The former Minister of Economy questioned the interventions to contain the price of the dollar and the lack of a real stabilization plan.
The former Minister of Economy, Domingo Cavallo, he hardly questioned the government for its improvisation in economic matters and the lack of a real stabilization plan. In that sense, He argued that the country needs an urgent monetary, financial and exchange reform, supported by free convertibility of the peso with the dollar as a fundamental pillar.
Through a new publication in his personal blog, Cavallo said that the paralysis that economic activity is suffering, mainly since March, does not respond only to the “attacks” of the opposition but also to unforeseen and improvisations dThe economic team, conducted by Luis Caputo.
Among the unpredictions he promptly criticized the lack of accumulation of reserves during 2024, a necessary condition to implement a stabilization plan, which for the economist still does not exist. At the same time, among the improvisations, the disarmament of the Lefis and the “abuse” with the lace, which caused a strong volatility in the interest rates and are affecting the credit, are affecting the credit, the main engine of the recovery at the end of last year.
The Government has as obsession the slowdown of inflation and for this it seeks to contain the price of the dollar with all the intervention tools it has at hand. And that is the main error of the ruling for those who knew how to be one of the economic referents of President Javier Milei.
“The error has been to have used the inconvertibility of the currency to achieve a faster inflation rate drop, applying change controls to the old way and dictating the official exchange rate without accumulating its own reserves and with very discretionary and erratic handling of monetary policy“, said the” father “of convertibility during the 90 ‘.
Domingo Cavallo Plan to normalize the Argentine economy
In that sense, Cavallo said that The main challenge forward is to implement a “monetary, financial and exchange reform that ensures the free convertibility of the weight and allow to function, without regulatory shocks, to a system of financial intermediation and local capital market with real interest rates that do not exceed the growth rate of the economy. “In order to normalize the Argentine economy, he said the following key points:
- The prohibition of monetary issuance to finance the fiscal deficit. It should only be affected for the purchase of reservations and operations in the secondary market of public bonds.
- Completely lift the exchange rate and declare the free convertibility of the peso with the dollar.
- Allow deposits and credits in dollars to be carried out under the same conditions as those in pesos (keeping a lace in the case of deposits)
- Financing to the private sector originated in deposits may be for credit card balances, personal loans, mortgages and loans to small and medium -sized companies
- The financing for investment, or working capital of large companies, must be provided through capital market instruments, inducing that the fixed -term depositors of great magnitude opt for quota parts of investment funds administered by the same banks
Source: Ambito
