Regarding the immediate future, Cavallo announced that “in economic matters, our forecast for 2023 does not foresee progress in eliminating the fiscal imbalance or in relative price distortions, but, at the same time, it argues that the imbalances will not worsen.”
Electoral promises 2023
Regarding the electoral promises for this year’s presidential elections, the former member of the national Cabinet pointed out on his website: “The announcements of the main opposition candidates about a great change in the organization of the economy that includes the total elimination of the fiscal deficit and monetary issue help reduce the risk of a hyperinflationary episode such as the one that occurred in the transition of the government from President Alfonsín to President Menem in 1989”.
Along the same lines, he warned that “at the same time, the presence of strong organized groups of beneficiaries of social and economic subsidies feeds the skepticism of economic agents about the feasibility of a successful rapid reform process“.
During his analysis, Cavallo also referred to the future of two of the main macroeconomic variables that concern Argentines: “We forecast that in terms of inflation and growth 2024 will not be much different than 2023.”
The former Minister of Economy also announced that “the possibility of strong disinflation and the start of a process of sustainable growth is contemplated for the second half of 2024 and, above all, for the year 2025.”
In turn, the economist added: “The big difference will speak out about the organizational and microeconomic reforms that will emerge from the elimination of exchange and price controls, elimination of subsidies, reprivatization of companies that were nationalized during the Kirchner governments and the reform of the monetary system, to avoid excessive issuance in the future”.
What did he say about the dollar?
For the economist, the opposition will emphasize “recovering the climate of stability of the ’90s.” In this sense, “in the need to produce a rapid fiscal adjustment and introduce a monetary reform that gives a crucial role to the dollar as legal tender, as happened under the convertibility plan.”
“The proposals range from the legalization of the use of the dollar in competition with the Peso to the total dollarization of the economy,” stressed.
The main economic reform is the end of exchange controls and the unification of the exchange rate with the dollar stabilizing at $500. “It would be an outcome like that of the reunification and liberalization implemented in December 2015 by the recently promulgated Macri government when the official exchange rate was 9 pesos per dollar and jumped to 13 pesos per dollar,” he explained, although he avoided opting for a new experience of convertibility or one of dollarization.
By way of conclusion, Cavallo announced: “Most likely, the reforms that will take place after the change of government in December 2023 they will look much more like the nineties than those that prevailed from 2002″.
Source: Ambito
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