(Corrects story published June 26 to indicate Boudou’s graduate degrees in sixth paragraph.)
June 26 (Bloomberg) -- Argentine President Cristina Fernandez de Kirchner chose Economy Minister Amado Boudou as her running mate in October elections she is favored to win.
Boudou, 48, was in charge of last year’s restructuring of about $12.9 billion in debt that remained from a 2001 default on $95 billion of bonds, the biggest sovereign default ever. As head of the nation’s social security agency in 2008, Boudou led the government’s seizure of about $24 billion in private pension funds, Fernandez said yesterday.
“The most important measure we took was to recover the administration of the workers’ funds that allowed us to sustain everything” during the global financial crisis, said Fernandez in Buenos Aires. “The person who came to bring me the idea when the world was falling apart was our current Economy Minister Amado Boudou.”
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 agricultural exports. In legislative elections the following year Fernandez lost majority control in both house of congress.
“Because of the things that have happened to us, one of the attributes that a vice president must have is loyalty,” Fernandez said.
An avowed rock-and-roll fan who has a masters in economics from CEMA University in Buenos Aires, Boudou has a mixed record helping lead South America’s second-biggest economy that may make investors uncomfortable, said Federico Thomsen, a Buenos Aires-based economic and political analyst with research firm E.F. Thomsen.
“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.”
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. administration’s greatest accomplishment.
Fernandez, 58, used the pension funds to help fuel government spending, including giving 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, the government said. 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 in the first quarter of this year.
A survey earlier this month showed Fernandez had the support of 48 percent of those polled, compared with 13 percent for opposition lawmaker Ricardo Alfonsin, according to Buenos Aires-based 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.
In addition to advising on the pension takeover and the bond swap, Boudou has led a failed effort to restructure about $8 billion in defaulted debt with the Paris Club group of creditor nations. Under his tenure, the government has watched as 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).
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 prices 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 run as the Peronist party candidate for mayor of Buenos Aires when Fernandez named Senator Daniel Filmus her candidate for the race.
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.”
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