suspect is being primed to be her successor when her term ends in 2015.

Other changes include a new president at the central bank, Juan Carlos Fábrega, who previously headed the state-run Banco de la Nación Argentina and was an old friend of Ms Fernandez’s late husband and predecessor, Néstor Kirchner.

The much-awaited reshuffle dashed hopes that Ms Fernández might pursue more moderate policies to mitigate high inflation, dwindling foreign exchange reserves, and a widening gap between the official and black market exchange rates.

“The last available opportunity to do something different that might have succeeded has perhaps been lost,” said Luis Secco, an economist, who expects the last two years of Ms Fernández’s term to be shrouded in uncertainty and risk.

Mr Secco expects Mr Kicillof, until now the deputy economy minister who was in charge of the nationalisation of state energy company YPF last year, to very soon put in place a multi-tiered exchange rate system in a bid to stem a decline in central bank reserves by almost $1bn a month.

There are also concerns that outgoing economy minister Hernán Lorenzino’s tentative moves towards Argentina’s so-called “external financial normalisation” may now also take a back seat.

Nevertheless, Mr Lorenzino will head a new entity called the Executive Restructuring Unit to oversee attempts at resolving disputes with so-called “holdout” creditors, in a bid to enable Argentina’s return to the international capital markets.

Indeed, the move comes as Argentina lost a bid on Monday for a full-court rehearing of an appeal against a ruling in US courts in favour of the holdouts, who are demanding repayment of $1.3bn in defaulted bonds.

As Ms Fernández returns to the public arena – when for the first time she was seen not wearing all black clothes, as she has done since the death of her husband Néstor Kirchner in 2010, this time wearing a white blouse – she finds a changed political situation after her candidates faired poorly in midterm legislative elections last month.

Failing to secure the two-thirds majority necessary to amend the constitution and enable her to run for re-election, a succession battle within her Peronist political movement is now under way. Many analysts had named Mr Capitanich, the governor of Chaco province, as a likely successor.

In the video filmed by her daughter Florencia, Ms Fernández said she had been through a tough time, and expressed thanks for presents that ranged from a giant stuffed penguin to a white puppy given to her by a brother of the late Venezuelan president, Hugo Chávez, which she had named Simón, in honour of the South American independence hero, Simón Bolívar.

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