By Anette Berve

The resignation of economy minister Martín Lousteau marks the first major departure of the Kirchner government and increases worries regarding the government’s ability to repair the country’s growing economic problems.

The 37-year-old minister was the architect of the recent tax hikes on soybeans and other crops, which lead to widespread food shortage after a 21-day strike from farmers who claimed they were robbed of any profit.

Lousteau quietly handed in his resignation late on 24th April after appearing sidelined in the ongoing negotiations with the farmers over the tax increases.

Carlos Fernández, head of AFIP tax agency, was quickly announced as Lousteau’s successor. The Peronist is a close ally of the Kirchners and served as the chief of economy in the Province of Buenos Aires during Néstor Kirchner’s presidency.

Lousteau joined the Kirchner government as a breath of fresh air and one of few new faces in a cabinet mostly containing officials from the previous administration of Néstor Kirchner, current president Cristina’s husband. He was viewed as an independent minister and one not afraid of renewing policies.

Soaring inflation

Whilst departure is seen as a direct consequence of the heated debate over the tax hike, it is also believed to be closely connected with the increasing inflation.

Argentina’s economy has grown 8% in each of the last five years since the economic crash in 2001. But high inflation has become a major challenge for the government.

It is believed Lousteau clashed with the Domestic Commerce Secretary Guillermo Moreno over the design of a new consumer price index, a project aimed at restoring credibility to the INDEC national statistics office.

Many accuse the government of manipulating INDEC inflation data to under-report real inflation. Inflation was 8.5% in 2007, but many private analysts put the true figure at at least twice that.

Also ex-president Néstor Kirchner has publicly shown his disapproval over the young minister. “There should be no more talk about cooling the economy,” he said in a speech – a comment directly aimed at Lousteau’s recommendation a few days earlier that the government try decelerate growth as an anti-inflationary measure.

Centre-left opposition leader Elisa Carrío has later publicly announced her disapproval of the ex-president speaking on behalf of the government.

“It was obvious that there was only one power in Argentina and that person was Néstor Kirchner… This means Kirchner will directly intervene in the Economy Ministry; (it is) a tremendous endorsement of Moreno (and) a weakening of Cristina,” she said.

Ever since Néstor stepped down as president he has maintained a strong influence over his wife’s government.

Second presidents

In the past, Argentina had strong economy ministers – dubbed second presidents – who clashed with presidents over policy. However, the post has become less independent for historical reasons as all major crises’ has originated due to a failing economy.

Lousteau was one of few independent figures in the Kirchner government. His departure is a sign that the government is not ready for a change and unfortunately not willing to face it’s growing economic problems.