Early Thursday morning Argentina's Central Bank president, Roque Maccarone, submitted his resignation for personal reasons, a top economy ministry official said. However, local media reports said the departure had more to do with differences between Mr. Maccarone and President Eduadro Duhalde over monetary policy. Mr. Maccarone has been worried about protecting the country's fragile banking sector while there are those within the Duhalde administration who are less concerned about the health of the country's banking system.
Mr. Maccarone's resignation comes less than 24 hours after two positive developments seemed to open doors for the new Duhalde administration and is just one more example of Argentine politicians shooting themselves in the foot.
On Wednesday, U.S. President George W. Bush gave a speech promising to back Argentina once the country comes up with a strong, sustainable economic plan while the International Monetary Fund gave the country a one-year grace period on nearly $1 billion in debt. But instead of taking advantage of the moment, political maneuvering forced the Central Bank head out of office.
The same thing happened last February as Argentina was basking in the afterglow of a massive IMF bailout package when differences between then Central Bank head Pedro Pou and President Fernando de la Rua sent the country into an economic and political tailspin that it has yet to recover from.
The Central Bank has recently been put back in charge of the country's monetary policy after 11 years of a currency board which had pegged the peso at one-to-one with the dollar. Now, the Central Bank must maneuver the tricky dual exchange sanctioned by the Duhalde government. The Central Bank has already intervened twice in Argentina's foreign exchange markets this week to prop up its ever-weaker currency.
Midday Thursday the peso was trading up at 2.00 to the dollar, 30 percent off the official rate of 1.40. Setting up clear rules to control hyperinflation, the scourge of Argentina in the late 1980s, will be among the many tasks of the new Central Bank head.
Local economists say what matters more is who will replace Mr. Maccarone rather than his leaving. For now it appears Central Bank vice president, Mario Blejer, will take over, which economists say is a good sign because he has a good working relationship with the IMF.
Mr. Blejer inherits a set of government restrictions on the banking sector that have sparked hundreds of protests over the past six-weeks. A Gallup poll conducted by a major daily newspaper showed that 83 percent of Argentines are opposed to the bank limits. All week, depositors across Argentina have taken to the streets to protest against the measures which are keeping them from their money.
The government, hoping to avoid the fate of the past two administrations, which were toppled by such street protests, is working to ease the limits while protecting the system from a run on deposits. Later Thursday, the economy ministry is expected to announce some changes to the measures but it's likely that the protests will continue as long as Argentines feel that they are being kept from their money.