Argentine Debt Plan Author Boudou to Run With Fernandez

Argentine Economy Minister Amado Boudou
Argentine Economy Minister Amado Boudou, who oversaw a $12.9 billion debt restructuring and helped manage the nationalization of the countrys pension funds, was tapped to be President Cristina Fernandez de Kirchners running mate in October elections. Photographer: Andrew Harrer/Bloomberg

Argentine Economy Minister Amado Boudou, who oversaw a $12.9 billion debt restructuring and helped manage the nationalization of the country’s pension funds, was tapped to be President Cristina Fernandez de Kirchner’s running mate in October elections.

Fernandez, 58, announced her selection June 25 at the presidential residence outside Buenos Aires, citing Boudou’s “loyalty” and advice in 2008 that she take over the $24 billion pension industry to bolster government spending. Boudou, while new to the ranks of Fernandez’s Peronist party, emerged as a champion of the president’s policies during the pension debate and became her third economy minister in two years in 2009.

Boudou, 48, has a mixed record helping lead South America’s second-biggest economy after Brazil that may make investors uncomfortable, said Federico Thomsen, a Buenos Aires-based economic and political analyst with research firm E.F. Thomsen. Argentina hasn’t sold debt abroad since its 2001 default on $95 billion in bonds.

“He is quite imaginative when it comes to finding resources to finance the government’s growing spending,” Thomsen said. “This isn’t a plus. Having been trained as an orthodox economist, he has not found it difficult to support any policy that would put him in a favorable light for the Kirchners.”

Press officials at the Economy Ministry and presidential palace didn’t return messages left by Bloomberg News seeking comment on Boudou’s record and agenda.


Fernandez, who succeeded her husband, Nestor Kirchner, in 2007, turned to Boudou after cutting ties with current Vice President Julio Cobos in 2008 when he voted against her measure to raise taxes on farm exports.

Cobos said in a June 25 statement that his decision helped prevent a worsening of social unrest following four months of protests that blocked roads and led to food shortages.

“Because of the things that have happened to us, one of the attributes that a vice president must have is loyalty,” Fernandez said in announcing her choice of Boudou.

Market View

Boudou’s debt restructuring last year, Argentina’s second since the 2001 default, helped the country’s dollar bonds soar 35.8 percent last year, the best performance among major emerging markets in JPMorgan Chase & Co.’s EMBI+ Index.

Argentine bond yields have climbed 12 basis points, or 0.12 percentage point, to 9.66 percent since Fernandez announced her candidacy June 21. The country’s main stock index, the Merval, has climbed 0.6 percent over the same period compared with a 0.3 percent decline in Brazil’s Bovespa.

The yield on benchmark dollar Argentine bonds that mature in October 2015 rose 3 basis points to 8.31 percent, according to data compiled by Bloomberg, as of 9:42 a.m. New York time.

The extra yield investors demand to hold Argentine dollar bonds instead of U.S. Treasuries fell 12 basis points to 624, according to JPMorgan Chase & Co. The Merval was little changed today at 3,289.93.

Rock and Roll

Boudou, who organized rock concerts while getting a degree in economics at the Universidad de Mar del Plata, was the administrator of the pension fund agency Anses in 2008 when he approached Fernandez about taking over the industry to support government spending during the worst global recession since the Great Depression.

Fernandez used the pension savings to provide loans to companies such as the local unit of General Motors Co. to avoid layoffs. The economy grew 0.9 percent in 2009 during the worst of the global crisis. Under Fernandez, gross domestic product expanded an average 5.6 percent per year from 2008-2010. Unemployment fell from a peak of 9.1 percent in the third quarter of 2009 to 7.4 percent this year.

“President Fernandez will try to show that there was a huge international crisis while Argentina maintained its economic growth,” said Enrique Alvarez, head of Latin American fixed-income research at IdeaGlobal in New York. “And that’s where they will try to highlight Boudou’s figure in the campaign.”

Leading Polls

Fernandez, who leads in polls ahead of the Oct. 23 vote, kept her supporters guessing whether she would run until June 21, four days before a deadline to announce her decision. A survey this month showed that she had 48 percent support, compared with 13 percent for lawmaker Ricardo Alfonsin, according to pollster CEOP Opinion Publica. About 8.4 percent of the 1,500 people surveyed said they haven’t decided whom they will vote for or refused to answer, according to the poll, which had a 2.6 percentage point margin of error.

Under Argentine law, a candidate can win the election and avoid a runoff by receiving more than 45 percent of the vote, or 40 percent and a 10 percentage point lead over the nearest competitor. A second-round runoff, if needed, will take place Nov. 20.

Boudou also led a failed effort to restructure about $8 billion in defaulted debt with the Paris Club group of creditor nations. Under his watch, inflation accelerated to about 25 percent this year, according to private economists including Roberto Lavagna, Kirchner’s former economy minister. The government says prices are rising at an annual rate of 9.7 percent and has fined researchers who say otherwise as much as 500,000 pesos ($120,000).

Faster Inflation

In an April 14, 2010, interview in his office, seated below portraits of former President Juan Domingo Peron and his wife ,Eva, Boudou blamed the inflation dispute on holders of inflation-linked debt who wanted better returns and said price increases were low for the poorest sector of the population.

“It’s understandable that other sectors of the population, especially the middle and upper class, have a perception that prices” are high, Boudou said. In a June 16 interview on Channel 26 television, he said a Paris Club accord can be reached by December.

Boudou failed in a bid earlier this year to become the Peronist party candidate for mayor of Buenos Aires when Fernandez endorsed the candidacy of Senator Daniel Filmus.

26-Year Career

This year’s election will be Fernandez’s first following the death of Kirchner, who served as her closest political adviser through 26 years of campaigning, from a heart attack last October at age 60. It also comes after a series of bouts with low blood pressure prompted Fernandez to cancel her activities at least twice this year.

In her June 21 speech, Fernandez said the support she received in the wake of her husband’s death last year helped her decide to run “one more time.”

If elected, Boudou will formally be charged with overseeing the Senate, the post which Cobos used to defeat the tax bill, and will likely continue to provide economic advice to Fernandez, Thomsen said.

“He will continue to have the ear of the president, much as he does now,” said Thomsen. “He isn’t a proponent of populism. I see his appointment as rewarding crude pragmatism over ideology and this should be somewhat reassuring.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE