Taming Argentina’s economy: the team with a daunting task
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Argentina’s president-elect Alberto Fernández has selected a transition team of economic advisers charged with turning around the country’s dire economic problems as it teeters on the brink of its ninth sovereign debt default.
When a new Peronist administration takes power on December 10, it will need to act swiftly to negotiate a new agreement with the IMF and win back investor confidence amid fears of a return of state interventionism in economic policymaking.
A close adviser confirmed that Mr Fernández’s finance minister and a new central bank governor are likely to be chosen from the four economists (profiled below) tasked with tackling what may be the incoming government’s greatest challenge.
Daniel Kerner, an analyst at Eurasia Group, a risk consultancy, argued that Mr Fernández’s advisers “point to a clear heterodox strategy that will complicate relations with the IMF, debt negotiations and the overall design of a stabilisation plan”.
Indeed, Mr Fernández’s fierce criticisms of the austerity measures implemented by President Mauricio Macri, and a clear preference for higher public spending, have fuelled concerns that he may struggle to reach a deal with the IMF — a prerequisite for an agreement with private creditors.
Some analysts fear that Argentina’s public debt is unsustainable, meaning that a large “haircut” on the value of private creditors’ bonds will be inevitable.
At the same time, Mr Fernández will be limited by a likely power struggle within his own diverse coalition, with looming doubts over the extent to which his vice-president and former boss, ex-president Cristina Fernández de Kirchner, will influence economic policy.
The top team
Matías Kulfas, 47, is an economist with heterodox leanings who is one of the vital members of Mr Fernández’s think-tank known as the Callao Group. It was founded last year and composed of a new generation of Peronist politicians, mostly with experience in public office but not at the highest echelons of power.
His 2016 book, The Three Kirchnerisms, is critical of the second half of Cristina Fernández de Kirchner’s 2007-15 presidency, but identifies the anti-industrial policies of Argentina’s last military dictatorship in 1976-83 as the principal reason for the country’s inexorable economic decline over the last half century.
Mr Kulfas is a strong proponent of a socio-economic pact aimed at bringing down high levels of inflation, while also supporting a recovery in real salaries which have been eroded. He also favours import substitution by developing industrial “clusters” that would add value to Argentina’s natural resources, and has argued against the need to reform Argentina’s labour market.
Mr Kulfas was general manager of the central bank during Ms Fernández’s second term as president, having previously been a director of the state-owned Bank of the Argentine Nation, the largest in the country’s banking sector. Before that he was under-secretary for small and medium-sized businesses during the presidency of Néstor Kirchner.
Cecilia Todesca is another central member of the Callao Group, and worked alongside Mr Kulfas as cabinet chief in the central bank during Ms Fernández’s second term as president.
A trained economist who also studied public administration at Columbia University in New York, she too has been critical of the late Kirchner period. In particular, she has argued against the excessive regulations implemented by Ms Fernández, especially on the currency, preferring instead “capital flow management measures” as recommended by the IMF.
At the same time, she rejects the outgoing government’s disproportionate reliance on interest rates to control inflation. In a recent interview she emphasised that investment in Argentina is too low, while the country “desperately” needs to export more.
She is the adopted daughter of the Peronist head of Argentina’s statistics agency, who was appointed by Mr Macri. Her biological father was killed in 1975 while fighting for the Montoneros, a leftist urban guerrilla group.
Guillermo Nielsen, 68, was Argentina’s finance secretary from 2002 to 2005, mostly during the government of Néstor Kirchner when Mr Fernández was cabinet chief, in the aftermath of the 2001 sovereign debt default. One of the more orthodox economists on Mr Fernández’s team, he played a leading role in the negotiations with the IMF that followed what was the largest default in history at the time.
He is strongly in favour of the development of Argentina’s vast Vaca Muerta shale resources as an essential source of foreign exchange that can help to plug Argentina’s dollar shortage. He told the Financial Times earlier this year: “Vaca Muerta is going to be a priority. Argentina has to become, and can become, an oil and gas exporting country.”
After leaving the Kirchner government, Mr Nielsen briefly served as finance minister for the city of Buenos Aires — more recently running for the office of mayor in 2015 — and Argentina’s ambassador to Germany from 2008 to 2010.
Miguel Ángel Pesce
Miguel Ángel Pesce, 57, has had a long if low-profile career in the public sector. He briefly served as governor of Argentina’s central bank in 2010 when the incumbent fell out with the president, Cristina Fernández.
An economics professor at the University of Buenos Aires, he was vice-president of the monetary authority from 2004 to 2015 under four different governors, making him the longest serving member on the central bank’s board in the country’s volatile history. Since then, he has been president of the Bank of Tierra del Fuego, living in the southern city of Ushuaia.
Mr Pesce is an old friend of Mr Fernández, dating back to his time as finance secretary for the city of Buenos Aires, when the president-elect was a Peronist legislator for the city. When Mr Fernández then became Néstor Kirchner’s cabinet chief in 2003, he appointed Mr Pesce to various positions in the public sector before sending him to the central bank.
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