domingo horse He made a stark analysis of the current economy and stressed that the political factor does not contribute to achieving stabilisation, although in his opinion there are no economic reasons that justify inflation above 7%.
“What is happening is very unfortunate, but inevitable because of the policies that have been applied. Not only because of the last government, but because of the previous ones as convertibility was dropped in 2002,” the former minister considered during an interview with Continental Radio.
At the time “the little ticket printing machine was started with the idea that this would solve the problems, and the problems got worse over time,” he added.
Cavallo clarified that he does not see specific factors in the economy favoring high inflation, which in its latest monthly measurement indicated a 7.7% increase in retail prices.
“I prefer not to make predictions, because sometimes predictions become self-fulfilling prophecies. In my opinion, there is no economic cause for inflation to exceed 7% per month,” said the economist.
Instead, he attributed it to the political turmoil, especially those that the governing coalition is going through: “More or less the monetary issue is growing at a slightly slower pace. But the factor pushing it above 7% is the political factor. This exacerbates the inflationary outlook.”
“I I hope it doesn’t end in total chaos.. Once the opposition candidates are well defined, if they explain well what they are going to do, that could help control the situation,” she said.
However, this message of hope also brought an element of patience, as Cavallo estimated that the future government that takes office in December after the elections will need a reasonable amount of time to start showing results.
“It will take a year to make all the necessary adjustments after the new government takes office. But during that year, unlike what is happening now, people have to understand what the government is doing and where it is going.” decisions that he is making,” she said.
The dollar is “too high”
Cavallo also referred to the value of the blue dollar, which closed on Friday at $442 for sale after surging more than 10% for the week.
“Today the price of the dollar, in my opinion, is too high. But it can get much higher until it becomes clear how the economy will be managed in the future,” he summed up.
“What the government should do in matters of exchange is to unify all the trade dollars, which are all dispersed now. And, on the other hand, the dollars in the free market. It is important to have one trade dollar and one free dollar, and organize convergence towards a free market on that basis,” explained the father of convertibility.
The former minister of the presidencies of Carlos Menem and Fernando de la Rúa also referred to the possible dollarization of the Argentine economy, one of the main measures promoted by presidential candidate Javier Milei.
“The question of dollarization is an issue that is being discussed at the wrong time, because before thinking about the stability of the exchange rate, a series of reforms must be made and the foreign exchange market must be unified,” he concluded.
Source: Clarin
