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Argentina’s finance minister Alfonso Prat-Gay is unexpectedly stepping down amid tensions in the government and growing disappointment over the speed of the country’s economic recovery.
President Mauricio Macri requested Mr Prat-Gay’s resignation on Monday as “differences” between officials were compromising the “coherence” of the government’s economic team, according to cabinet chief Marcos Peña.
The ministry of treasury and finance led by Mr Prat-Gay will now be split into two. Nicolas Dujovne, a former chief economist at Banco Galicia, a local bank, will become treasury minister. Luis Caputo, the finance secretary who played a key role in Argentina’s triumphant return to the international capital markets earlier this year, will be promoted to minister.
After a strong start as finance minister, presiding over the removal of currency controls and the resolution of a decade-long debt dispute that enabled Argentina to issue a bumper $16.5bn bond in April, a record in emerging markets, Mr Prat-Gay has faced growing criticism as the economy has taken longer to recover than he initially predicted.
Nevertheless, Mr Peña said that Mr Prat-Gay’s resignation has “nothing at all” to do with a change in the broader direction of economic policy. Although a contraction of as much as 2 per cent is expected for 2016, most economists expect growth of about 3 per cent in 2017.
The move comes after a bitter struggle in congress over important tax reforms largely designed by Mr Prat-Gay’s ministry, which then required significant changes because of strong pushback from opposition congressmen and unions.
A revised tax reform was passed by congress last week, but the fierce opposition to the government’s original proposals were seen as leading to an unnecessary and damaging defeat, and effectively the beginning of the campaign for key legislative elections next year.
Mr Prat-Gay’s exit also follows the surprise resignation last week of Isela Costantini, chief executive of the indebted state airline, Aerolíneas Argentinas.
Mr Peña said her resignation came at a time when the government was trying to introduce “more competition” in the sector, with some observers attributing Ms Costantini’s departure to a resistance to more aggressive reforms backed by other officials.
Mr Macri shook up the organisation and formulation of economic policy in Argentina when he took power a year ago, in a new structure that many have criticised as lacking clarity.
Decision-making was traditionally concentrated in the hands of an economy “super minister” whose power often rivalled that of the president, such as Domingo Cavallo, who was hugely influential over economic policy during most of the 1990s and whom many blame for the 2001 economic crisis.
But as well as Mr Prat-Gay, a respected former central bank governor and currency strategist at JPMorgan, Mr Macri appointed separate ministers in charge of production, transport and energy, while also giving responsibilities for economic policy to the interior and foreign ministries.
The economic cabinet is co-ordinated by Mario Quintana, a deputy of Mr Peña, who nevertheless clarified that ultimate responsibility for economic policy rests in the hands of the president.