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By: Lionel Barber, Jude Webber and John Paul Rathbone for the Financial Times
Sitting in his office sipping mate, a traditional Argentine herbal tea, Amado Boudou has no doubt that his most significant achievement as economy minister would be to take his country back to international capital markets.
With his blue eyes and Johnny Hallyday looks, such a move would be a stunning feat by a man many in Argentina consider just a "pretty face". It would also mark a remarkable return by a country that defaulted on $95bn of debt eight years ago - the largest sovereign default in history - and bitterly turned its back on the International Monetary Fund, which it blamed for leading Argentina down the road to ruin.
Latin America's third-biggest economy, a quarter of the size of Europe, has been a financial pariah ever since, cut off from global markets and hounded by lawsuits from holders of defaulted bonds who rejected a tough restructuring in 2005. The country's black sheep status sent its credit risk soaring and spreads between its benchmark bonds and US Treasuries have topped 1,900 basis points in the past year.
Yet now even formerly stable countries such as the US and the UK have been humbled by the global crisis. In the words of one influential businessman in Buenos Aires, "every country is a black sheep now".
Ultra-low interest rates are whetting investor appetite for even the riskiest assets, such as Argentina's. That provides a window of opportunity for Mr Boudou, who has embarked on a rapprochement with the international financial community since his appointment three months ago.
Domestic bonds have rallied sharply, halving country risk in recent weeks on hopes Argentina may mend its ways. But one economist says expectations are so high that any delays or backtracking by the government would be a serious blow to confidence.
Mr Boudou plays his cards close to his chest about when or how Argentina might mend fences with international creditors. In an ideal world, there would be a new offer before the end of the year to holdout bondholders who shunned Argentina's offer of 30 cents on the dollar in 2005 and are owed some $29bn with interest. IMF scrutiny of Argentina's public accounts for the first time in three years could follow.
That would open the door to repaying more than $6bn owed to the Paris Club of rich nations. Finally, Argentina could tap markets next year to boost public finances, strained by plunging growth and unsustainable state spending.
Mr Boudou smiles and says: "No one has a crystal ball." But the photos of President Cristina Fernández lining his office are reminders that what is needed first is an unequivocal political signal from the presidential Pink House. And that means a nod from Ms Fernández's husband and presidential predecessor, Néstor Kirchner, who retains influence over policy.
Some believe Ms Fernández would like Argentina to get into bed with the international community. "But every night she has to go to bed with Néstor Kirchner," says a person familiar with the presidential couple.
Mr Kirchner famously thundered that there was "no way in hell" Argentina would ever return to the IMF after he paid off its $10bn debt in 2006. But the government may swallow its pride to boost Mr Kirchner's chances of returning to power in elections in 2011, and could accept low-key scrutiny of its books from a more contrite IMF, not the lender which Mr Boudou says used to march into town "like a king".
The minister says his aim is to "make the economy sustainable". Many disagree. "If the government is pragmatic now, it's out of necessity," said one businessman, echoing a widely held view. "Argentina's biggest problem is credibility."
The government has been allegedly manipulating the state statistics agency, Indec, for nearly three years, which has led the central bank to ditch using some official data.
The president also stunned investors last year with a snap nationalisation of private pension funds, executed by Mr Boudou. Over the weekend she rushed through a law aimed at curbing the power of the Clarín media group, a fierce critic.
"Argentina is a country you should cry for," Martin Richenhagen, head of US-based farm machinery maker AGCO, said recently. It has "an incompetent family government that thinks only about themselves and nothing about the country". Mr Boudou, a keen DJ in student days, will win kudos if he manages to get the holdouts dancing to his tune. He may then look forward to a bigger office.
"No, there's only one that's bigger," he smiles. "Or maybe two."
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