Marina Dal Poggetto: “Argentina needs a real export leap that allows us to accumulate dollars”

Marina Dal Poggetto has a degree in Economics from the UBA and a Master in Public Policy from the Torcuato Di Tella University. For more than 10 years she has been dedicated to economic and financial consulting, with her directing Estudio Bein for twelve years and as of July 2017, directing Eco Go. In this dialogue, the IDB consultant also points to the historical distortions of the Argentine economy (“the two most important people in a company were the financial manager and the public relations manager”), praises Javier Milei’s commitment to fiscal adjustment, He describes his economic policy as a “heterodoxy of pragmatism” and criticizes the disarmament of the Central Bank: “it borders on malpractice.” Furthermore, she assures that the context demands “ordering the State, not destroying it.”

—We are going to look at December 2023. What did the Government get right in its initial economic program?

—I think the magnitude of the devaluation was good: you had to be at that moment to devalue such a magnitude and survive politically. But I think that having amplified the shock with the Country Tax was a mistake. The idea of ​​offering to settle exports in the blend model, 80% official and 20% Cash With Settlement, seems to me to have been too expensive insurance, because you generated a new commercial debt, which is being paid today.

—But it was a controlled shock, which was probably the only possible recipe.

—Yes, but this model today makes you more dependent on the stocks, not less. By having prioritized the delay of the exchange rate as an inflationary anchor, and by having aggressively lowered the interest rate, again, you are further away from removing the controls, not closer. The initial program said that it wanted to go to dollarization, let’s say “Ushuaia”, but it pointed to La Quiaca.

—Because what you generated was de-dollarization, not dollarization, it was the other way around. Today you do not have hyperinflation, but you have still high inflation rates, more similar to those of the 80s, with the need for a stabilization program also similar to that of the 80s. Here you need a fiscal, surplus program, as an anchor, which is , but also a financial program that lowers your country risk and opens your access to the credit market.

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—Going back to December 23, where did we come from?

—From a previous model that was unviable and perverse, because it was a model of gaps: exchange rates, rates, prices… Think that companies took all the cheap pesos that the financial system offered, because the interest rate She was very negative, to buy all the cheap dollars she could from the Central Bank, and then sell them in the market at careless prices. The original accumulation was extraordinary. This model emptied the Central Bank, which would never be able to buy dollars, and accelerated inflation.

—A market plagued by distortions.

—For companies that did not care about the level of activity or the cost, the only thing that mattered was the nominal value and how they covered themselves against the increase in nominal value. They only looked at inflation, the official dollar, the financial dollar, the rate, and the relationship with the regulator. The two most important people in a company were the financial manager and the public relations manager, because the only thing to do was get cheap dollars from the Central Bank at any cost.

—What is the main virtue of the current scenario?

—Milei’s commitment to fiscal adjustment. A very interesting commitment for politics, first because it is unprecedented, but fundamentally because society supports it. We are seeing that there is a much greater tolerance for adjustment than all politicians in Argentina believed existed.

—And the main defect?

—That to lower inflation the Government first tried to restore the dollar, but now it is using the dollar as an anchor. It is going too far, and by not giving flexibility to the exchange rate, it happens or what happened to convertibility. Here you respected the contracts, which for me was fine, but you had to build a demand for pesos. By delaying the exchange rate, lowering the interest rate, and increasing the Treasury’s short-term debt, the truth is that you generated distributive costs that were not homogeneous, because you split the retiree in half.

—How difficult will it be to break through the level of 5 points of monthly inflation?

-Very. In May, for inflation to be 4.2%, rates rose 0.8%. You had to lower the incidence of tariffs to lower inflation. Core inflation also fell, but less: from 6.2 to 3.7%. In June, we have tariff increases announced, which will impact the pocket in July or August. That will impact between 1.5 and 2 inflation points.

—How much do you calculate June inflation today?

—It gives us 5.7%. For July and August you also have pending increases in transportation. That is to say, you still need to recompose the relative prices. If you do not recompose the relative prices you have two impacts. One fiscal impact, and the other impact is the companies’ balance sheets. If you make the fiscal adjustment by accumulating debt that you create with bonds, and you do not record the interest on the bonds in accounting, you convert it into an accounting adjustment. Today Argentina has 40 billion dollars more in total debt between the market and organizations, which is what it had in 2019. That year it paid 3.4 points of GDP in interest and today it pays 1.7.

—The Guzmán restructuring has passed, the pesos that remain at a negative rate and the change in criteria for recording the peso debt, because today the interest is not recorded. Now, if you want a scheme with greater capital mobility, that is, less CEPO, the question you have to ask is what is the interest rate at which Argentina can be financed. Today in Argentina the country risk has dropped a lot, but it is still very high in a world of high rates.

The economist and Executive Director of EcoGo analyzes Milei-Caputo’s economic program and criticizes the Government’s embrace of the dollar as an inflationary anchor.

—And the attempts to reactivate demand?

—When you listen to them, if you close your eyes, you perceive an enormous Kirchnerist aftertaste. First, the promise that the salary will beat inflation and second that credit at a negative rate will expand consumption. When you ordered such an adjustment at the start of a government with a patient society, the truth is that it was to raise milestones to generate a program that lasts over time. Because the feeling is that you have created several bottlenecks here.

—The Central is not buying dollars in June, and the agreement with the fund itself tells you that your reserves at the end of the year are going to be less than what you have today. Pressure on the exchange gap is beginning to appear, even though you are throwing 20% ​​of exports into the cash market with settlement. Is it a problem already? Not necessarily, because there is still room.

—From afar, Milei-Caputo’s program seemed orthodox, but it is heterodox.

-Without a doubt. It has the heterodoxy of pragmatism. But the accelerated disarmament of the Central Bank is a heterodoxy that borders on malpractice.

—The IMF document following the eighth review of the agreement, which was published this week, seems to set very clear limits on eventual dollarization.

-Yeah. What the Fund says is we are going to go to a Peruvian-style coin competition. But be careful that this was an economy that was de facto dollarized, in hyperinflation, and Fujimori’s program, which among other things closed Congress, aimed at building a monetary anchor. They went to a monetary program, and built the credibility of the Central Bank, but it was a process that lasted many years.

—However, to get out of the trap, part of the Government is thinking about a new agreement with the Fund.

—A new agreement implies going through Congress, it implies accepting the conditions of that new agreement, and this type of exchange is not a type of exchange for a new agreement. All stabilization programs start from a recomposition of relative prices, and start with the dollar up, not down.

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—That document projects a 3.5% drop in GDP for this year, and a 5% increase for next year. Do EcoGO’s numbers and projections match this forecast?

—They are not very different. He thinks that the economy fell 8.5% in March, so there will be a rebound, which will be slow. The document projects for 2025 a 5% growth in imports and a 13% growth in exports, with a current account surplus. And then it predicts a trend growth between 3.5 and 4% annually, for the next 3 years. And they continue to have a surplus in the current account. Difficult.

—Next year you have almost USD 3,000 million of interest maturities with the fund, and in 2026 the capital maturities begin. That is, at the beginning of 2026 you need access to the credit market or a new program with the fund to be able to pay the capital installments.

—What should happen in the meantime with the real economy?

—There is a lack of very strong work on the systemic productivity of the economy, which includes deregulation, but also macroeconomic ordering. Our macroeconomic order continues to be that of convertibility. We have had inflation for 20 years, but the tax system is designed for an economy without inflation, and the financial system is designed for an economy without inflation. Today you see the fight between banks and fintech companies over the management of pesos, but the banks still do not remunerate the savings banks, in an economy that had 200% inflation… there is something strange there. And in several ways we are worse than a year ago.

—Today you have more infrastructure deficiency than you had a year ago, more provincial and municipal taxes than you had a year ago, you also have more national taxes, you have the country tax. Companies, even though they are very efficient from the inside, operate in the Argentine environment and costs, which are very high. In an unviable tax structure.

—The main lobby in Argentina is that half of any product is taxes, and that coexists with massive evasion. As Miguel Bein said, sometimes it becomes the main competitive advantage of an SME. This breaks the social contract, with the middle classes seeing the poor quality of public goods and also evading them. In this context you have to organize the State, not destroy it.

—When the president at the Llao Llao Forum praised those who flee capital, he received applause from that audience.

—The truth is that Argentina is a hostile country to live in, and a country where capital accumulation is ultimately associated with direct or indirect transfers from the State. As Miguel Bain also said, the greatest national sport is to extract all the pesos from the Treasury and all the dollars from the Central Bank. Capital accumulation is not defined in terms of long-lasting investment projects with stable rules of the game and a reasonable discount rate.

—How much impact will the approval of the Bases Law, scheduled for next Thursday, have?

—On the one hand, it is important that the Government shows political power. On the other hand, some RIGI measures, such as the free availability of foreign currency, objectively improve conditions for some sectors. But the key is whether a true export leap allows you to accumulate dollars, because currency competition in countries like Zimbabwe or Ecuador are not paradise.

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