Page 15 - MONTT LATIN AMERICAN MAGAZINE, SEPTEMBER 2021 (English)

had been in command of the municipality of Viña del Mar for 16 years.
Ministers in the Region
The same phenomenon is occurring in the rest of Latin America, such as that of the Peruvian Minister of Economy. When the last global financial crisis hit in 2008, María Antonieta Alva was a 23-year-old young woman who had just graduated from the university where she worked as an assistant in the Peruvian Ministry of Economy and Finance. She now, at 35 years old, heads that same Secretary of State, being the youngest who ever held a position of that nature and she does it while Latin America faces a phenomenal economic contraction due to the pandemic.
But she is not the only one; another millennial in charge of the public finances of a country is the Argentine Minister of Economy Martín Guzmán, 37, graduated as a Doctor in Economics from Brown University; Researcher at the Columbia University School of Business and Director of the Public Debt Restructuring Program of the Initiative for Policy Dialogue of the same School. Together with Nobel laureate Joseph Stiglitz, he directs the Academic Training Program of the Initiative for Policy Dialogue at Columbia University.
In the Dominican Republic, 35-year-old Juan Ariel Jimenez holds the same position. When President Danilo Medina appointed him as Minister of Economy, Planning and Development, this senior executive served as Vice Minister of Development Policies of the Ministry of the Presidency.
In Ecuador, Richard Martínez before turning 40 was the Minister of Economy and Finance of the Government of former President Lenín Moreno.
The current Minister of Economy of Venezuela is Simón Zerpa, 37, appointed to the position in 2017. He has served with a low profile; he has been sanctioned by the United States Government since 2017 for allegedly violating international money laundering regulations.
On the other hand, Zerpa is an official, in general, well evaluated in the stock market, where he generated a promotion policy that reached unexpected extremes such as the issuance of fixed income in foreign currency, the expansion of the product offer and the incentive that more private companies join the stock market.
Of that group, Alva and Guzmán are the newest on the job and despite arriving not long ago, they had a baptism of fire with the pandemic, as they are under intense pressure to mitigate the damage caused by the near-total quarantines due to the
coronavirus in Peru and Argentina.
Both Alva and Guzmán worked quickly to limit the damage. Alva recently announced that Peru was preparing to spend USD $ 26.41 billion or the equivalent of 12 percent of its GDP, in what it called “an unprecedented measure” to contain the coronavirus and recover from the economic consequences. The Ministry of Economy made direct transfers to support poor households, deferring payments for water and electricity, creating a fund for small and medium-sized enterprises, and taking a series of tax reduction measures.
always efficient and stable was really shattered,” Stiglitz said, who has worked closely with Guzmán.
Both Alva and Guzmán were promoted to their positions in the midst of crisis: Alva after President Martin Vizcarra dissolved his cabinet and the Peruvian Congress in October last year, and Guzmán in the midst of the economic debacle. The current Economy minister came of age during Argentina’s economic collapse in 1998-2002; he was a graduate student in the United States during the 2008 recession, and his doctoral thesis was titled “The Causes and Effects of Financial Crises.”
In December, Argentina’s President Alberto Fernández tasked Guzman with leading the negotiations with bondholders and pulling Argentina off the brink of a debt-induced financial abyss. After his appointment, Guzman’s reputation as a moderate reassured the markets despite his heterodox economic approach.
Pragmatism Prevalence
Guzman’s advantage, Stiglitz said, is his understanding of Argentina’s frequent financial crises, and his awareness that markets are more messy than conventional theory assumes. “I think that gave him pragmatism as well as the theoretical tools to think about Argentina’s circumstances in a really rigorous way,” argued Stiglitz.
On his part, Alva also showed that she is willing to do whatever the circumstances require, although her own economic philosophy and the fiscal situation of her country is different from Guzman’s.
“She is an orthodox pragmatist,” said Roxana Barrantes, professor of economics at the Pontifical Catholic University of Peru and principal investigator at the Institute of Peruvian Studies. “At this time of crisis in which we live, for example, it has no problem using the resources that Peru has saved,” explained Barrantes. “It is that he is not afraid to implement measures that if implemented by a left they will accuse him of being a populist.”
There is no guarantee that the steps Alva and Guzman have taken will prevent economic disaster. At this time, Argentina must present a plan to restructure some USD $ 70,000 millions of foreign debt, and unless there is a last-minute delay, it is expected to pay USD $ 225 million of interest on March 31. These are the first flirtations with the power of Latin American millennials, but in the coming years this will be the norm and the Region has to prepare for it.
Economic
Doctrine
Guzmán, on the other hand, has less room to manoeuvre. While Peru exhibited the lowest debt-to-GDP ratio among the major Latin American economies before the virus hit, Argentina’s was around 90 percent. Even so, while sharing some functions of the portfolio of a traditional economy minister with Matias Kulfas, Argentina’s Minister of Productive Development, Guzmán presented a good plan to respond to the crisis. In total, all of his proposals are costing one percent of Argentina’s GDP, according to the IMF. These include cash transfers to vulnerable sectors of the population, the expansion of unemployment insurance, price controls, increased spending on public works, and assistance to small and medium- sized enterprises, including exemptions from contributions to social security.
“To give liquidity globally, we must use all the economic measures at our disposal, and experiment with others that could be added to them,” Guzmán wrote in an opinion piece recently.
Although young ministers like Alva and Guzmán cut across the ideological spectrum of Latin America, they share some traits, including a pragmatic approach and a familiarity with the crisis that may help make up for their relative lack of experience in policy making.
“A basic advantage of this young professional economists in Latin America is that they are involved in political debates from the beginning of their careers,” said Jose Antonio Ocampo, a professor at Columbia University and a former Colombian finance minister. Starting their careers around the 2008 crisis also pushed economists of their generation to think outside the rigid confines of conventional economic doctrine, said Joseph Stiglitz, a Nobel Prize-winning economist and professor at Columbia University.
“Among young people, particularly those from emerging markets and developing countries, the belief that markets were
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