Buenos Aires (EFE).- The Minister of Economy of Argentina, Luis Caputo, announced this Friday the “second stage” of the stabilization plan of the Government of the president, Javier Milei, which consists of eliminating another cause of money issuance by the Central Bank (BCRA) for the interests paid by the liabilities of the monetary entity.
“We have three channels of monetary emission. One is the fiscal deficit, the second is the interest that the Central Bank pays on remunerated liabilities, the third is when the Central Bank buys dollars,” said Caputo in a press conference at the Ministry of Economy, accompanied by the president of the BCRA, Santiago Bausili.
Argentina advances with its economic plan
The Milei Government achieved a fiscal surplus of 0.4% of GDP in the first five months of the year, thus eliminating the first cause of monetary issuance, which served as a fiscal anchor to slow down monthly inflation of 25.5% in December from 2023 to 4.2% last May.
The second stage of the economic plan with the elimination of the monetary issue for the BCRA liabilities is announced after Congress approved in the early hours of this Friday the so-called ‘Bases Law’ and a fiscal package, an ambitious package of economic reforms that It is expected to allow it to consolidate fiscal balance.
“In the first stage, the money supply was closed due to the fiscal deficit, something that was greatly abused by the previous government and generated this imbalance and the inflation that we are experiencing,” said Caputo.
“In this second stage we are closing the tap on the second channel of issuance, which is the interest that the BCRA pays on remunerated liabilities,” the minister explained.
“We want to give greater certainty and even greater solidity to the economic program, so that in some way there stops being anxiety regarding when the exchange rate will be released,” Caputo acknowledged, in reference to the strong restrictions on accessing the currency market. changes that are generating nervousness in the financial market.
“Getting out of the stocks is a third stage,” he stated.
Monetary issue
According to Bausili, in order to eliminate the monetary issue for the remunerated liabilities of the BCRA, the entity will return the securities held in the Treasury, because the origin of these bonds was to finance the fiscal deficit.
“We are going to replace the remunerated liabilities of the BCRA with Treasury liabilities,” explained the president of the BCRA, who will meet with the banks holding these securities next Monday to make the transfer.
“In monetary policy, it returns or reintegrates a very important autonomy to the BCRA,” said Bausili.
For Caputo, this new stage of the economic plan, with zero fiscal deficit and zero monetary emission, “leads to a truly robust economic program,” “reduces exchange rate volatility” and “contributes to the process of disinflation.”
