“Fierce adjustment, Bonex plan and a second devaluation”: Cristina Kirchner’s 10 definitions of the Milei plan

After maintaining three months of silence on the economic situation, Cristina Kirchner reappeared on the scene with strong questions about Javier Milei’s shock plan. In a 33-page letter, the former vice president took stock of the failure of stabilization plans from the last dictatorship to the present, opened the door to negotiating some reforms and warned that the government could order, among other things , a new devaluation in the coming weeks. of its main economic definitions which were the following:

1) Milei’s program

“So far, the new government has only implemented a ferocious adjustment program that acts as a real destabilization plan and which not only fuels the inflationary spiral, placing society on the brink of shock, but will also inevitably cause an increase in inflation, unemployment, and social desperation in a sort of planned chaos. It is more than evident that in the president’s mind the only stabilization plan is that ofdollarization.”

2) “Failed officials”

In her letter, Cristina questions the laundering of “characters and officials”: “The most worrying is that of Luis Caputo, architect of the serial indebtedness of Mauricio Macri’s government and the return of the IMF to Argentina, whom you mention, nothing more or nothing less than as Minister of Economy, to which is added the reappearance as a leading figure of Federico Sturzenegger, former president of the BCRA during the Macri government and protagonist of the “Mega swap” of the foreign debt together with Domingo Cavallo in De La Rúa’s government”. (…) Recycling failed officials to revive failed policies can only lead to bad results.”

3) The cause of inflation

“Unlike what is usually stated, since the main problem of the Argentine economy is the fiscal deficit and the main cause of inflation, the monetary issue is necessary to cover it; we argue that inflation in Argentina skyrockets to cause of the shortage of dollars and that compulsive indebtedness in said currency does nothing but aggravate this shortage by deepening the already known and structural external restriction of our bi-monetary economy.

4) “Third debt crisis”

“40 years after having recovered democracy, Argentina is going through its third debt crisis. The first, originating from the last civil-military dictatorship and unleashed in 1989 with the UCR at the head of the government; the second, incubated in the convertibility and which imploded in 2001 with the Alliance government and this third party, germinated in the process of ferocious indebtedness of the Mauricio Macri government which implied the return of the IMF and whose results we are experiencing, this time with a deepening of the bi-monetary character of our economy, which aggravates the already known and structural external constraint”.

4) Labor reform

“It is inevitable to seriously discuss a work update plan that provides responses to the new forms of work relationships that have emerged in light of technological progress and a pandemic that has disrupted every area of ​​people’s lives.(…) These updates must respect the rights acquired by workers, but they must also be implemented taking into account the concept that, once enshrined, rights entail obligations to be respected.”

5) Privatizations and investments

“We also want to discuss the integration of state-owned enterprises both through the participation of private capital and the Provinces, in case their resources are affected by their economic exploitation, and their listing on the stock exchange to add value and efficiency. below form of a virtuous public-private partnership. We are willing to discuss a regime that encourages large investments that add value and transfer technology. The opposite would mean redefining our economy and condemning ourselves to extractivism.”

6) Dollarization

“However, the novelty that Milei presents is his true stabilization plan, which is neither more nor less thandollarisation, as he expressed it during the electoral campaign in numerous television interviews. To carry out this “plan” he must obtain the dollars to save the Monetary Base and the remunerated liabilities of the BCRA. When it was suggested to him during the election campaign that he did not have enough dollars to do so, he replied that he would obtain financing from Investment Funds. Milei became president but the financing did not appear.”

7) “Dollar debt is poison”

The former vice president spoke out against the reforms contained in the omnibus law: “The National Executive (Milei-Caputo) will be able to re-debt Argentina in dollars, without limits and under foreign jurisdiction without going through Congress, it will be able to restructure the foreign debt without the obligation to improve its amount, duration or interest, will have the power to liquidate the ANSES FGS and to privatize the state’s assets. If these reforms were approved, rather than a legal authorization, the Congress grant a brand patent to the President and his Minister of Economy. (…) This is why excessive dollar debt is poison for our bimonetary economy, and in the case of the IMF loan it is even more so .”

8) New devaluation

“Meanwhile, Milei is also employing another alternative todollarization. It is liquefying the remunerated liabilities of the BCRA and the Monetary Base through inflation and hopes that the brutal recession it is causing will interrupt the inflationary inertia and even allow it to realize a new devaluation before the harvest, without passing prices being equivalent in percentage terms; as happened in 2002 when the fall in convertibility meant a devaluation of more than 300% and inflation was only 41% per year, given the context of recession and “a decline in the level of employment that would lead to unemployment of 25% the following year”.

10) Another Bonex plan?

On the other hand, according to the former president, a new devaluation “would allow it to save the entire monetary base which is increasingly liquefied with the dollars from the harvest that will arrive starting from March and, if it had not yet obtained enough dollars with powers that Congress would grant him if the “Omnibus” law were approved, the President, while stating that he will never touch private property, could issue a dollar bond on the remunerated liabilities of the BCRA, which are also increasingly liquefied, thus giving a third appropriation of Argentine savings as a result of this third debt crisis.”