The Minister of Economy Luis Caputo highlighted this Tuesday the conviction of President Javier Milei to carry out the national government’s economic program and emphasized that now “some want to underestimate it.” “A President who dared to do what some want to underestimate, but no one dared to do in 100 years”stated the head of the Treasury Palace.
Caputo participated in an event organized by the Cato Institute in Buenos Aires and the Libertad y Progreso Foundation with the name “The Rebirth of Freedom in Argentina and in the World”. There, the official highlighted that people “support the change. They are making an important effort, but the difference is that there is hope because the majority understood that it is the correct path, that one does not leave a hundred-year-old model in a couple of months, that one does not have to go back there. Let’s not get hooked on 30 people in the Senate attacking these achievements”he asked.
Likewise, the official predicted that in the event that the Bases law is not approved by the National Congress, the Government will not change course and “it will only be a matter of time” because next year the force led by President Javier Milei “will win the elections by 60% or 70%”, which implies that from there it will have legislative force to carry out the reforms it seeks. “It is very good that the law passes because it will change the country and will enhance the recovery of the economic situation. But if it does not happen, it will not alter the fact that the country is going to recover,” the minister stated.
According to Caputo, “the best way to combat these people (those who oppose the Bases law), who only want to continue in the past, is to support the model. You have to empower yourself and know that each person’s decision is more important than the law, because If you are convinced, the economy will recover more quickly and we will return the surplus to you in lower taxes.”, he assured. And he added: “That is what we are going to do and that is what is going to get the country going; If we reverse the cycle, we start to grow, we start to lower taxes, and Argentina won’t stop anyone”.
In his speech, the minister emphasized that adjusting the macroeconomic variables that included a deficit of 15 points of GDP was “done in a neat and orderly manner.” “Fiscal balance was reached in month one when in theory it was difficult to do so in the mandate“, stressed the official.
The minister also affirmed that the achievements in macroeconomic matters were achieved “taking into account the most vulnerable.” “Everything that is, direct assistance, universal assistance per child rose 335% at the same time as in this period, that is, from the end of November to today, inflation was 129%, that is, universal assistance practically it doubled in real terms,” the minister stressed.
Caputo also stressed that “the Alimentar Card rose in real terms and the Thousand Days Plan rose more than 1,000%” and reiterated that in May there will also be a fiscal surplus, marking five consecutive months of positive balance. In addition, he complained about “the energy debt left by the previous government.”
“More than six months have passed, so it is good to make a small account of what has been received. The situation was truly dire. The combination of the worst of the Rodrigazo, the worst of the inflation of Alfonsín and Menem and the crisis of 2001. A fiscal deficit of 5 points, a quasi-fiscal deficit of 10 points; So a consolidated deficit of 15 points, which is brutal,” said the official.
Furthermore, at the Cato Institute event in Buenos Aires he expressed that upon assuming office they found “a totally bankrupt Central Bank, 11.5 billion dollars of negative reserves, 3 monetary bases in remunerated liabilities, at a rate that implied issuing one more monetary base every 3 months and a half, along with inflation above 200 and most of the prices depressed.”
According to the Minister, “within 6 months we will have a fiscal surplus, a trade surplus, a current account surplus, having purchased 17,000 million in the market, having practically solved the problem of importers’ debt, finished with the SIRA, issued more than 69 regulations in foreign trade and with 30-year mortgage loans. That is the situation we are in today,” he concluded.
On the other hand, he reiterated that the national State will not finance more public works because “it is a mess” and suggested that they gave them to the provinces because “it was a job.”
“They give the provinces public works which is a job,” said the minister while maintaining: “They are coming (for the governors) to request the transfer and that is how it should be.”
“They are coming to ask that we give them the works and (Guillermo, Chief of Staff) Francos is signing the transfer every day and that is how it should be,” said the minister.
Along these lines, he stated that “discretionary transfers will continue to be zero,” a tool that was usually used as a political condition.
When speaking about the relationship with subnational states, Caputo revealed: “Last week several governors came to see me and I apologize if I send them to the front, they have a smile from ear to ear.”
At that moment, he took the opportunity to point out Axel Kicillof: “With the exception of the province of Buenos Aires, where we have a serial spender, everyone is happy.”
This morning the Minister of Government of the province of Buenos Aires, Carlos Bianco, and the Minister of Public Works, Gabriel Katopodis, along with 20 Buenos Aires mayors, appeared at the Ministry of Economy to present a note in which they demanded the funds to complete unfinished public works and a debt of $5 billion pesos.
Caputo also referred to the situation of the Minister of Human Capital, Sandra Pettovello, and maintained that “the managers of poverty are also going to be looking for ways to turn this Government around because it is going to continue fighting them and they are going to win.”
The minister reiterated that if the Base Law is approved, a new negotiation will begin with the IMF to accelerate the exit from the stocks.
Featured quotes from Caputo’s speech
- We had a country with fiscal cancer and monetary, financial, exchange and institutional metastases. He was a patient who was closer to passing on to the other side of life than to recovering.
- Fiscal balance was reached in month one, something that in theory was impossible to do in the four years of mandate and that was also achieved, taking into account the most vulnerable. Everything that is direct assistance rose 335%.
- Typically to lower inflation, the first thing central banks do is raise rates, is what the manuals say. For Argentina at that time it would have been a mistake because raising interest rates is done to decompress credit, the secondary generation of money and to slow down the economy.
- Why is it different in Argentina? Because there is no secondary creation of money. If we raised the rate, the only thing we would have done was exacerbate the monetary disaster, because endogenous liabilities would have multiplied; we would have had to print one monetary base per month.
- Thus, it would have been impossible to get out of the exchange trap, because today we would have 6 or 7 more bases that would have earned 150% in dollars and they would be waiting for us to open the trap to leave.
- We knew that we were going to be able to control that because we designed a financial instrument like Bopreal that served to cushion the rise in the exchange rate, absorb pesos and the promise of US$60,000 million that the BCRA had to give to importers, another element to a hyperinflation, which was just around the corner.
- That set of measures was what made the operation successful. In each of these crises, here we had the combination of all three and the patient came out healthy; 84% of people thought we were going to hyperinflation.
- All this happened for a reason and it is because homework was done; It is not a coincidence that things have improved, it is a causality. In any case, the surprise is that homework was done that had not been done in 100 years.
- It is no coincidence that things have improved. It’s a causality. When you do things well, the consequences are good. The Argentine problem was that for 100 years they put us in a story and for 20 years we directly entered a pyramid scam.
- The most conclusive summary of this is that we went from almost guaranteed hyperinflation to having mortgage loans.
- It is very good that the law passes because it is a law that benefits all Argentines. It will be an accelerator, an enhancer of the recovery of the economic situation.
- However, the vote on the Law will not alter the fact that this country is going to recover because this government is not going to change course. The macro order will continue and the country will recover just the same.
- The entire opposition knows that this law favors Argentines, and that is the reason why many of the opposition do not want to vote for it.
- We are going to return the surplus that we have as a result of the recovery with low taxes.
- Today we are growing and in conditions where inflation is at absolutely normal levels.
- We are in the process of reviewing the Fund, which will be on the 13th, and from there we will begin to negotiate a new program with them. We are not announcing it now because logically we must first agree on it with the Fund and eventually try to ensure that new money arrives with this new program.
- We are ending all the jobs of politics, we are ending the famous political caste.
- Next year the president is going to win, with 40%, if not with 60% 70%
- We are not going to finance more public works because it is a mess and it is a job.
With information from agencies.
IG/CRM
