President Javier Milei declared this last night in front of Congress inflation “will continue to fall strongly and the exit from the shares is approaching”. It did not provide details and estimates on the extent of this slowdown and how long it will take. Nor when would the elimination of exchange controls take place, something that the Monetary Fund has in the worksheet with the Ministry of Economy and the Central Bank – it was discussed in recent days – even if it does not seem to be in a hurry since the Argentina still has negative reserves.
The axis of Milei’s speech last night was based on this point of view the tax issue, which is the cornerstone of his plan.
Milei began with an introduction to his speech before the Legislative Assembly assembled in Congress, based on a diagnosis of the inheritance received and what policies your government follows to reverse the imbalances.
“The last 20 years have been an economic disaster, an orgy of public spending”said the President. “The twin deficits we inherited reached 17 percentage points of GDP. “Five points of fiscal deficit of the Treasury and 10 of quasi-fiscal, generated by the Central Bank”Milei started out as a balance.
Like most presidents when they appear before Congress, he talked about the problems he encountered. “The worst in history”, cataloged the inheritance received. He then listed the debt accumulated by the Central Bank with importers, negative reserves of 11.2 billion dollars, “repressed” energy and transport prices, a gap of 200%, an average salary of 300 dollars (“A third of formal workers are poor”) and “record poverty with a history of social assistance.”
To reverse this situation, Milei justified the adjustment of public finances. “There are no more options, the only alternative is to do something diametrically different than in the past. We must go back to the basics, to the ideas that made this country great.”
On several occasions, the President has used grandiloquent phrases to describe the decision to correct inherited imbalances. “The speed with which the financial surplus was achieved in January is at historical testimony of modern capitalism”. “Thanks to the mandate for change that the people gave us and the confirmation of having told the truth in the campaign during our first 82 days, we have carried out the most ambitious government program in memory”.
Milei called on governors to sign an agreement in May that would allow him to implement reforms he failed to make after February’s legislative setback. Last week, IMF No. 2 Gita Gopinath recommended that the government obtain political support to implement the desired reforms.
Milei, however, was categorical on the tax issue. “The organization of tax accounts will be carried out with or without the support of the forces. If they accompany, it will be faster, better and with fewer social costs.”
He didn’t talk aboutdollarization or currency competition as had been hypothesized in the previous hours and this is why dollar futures contracts increased by 5% yesterday. The IMF has confirmed thatdollarization is not currently an issue on the table in negotiations with Argentina for the advancement of the Extended Facilities program. And not even the request for funds.
Source: Clarin
