Argentina Economy Minister Power in Question

Kirchner II’s new economy minister is Martín Lousteau, a 37-year old economist educated in the University of San Andrés in Argentina and the LSE. The appointment is broadly market friendly, but analysts wonder how much autonomy the current head of Banco de la Provincia de Buenos Aires will have. “The dominant view among observers is that major economic policy decisions will continue to be made by the president and a small inner circle,” says Goldman Sachs. “We expect the new minister to tighten the fiscal stance, try to renegotiate the Paris Club debt, and resort to agreements with labor unions and business sector representatives on wage and price increases to fight inflation,” the shop adds. “He is an opinionated man, who supports a weak peso to promote competitiveness,” says Merrill Lynch. “Louteau should provide more sense to the conduct of macro policy if allowed to act. This remains an unknown,” it adds. Central bank president Martin Redrado is set to remain in his post in charge of FX and monetary policy.