ARGENTINA
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Just weeks after taking over as Argentinas new economy minister, Felisa Miceli is already tackling one of the countrys biggest bogeysinflation. The former head of the state-owned Banco de la Nacin says shell take a tough stance to avoid the countrys runaway inflation of the past.
Consumer prices rose 12% in the year through November, giving Argentina its first taste of double-digit inflation since the pesos devaluation in 2002. However, Miceli is forgoing traditional fiscal and monetary policies and is resorting to price freezes and other measures some analysts claim are part of what they feel is the Nestor Kirchner administrations growing economic interventionism.
Miceli has reached an agreement with several supermarket chains to temporarily lower prices on key food items by 15% and launched talks with municipal and provincial authorities to monitor price hikes in their regionsforming what the president has named the League of Price Monitoring. She also unveiled Banco de la Nacins plan to offer $1.5 billion in new loans to boost production and reduce price pressures.
Yet Micelis appointment is regarded as a way for center-left President Kirchner to gain greater control over the economy. She is viewed as politically weaker than her predecessor, Roberto Lavagna, who was axed in November over policy differences. Miceli is expected to keep her policies in line with Kirchners, who has typically blamed retailers, food companies and utilities of introducing unjustified price hikes to take advantage of Argentinas poor.
With inflation rising and no signs that the government will curb spending, the situation does not bode well for a new IMF agreement after the previous pact was suspended in 2004. The departure of Lavagna, who had sought greater fiscal restraint, will likely strain relations further.
Meanwhile, Miceli disagrees with critics who say the government is imposing price controls as a short-term fix to a longer-term problem. We dont call it control because we dont believe in control, in fixing maximum prices, she told the press. This is monitoring so that the whole population can be calm.
Antonio Guerrero
