Argentina gives economic reins to aides more keen on austerity
For more than two generations, Argentina has rocked from one economic crisis to another -- with soaring inflation, whopping government deficits, a runaway foreign debt, and virtual economic collapse. This week there is a new crisis.
Fresh on the heels of several bad economic reports, Economy Minister Bernardo Grinspun and Central Bank President Enrique Garc'ia V'asquez have resigned.
After 15 months on the job and with limited success in resolving the nation's economic quandaries, the pair have been replaced, at least temporarily, by Juan Sourrouille and Alfredo Concepci'on.
The Grinspun resignation, although it surprised some observers, had in fact been rumored for a month. What lies behind it, as well as what actually triggered it at this moment, however, is unclear.
``I would have thought that with Grinspun involved in delicate negotiations over a rescheduling of Argentina's $46 billion foreign debt, he would have stayed on the job until the negotiations were concluded,'' said an American banker close to the talks. ``We were not at an impasse, so I guess there were other reasons, probably related to the economy, that led to Grinspun's departure.''
Although Argentine President Ra'ul Alfons'in once called Mr. Grinspun ``the economic savior of Argentina,'' there has been growing discontent with Grinspun and his policies in both government and private circles for some months. His often abrasive manner ruffled many of those with whom he dealt, including foreign bankers to whose institutions Argentina owes billions of dollars.
In some measure, moreover, the Argentine economy's continuing malaise and its failure to respond to Grinspun's ministrations must have played a role in his departure, observers say. Two examples:
Inflation has continued to soar. In January, it galloped along at a monthly rate of 25 percent -- which, if continued at that rate through 1985, would give Argentina an inflation tally of more than 1,000 percent for the whole year. Inflation for the last 12 months registered at 776 percent.
Preliminary reports suggest that the 1984 losses of state corporations ate up some 55 percent of all government expenditures for the year. Estimates for 1985 indicate that this pattern will continue.
Both the inflation rate and the losses of state corporations were to be cut sharply under agreements worked out last year with the International Monetary Fund. Those agreements, calling for stiff domestic austerity, were aimed at getting Argentina's runaway economy under control.
The Alfons'in government had agreed to strenuous belt-tightening measures, including a rein on inflation, holding it to 150 percent for 1985, and deep cuts in the losses of state enterprises, along with the sales of many of those enterprises.
So far, however, the measures have not been totally implemented.
The former economy minister is frequently blamed. Grinspun was always less enthusiastic than others in the Alfons'in government about the austerity program. Some observers say he did a lot of foot-dragging on the program.
Not so the Planning Ministry which was headed, until this week, by Mr. Sourrouille, who is Grinspun's replacement. The Planning Ministry readily accepted austerity as ``a way of life for Argentina until it gets its economic house in order,'' Sourrouille said last year.
He has been involved in many of the IMF negotiations, and is author of a new five-year plan that puts heavy emphasis on exports as a means of getting Argentina out of its foreign-debt bind.