The concern generated by the acceleration of inflation determines greater adherence to the recovery of stability. Dollarization always appears, but the monetary regime change is doomed to fail without a comprehensive state order. Furthermore, there are no reasons to expect an easing of the inflationary phenomenon in the coming months. On the contrary, the implementation of soybean 3 dollar will encourage inflation because pay a higher exchange rate to exporters, while maintaining a lower official exchange rate for importers, monetary issuance increases.
The argument for dollarization is that in this way the BCRA will not have the possibility to issue pesos. The closest experience is that of convertibility, which managed to overcome hyperinflation and eradicate inflation for a decade. But to contemplate its implementation it is necessary to analyze the balance sheet of the BCRA. According to these data, the monetary base amounts to 5 trillion dollars and the Leliqs (money that people deposit in banks and this in the BCRA) amounts to 12 trillion dollars. This data demonstrates that if you wanted to redeem all issued pesos and give dollars in return, you would have to do so in a mega devaluation.
If reserves were strengthened, for example, with an international credit, the surrender value could be reduced. But, the chances of that happening are remote. This is a consequence of the accumulation of recurring monetary issues in the past to cover chronic fiscal deficits.
Most importantly, dollarization does not guarantee that the public sector will stop being chronically in deficit. The unappealability of the matter does not prevent it from spending more than its income and covering the difference with bank loans, delaying payments to suppliers or racking up lawsuits. The alternative that the provinces issue quasi-currencies to cover their imbalances is also latent. This has happened in the past.
Fiscal indiscipline was the main cause that caused convertibility to fall. By itself, there are two problems:
- One of stocks, originating from the accumulation of fiscal deficits in the past
- Another of the flows, originating from the poor organization of the state which leads him to spend more and more of his income
A change in the monetary regime monopolizes the supply problem. But to tackle the problem of flows, and overcome the chronic financial and managerial deficits, an overall state structure is needed.
Dollarization is very attractive. But it does not foresee that the State will not cease to be in deficit if not mediate a comprehensive and profound reconsideration. For this reason, even if these are complex changes, it is essential that the next administration prioritizes:
1. The tax unification
2. The elimination of sharing
3. The elimination of overlapping functions between national, provincial and municipal public bodies
4. The pension system
NS
Source: Clarin
