By Caroline Stauffer and Guido Nejamkis
BUENOS AIRES Nov 19 President Cristina
Fernandez's new Cabinet picks this week confirmed a deepening of
Argentina's left-leaning economic model rather than a policy
switch needed to confront escalating inflation and dwindling
foreign currency reserves.
After the president's first public appearance since an Oct.
8 operation to remove blood that pooled on her brain, her office
late on Monday announced the promotion of leftist economist Axel
Kicillof to economy minister and the replacement of the central
bank director and agriculture minister. Kicillof has served as
deputy economy minister.
Argentine debt prices were little moved on Tuesday by the
news, though the Global 2017 bond was down 1
percent. The Merval stock index fell 3 percent.
Analysts said the 42-year-old Kicillof already had more
influence on Fernandez than the man he replaced, Hernan
Lorenzino, who was given the job of ambassador to the European
Kicillof has advocated more interventionist policies and, as
an academic, gave classes and wrote about the theories of
economists including John Maynard Keynes and Karl Marx.
"For private investors, Kicillof is a concern, and for
Argentines he is the ratification of the current economic course
- nothing will change," said Alberto Fernandez, who was Cabinet
chief under former President Nestor Kirchner, Fernandez's late
Carlos Casamiquela will take over from Norberto Yauhar as
agriculture minister in the world's No. 3 soybean and corn
supplier. A 65-year-old agronomist, Casamiquela is known as a
serious farm technician who understands the issues facing
His appointment may improve dialogue between the government
and the agriculture sector, but no big changes were expected in
the interventionist policies that farmers say wreck their
In addition, Carlos Fabrega was named central bank chief,
replacing Mercedes Marcó del Pont.
Domestic Trade Secretary Guillermo Moreno, Fernandez's
right-hand man in negotiating with the private sector and a
lightning rod for criticism of her most contentious economic
issues, resigned on Tuesday.
He is known for his tough stance with foreign firms,
particularly grains trading companies, and has sent companies
like Brazilian miner Vale running for the door.
Moreno's resignation takes effect on Dec. 2; there is no
word on who will replace him.
In a video shown Monday before the Cabinet changes were
announced, Fernandez looked healthy and rested, holding a small
white dog she said was sent to her by one of the brothers of the
late leftist leader of Venezuela, Hugo Chavez.
Argentina, Latin America's No. 3 economy, faces inflation
that private economists estimate at 25 percent and a currency,
the peso, that is 65 percent weaker on the informal market
than at the government's official rate.
The government is also in the midst of a decade-long legal
battle with holdout creditors and is blowing through foreign
currency reserves to import energy and fund popular subsidies.
Kicillof steered the Argentine government's expropriation of
a controlling stake in energy company YPF from its
former parent company, Spain's Repsol. Argentina, once
a net energy exporter, needs foreign capital to develop its vast
Vaca Muerta shale reserves.
Amid concerns over the economy's health, Fernandez's
supporters suffered heavy losses in congressional elections on
Oct. 27 that ended her chances of securing a change to the
constitution that would have enabled her to run for a third term
"Since there's no chance of Fernandez holding on to power,
she might just throw caution to the wind and really double down
on some of these ideological reforms pre-2015," said Michael
Henderson, a Latin American economist at Capital Economics.
Most observers expect Fernandez's government to maintain or
intensify measures to keep the economy growing even as foreign
investment abandons Argentina. She increased public spending to
keep voters happy before the mid-term vote, causing prices to
rise and reserves to melt away.
"The bottom line is that if the government fails to tackle
the underlying inflation problem - which the new economy
minister doesn't even recognize - there will be a strong risk of
some sort of currency crisis in the rest of Ms. Fernandez's
term," said Fiona Mackie, an Argentina analyst for the Economist
Mackie said bondholders who refused to participate in two
debt restructurings dating to the country's 2002 default had
more confidence in Lorenzino as a dealmaker than in the
abilities of Kicillof, who previously focused on domestic
"This could dash hopes that were only recently raised that
some sort of negotiated settlement to the holdout problem could
finally, and against the odds really, be found," Mackie said.