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The advisor Federico Furiase, that works with Minister of Economy, Luis Caputo, maintained that to get out of the trap, four fundamental points must be met on which the Government is still working. After putting producers and businessmen who listened to him in context, Maizar Congress 2024 about the situation in which the country’s economy was, he pointed out that if this [la salida del cepo] would have occurred in December when he took office Javier Milei would have been a “calamity”. She clarified that there is no attempt to enter the loop to gain competitiveness by devaluing, since it generates greater inflation. And to lower taxes, the fiscal and monetary issue must be firm.
The economist closed the Maizar Congress together with the Secretary of Bioeconomy, Fernando Vilella. He highlighted that from January to April a primary fiscal balance and a financial fiscal surplus have been achieved that reflects the real anchor of the model that is related to fiscal matters. This It is related to adjustments in spending, where there is also the reduction of subsidies and increases in rates.
Asked about the release of the stocks, he said that the Government still does not have a forecast of when it would be defined. “To get out of the trap, four conditions must be met, such as inherited stocks, commercial debt, flow problems, the fiscal anchor and cleaning up the Central Bank’s balance sheet. [BCRA]which is the reserve level of remunerated liabilities. To understand that the exit from the stocks is given, it is that these four macroeconomic aspects are met and it will happen. when there are no shocks”, broad.
He added that it will happen when “there should be no devaluation, an increase in interest rates that implies a setback in this inflation process.” Accurate: “If we look from December to now and the inherited conditions, getting out of the stocks would have been a calamity, looking at these four aspects.”
He stressed that if today he got out of the trap with all the progress that the Government made on these fronts, it would not be appropriate. “There is still a risk, that is why we must continue advancing in the sanitation and balance sheet of the BCRA. Very good progress was made on the fiscal front, very good progress was made on the stock problem, as well as on the issue of flow, in the level of reserves and remunerated liabilities, because the Central Bank had 12,000 million negative net reserves. Today we are close to being at ground zero, but we still have to make a cushion. From the side of remunerated liabilities they fell by 54%, but progress needs to be made on the front of being more comfortable in the level of reserves to be able to get out of the stocks without problems,” she added.
Said As long as we continue to do our homework from the fiscal and monetary side, all inflation expectations will converge to that crawling peg Of 2%. He also indicated that inflation and the interest rate are converging and that means that each time the rate that is negative is closer to neutral and positive: “It is not a surprise for us, it was logical to have an appreciation of the exchange rate once time we did a overshooting of the type of departure.”
Clarified that Once you get out of the trap, you don’t go back, but with a firm fiscal anchor it becomes unbreakable: “This allows for a reduction in taxes.” He argued that fiscal and monetary duties must be done beyond the macro, in SMEs. He also explained that competitiveness is not gained by devaluing: “It is a lie. They have to understand that devaluation only leads to a higher level of inflation and that is a problem for all Argentines.”
The economist, who listened to questions from the public, insisted that You do not gain competitiveness by devaluing. “For your numbers it is doing your fiscal and monetary duties, which is what is being done, that will allow taxes to be lowered. This is the way, once we are firm to start lowering taxes; “A devaluation means generating more inflation, it is not a decrease in competitiveness.”accurate.
At Vilella’s suggestion, he provided “advice” to producers who have stored grains: “When you look at the macroeconomic incentives, the conditions are given. In December we saw that a real appreciation was going to come and the exchange rate gap was going to narrow as a result of the appreciation. Today the same thing continues to happen, there are no reasons to think about a devaluation. The nominal value is compressing very strongly, inflation and the interest rate are on track as long as the crawling peg and fiscal and monetary control, with which, and in recent [meses] We had the added bonus that international soybean prices increased. Even with this realignment of the dollar to Cash With Liqui there is a realignment in the price of soybeans of 13% in the last month, and fiscal and monetary control will continue to be very strong.”
