—Between 40 and 50 I think we can help you— David Malpass told Nicolas Dujovne in May 2018.
It was kicked off an amount and report that it would reconfigure the parameters of Argentine economics and politics forward.
Malpass was Undersecretary for International Affairs of the US Treasury Dujovne, Minister of Economy of Argentina in the government of Mauricio Macri. The American announced this week that in late June he will step down as president of the World Bank which he has held since 2019.
Dujovne and Malpass spoke for no more than 20 minutes that time. The American, a man close to the then US president. Donald Trump, and married to a Venezuelan, he was well aware of the Argentine crisis at the time.
—What help do you think?— confronted Dujovne.
— I like the Uruguay modelreplied the Argentine, who had seen that in the 2002 crisis Uruguay had first obtained a standby loan of 781 million dollars and a few months later another 1.5 billion dollars (23% of GDP).
Argentina could not claim more than 435% of its quota according to the statute of the IMF, which brought in about $20,000 million in minimum credit request. If one takes into account that the Fund had decided to extend aid to countries because quotas had become expired due to financial globalization which aggravated episodes of balance of payments crises, Argentina would have access to more money. It finally got $54,000 million in 2018.
The name of Malpass’s successor has not yet been released. An unwritten rule indicates that Joe Biden will nominate the next candidate.
Whoever is his successor, and despite the justified criticism he has received for his reluctance to the climate change agenda, with Malpass out of Washington, a person who has crossed international financial diplomacy in a crucial moment between Wall Street and the emerging world. Malpass joined the Treasury in the 1980s on projects such as packing the bank debt of countries like Argentina and Mexico with bonds Brady. He was also chief economist at Bearn Stearns.
The American economist Bradford De Long, in his extraordinary book ‘Moving slow to utopia’ – book of the year second New York Times-, believes that the 20th century is the period 1870-2010.
If De Long is right and the world is facing new problems today, it is logical to find a generation of economists like Malpass whose footprints and experience in the exercise of economic policy in recent decades start seeing yourself in the rearview mirror.
However, it won’t be that the last jedi of the world economy are underrated out there circling and their inheritances for what is to come.
This week the Financial Times published an article on Stanley Fischer’s influence on recent central bankers following the appointment of the prestigious Japanese academic and economist Kazuo Ueda (71) as president of the Bank of Japan. Beyond Fischer’s academic imprint underlined by FT, Stan too, as is well known, was in the trenches. And a hot one. He was president of the Central Bank of Israel, chief economist of the World Bank, number two of the IMF and third of the Fed.
In the same spirit of saving the practical side of economic policy, a conference will be held this week in honor of the Argentine economist Guillermo Calvo -which anticipated the 1995 Tequila Effect that hit the emerging world after the fall of the Wall-, at Columbia University in New York with the presence of Central Bank officials, former Ministers of Economy, IMF staff and academics such as Andrés Neumeyer, Federico Sturzenegger and Iván Werning among others. The seminar is entitled ‘The credibility of government policies’.
“Credibility is a fundamental resource of the architect of economic policy, and a determining factor of the effectiveness of his announcements. In turn, the actions of the policy maker affect his future credibility.explained to the Economic, the Argentine economist Martín Uribe, one of the organizers of the seminar together with Neumeyer.
Malpass, Fischer, Calvo, each in his own field, have tried to take care of this aspect that Uribe points out, that of credibility. Curiously, the first two have provided millions in loans to Argentina over the past nearly 20 years. Fischer ‘El Blindaje’ and Malpassano the 54,000 million dollars (both failed).
Calvo, for his part, has also been arguing this for years the lack of credibility in Argentina weakens any announcementfinancial aid and even an adjustment that is being made, because investors believe that it will happen – for example a correction -, and invest little, aggravating the crisis.
To economize is to work without certainties and resort to audacity. Sometimes in excess.
In 2001 José Luis Machinea asked Fischer. “Köhler tells us to go 1 on 1, but do you know how to do it?”. Köhler was 1 in the IMF.
– we have no ideaStanley replied.
Source: Clarin
