Argentina’s central bank chief ‘resigns’
Amid volatile economic crisis
BUENOS AIRES, Sept 25, (AFP): The president of Argentina’s central bank, Luis Caputo, abruptly resigned on Tuesday after just three months in the position, amid a volatile economic crisis.
The resignation, which the bank said was for “personal reasons,” came as President Mauricio Macri was trying to negotiate accelerated IMF funding from a $50 billion loan agreed in June to help stabilize Argentina’s economy. Macri is currently in New York, attending the United Nations General Assembly, while back home discontent was growing as a 24-hour general strike paralyzed the country.
The central bank said in a statement announcing Caputo’s resignation that he was doing so with the conviction that a “new agreement with the International Monetary Fund will restore confidence in the fiscal, financial, monetary and exchange situation.”
Rumors
But analysts said there were already rumors on Friday that he would resign due to “a disagreement with the IMF over monetary policy,” according to Argentine economist Gabriel Rubinstein.
Formerly chief of trading at JP Morgan and Deutsche Bank, Caputo is close to the center-right Macri and was finance minister before he was appointed president of the central bank in June.
He has been replaced by deputy finance minister Guido Sandleris, an economist who worked previously for the World Bank and Inter-American Development Bank.
Economist Fausto Spotorno said Caputo was never seen as a long-term fixture and that “the government’s priority is an agreement with the IMF.”
After a crisis of confidence beginning in April saw the value of the peso plunge, Argentina negotiated a $50 billion bailout loan from the IMF that included an initial $15 billion tranche in June.
But that failed to prop up the currency and Macri announced in August he would be seeking an accelerated disbursement of the remainder of the funds that were initially due to be transferred over a three-year period. That sparked two days of damaging drops in the value of the peso, which lost 20 percent against the dollar. For the year it is down around 50 percent.
Economy
Inflation is expected to hit 40 percent by the end of the year while economy is predicted to shrink by 2.0 percent.
Macri responded by announcing new, and unpopular, austerity measures, including halving the number of government ministries and restoring taxes on grain exports. The central bank hiked interest rates to a world-high 60 percent and the peso has remained largely stable since its sudden crash in August.
But restoring faith in the peso has proved difficult with skeptical Argentines believed to be holding $300 billion outside of the country’s fiscal circuit, either in cash or abroad, in a bid to protect their assets from the peso’s woes.
With no public transport or taxis running, Tuesday’s strike was largely respected, as many shops remained closed and citizens found themselves unable to get to work.
Banks and public sector offices were closed but hospitals continued to run a basic service.
Airports were deserted, though, with all flights in and out of the country cancelled.
Streets were calm with no organized protest expected following Monday’s mass rally led by unions.