Argentina's Economy Minister Martin Lousteau's resignation yesterday had been widely predicted and caused no surprise, apart from its timing. With the simmering agricultural dispute over export taxes set to be renewed, it was assumed that the government would seek to defer cabinet changes in order to avoid the perception that it had caved in to pressure from the farm sector.
Although Lousteau had limited influence, his departure points to an escalation of both consumer prices and the agricultural conflict:
- Inflation. The government's refusal to curb public spending in order to slow economic overheating and inflationary pressures means that there will be no change in policy. This determination to avoid unpopular spending cuts will be strengthened by recent opinion polls that show that approval of both President Cristina Fernandez de Kirchner and her government's performance has fallen dramatically in the four months since she took office, to around 35% or less. The appointment of a new minister with little apparent policy autonomy, seemingly willing to accept the limitations on his influence, tends to confirm this perception.
- Agriculture. The 30-day 'truce' declared by the agriculture sector, following three weeks of damaging strikes and roadblocks that halted exports and left major cities without food supplies, will come to an end on May 2. The failure to make serious progress on resolving the export tax dispute points to renewed strike action, although sector organisations are considering alternative methods less likely to undermine public support.