Duhalde Names Lenicov Finance Minister
Ahead of Unveiling Economic Measure

By: Michelle Wallin
The Wall Street Journal, January 4, 2002


Buenos Aires -- As he prepared to announce a shift in Argentina's currency policy and other economic measures to stem escalating civil unrest, Argentina President Eduardo Duhalde named as finance minister a top lieutenant from his days as a free-spending provincial governor.

The appointment of Jorge Remes Lenicov, who served as economic chief of Buenos Aires province from 1989 to 1997, during most of Mr. Duhalde's governorship, signaled that Mr. Duhalde is looking more for a team player than for a bold economic thinker. Under Mr. Duhalde, Buenos Aires province, which accounts for about one-third of Argentina's population and economic output, saw a sharp increase in the fiscal deficit. Mr. Duhalde left the province in such a weak financial position that his successor last year was forced to print up scrip to pay public servants.

At an emergency congressional session on Tuesday, the 60-year-old Mr. Duhalde, of the Peronist Party, was voted Argentina's fifth president in a two-week period, following street protests against the country's 42-month recession. Mr. Duhalde and Mr. Remes, 53, are expected imminently to announce a package of economic changes, including an overhaul of Argentina's decade-old one-to-one peg between the peso and dollar.

Already, some shops around the Argentine capital were marking up prices Thursday in preparation for a devaluation of the peso, which is generally regarded as overvalued.

Managing the economic turmoil will be a daunting task for Mr. Remes, who couldn't be more different in training and temperament from Domingo Cavallo, the volatile economy minister who introduced the dollar peg and who resigned last month following deadly rioting and looting around the country.

While Mr. Cavallo held a doctorate from Harvard University, Mr. Remes earned an undergraduate degree in economics from the Universidad Nacional de la Plata, a state university in the provincial capital. While Mr. Cavallo was capable of alienating his closest advisers with his abrasiveness -- and dazzling his enemies with his creative policy solutions -- Mr. Remes is characterized by acquaintances as having a conciliatory personality and tending to follow consensus.

The legacy Mr. Duhalde and Mr. Remes left in the province of Buenos Aires has been widely questioned. The province's budget deficit swelled from $124 million in 1991, when Mr. Duhalde took office, to more than $1.57 billion when his governorship ended in 1999. Economists say that while the province enjoyed relatively healthy finances during the country's economic boom years in the first half of the 1990s, thanks to robust tax income and privatization, it never made much progress on controlling expenses.

"There was a sharp increase in the expenditure side in the late 1990s," says Sebastian Briozzo of Standard & Poor's.

That spending rise coincided with Mr. Duhalde's unsuccessful bid for the presidency in 1999. Mr. Remes had stepped down as Buenos Aires finance chief by the time the province's worst fiscal excesses were committed, but he was still working closely with Mr. Duhalde as the top finance official in the latter's failed presidential campaign.

"They did lots of public works, schools, hospitals, jails," says Daniel Amato, an office-equipment vendor in La Plata who heads an association of provincial contractors. "It was a good administration from our standpoint, but one heard criticism about how they managed the budget."

The provincial debt increased 70% to $2.3 billion during 1999, the year Mr. Duhalde ran for president. That meant that when the economy slowed, the province was particularly vulnerable.

Mr. Duhalde's successor as governor of Buenos Aires, Carlos Ruckauf, who had criticized his management of the province, is now working in Mr. Duhalde's cabinet as foreign minister.

Mr. Remes has a tough sell to the Argentine people, who are demanding fresh faces and clean government. "Duhalde and the people who surround him are more of the same," says Ana Maria Caceres, a 50-year-old schoolteacher who took to the streets to demonstrate after Mr. Duhalde was elected president Tuesday.