“Exchange control must be limited to commercial transactions.” “If the latter were left at the free exchange rate, there would be a dangerous inflationary impact. But all other transactions, such as hoarding, tourism, payment of services or debt repayments abroad, must run through the free market.”, he added. All service charges could also be incorporated.
On the other hand, Cavallo referred to the problem of the debt in pesos: “No measure that means a new violation of the property rights of those who have trusted the Argentine currency, helps to create a climate of stability. You have to find a way to be able to comply with your obligations, whether in pesos or in dollars, ”he commented, and said that compulsory transformations of government liabilities must be ruled out.
“Passive ‘magic passes’ are useless. The fiscal situation should be alleviated by reducing budget expenditures and by means of deregulation and honesty processes. It is not possible to continue with tariffs for public services that do not cover the costs, and require that the Government later pay subsidies. Or companies that have been re-nationalized to generate huge losses that the State must finance,” he added.
Another proposal that he mentioned again is the possibility of returning to convertibility, allowing the convertible peso to be used against the dollar. “And at the extreme, you can also think of a total dollarization of the economy, as Ecuador, El Salvador or Panama did.”he expressed.
Cavallo said that the program did not “fly through the air.” “The program ‘was blown up,’” he declared. “Convertibility is over because there was an institutional coup to remove the president [Fernando] De La Rúa and to get me out. The objective of those who promoted it was to forcefully pesify the economy, ”he said and concluded that it meant the worst imaginable redistribution of wealth and income.
Finally, the economist anticipated high inflation until 2024.
Source: Ambito
