The new Economy Minister, Sergio Massa, is preparing a set of measures to deal with one of Argentina’s main problems: a chronic dollar shortage that has sent the US currency soaring in parallel currency markets.
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Massa, who was appointed by President Alberto Fernández last week as head of an expanded and strengthened Economy Ministry, is expected to unveil incentives for exporters, as well as policies to attract more foreign investment and capture additional income from tourism, according to people with knowledge of the plan.
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On Monday, Massa appointed Raúl Rigo, who had resigned just a month ago along with former economy minister Martín Guzmán, to return as finance secretary.
He will continue to name team members over the course of Monday and Tuesday, and said he would begin announcing policies at a news conference on Wednesday after he is sworn in.
The plan is being finalized with a renewed sense of urgency. The gap between the official and parallel exchange rates last month reached the widest level since the hyperinflation days of the 1989-1990s, before dipping in recent days.
Foreign exchange reserves are very scarce, since Argentines, fearing an escalation of the crisis that claimed two economy ministers last month, continue to withdraw dollars from their accounts.
Measures being considered include measures aimed at improving conditions that would encourage farmers to sell their crops, which is the country’s main foreign exchange earner, people familiar with the matter said.
That could include some kind of tax incentive for farmers, according to one of the sources cited, or the possibility that they can access a weaker exchange rate than the official one, another of the people said.
No official decision has been made yet. Massa’s team is also studying measures to ensure that foreign currency brought in by tourists enters the formal financial sector. A spokesman for Massa declined to comment.
Strengthen credibility
In an attempt to bolster the government’s credibility abroad, Massa will travel to Washington, New York, Paris and Qatar during the third week of August to meet with international investors and creditors, one of the sources said.
IMF staff met last week with Massa’s predecessor, Silvina Batakis, who lasted only three weeks in office.
Sometime this week, Massa is scheduled to meet with powerful Vice President Cristina Fernández de Kirchner.
The previous economy minister did not have such a meeting with Kirchner, exposing the nervousness generated by a split within the ruling coalition over economic strategy that has been eroding the government’s credibility.
Investors are watching to see if Massa’s political clout allows him to implement a more conventional economic framework that the ruling coalition has so far resisted, in particular spending cuts, a devaluation and less printing of money.
INTERNATIONAL WRITING
*With data from Bloomberg
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