Finance Minister of Argentina Resigns Post

 



  The uncertainty of Argentina's precarious financial situation 
deepened yesterday when Daniel Marx, the finance secretary, 
resigned.

  Mr. Marx stepped down as Argentina paid $700 million in 
short-term debt owed to local banks by forcing pension funds to 
buy government bonds. The payment was the first of two in 
December that would hold off a default on its public debt.. 
Argentina has been struggling to contain its public debt, now 
totaling about $132 billion, after four years of recession.

  In discussing his decision, Mr. Marx suggested that it was time 
for someone else to oversee the government's negotiations with 
its creditors. "It's a cycle," he said. "I had also some 
personal things to deal with."

  Mr. Marx added that he would still work with the government, in 
a capacity that had not yet been formalized. "I agreed to 
continue to work on the national debt issues for Argentina," he 
said.

  In the last few weeks, working with the economy minister, 
Domingo Cavallo, Mr. Marx had been trying to persuade 
Argentina's foreign creditors to accept lower interest rates on 
existing debts. Domestic creditors already agreed, under some 
duress, to swap roughly $40 billion in obligations for new 
loans. Mr. Marx said that his foreign consultations had been 
proceeding "according to schedule."

  There was no doubt, however, that Mr. Marx's job had recently 
become tougher. The International Monetary Fund decided last 
week to delay the release of $1.3 billion in aid, which is 
needed to cover a budget shortfall. During the last few months, 
political infighting has eroded the government's ability to 
adhere to the zero-deficit rule favored by the I.M.F. and 
promised by Mr. Cavallo.

  Mr. Marx's resignation also followed a national strike on 
Thursday by union members, shopkeepers and unemployed workers, 
which brought the country close to a standstill. The strikers 
were protesting federal budget cuts and restrictions on 
withdrawals from bank accounts.

  Mr. Cavallo instituted the banking controls on Dec. 1 to stave 
off a run on Argentina's banks. Depositors who worried that the 
peso's fixed one-to-one exchange rate with the dollar was about 
to be broken by a devaluation, despite Mr. Cavallo's insistence 
to the contrary, were withdrawing dollars from bank accounts. A 
sudden, widespread drop in deposits threatened to choke economic 
activity and worsen the country's financial troubles.

  The controls were a sign of the financial pressures on 
Argentina, according to Vincent Truglia, an analyst at Moody's 
(news/quote). "They were indicative of the very difficult 
situation that the country was in and continues to be in," he 
said.

  Mr. Marx declined to say in an interview whether he had favored 
imposing the restrictions.

  Mr. Marx became finance secretary in December 1999 after a 
career in private finance and a stint on the board of 
Argentina's central bank. The finance secretary is effectively 
the economy minister's deputy, with specific responsibility for 
the public debt.

  Mr. Marx kept his job through the resignation and replacement of 
two economy ministers, Jose Luis Machinea and Ricardo 
Lopez-Murphy, and the return of Mr. Cavallo to government. His 
technical knowledge and strong relations with Argentina's 
foreign creditors won him considerable respect at home and 
abroad.

  Mr. Marx is known for favoring market-based rather than 
regulatory solutions to economic problems, a reputation shared 
by Julio Dreizzen, who resigned as finance undersecretary on 
Oct. 29, citing personal reasons.

  Mr. Marx's departure may pave the way for Miguel Kiguel, an 
economist from the Justicialist opposition party, to join Mr. 
Cavallo's team. On Thursday, Argentina's president, Fernando de 
la Rua  met with Carlos Sa?nem, a former president and 
leader of the Justicialists, to discuss economic strategy. The 
appointment of Mr. Kiguel to succeed Mr. Marx may be seen as a 
way to bring the Justicialists into Mr. De La Rua's ruling 
coalition, forming a sort of national unity government to 
address the economy.



Copyright 2001 The New York Times Company