"The main target is to guarantee the stability of the exchange rate ... [it is] the primary objective in this list of the electoral period," Lacunza said and added that "there is no need for a higher exchange rate."
These statements occurred amidst an accelerated depreciation of the Argentine peso with respect to the U.S. dollar. The national currency has lost 23.3 percent of its value since last week, which further increases domestic inflation and deteriorates Argentinians purchasing power.
From the logic of the new minister, however, the solution to the currency volatility is to continue with the reduction of public investment and meet the fiscal goals agreed with the IMF, a multilateral institution which delivered a “financial aid” for US$56.3 billion in 2018.
According to political analyst Nicolas Moras, President Mauricio Macri and his economic team have a policy strategy that will inevitably lead to a debt crisis.
"Argentina is going straight into a debt crisis and that is virtually inevitable," Moras said and recalled that "Argentina's debt to the IMF is unpayable because it constitutes the largest loan in the IMF history."
The political analyst also stressed that the resolution of the economic crisis is not among the priorities of Argentine politicians because they have their attention focused on the October 27 presidential elections.
Argentina's short-term prospects are bleak. On Tuesday, the Central Bank tried to calm expectations at the foreign exchange market by pouring US$112 million of its reserves into dollar auctions. The final effect was practically minimal.
"The interventions pushed the national currency through the 55 pesos-per-dollar barrier towards a very close price: 54.5 pesos-per-dollar," Gustavo Quintana, a foreign exchange trader said.
Macri, who is betting the new treasury chief can help stabilize the economy until the next elections, announced a cut in taxes on food and personal income last week. While this measure could help the right-wing politician to conquer a few voters, the tax cut will create a "fiscal hole" in the short term.
���� #Argentina Protesters: 'Capitalists Must Pay for Their Crisis'
On Thursday, Aug. 15, thousands of Argentines protested President Mauricio Macri and his government's capitalist economic policies.
The meme reads, “The debt is with the people, not with the IMF” “Capitalists should pay for the crisis,” “Get out IMF’s government,” “Young people standing.”
To compensate for this problem, Argentina could borrow further from external creditors, which would not be a solution either because government bonds denominated in dollars are harder to pay when the peso weakens.
A crunch point will come in the second quarter of 2020, when Argentina is scheduled to make US$20 billion in debt repayments, up sharply from $ 5.6 billion in the first quarter of next year.
The Central Bank chief Guido Sandleris said on Tuesday that his institution would continue to sell its reserves in an effort to halt the peso's slide. The bank had auctioned off US$615 million in reserves as of Tuesday afternoon.