New IMF chief negotiators leave Libertarian gov’t reassessing the turf

New IMF chief negotiators leave Libertarian gov’t reassessing the turf

After Thursday’s announcement that International Monetary Fund (IMF) Western Hemisphere Director Rodrigo Valdés would no longer be handling the negoatiations between the global credit agency and the Government of Argentina, there were mixed feelings at Casa Rosada Friday. It was first a diplomatic victory for President Javier Milei, who had repeatedly spoken about Valdés’ alleged animosity against Buenos Aires.

 However, the IMF’s move left Argentine Economy Minister Luis Toto Caputo wondering how to go on from here. The Buenos Aires-born economist José Luis Daza, who grew up in Santiago and has taken up Chilean citizenship, was appointed Deputy Economy Minister by the Milei administration given his long-time connections with fellow Chilean Valdés, who has not left his post – only the part in which he engaged in talks with Argentina authorities. These functions have now been taken over by Deputy Westrern Hemisphere Director Luis Cubbedu and Ashvin Ahuja, who heds the IMF’s mission to Argentina. They both report directly to IMF Depouty Managing Director Gita Gopinath.

“To better support the ongoing constructive engagement with the Argentine authorities, Western Hemisphere director Rodrigo Valdez has fully delegated the program negotiations to Luis Cubeddu, the deputy director of the Western Hemisphere department, and Ashvin Ahuja, the Argentina mission chief, whose work is overseen directly by fund management,” IMF spokeswoman Julie Kozack explained.

Milei underlined Valdés’s apparent allegiance to former Economy Minister and presidential candidate Sergio Massa. The Argentine president insisted the official always raised objections despite Argentina’s overcompliance with the IMF guidelines. The Libertarian leader also hinted Valdés adhered to the leftwing-oriented Sao Paulo Forum.

In this scenario, Argentina and the IMF are back to square one or even worse than in March, 2022, when the Extended Credit Facility agreement was reached by the administration of then-President Alberto Fernández. Back then, the Brazilian-Israeli Illan Goldfajn held Valdés’ current post, from where he negotiated with Buenos Aires under direct supervision from Gopinath.

The IMF has been reported to eye a 30% devaluation for Argentina in addition to lifting the so-called exchange rate stocks and dropping any idea of dollarization, which was one of the main reasons for Milei’s electoral victory last year.

Valdés has a background in private financing circles. He joined the IMF in 2006. He has a college decree in Economics from the University of Santiago and a PhD from the University of Chicago. In 2015, he was appointed Finance Minister of Chile under then-President Michelle Bachelet, from where he was pivotal in the introduction of fiscal measures to curb public spending.

According to Chilean media, Daza would have been appointed as Chile’s Economy Minister had the conservative José Antonio Kast prevailed over Gabriel Boric Font.