The Minister of Economy Luis Caputo assured that “The era of the negative rate ended today”, after the tender for Treasury bills carried out this Wednesday by the Treasury Palace. He said it in a speech before finance executives at ExpoEFI, in which he also reiterated that if the Bases law is approved, the rate of the COUNTRY tax for imports from 17.5% to 7.5 percent.
“We held a tender where we put a minimum rate of 4.25% for 90 days to give the market the signal that the negative real rate function of the first months has already met its objective. Now what is created from primary money by remunerated liabilities It’s not a major problem anymore.“, defined the Minister of Economy.
“From the monetary side, the BCRA did a phenomenal job. And something was done against the textbook, some economist told me ‘they are going to have to write a book: they lowered inflation by lowering the rate.’ It is something unprecedented. There are economists who still do not understand it,” shot Caputo, who also dedicated other passages of his speech to questioning economists critical of his management.
“Argentina, being a country without credit, the transmission mechanism (of interest rates) is null. If we had followed the book and set positive rates, on the side of primary money creation they would have exploited the endogenous interests of remunerated liabilities and they would have forced us to issue a monetary base every two and a half months and we could be in hyperinflation. And it would be impossible to get out of that trap,” he described.
And regarding his economic plan he also highlighted the Central Bank’s Bopreal bond. “I said that it was going to have three functions: absorb pesos, rebuild the relationship between importers and suppliers. And serve as a buffer against the rise in the exchange rate. Now you see how all these things were all interrelated. If you touch a wrong wire, everything explodes“, graphic.
Regarding the lowering of the PAIS tax rates for imports in the event that the Bases Law is approved in Congress, Caputo reiterated on the stage of ExpoEFI, in La Rural: “We are going to roll it back and as we have a fiscal surplus, we will to continue lowering taxes.” After the speech, he specified in response to a question from Infobae that this adjustment of aliquots would operate from the July 1st in case the parliamentary treatment was favorable for the ruling party.
The official had already anticipated that starting this week the Government will begin negotiating a new program. “It will take a while but it must be agreed with the Fund and eventually (we hope) with that new program new money arrives“said the minister. These additional dollars, he assured, are a decisive step towards exiting the exchange rate.
In the middle of the discussion about the Base Law, he had stated in Libertad y Progreso that “there is a lot of talk about the law in a binary form. If it happens it’s good, if it doesn’t it’s a disaster; It is not like this. It is very good that the law passes, it is a law for Argentines, an accelerator, an enhancer of the economic situation, but it is not going to alter the fact that the country is going to recover.” “The macro order will continue and the country will recover the same; The course is not going to change, it is very important that this be incorporated,” he stated.
“It is not binary. I hope there is responsibility on the side of Congress and that the Law comes out. But we are going to continue; Everyone knows that this law benefits all Argentines and that is why the opposition does not want to approve it, they are people who have no interest in the country doing well. They are in politics for the business and they want to manage it,” Caputo added.
In the debt tender this Wednesday, the Ministry of Economy placed $5.4 trillion in Treasury bonds to fixed income on a total offered of $16.4 million and announced the end of the process of negative real interest rates, a strategy with which they made progress in reducing the remunerated liabilities of the Central Bank and inflation.
“The total award was made in Lecap with maturity on September 13, 2024 (S13S4), prioritizing reinforcing the reference rate signal of 4.25% TEM, given that we consider that the negative real rate process has arrived to its end, having fulfilled the double objective of contributing to the cleaning up of the BCRA’s balance sheet and being a fundamental pillar in the reduction of inflation during these 6 months of management,” the Secretary of Finance explained in his official X account. , Pablo Quirno. On the other hand, it was resolved to void the Lecaps maturing on July 12, 2024 (S12L4) and August 16, 2024 (S16G4).
