Argentine Massa proposes ‘fiscal order’ to deal with economic malaise

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BUENOS AIRES, Aug 3 (Reuters) – Argentina’s new Economy Minister Sergio Massa on Wednesday announced a list of measures aimed at fixing the country’s ailing finances, including promises to hit a key deficit target and to meet the debt payments already agreed.

The announcements mark the first steps taken by Massa, President Alberto Fernandez’s latest choice for the post of economy minister, as the South American country’s economy suffers from a debilitating crisis of spending, debt and inflation that has fueled angry street protests.

In his first press conference as minister, Massa took a particularly tough line against the “scourge” of soaring consumer prices, which have risen by at least 70% this year.

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“We must face inflation with determination because it is the main poverty factory that any country faces,” said Massa, who stressed that “fiscal order” was a key confidence-building measure, in particular tighter control of public spending.

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

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

Fernandez’s third chief economics officer over the past month, Massa officially took over the reins of his new “superministry” on Wednesday.

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

A former congress leader and advocate for the ruling Peronist coalition, Massa pledged to end the year with a budget deficit equal to 2.5% of gross domestic product, a pre-existing government target, as well as abstain to use Treasury advances for expenditures. for the rest of this year. He also promised to keep a freeze on new government hiring in place.

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

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

Regarding key commodity exports, Massa reported that he had reached an agreement with agriculture, fishing and mining leaders to accelerate shipments by $5 billion, which would also help bring the necessary hard currency to the state coffers.

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

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

Some analysts have offered optimistic views on Massa’s initial attempt as minister to tackle a disheartening economic slide.

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

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

Warring factions of the centre-left governing coalition have united behind Massa, seen by many as perhaps Fernandez’s last chance to stem the economic haemorrhage that has severely damaged the government’s popularity ahead of the presidential vote in next year.

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, lasted only a few weeks.

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Additional reporting by Carolina Pulice and Lucila Sigal; Written by David Alire Garcia; Editing by Alistair Bell, Leslie Adler and Bradley Perrett

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