Sergio Massa: balancing the impossible

Argentina is discovering these days the 2,000-peso bill, the highest denomination.

Oliver Thansan
Oliver Thansan
28 May 2023 Sunday 04:42
3 Reads
Sergio Massa: balancing the impossible

Argentina is discovering these days the 2,000-peso bill, the highest denomination. As it is born, it falls short: it suffices for a couple of products and does not reach a kilo of the traditional roast. The unofficial change is equivalent to only 4 euros. Reflection of one of the highest inflation rates in the world.

It is the great pending task of Sergio Massa (San Martín, Buenos Aires, 1972), Minister of Economy. In command since August, his arrival came with a restructuring of portfolios that united Economy, Productive Development and Agriculture, Livestock and Fisheries. He also rules over the Treasury, Energy or Commerce. Superminister, said the press. "Was necessary. There was a lack of coordination. At the beginning it gave that feeling, but today it is not working”, assesses Matías Bolis Wilson, chief economist of the employers' Argentine Chamber of Commerce and Services. He landed with a thousand problems on the table. He promised to lower the deficit and inflation. But prices accelerate, the peso loses value, growth is irregular, reserves dwindle, the IMF tightens...

Massa, a lawyer, has a career linked mainly to the public sphere. He is famous for knowing how to move, even though he contradicts himself, going from liberal positions to those closer to Peronism and Kirchnerism. Precocious, he made his debut as a representative in Buenos Aires at the age of 27. In 2002, after the disaster that the country was experiencing and under an interim government, he went on to direct Anses, similar to the Social Security Institute. Néstor Kirchner, after winning in 2003, kept it. His best moment came years later, between 2007-2008 and 2009-2013, with his management at the head of the municipality of Tigre (Buenos Aires), where he promoted infrastructure and the deployment of large-scale security cameras, as pioneer that managed to reduce crime.

In Tigre there were two stages. In the middle there was a key episode to understand why it is there today. In 2008, then-president Cristina Kirchner called him to lead her cabinet. He lasted a year and went bumping into the boss. But he learned the ins and outs of high politics and the ministerial game. “In choosing him as minister, his management capacity weighed more than his technical or economic ones. He knows how the State, the Administration works, ”says Bolis Wilson. He is also a balancing factor in the governing coalition: Alberto Fernández –president–, Kirchner –now vice president– and Massa are their heads. The trio has been an ally and an enemy depending on the moment. In the 2019 elections, the current term, they got together despite having exchanged wishes for jail, threats and insults shortly before.

His steps confirm the managerial profile more than the technical one. He is not an economist. He started Law in 1990 and graduated... in 2013. It is above all his number two, the economist Gabriel Rubinstein, who handles the hardest. Prepared or not, the drought, one of the worst in history, has been a blow. Black swan and lace. If there were already problems, now there is not so much soybean, wheat or corn to sell abroad and collect in dollars, feeding public coffers and reserves. Agriculture, a fundamental part of the economy, will lose up to 23,000 million dollars. The entry of foreign currency suffers and without dollars, key imports are not paid for. Inputs, parts, goods... Less supply and a crisis that could be worse.

Massa has been left with little margin because the markets do not trust the country. The Central Bank –with rates at 97%– has reserves of 30,000 million dollars, but the effective ones are one third. And part of it is dedicated to maintaining the price of the peso – which has lost 75% with the dollar since its arrival – or financing the Treasury. Getting money goes through Washington: there the IMF is asked to advance payments of the current agreement, with counterparts. And for Beijing: it has just activated a swap with China to pay for imports.

The minister does not do more either because there is an unknown. This year the president is elected, with primaries in August. The coalition has not closed candidates. He is neither ruled out nor confirmed and it would not be the first time he has tried it. Apart from Kirchnerism, he ran for president in 2015. He came third with 21%. Taking drastic measures – devaluing, cutting – would cost him possible votes. The feeling is that he will not touch anything until the political front is cleared. The balance is therefore bad: the latest inflation data is 109% year-on-year and food is up 10% per month. “It's not a healthy working economy,” says Bolis Wilson. 39.2% –11.5 million people– are poor.

The polls do not bode well for him. Father of Milagros and Tomás, he is a great soccer fan. The match looks like an impossible comeback. “He has a political waist. But the problems are of such magnitude that they cannot be fixed with that alone”, believes Alfredo Félix Blanco, economist and former dean of the National University of Córdoba. “There are no indications that he can control prices. Until the elections, the mission is to balance the imbalance”.