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Bonds News

New Argentine economy minister seen as lame duck

BUENOS AIRES, July 17 (Reuters) - At just 40 years of age, Miguel Peirano has secured Argentina’s most powerful economic post. But the newly named economy minister’s tenure is only ensured through December and analysts expect little change in policy.

The former industry secretary, Peirano is due to be sworn in as minister on Tuesday evening, a day after Felisa Miceli resigned over a judicial investigation into some $60,000 in cash found inside her office bathroom.

An Oct. 28 presidential election will sharply limit Peirano’s ability to make his mark, and financial markets barely reacted to his Monday night appointment.

“It is difficult (to imagine) that the government will decide to change course three months before the elections,” Dresdner Kleinwort said in a research report.

Even if the first lady, Sen. Cristina Fernandez de Kirchner, were to become president, he would not necessarily be invited to stay on.

“I have no doubt that we will continue with the same economic logic that has existed up to now, reaffirming the national government’s industrial and productive vocation,” Cabinet Chief Alberto Fernandez told reporters late on Monday.

Asked whether Peirano would continue as minister if Cristina Fernandez won the election, the Cabinet chief said he had no idea and that would depend on her.

The wife of center-left President Nestor Kirchner, Fernandez is due to formally launch her presidential campaign on Thursday. She is the undisputed front-runner in polls, which show her with more than 40 percent of voter support.

Local media report that other potential economy ministers under Fernandez include Mario Blejer, director of the center for central banking studies at the Bank of England, and Beatriz Nofal, who heads the government’s investment promotion agency.

But this is just speculation for now.

In the meantime, Peirano is expected to continue the government’s commitment to a primary budget surplus, trade surplus and competitive local currency.

“With Peirano as minister, we expect the government’s weak peso policy and generous electoral spending to remain unchanged,” Credit Suisse said on Tuesday in a report.

MARKETS STEADY

Argentine markets barely reacted to Peirano’s appointment.

The peso ARSB=, which shows little movement in a market dominated by central bank intervention, traded steady at midday, as did government bonds. The MerVal benchmark stock index .MERV was only slightly higher.

“The market is indifferent to Miceli’s replacement. A priori, everything is fine,” said Horacio Corneille, a trader at Horacio Corneille brokerage.

Marcelo Fernandez, president of the General Economic Confederation, which groups small and medium-sized businesses, described Peirano as accessible and helpful.

“I believe he will continue with the same style of working (as Miceli), and we could see a strengthening on some industrial issues that concern us all,” Fernandez said.

Kirchner’s government has prided itself on “re-industrializing” Argentina after a currency peg to the dollar during the 1990s favored imports over local production.

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