Argentina’s Massa pitches ‘fiscal order’ to treat economic malaise

Argentina’s new economy minister, Sergio Massa, announced a list of measures on Wednesday aimed at healing the country’s ailing finances, including pledges to meet a key deficit target and stick with already agreed debt payments.

The announcements mark the first actions taken by Massa, President Alberto Fernandez’s latest pick for economy minister, as the South American country’s economy suffers from a debilitating spending, debt and inflationary crisis that has stoked angry street protests.

During his first news conference as minister, Massa took an especially hard line against the “scourge” of surging consumer prices, seen rising at least 70% this year.

“We have to confront inflation with determination because it’s the main poverty factory any country faces,” said Massa, who stressed “fiscal order” as a key confidence-building measure, especially a tighter lid on public spending.

He also sought to promote what he called inclusive growth, and did not seek to minimize the many problems facing Latin America’s third-biggest economy.

“The challenge is enormous,” said Massa, who is known to have close ties to international investors.

Fernandez’s third economy chief in just the past month, Massa formally took the reins of his newly dubbed “superministry” on Wednesday.

The South American country’s large fiscal deficit, exacerbated by years of overspending, high debt and a weak peso currency will all battle for the new minister’s attention.

A former congressional leader and lawyer from the ruling Peronist coalition, Massa pledged to close the year with a budget deficit equal to 2.5% of gross domestic product, a pre-existing government goal, as well as refrain from using advances from the treasury for spending during the rest of this year. He also promised to keep in place a freeze on new government hires.

Massa said the government would rework anti-poverty and fuel subsidies, but he was light on details.

Explicitly backing the government’s $44 billion debt deal with the International Monetary Fund, Massa told reporters he would continue with all agreed payments to the lender.

Regarding key raw material exports, Massa signaled he had reached a deal with farming, fishing and mining leaders to speed up $5 billion in shipments, which would also help bring in needed hard currency to state coffers.

The new minister, with expanded power over economic policy, said the government would launch a voluntary exchange for peso-denominated debt maturities over the next three months.

He also said the government was advancing with $1.2 billion in payments to international entities, for ongoing programs as well as programs under consideration.

Some analysts offered downbeat takes on Massa’s initial attempt as minister to tackle a daunting economic slide.

“Containing the fiscal deficit and the recomposition of reserves are the most important points among the announced measures,” said Manuel Solanet, director of public policy at consultancy Libertad y Progeso.

“But in both cases, nothing is certain,” he added.

The center-left governing coalition’s warring factions have united behind Massa, seen by many as perhaps Fernandez’s last chance to stanch economic bleeding that has badly hurt the government’s popularity ahead of next year’s presidential vote.

In his new role, Massa oversees the agriculture, production and trade secretariats, whose officials report directly to him.

His appointment follows the abrupt resignation of Economy Minister Martin Guzman in early July, after which Guzman’s successor, Silvina Batakis, only lasted a few weeks.