Argentine Economy Minister Nicolas Dujovne resigned on Saturday, capping a week of market chaos that followed President Mauricio Macri’s stunning loss in a primary vote. Apparently, his resignation was on the table since last Tuesday.
Dujovne, who led bailout negotiations between Argentina and the International Monetary Fund last year, justified his departure by saying the government needs “significant renewal in the economic area” following Macri’s defeat to leftist Alberto Fernandez on Aug. 10.
”No doubt we’ve made mistakes, which we never failed to acknowledge and which we tried to correct as much as possible,” Dujovne wrote in a letter to the president. “It’s been an honor for me to serve in your government.”
Hernan Lacunza, economy minister for the province of Buenos Aires, will replace Dujovne, according to a statement from the presidential palace.
Dujovne’s departure comes at the end of a week that has seen Argentina’s peso and sovereign bonds fall to record lows. Fitch Ratings and S&P Global on Friday downgraded Argentina deeper into junk citing the possibility of a sovereign debt default. Investors have been dumping Argentine assets for fear that Fernandez may shun the IMF deal and implement interventionist policies if elected on Oct. 27.
Macri rolled out several economics measures this week to appease voters, including tax breaks and plans to increase the minimum wage while freezing fuel prices. Local media had reported that Dujovne didn’t support the measures because they could violate fiscal targets agreed upon with IMF in exchange for a US$ 56 billion credit line. An IMF spokesman declined to comment.
Dujovne’s tenure was plagued by the unpopular IMF deal, significant spending cuts, recession and inflation over 50%. While the economy was showing signs of digging out of its hole in May and June, this week’s market rout is likely to put it back in the red.
The new minister Lacunza, 50, has since December 2015 been the economy minister for the Buenos Aires province, the biggest in the country with more than 16 million inhabitants, and the largest electoral circumscription, representing 37% of the electoral roll. He was general manager and chief economist at the central bank between 2005 and 2010, after which he founded Empiria, an economic consulting firm.
Lacunza is an economist from the University of Buenos Aires and has post graduate studies in the orthodox economics University Torcuato Di Tella. He is praised for having done a good job in helping reorganize and manage the province's finances, which was left bankrupt by the previous administration of Kirchnerite Daniel Scioli.
A big soccer fan, Lacunza speaks calmly and will need a cold head to maintain an open channel with the IMF while attending to the needs of Argentines. As the peso’s sharp drop increases prices of imported goods, inflation is likely to accelerate again, adding to the pain of a country suffering with double-digit unemployment.
“I’m deeply sorry that Hernan Lacunza will have to take care of this disaster,” Guillermo Nielsen, an economic adviser for Alberto Fernandez, said in a Twitter post. “A professional with his track record and integrity deserves to take care of a more normal situation.”