Milei replaces top minister in major shake-up as Argentina’s reform agenda stalls

Javier Milei, the Argentinian president, is shaking up his cabinet after six turbulent months in office in a bid to regain momentum for his restructuring of the country’s economy.

Nicolas Posse, the cabinet chief, has resigned, apparently after taking the blame for a scandal earlier this year when Mr Milei awarded himself and other senior functionaries a 48 per cent pay increase.

He will be replaced by Guillermo Francos, the interior minister, who has played a key role in wrangling with the opposition-dominated congress over planned reforms.

In a statement accepting his resignation, the president’s office pointedly failed to thank Mr Posse for his service, while noting: “This decision has been motivated by the difference in criteria and expectations over the government’s progress.”

Mr Posse was a key member of the team that renegotiated Argentina’s mammoth International Monetary Fund (IMF) debt of $44 billion (£34 billion), the largest in the lender’s history.

The former cabinet chief had been regarded as one of the president’s handful of friends from before his move into politics.

He first met Mr Milei when they worked at Corporación América, the airport operating company of billionaire Eduardo Eurnekian, one of Argentina’s wealthiest individuals.

But the relationship came unstuck after a huge political row broke out in March, when Mr Milei signed off the pay rise, apparently inadvertently.

The move was hugely embarrassing for the president just as he was urging ordinary citizens to bear with austerity measures that have seen the poverty rate jump from 40 per cent to nearly 60 per cent.

Mr Posse, insiders say, had failed to adequately brief Mr Milei, who was unaware of the remuneration clause when he signed various government papers, and was subsequently forced into a humiliating about-turn.

The cabinet shake-up comes at a critical time for Mr Milei, who this week is in San Francisco to meet the heads of Google, Meta and Apple, among other business leaders. It is his fourth visit to the United States during his presidency.

The soaring inflation Mr Milei inherited has hit 300 per cent but is finally showing signs of coming down as the president’s economic measures, including sacking 15,000 public workers and closing multiple government agencies, kick in.

A second one-day general strike, in protest at cuts to public spending, shut down much of the economy, from airports to schools, earlier this month.

Yet Mr Milei, who can rely on only a handful of politicians from his Freedom Advances party, is still keen to push through landmark labour, tax and pension reforms. As the new cabinet chief, Mr Francos is expected to play a prominent role in negotiations with legislators.