Argentia Economy Minister Martin Guzman resigned from his post on Saturday, posting his resignation letter on Twitter.
Addressing President Alberto Fernandez, Guzman said, “I am writing to present to you my resignation as Minister of Economy…which has been my honor since December 10, 2019.”
He called on the president to repair internal divisions so that “the next minister does not suffer” the same difficulties as him.
As economy minister, Guzman was tasked with renegotiating a $44 billion (42.19 billion euros) debt with the International Monetary Fund that Argentina insisted it could not afford to repay.
Despite internal divisions within the government, perhaps most notably opposition from vice president and two-time head of state Cristina Fernandez de Kirchner, who leads the far left of the ruling coalition, Guzman managed to strike a deal and save the country from default. .
Argentina grapples with inflation and currency issues
The resignation comes at a time when the country’s economy faces multiple challenges, from soaring inflation and currency depreciation to critical shortages of items like diesel and fertilizer.
The Latin American country, which has the region’s third-largest economy, currently has the second-highest inflation among major economies behind Turkey, at around 60%.
The authorities predict that it will reach 70% by the end of the year.
Meanwhile, pressure on its peso currency is mounting and a high energy import bill is preventing it from building up vital dollar reserves.
The situation has placed the country’s central bank in a difficult situation. If he tightens monetary policy to stem rising prices and support the currency, he will likely jeopardize economic growth.
The interest rate has already jumped to 52% in a bid to prevent investors from dumping peso assets.
In a further sign that investors think another Argentinian default is likely, government bond yields are among the highest in the world.
The agricultural sector under pressure
The country’s key agricultural sector is also under strain due to critical shortages of items such as diesel and fertilizers.
Major agricultural groups have called for a trade strike in two weeks in a bid to pressure the government of leftist President Alberto Fernandez to do more to boost supplies.
The groups have announced that the national shutdown of agricultural exports will begin on July 13 and will last 24 hours, according to sector officials and a statement from the Mesa de Enlace which includes the country’s four main rural associations.
Argentina is the world’s second largest exporter of maize, the leading exporter of processed soybean oil and meal, as well as a major supplier of wheat and beef. The country has been plagued by economic crises, defaults and runaway inflation for decades.
sri/msh (AFP, Reuters)