-In the short term there are no recipes. There is a Copernican shift in fiscal policy, which is a very significant adjustment in spending policy. In real terms, what (Sergio) Massa spent during his administration, between August and December 2022, compared to what (former Economy Minister) Martín Guzmán had spent in the same period is 20% less in pesos constants.
-There are significant adjustments. 36% less is spent on public works and 20% less on economic subsidies. Except for personnel expenses and pensions, which have fallen a little less, there is a notable adjustment. There is less issuance and that could cause inflation to come down. In any case, I find it very difficult for the number to start with 3.
-The Argentine economy is already in a regime of high inflation. There are more and more indexing behaviors and the terms of contractual adjustments are getting shorter. The Central Bank, which at the same time keeps the interest rate high – which is positive – together with a tight pace of daily adjustment of the devaluation of the official exchange rate between 5% and 5.5%. All this already puts a floor.
-There’s the whole question of tariff adjustments to meet the IMF’s target, which involves reducing the burden of subsidies on primary spending and setting a floor for the inflation rate. The latest wage negotiations, which date back to October and November last year, are already underway, with average increases of 5%-6% in the formal sector and in some cases 7%. Fuels increased by 4%. And we add something that helped at the end of last year: meat.
– Generates great inequality in social terms. Only a few corporations can accompany and promote parities, and it’s not a business. First, because it’s late to the market. Secondly, because they put a cap on inflation. Not because salaries create inflation, but we are part of the costs of companies and if that percentage increases it will obviously be transferred to prices.
-When there is an 80% to 90% gap in the price of the dollar (from the official to the “blue”), in practice it is an expectation of devaluation, i.e. what in a sense measures the gap. What the price maker does every day, which is not the oligopolistic price maker, but the hardware store, the owner of this restaurant where we have coffee, everyone looks at the “blue”, thinks about the replacement cost and highlights any doubts. This also influences. To stabilize the economy, the world of pesos and the world of dollars must be synchronized.
-Companies in the world that have developed the work with basic agreements. Therefore, the longer and more respected, the better. There are things we have been discussing, such as the need to get your tax accounts in order, up until yesterday. For this some basic agreements will have to be reached by the next government.
– Massa does the trick with two fours and a large fake. Everyone knows that he has those cards, that he doesn’t have enough reserves in Central and that he will cause the gap (between the different dollars) to remain at least at this level. All good measures related to the fact that the only net contributor of foreign currency is not soy. Today it is the only sector with a positive balance. Everything else is all deficit sectors: all industry that is not related to agriculture. We as tourists, when we travel abroad. Goods, services, everything spends more dollars than it generates.
-It was much more communicative than real, but this can be blamed for the subsequent inflationary acceleration. There is Massa’s ability and political decision to defend the objective of the tax agreement. There is a challenge from Peronism making adjustments in an election year. In 2022, Argentina agreed with the IMF that the target was 2.5% (fiscal deficit) and the parties say it has been achieved, with a deficit of 2.4%.
– We are once again discussing giving less weight to the quarterly goals and returning to the yearly goal. The agreement with the IMF is the road map. It is a good thing that Argentina, if one day it wants to regain some reputation, sometimes agrees, after more than twenty defaults”.
-We had seen the mountain of deadlines in April, which are important. You have to start explaining. The question of expectations is an important one. A debt can be sustainable or not, as long as the debtor is created. The cold hard numbers say that Argentina could roll over its peso debt (refinance itself) in a context and within an overall economic program that does not exist today and will not exist.
-The semantic pyrotechnics of the “explosion”, “wick”, “bomb” style, all those strong figures from the opposition complicate. Beyond perhaps the virtual electoral revenues, this would generate a crisis that transcends the change of government and would be very delicate in the social sphere, I believe more in the basic agreements on tax matters, debt in pesos, debt in dollars.
-The scrolling capability is achieved with two non-secondary elements: an increasing cost and a decreasing duration. For a year and a half now the deadlines have shortened and compressed violently. Today it’s about four and a half months on most tools. Positive rates are getting higher and higher.
It’s complex science fiction. I do not know. It depends on how the government arrives at the time. For practical purposes, the opposition has already given its opinion. We will see how the market digests these statements in these weeks, how these statements continue, what the economic sectors say about the statement. Now, it seems to me that they are walking a tightrope.
-I make non-explosive scenarios. But the scenario of the epidemic must be kept in mind and taken into consideration, no doubt. But I think there is room to avoid the explosion. I am confident that the “political animals” who make decisions for the government and the opposition will understand that the epidemic is not a long-term affair, nor a medium-term one.
-The economy has no employment problems today. The problem is that employment is not paying enough, basically because there is inflation. There is no better wage policy than reducing inflation.
Profile
Ricardo Delgado is an economist who calls himself an anti-crack. “It is always easier to read who shouts the loudest, who will best constitute a ‘thick minority’. Which sells more than saying ‘we agree with each other’. Because, somehow, they are branded as soft, as collaborators and they are not”, says the economist, who has toured different political spaces.
He was Sergio Massa’s economic adviser during the days of the Renewal Front -2013 and 2015- when the current Economy Minister was trying to become president in the face of Kirchnerism. Subsequently he was undersecretary for the Coordination of Federal Public Works, where he reported to the Minister of the Interior -Rogelio Frigerio- between 2015 and 2019. In this interview he refers to the dollar and the economic legacy that this management will leave.
Source: Clarin
