ARGENTINA: Top Economics Officials Resign : Top Economics Officials Resign in Argentina

With its attempts to control Argentina’s galloping inflation an apparent failure, President Raul Alfonsin’s economics team resigned en masse Monday night in a move that caught the nation by surprise.

A presidential spokesman said Alfonsin has accepted the resignations of Economics Minister Bernardo Grinspun and Central Bank President Enrique Garcia Vazquez. They are the technocrats principally responsible for Argentina’s prolonged but ultimately successful attempt to renegotiate the country’s $48-billion foreign debt with foreign banks and the International Monetary Fund.

Within an hour, most of the second- and third-level officials in the Economics and Treasury ministries had also announced their resignations.

The resignations came without warning or immediate explanation. However, they clearly represented a setback for attempts by Alfonsin’s young democratic government to walk an economic tightrope between volatile Argentine workers on the one hand and Argentina’s international creditors on the other.

The creditors are demanding more stringent austerity measures, which the workers reject. Grinspun had promised that austerity, imposed as a condition of the settlement last year with the IMF, would not produce a recession. That insistence, and the government’s pledge to increase real wages despite inflation, brought Grinspun into conflict with more orthodox economists.

Grinspun and Garcia Vazquez both came to office with Alfonsin in December, 1983, as Argentina returned to democracy after nearly eight years of spendthrift military rule.

Alfonsin announced Monday that Planning Secretary Juan Sourrouille, 44, a respected economist with broad international experience, will replace Grinspun. The secretary of internal commerce, Alfredo Concepcion, 63, was named to replace Garcia Vazquez.

As the lightning rod for the government’s economic policies, the combative, 59-year-old Grinspun had drawn fire from all sides.

In the last week alone, Peronist labor unions challenged him, charging that wage boosts were not keeping pace with inflation, and the ruling Radical Civic Union’s congressional caucus demanded that he appear in Congress to explain how his policies were “going to get us out of this labyrinth.”

At the South Atlantic resort of Mar del Plata, where Grinspun was vacationing over the weekend, a fellow patron confronted him in a municipal casino and accused the economics minister of being a Mafia-like “godfather.” It reportedly took security guards to avert a fistfight.

Steady Rise in Inflation

Although Argentina has pledged to reduce record inflation, and the government budget is based on an assumed inflation of 222% for 1985, inflation rates have risen steadily since Alfonsin took office.

Inflation for 1983, which Alfonsin blames on the military government he replaced, was 434%. During the last 12 months, though, the rate has risen to 776%--despite government pledges to control its own large deficit and to make chronically uneconomical government enterprises, ranging from the state oil companies to the telephone company, operate in the black.

The Alfonsin government promised the monetary fund that it will reduce inflation to a yearly rate of 300% by September. By government reckoning, though, inflation for January was 25%, and projections for February are for at least 20% more on top of that--far above guidelines Argentina said it would meet.

A monetary fund team that has been here for the last two weeks was reported in the local media to be distressed by the rising inflation and by what it considers alarming flight of capital from the country. One Argentine news service reported that the fund officials had expressed their concerns to Grinspun and Garcia Vazquez in a meeting Monday morning.

February is the height of the summer season here--the southern hemisphere equivalent of August--and economic and governmental activities tend to be at low ebbs. Despite the summer lull, there has been a sharp and steady fall in the worth of the Argentine peso against the dollar in recent weeks, both in official and black markets. A black-market dollar that bought 170 pesos at the end of 1984 was quoted at around 324 pesos Monday before the resignations were announced.

After negotiations that lasted for all of 1984, Argentina reached agreement with the International Monetary Fund in late December for an economic program that included curbs on imports and reduced government spending to confront inflation.

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