The unexpected departure this week of Roberto Lavagna, Argentina’s economy minister, has highlighted tensions within the government of President Néstor Kirchner, and raises questions over the sustainability of its conservative fiscal policy. If Mr Kirchner now chooses to pursue a more radical approach to economic management it will increase the possibility that Argentina’s economic recovery will run into serious difficulties.

Since taking office in 2002 Mr Lavagna masterminded Argentina’s recovery from the twin default and devaluation crisis of December 2001. Macroeconomic stability, underpinned by firm fiscal policy – including a primary surplus (before debt payments) of 3.7 per cent of gross domestic product – helped Argentina take advantage of favourable conditions in international markets.