The former minister warned that after the elections, the government should eliminate the stocks, allow the flotation of the dollar and apply a reservation purchasing program.
The former Minister of Economy, Domingo Cavallosaid the national government must completely release the exchange stocks and allow a transitory leap of the dollar accompanied by greater inflation, ensuring that in a few months both variables will be stabilized. He also argued that The Treasury and the Central Bank should execute a reservation purchasing program to guarantee the payment of the future debt.
Cavallo recalled that the current economic situation resembles which Argentina lived at the end of 1990 and early 1991 under Menem’s mandate. “There are some very interesting similarities between the first 20 months of the Menem government and the first months of the Milei government“He explained. He pointed out that both inherited” a catastrophic economic situation, “they applied public spending settings and sought to contain inflation by eliminating the fiscal deficit.
The former official explained that “At least, all restrictions to operate in the exchange market must be immediately eliminated” and “The exchange rate should float without any bands“According to his intuition,” this is what will end up “after October 26.
In addition, he assured that the intervention of the United States and IMF will influence the adoption of measures, even if the government would not want to implement them: “They will put as a condition that changes in monetary and exchange policies necessary to overcome the crisis are instructed“
Domingo Cavallo former Foreign Minister of the Argentine Nation
Mariano Fuchila
Cavallo recommendations to stabilize the dollar and economy
He also explained that “The most important provisions that the new monetary, financial and exchange legislation should contain are the following:
- Prohibit monetary issuance to finance the fiscal deficit of the Nation, the provinces and municipalities.
- Allow only monetary issuance To buy reservations and open market operations in secondary markets of public titles.
- Declare the Free Convertibility of Weight and prohibit change controls.
- Allow the Financial intermediation in dollars (and any other convertible currency) in the same applicable conditions to the convertible weight.
- Establish that banks can receive deposits in Any convertible currency And they can provide those funds by keeping a lace that will establish the Central Bank.
- He Financing to the Private Sector originated in deposits may be for balances of Credit cards, personal loans, mortgages and loans to small and medium -sized companies.
- The financing for investment or working capital of large companies must provide through capital market instruments, inducing that the most magnitude fixed depositors opt for shareholding of investment funds administered by the same banks.
“The Central Bank, in addition to managing bank lace, may carry out open market operations in secondary markets, both with titles in pesos and with dollar titles, to control credit expansion in pesos and dollars”Cavallo concluded.
Source: Ambito
