Top Official on Economy Steps Down in Argentina



April 26, 2008

By ALEXEI BARRIONUEVO

RIO DE JANEIRO — Martín Lousteau, Argentina’s embattled economy minister, resigned late Thursday after less than five months in the job, amid rising inflation and a protracted conflict with farmers over government tax policy.

Cristina Fernández de Kirchner, Argentina’s president, quickly named Carlos Fernández, an adviser who briefly headed Argentina’s tax agency, to succeed Mr. Lousteau.

The government did not comment on the reasons for Mr. Lousteau’s departure. Mr. Lousteau, who is 36 and was trained at the London School of Economics, apparently grew frustrated with the government’s response to rising inflation and the fallout from a three-week strike by farmers.

Mr. Fernández, a former economy minister of Buenos Aires Province, was also an adviser to former President Néstor Kirchner, the husband of the current president. He said Friday that government economic policy would not change.

Before resigning late Thursday, Mr. Lousteau met with Mrs. Kirchner and presented her with a plan to stabilize the economy, urging her to adopt it to “avoid a serious crisis,” the Argentine newspaper La Nación reported.

Mr. Lousteau was working on an index of prices to try to contain inflation, said Fernando Porta, an economist with the Center for Science, Development and Higher Education Studies in Buenos Aires. “He was admitting to her that there was a problem with inflation,” Mr. Porta said.

Efforts to reach Mr. Lousteau were not successful. Messages left at his office and with his spokesman were not returned.

Despite his title, Mr. Lousteau held little power to set the overall direction of Argentina’s economy, which most analysts said was being controlled by the former president.

Since Mr. Kirchner was elected in 2003 in the wake of a financial crisis, the economy has grown by an average of 8 percent a year, in large part through a strategy of maintaining a low currency to increase exports and high subsidies on food and energy to encourage consumer spending. His wife has continued those policies.

But those policies face increasing pressure. For several months leading up to the presidential election last October, the Kirchners denied that inflation was rising quickly, insisting that official numbers from the government statistical agency, Indec, were accurate.

Several officials who had left Indec, however, criticized a new methodology for calculating inflation established by a political appointee. Dante Sica, director of Abeceb, an economic consulting firm in Buenos Aires, said inflation was 16 to 18 percent, about twice as high as the 8.8 percent that the government reported last month.

Mr. Lousteau had been shut out of much of the day-to-day decision-making, analysts said. He focused on improving relations with the United States and looking for a solution to Argentina’s outstanding debt, said Graciela Romer, a political analyst in Buenos Aires.

Nevertheless, he signed off on a series of floating-rate export tariffs on agricultural goods put in place on March 11 that incited a farmer revolt. The resulting widespread strike crippled exports of grains and meat and caused food shortages in stores.

Mr. Lousteau refused to back down from the new measures, and Mrs. Kirchner harshly criticized the farmers in speeches.

The farmers suspended their strikes on April 2, declaring a one-month truce to try to negotiate with the government. Mr. Lousteau was visibly absent from the talks.

Farmers are threatening to resume blockades on Friday unless they see progress in negotiations with the government.

Vinod Sreeharsha contributed reporting from Buenos Aires.