“It is difficult for me to imagine that this government achieves a better alternative scenario, with Guzmán or with any other economy minister who can replace him with the current political context. If I can imagine much worse results if the change of minister were made to accommodate the ideas of those who surround the Vice President,” launched without mincing words.
According to Cavallo, the simulation was based on the assumption that the Government achieves the fiscal and monetary goals of its macroeconomic program, “always thinking of these goals as percentages of the gross domestic product at current prices.” Although he considered that this “is not what the IMF usually admits in its programs”, given the high inflation “it is very possible that this time the IMF technicians admit measuring these goals in percentages of GDP.”
The economist discounts that the Government of Alberto Fernandez It will not be able to meet the inflation targets agreed upon with the IMF, nor with those for the accumulation of foreign reserves, but it maintains that it will work to avoid falling into arrears with the institution.
For this, the Government must “increase the rate of devaluation in the official market (which should be between 4 and 5% per month), it will have to raise the intervention rate of the Central Bank (and the rate that the Treasury will be willing to pay to place internal debt), to no less than 4.7% per month , that is, 56% annual nominal or 73% annual effective”.
This will be accompanied in your opinion by “a sharp increase in electricity, gas and transport rates” with the aim of reducing subsidies by 0.8 of GDP compared to 2021.
“Alternatively, it will have to reduce capital spending or some other item in the budget, until completing that reduction as a percentage of primary spending,” he adds.
Cavallo also estimated that the economic recoveryIt will continue and could even reach the 4% annual rate estimated by the IMF in its latest report in April. But to this positive data, the economist compensates it with another negative one for the workers. From his perspective, “even though the unions are demanding raises of between 50% and 80% for the next 12 months (…) during 2022 wages will end up rising 60%”.
Source: Ambito
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