BUENOS AIRES 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 October 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 Union.
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 husband.
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 growers.
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 profits.
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 grain trading companies, and has sent companies like Brazilian miner Vale running for the door.
He led the government's crackdown on private economists who say inflation is at least twice the official rate, charging them hefty fines to try to quell dissent over the crucial data.
The International Monetary Fund, which requires accurate statistics to analyze the world's economies, censured Argentina in early 2013 for failing to improve the accuracy of its inflation and gross domestic product data.
Moreno's resignation takes effect on December 2; there is no word on who will replace him.
In a video shown Monday before the first round of Cabinet changes were announced, Fernandez looked 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 October 27 that ended her chances of securing a change to the constitution that would have enabled her to run for a third term in 2015.
"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 Intelligence Unit.
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 policy.
"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.
(Additional reporting by Carolyn Cohn in London and Nicolas Misculin in Buenos Aires; Editing by Will Dunham, Doina Chiacu and Jackie Frank)