Argentina: Martin Lousteau Resigning?

Word from Buenos Aires tonight is that Martin Lousteau, Argentina’s Minister of the Economy of just two months, may be about to resign his post. According to our information, Lousteau spent two hours this afternoon with his President, Cristina Fernandez de Kirchner, where he explained that he could not do his job correctly while other members of the government continue to interfere with the workings of his ministry.  

Singled out in his complaints is the role of Guillermo Moreno, the secretary of interior commerce and member of the Kirchner inner circle. According to our information, the straw that broke the camel’s back is the news that Moreno has formed a task force of 30 economists to investigate costs of production in Argentine industries. Some members of government suspect there are companies that overstate production costs and therefore avoid fiscal responsibility. This may or may not be true, but the actions taken by Moreno seem rather extreme, particularly when one considers he made use of a heavy-handed law enacted in the period of Argentina’s military dictatorship that gives said economists free access to the books held by any company the government wants to examine.  

Whether or not he finally resigns, Lousteau’s obvious and understandable discomfort about this situation seems to have peeled a layer of respectability away from the new Cristina government. If this administration is set on taking such an intrusive attitude towards businesses operating in Argentina, we would have to agree with the stance reportedly taken by the youthful but respectable and respected Lousteau. We would also be more than a little concerned for the future of the country’s economy.  

Update 8:50pm

Just hours after the information (from normally reliable sources) originally passed this desk, Argentina’s government has denied that Lousteau will resign with the Presidential Palace apparently calling the reports “ridiculous” and “a total delirium”.

We, however, have learned from experience that there is no smoke without fire in Argentine politics.

5 Responses to "Argentina: Martin Lousteau Resigning?"

  1. Guest   February 28, 2008 at 12:23 pm

    Hi Mark,Let me add to your post that newspapers in Argentina are also reporting that the potential resignation was also linked to the “new” Consumer Price Index methodology. As per that info, it seems that the new methodology is giving an inflation rate that looks even lower than the already non-sense (“massaged”) CPI that Indec has been reporting since January 2007.If this is true, it implies increasing the de-facto default that the authorities are carrying on on its inflation-adjusted bonds. If true, the intertemporal effects of this greater default seem important… (the more so if added to my two previous posts).Nicolas

  2. Nicolas Magud   February 28, 2008 at 12:25 pm

    Sorry Mark, it was me that made the previous comment–I forgot my write my full name.Nicolas

  3. mark turner   February 28, 2008 at 5:51 pm

    Nicolas,Yes, the new shiatsu massage system for CPI is causing headaches already, isn’t it? Clarin reported they ran the new system side-by-side witht he still official one in January, and the new scheme returned 0.4% inflation while the present system recorded 0.9%I do wonder how far i should or should not lapse into plain old gossip on this blog (it may already be too late!), but suffice to say now that although Lousteau’s meeting with Cristina was unscheduled, it was then reported that the CPI system was the planned reason behind the meeting. I’m happy to stick with the information i was given yesterday, Nicolas. Can you hear a clock ticking?

  4. Anonymous   April 24, 2008 at 9:58 pm

    Far from being "ridiculous" and "a total delirium", this news was only 2 months too early, as Minister Lousteau has just resigned.

  5. mark turner   April 24, 2008 at 10:32 pm

    Indeed anonymous, lousteau got to 4 1/2 months before throwing in the towel.Carlos Fernandez, head of the AFIP, is replacing him