New economy super minister will need to contend with alarmingly low reserve levels

The ministry is slated to publish a slew of new measures this week focused on addressing USD shortages

Although the Central Bank of Argentina (BCRA) raised the benchmark policy rate last week, which helped stabilize the parallel exchange rate, firms should expect the new economy minister of the so-called “super ministry” to respond to the crisis by remaining focused on ad hoc measures aimed at enabling Argentina to muddle through until the 2023 election rather than tackling the root of these macroeconomic imbalances. The economy super ministry is slated to publish a slew of new measures this week focused on addressing USD shortages. Furthermore, it will be key to continue to monitor negotiations with the IMF, as tensions with the multilateral could push Massa’s short-term strategy off course.


Last week, the Argentine government replaced former economy minister Silvina Batakis after less than a month in the role. In her place, lower house congressional leader and former presidential candidate Sergio Massa will lead the newly established economy super ministry, which will absorb the agriculture and productive development ministries. Seen as a more moderate, market-friendly Peronist, Massa was broadly well received by markets, particularly given that he is a well-connected establishment figure with solid ties within the Frente de Todos ruling coalition, the provinces, and even the private sector. Still, Massa faces enormous challenges, including dramatically low reserves, expected 8% MOM inflation in July, and a record gap between the parallel and official exchange rates that reached 160% last week.

Our View

Massa is indeed better positioned than Batakis—and perhaps even Martin Guzmán—to take the lead of the economy ministry and gather enough political support to tackle Argentina’s long-standing macroeconomic imbalances. However, his presidential aspirations will likely keep him from pursuing fiscal adjustments in line with the IMF agreement, as he himself would bear the cost of social pushback. Therefore, Massa will be faced with the immediate challenge of shoring up international reserves, likely through additional incentives for key sectors, primarily agrobusiness, and continued efforts to keep tourist dollars in Argentina. In the medium term, we expect Massa to continue to negotiate with the IMF to loosen targets for the agreement, particularly relating to the elimination of energy subsidies. He will also likely pursue additional USD financing sources, though this will be a tall order for Argentina. Overall, Argentina’s operating environment will remain highly challenging, with elevated risks of currency and debt crises before next year’s presidential election.

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