Javier González Fraga
Encyclopedia
Javier González Fraga is an Argentine economist and businessman. He served as President of the Central Bank of Argentina from 1989 to 1991, and was nominated as running-mate by Ricardo Alfonsín
for his 2011 campaign
for the Presidency.
with honors at the Pontifical Catholic University of Argentina
, and in 1974, was brought on by La Nación
, one of the nation's leading news dailies, as a financial columnist. He later earned a fellowship at the Belfer Center for Science and International Affairs
at Harvard University
, and at the London School of Economics
. He married Bárbara Morea Giménez, and had two children; they later separated.
He established a dairy farm, La Salamandra, near Luján, Buenos Aires
, in 1979, and continued to write on finance and economics, authoring El Mercado de Capitales (1982) and El Sistema Financiero (1980 and 1985). He served as adviser to the State enterprise bureau during the Raúl Alfonsín
Administration, and was hired by BCCI
principal Ghaith Pharaon
to manage debt-equity swaps
for the bank, as well as portfolio investment
s that included the Park Hyatt Buenos Aires
.
candidate Carlos Menem
in 1989
, and his reliance on the agribusiness
conglomerate Bunge & Born for economic policy during the presidential transition, gave the company's Chief Operating Officer
, Orlando Ferreres, the power to choose most of the new administration's economic team. He recommended the relatively young González Fraga, who was well-known to the local banking sector as a policy consultant, to be the new President of the Central Bank. The nominee informed the President-elect that he had not voted for him (harboring policy differences, as well, with Bunge & Born personnel); González Fraga, nevertheless, was sworn in with the new administration on July 8.
González Fraga leveraged business confidence in the new economic team to stabilize the highly undervalued austral
, and despite favoring greater exchange rate flexibility in light of the critical need for foreign exchange reserves
(which had declined to around us$120 million, with us$4.5 billion in arrears
), González Fraga eliminated trade finance
lines of credit and increased U.S. dollar purchases from exporters. These measures created friction with both the agricultural sector and Bunge & Born itself, though he continued to enjoy Menem's support.
The austral, which had fallen sharply (from 450 to 650 per dollar) in the days prior to Menem's July 8 inaugural in anticipation of a devaluation
, stabilized. The financial crisis
continued to exert pressure on prices, however, and monthly inflation reached 197% in July. The National Mint could not meet demand for banknotes, and in response, the new Central Bank President ordered the mint to triple production by printing higher denominations on old (circa-1980) Peso ley templates, and issuing bills printed on only one side. The crisis subsided in August, and by September, monthly inflation was in single digits. González Fraga, however, remained in strained terms with the Bunge & Born-dominated Economy Ministry, and sought as much independence for the Central Bank as possible. Ultimately, however, Economy Minister Néstor Rapanelli's opposition to González Fraga's call for a floating exchange rate
led the central banker to resign on November 24. These news added to concerns that the us$2 billion in new portfolio investment
envisaged in July failed to materialize, and amid a new currency crisis, Rapanelli himself resigned three weeks later.
Menem loyalist Antonio Erman González was named President of the Central Bank in March 1990, and González Fraga returned to the institution as its Vice President. A reversal of the roles each had in 1989, this partnership continued when in June, he succeeded Erman González, while the latter retained the Economy Ministry. Even as the nation's finances stabilized, his agenda in the ensuing months was topped by difficult repayment negotiations over mounting foreign debt arrears (which had reached us$6 billion by then), as well as by ongoing investigations into securities fraud
allegedly committed against the Central Bank by numerous institutions during the crisis. Revelations in January 1991 that Menem Administration officials had solicited bribes from beef processor Swift & Company
, as well as a renewed currency crisis, led to the resignation of the entire economic team.
associated with the Buenos Aires Stock Exchange
, and was later named Vice President of the Stock Exchange. He remained active as a dairy farmer. He established a manufacturing plant at La Salamandra in 1991, and introduced buffalo mozzarella to Argentina; La Salamandra's dulce de leche
, a traditional Argentine confection, earned first place at the 2000 Fancy Food Show of New York.
He also returned to academia, and was given tenure as Professor of Economics at his alma mater in 1994. He earned a Konex Award
for his role as an entrepreneur in 1998, and in 2004, was offered the post of Director of the National Arts Fund by President Néstor Kirchner
; personal differences with actress Nacha Guevara
, a key Kirchner supporter, stymied the appointment, however. González Fraga became known as one of the nation's foremost experts and proponents of Keynesian economics
. He would influence a number of future policy makers in Argentina, including Martín Lousteau
, with whom he wrote Sin Atajos ("Without Shortcuts") in 2005, and Débora Giorgi
, who worked with González Fraga during his tenure at the Central Bank. He himself, however, never garnered an appointment to the powerful Economy Ministry, despite having been frequently considered for the post.
Close to important figures in both the center-left UCR
and the center-right Federal Peronism
, González Fraga was entrusted by UCR presidential nominee Ricardo Alfonsín
to offer former Economy Minister Roberto Lavagna
the vice-presidential slot for the 2011 elections
; Lavagna reportedly instead persuaded González Fraga to run with Alfonsín, and on June 2, their UCR ticket was formally announced.
Ricardo Alfonsín
Ricardo Alfonsín is an Argentine lawyer, academic and politician prominent in the Radical Civic Union. His father, Raúl Alfonsín, was the President of Argentina from 1983 to 1989.-Life and times:...
for his 2011 campaign
Argentine general election, 2011
Argentina held national presidential and legislative elections on 23 October 2011. Incumbent president Cristina Fernández de Kirchner secured a second term in office after the Front for Victory won just over half of the seats in the National Congress....
for the Presidency.
Life and times
González Fraga was born in 1948 as the youngest of four children to Elvira Fraga and N. González Casartelli. He earned a degree in EconomicsEconomics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
with honors at the Pontifical Catholic University of Argentina
Pontifical Catholic University of Argentina
The Pontificia Universidad Católica Argentina is a university in Argentina with campus in the cities of Buenos Aires, Santa Fe, Rosario, Paraná, Mendoza and Pergamino. The main campus is located in Puerto Madero, one of the most modern neighborhood of Buenos Aires...
, and in 1974, was brought on by La Nación
La Nación
La Nación is an Argentine daily newspaper. The country's leading conservative paper, the centrist Clarín is its main competitor. It is the only newspaper in Argentina still published in broadsheet format.-Overview:...
, one of the nation's leading news dailies, as a financial columnist. He later earned a fellowship at the Belfer Center for Science and International Affairs
Belfer Center for Science and International Affairs
The Belfer Center for Science and International Affairs is a permanent research center located within the John F. Kennedy School of Government at Harvard University. The center's current director is political scientist Graham T. Allison....
at Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
, and at the London School of Economics
London School of Economics
The London School of Economics and Political Science is a public research university specialised in the social sciences located in London, United Kingdom, and a constituent college of the federal University of London...
. He married Bárbara Morea Giménez, and had two children; they later separated.
He established a dairy farm, La Salamandra, near Luján, Buenos Aires
Luján, Buenos Aires
Luján is a city in the Buenos Aires province of Argentina, located 68 kilometres north west of the city of Buenos Aires. The city was founded in 1755 and has a population of 94,000 ....
, in 1979, and continued to write on finance and economics, authoring El Mercado de Capitales (1982) and El Sistema Financiero (1980 and 1985). He served as adviser to the State enterprise bureau during the Raúl Alfonsín
Raúl Alfonsín
Raúl Ricardo Alfonsín was an Argentine lawyer, politician and statesman, who served as the President of Argentina from December 10, 1983, to July 8, 1989. Alfonsín was the first democratically-elected president of Argentina following the military government known as the National Reorganization...
Administration, and was hired by BCCI
Bank of Credit and Commerce International
The Bank of Credit and Commerce International was a major international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier. The Bank was registered in Luxembourg with head offices in Karachi and London. Within a decade BCCI touched its peak...
principal Ghaith Pharaon
Ghaith Pharaon
Ghaith Rashad Pharaon, is a prominent Saudi businessman and financier.-Background:...
to manage debt-equity swaps
Swap (finance)
In finance, a swap is a derivative in which counterparties exchange certain benefits of one party's financial instrument for those of the other party's financial instrument. The benefits in question depend on the type of financial instruments involved...
for the bank, as well as portfolio investment
Portfolio investment
The purchase of stocks, bonds, and money market instruments by foreigners for the purpose of realizing a financial return, which does not result in foreign management, ownership, or legal control.Some examples of portfolio investment are:...
s that included the Park Hyatt Buenos Aires
Four Seasons Hotel Buenos Aires
Four Seasons Hotel Buenos Aires is a part of the Toronto-based Four Seasons chain of luxury hotels and resorts. It is located in the city's culturally-rich Recoleta District.-History:...
.
Tenure at the Central Bank
The election of Justicialist PartyJusticialist Party
The Justicialist Party , or PJ, is a Peronist political party in Argentina, and the largest component of the Peronist movement.The party was led by Néstor Kirchner, President of Argentina from 2003 to 2007, until his death on October 27, 2010. The current Argentine president, Cristina Fernández de...
candidate Carlos Menem
Carlos Menem
Carlos Saúl Menem is an Argentine politician who was President of Argentina from 1989 to 1999. He is currently an Argentine National Senator for La Rioja Province.-Early life:...
in 1989
Argentine general election, 1989
The Argentine general election of 1989 was held on 14 May. Voters chose both the President and their legislators and with a turnout of 85.3%, it produced the following results:-President:aAbstentions.-Argentine Congress:...
, and his reliance on the agribusiness
Agribusiness
In agriculture, agribusiness is a generic term for the various businesses involved in food production, including farming and contract farming, seed supply, agrichemicals, farm machinery, wholesale and distribution, processing, marketing, and retail sales....
conglomerate Bunge & Born for economic policy during the presidential transition, gave the company's Chief Operating Officer
Chief operating officer
A Chief Operating Officer or Director of Operations can be one of the highest-ranking executives in an organization and comprises part of the "C-Suite"...
, Orlando Ferreres, the power to choose most of the new administration's economic team. He recommended the relatively young González Fraga, who was well-known to the local banking sector as a policy consultant, to be the new President of the Central Bank. The nominee informed the President-elect that he had not voted for him (harboring policy differences, as well, with Bunge & Born personnel); González Fraga, nevertheless, was sworn in with the new administration on July 8.
González Fraga leveraged business confidence in the new economic team to stabilize the highly undervalued austral
Argentine austral
The austral was the currency of Argentina between June 15, 1985 and December 31, 1991. It was subdivided into 100 centavos. The symbol was an uppercase A with an extra horizontal line . This symbol appeared on all coins issued in this currency , to distinguish them from earlier currencies...
, and despite favoring greater exchange rate flexibility in light of the critical need for foreign exchange reserves
Foreign exchange reserves
Foreign-exchange reserves in a strict sense are 'only' the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, Special Drawing Rights and International Monetary Fund reserve positions...
(which had declined to around us$120 million, with us$4.5 billion in arrears
Arrears
Arrears is a legal term for the part of a debt that is overdue after missing one or more required payments. The amount of the arrears is the amount accrued from the date on which the first missed payment was due...
), González Fraga eliminated trade finance
Trade finance
Trade finance is related to international trade.While a seller can require the purchaser to prepay for goods shipped, the purchaser may wish to reduce risk by requiring the seller to document the goods that have been shipped. Banks may assist by providing various forms of support...
lines of credit and increased U.S. dollar purchases from exporters. These measures created friction with both the agricultural sector and Bunge & Born itself, though he continued to enjoy Menem's support.
The austral, which had fallen sharply (from 450 to 650 per dollar) in the days prior to Menem's July 8 inaugural in anticipation of a devaluation
Devaluation
Devaluation is a reduction in the value of a currency with respect to those goods, services or other monetary units with which that currency can be exchanged....
, stabilized. The financial crisis
1989 riots in Argentina
The 1989 food riots were a series of riots and related episodes of looting in stores and supermarkets in Argentina, during the last part of the presidency of Raúl Alfonsín, between May and June 1989...
continued to exert pressure on prices, however, and monthly inflation reached 197% in July. The National Mint could not meet demand for banknotes, and in response, the new Central Bank President ordered the mint to triple production by printing higher denominations on old (circa-1980) Peso ley templates, and issuing bills printed on only one side. The crisis subsided in August, and by September, monthly inflation was in single digits. González Fraga, however, remained in strained terms with the Bunge & Born-dominated Economy Ministry, and sought as much independence for the Central Bank as possible. Ultimately, however, Economy Minister Néstor Rapanelli's opposition to González Fraga's call for a floating exchange rate
Floating exchange rate
A floating exchange rate or fluctuating exchange rate is a type of exchange rate regime wherein a currency's value is allowed to fluctuate according to the foreign exchange market. A currency that uses a floating exchange rate is known as a floating currency....
led the central banker to resign on November 24. These news added to concerns that the us$2 billion in new portfolio investment
Portfolio investment
The purchase of stocks, bonds, and money market instruments by foreigners for the purpose of realizing a financial return, which does not result in foreign management, ownership, or legal control.Some examples of portfolio investment are:...
envisaged in July failed to materialize, and amid a new currency crisis, Rapanelli himself resigned three weeks later.
Menem loyalist Antonio Erman González was named President of the Central Bank in March 1990, and González Fraga returned to the institution as its Vice President. A reversal of the roles each had in 1989, this partnership continued when in June, he succeeded Erman González, while the latter retained the Economy Ministry. Even as the nation's finances stabilized, his agenda in the ensuing months was topped by difficult repayment negotiations over mounting foreign debt arrears (which had reached us$6 billion by then), as well as by ongoing investigations into securities fraud
Securities fraud
Securities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
allegedly committed against the Central Bank by numerous institutions during the crisis. Revelations in January 1991 that Menem Administration officials had solicited bribes from beef processor Swift & Company
Swift & Company
Swift & Company is an American food procession company a wholly owned subsidiary of JBS S.A. , a Brazilian company that is the world's largest processor of fresh beef and pork, with more than US$30 billion in annual sales as of 2010. It is also the largest beef processor in Australia.Swift &...
, as well as a renewed currency crisis, led to the resignation of the entire economic team.
Later life
González Fraga returned to the private sector. He was named Director of the Argentine Institute of Capital Markets, a think tankThink tank
A think tank is an organization that conducts research and engages in advocacy in areas such as social policy, political strategy, economics, military, and technology issues. Most think tanks are non-profit organizations, which some countries such as the United States and Canada provide with tax...
associated with the Buenos Aires Stock Exchange
Buenos Aires Stock Exchange
The Buenos Aires Stock Exchange is the organization responsible for the operation of Argentina's primary stock exchange located at Buenos Aires CBD. Founded in 1854, is the successor of the Banco Mercantil, created in 1822 by Bernardino Rivadavia.Citing BCBA's self definition: "It is a...
, and was later named Vice President of the Stock Exchange. He remained active as a dairy farmer. He established a manufacturing plant at La Salamandra in 1991, and introduced buffalo mozzarella to Argentina; La Salamandra's dulce de leche
Dulce de leche
Dulce de leche is a thick,creamy, caramel-like milk-based sauce or spread.Literally translated, dulce de leche means "sweet from milk". It is prepared by slowly heating sweetened milk to create a product that derives its taste from caramelised sugar. It is a popular sweet in Latin America, where...
, a traditional Argentine confection, earned first place at the 2000 Fancy Food Show of New York.
He also returned to academia, and was given tenure as Professor of Economics at his alma mater in 1994. He earned a Konex Award
Konex Award
Konex Foundation awards, or simple Konex awards are cultural awards from the Konex Foundation to Argentine cultural personalities.Created in 1980, where conceived as a way to reward the Argentine personalities and institutions of different fields, as well as to stimulate the beginners.Even though...
for his role as an entrepreneur in 1998, and in 2004, was offered the post of Director of the National Arts Fund by President Néstor Kirchner
Néstor Kirchner
Néstor Carlos Kirchner was an Argentine politician who served as the 54th President of Argentina from 25 May 2003 until 10 December 2007. Previously, he was Governor of Santa Cruz Province since 10 December 1991. He briefly served as Secretary General of the Union of South American Nations ...
; personal differences with actress Nacha Guevara
Nacha Guevara
Nacha Guevara is an Argentine singer and actress from Mar de Plata, Buenos Aires, Argentina.Trained as a dancer and actress, she discovered by chance a career as a singer becoming a symbol in the song of protest movement around 1968 in the avant-garde Instituto Di Tella in Buenos Aires, the...
, a key Kirchner supporter, stymied the appointment, however. González Fraga became known as one of the nation's foremost experts and proponents of Keynesian economics
Keynesian economics
Keynesian economics is a school of macroeconomic thought based on the ideas of 20th-century English economist John Maynard Keynes.Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and, therefore, advocates active policy responses by the...
. He would influence a number of future policy makers in Argentina, including Martín Lousteau
Martín Lousteau
Martín Lousteau was the Minister of Economy and Production of Argentina under the administration of President Cristina Fernández de Kirchner, from December 10, 2007, until April 24, 2008...
, with whom he wrote Sin Atajos ("Without Shortcuts") in 2005, and Débora Giorgi
Débora Giorgi
Débora Giorgi is an Argentine economist, currently the nation's Minister of Industry.-Career:Giorgi was born in Balvanera, Buenos Aires in 1959 and graduated with honors from the Argentine Catholic University with a degree in Economics, later publishing numerous academic articles in her specialty...
, who worked with González Fraga during his tenure at the Central Bank. He himself, however, never garnered an appointment to the powerful Economy Ministry, despite having been frequently considered for the post.
Close to important figures in both the center-left UCR
Radical Civic Union
The Radical Civic Union is a political party in Argentina. The party's positions on issues range from liberal to social democratic. The UCR is a member of the Socialist International. Founded in 1891 by radical liberals, it is the oldest political party active in Argentina...
and the center-right Federal Peronism
Federal Peronism
Federal Peronism , or Dissident Peronism , are the informal names given to a changing alliance of Justicialist Party figures, currently identified mostly by its opposition to ruling Kirchnerism, the center-left faction that heads the national Government of Argentina and leads the Peronist...
, González Fraga was entrusted by UCR presidential nominee Ricardo Alfonsín
Ricardo Alfonsín
Ricardo Alfonsín is an Argentine lawyer, academic and politician prominent in the Radical Civic Union. His father, Raúl Alfonsín, was the President of Argentina from 1983 to 1989.-Life and times:...
to offer former Economy Minister Roberto Lavagna
Roberto Lavagna
Roberto Lavagna is an Argentine economist and politician, and was the former Minister of Economy and Production of Argentina from April 27, 2002, to November 28, 2005.-Career:...
the vice-presidential slot for the 2011 elections
Argentine general election, 2011
Argentina held national presidential and legislative elections on 23 October 2011. Incumbent president Cristina Fernández de Kirchner secured a second term in office after the Front for Victory won just over half of the seats in the National Congress....
; Lavagna reportedly instead persuaded González Fraga to run with Alfonsín, and on June 2, their UCR ticket was formally announced.