The Macri administration cabinet has seen its first major shake up after the President requested Alfonso Prat Gay to resign as Argentina’s Finance Minister today. According to press reports, the decision is linked to the Government’s goal of splitting the ministry into two separate entities: The Ministry of Treasury (Ministerio de Hacienda), which will be overseen by Nicolás Dujovne, and the Ministry of Finance, which will be led by Luis Caputo. Dujovne has already worked with the Macri camp for a while now after getting heavily involved on the campaign trail while Macri was running for president. As for Caputo, he’s not new to the political scene ether and is the sitting Finance Secretary.
In a press conference held minutes ago, Cabinet Chief Marcos Peña assured that the decision only was a straightforward response to the need for dividing up the ministry in order to face next year’s challenges more effectively. This is a rather polite way of denying disagreements with other members of the Government’s economic team influenced the move. “Due to differences concerning the designing of the team we believed the best decision was to make a change. Because of this the President requested Prat Gay’s resignation. We want to thank him enormously. He left a very competitive ministry in a very challenging year,” Peña said.
The Cabinet Chief went on to highlight Prat Gays victories as minister, which happened mostly at the beginning of the year: the swift negotiation to put an end to the conflict with the so-called “Vulture Funds”; smoothly lifting the currency controls collectively known as cepo (clampdown); the important sums that entered the State’s coffers as a result of the — still ongoing — tax amnesty and contributing to the passing of the income tax law were all summed up as his career’s main highlights.
One point of contention in relation to income tax reform. The minister was left out of the negotiations over the bill that finally became law after his own bill was defeated by the opposition, which dealt an important political blow to the administration. Several pundits mentioned this as the beginning of Prat Gay’s end as minister.
There were other factors that could have contributed to his departure. Throughout the year, there was more than one rumor about strong disagreements between Prat Gay and Central Bank (BCRA) President, Federico Sturzenegger over the best way to steer the country’s economy, particularly on how inflation should be tackled.
There were times when this tension popped up onto the public’s radar. In August, when inflation was sole ruler of the political conversation, Prat Gay announced it was no longer an issue. A day later, Sturzenegger contradicted him publicly.
That may be why most questions Peña received in the press conference were aimed at finding out whether this had been the cause for his departure, or at least had played a role. The chief of Macri’s cabinet denied this every time he was asked.
“It’s not about internal rifts, but about stances on how things should work. And the President’s [stance] always prevails,” he added on the 26th.
In regard to the new ministries that will be created, Peña explained the Treasury’s one major objective will be to “design a new fiscal plan” that will be less of an economic burden for the Argentine people. “Dujovne was part of the [presidential] campaign’s technical team. He worked in our team on fiscal and treasury issues. We believe he will be a good addition,” said Peña.
As for the finance branch, Peña argued that it will have to “continue working so that Argentina can finance its path to being fiscally balanced and have a better financial system.”
“Caputo has been handling this issue very well. We believe that he is suited to handle this issue, which is very important for the country’s development,” he said.
Prat Gay is currently flying to the town of Villa La Angostura to have lunch with Macri, on vacation for the week. He has not made any public statements about his departure yet.