Democracy and Development Cycle organized by Clarín in MALBA. Photo: Fernando of the Order –
The increase in public spending and the expectation that the red will continue to grow this year even beyond the promises assumed in the Monetary Fund has led economists of various persuasions to agree that Controlling this hole is key to prolonging the dollar to stabilize the economy.
It was presented in a speech organized by Clarion in the fourth edition of the cycle of Democracy and Development, where Ricardo Arriazu, Carlos Melconian, Emmanuel Alvarez Agis and Hernán Lacunza spoke at the Malba debate and were organized by journalists Daniel Fernández Canedo and Ezequiel Burgo.
“It is wrong that Argentina has a problem with the lack of foreign exchange structure. The public sector spends more. We invented the philosopher’s stone: being rich without working. Let’s be prudent: let’s get rid of the desire to spend and the anxiety of broadcasting, ”said Arriazu, the first to speak in front of 300 politicians, executives and businessmen.
“We need to strengthen the macroeconomy. When public spending is not supplied, one is doomed. That discussion is over, we can’t waste any more time. Be careful about giving too many incentives and having rights to the sectors, ”Melconian said.
“There are more coincidences than anyone can predict. The goal of monetary policy should be to lower inflation. We are all populists, always with twins of others“said Alvarez Agis, former deputy minister of Cristina Kirchner.” The quick and simple solution does not last long. The solution to inflation will take years and more than a presidential term. ”
“We are addicted to deficit. For the lower income classes we have subsidized plans, for the middle classes we have subsidized rates and for the upper classes we have subsidized rates. We haven’t tried to have a long -term financial balance in a few years. I have nothing against public spending, what cannot be done is to collect 30 and spend 40, ”said Lacunza, former Economy Minister Mauricio Macri.
In addition to placing the focus on excessive public spending, economists have also pointed to inflation. “The interest rate higher than inflation is a major consensus for the peso to return to being a savings currency in the coming decades,” Melconian said.
“The government must ensure that inflation does not exceed 60% or 70% per year. I don’t think this administration is in a position to do that. ” assured the former president of Banco Nación.
The dollars are not disappearing
Economists also discussed shattering the myth that Argentina’s problem is the lack of the dollar. “Argentina has the best terms of trade -the difference between the prices it receives for exports and what it pays for imports- of your storyTinuro is Arriazu.
“In the last 40 years, we have had 21 improvements in terms of trade. Every improvement in terms of trade has increased public spending as a percentage of GDP. Everything that comes from abroad we spend and we also borrow. And then we were surprised that we were in debt. How on Wednesday can a deficit be financed if it is not in debt?“, Arriazu shot.
Hernán Lacunza, Mauricio Macri’s last Minister of Economy, agreed with Arriazu. “In the last two years we have generated a trade surplus of $ 29 billion. It’s not that we can’t generate dollars, we can’t handle it“And he showed that if the gas pipeline is built to expand exports from Vaca Muerta,” the dollars will go both ways because we can’t maintain them. “
Despite the fact that exports are setting records for Central, the accumulation of reserves is complicated. So far this year, it has barely added purchases for US $ 750 million.
“If the Central Bank does not buy dollars between now and July — the period of strong harvest sales — Argentina will have to endure an exchange conflict. It’s not possible that with stocks, an exchange rate gap and better trading terms we’re counting currencies, ”Melconian said.
Lacunza stressed the need for the Central Bank “add at least US $ 5,000 million between now and August. It is important to enter with dollars in the dry season of foreign exchange which runs from September to March. Going there with only $ 3.5bn of net reserves is difficult. There’s a dollar challenge in the summer and a dollar unknown in the coming winter. ”
To insist that the dollars are not in short supply, the former minister recalled that “the Monetary Fund threw us US $ 10,000 million a year -US $ 4,500 million of SDRs last year, plus another US $ 4,500 million from in reimbursement paid for the agreement, plus another US $ 1,000 million now coming from the resilience fund- ”.
“The IMF has expanded the cornice for us but it’s still messy. There are deficit dilemmas – tariffs, interest rates, exchange rate slippage, social programs, provinces – that must be resolved in the next three months and that will be determined in the next fifteen months, ”Lacunza said.