The former Minister of Economy, Domingo Cavallo, showed himself once again “relatively optimistic” on the future of the country. In the last post, reflected in his blog, he also predicted the reforms that the next government will make.
“Over the last four months of 2022, the economy has performed in line with the ‘optimistic’ scenario in our Aug. 31 projection for 2022 and 2023,” he said. And he added: “Imagine how the economy will develop in 2024 it is necessary to discuss how the political and institutional events will develop during the 2023 election year.
In economic matters, according to his forecasts for 2023, “no progress is expected in the elimination of the fiscal imbalance or in the related price distortions”. However, with a “relatively optimistic” look, Cavallo warned him “imbalances will not get worse”.
Regarding the electoral scenario and the promises of the candidates for this year’s presidential option, former minister Carlos Menem said that “a change in the organization of the economy that includes the total elimination of the fiscal deficit and the issuance of monetary policy helps to reduce the risk of an episode of hyperinflation” such as the one that occurred in the handover of government from President Alfonsín to President Menem in 1989.
However, and in contrast, for Cavallo, the presence of strong organized groups of beneficiaries of social and economic benefits “It fuels skepticism of economic operators about the feasibility of a successful rapid reform process”.
And for this reason, the economist predicts it “in terms of inflation and growth, 2024 will not be much different from 2023”.
For him “the big difference will manifest itself in terms of organizational and microeconomic reforms that will result from the elimination of exchange and price controls, the elimination of subsidies, the reprivatization of companies nationalized during the Kirchner governments and the reform of the monetary system, to avoid excessive emissions in the future”.
“The possibility of strong disinflation and the start of a sustainable growth process is envisaged for the second half of 2024 and, above all, for the year 2025”, said Cavallo.
And along this line he warned that “most likely the reforms that will take place -after the change of government in December 2023- They will look much more like those of the 1990s than those that have prevailed since 2002.”
Ahead of the 2023 elections
“The emergence of a strong libertarian alternative led by Javier Milei is having a strong influence on the type of economic discourse of the opposition. There is much more emphasis on the role of the free market, the opening of the economy, the reform of the state , fiscal discipline and economic freedom in general, compared to what was featured in the 2015 ‘Change’ speech,” he said.
And in this sense the economist assured that “for the first time since the abandonment of convertibility in 2002the so-called neoliberal reforms of the 90s are appreciated and cited as a reference for future reforms”.
In his view, “these ideas are gaining support among young people, workers and people with limited resources who have been attracted by populist and statist policies in the past.”
In this regard he added: “This was the result of Milei’s preaching which, with a very particular style, he combined a bailout of the Menem-Cavallo policies of the 1990s with an interpretation of the Austrian School of Argentine economic policies”.
For the economist, the opposition will place the accent on the “recovery of the climate of stability of the 1990s”. In this sense, “in the need to produce a rapid fiscal adjustment and to introduce a monetary reform that gives a crucial role to the dollar as legal tender, as happened with the convertibility plan”.
“Proposals range from legalizing the use of the dollar in competition with the Peso to outright dollarization of the economy,” stressed out.
NS
Source: Clarin
