In a few days, we will begin to know the results of the private consultants regarding the evolution of prices in May and everything indicates that this index would be above the April data, which was at 8.4%, according to the National Institute of Statistics and Censuses (INDEC). It seems that the economic team is finding it increasingly difficult to face this threat, which is why there is much debate regarding its causes and how to combat it. However, for the economist Claudio Scaletta, is that, “the fact that we continue to debate the causes of inflation, perhaps one of the reasons why we have inflation.” This is what he points out in dialogue with Ambitin a talk in which he makes it clear that, by not having identified the real problem, it becomes very difficult to solve it.
Scaletta mentions that, within the framework of this debate on inflation, many voices point out that it is a multicausal phenomenonbut he assures that he has I disagree with these kinds of statements.. According to his view, it is “a phenomenon of movement of the basic prices of the economy, which are wages, rates and the dollar.”
In this sense, he ensures that, in the local economy these values are off and that is why it is said that we need to “adjust relative prices”, the relationship of basic prices to each other. Thus, he explains that, “if in order to maintain the prices of the tariffs it is necessary to resort to a mass of growing subsidies, it is obvious that there there’s a mismatch that can’t be sustained”.
A stabilization plan is needed
And of course, He mentions the dollar and identifies it as “the main problem of the present.” It happens that Scaletta observes that the US$20 billion less that will enter the country this year due to the drought were the coup de grace to sustain its value. And that is why it is said that a stabilization plan is needed. But what is stabilization? “That’s it, accommodate relative prices,” he replies.
And one of the great problems that the Government has in this sense is the fact that, in the local economy, in which the currency has lost its function as a store of value, all the surpluses end up, sooner or later, in the dollar, “which affects its price and, therefore, the set of prices”.
Likewise, the analyst states that, when inflation goes from high to very high (that is, as is the case at this time, when it is around 7% or 9% per month), the phenomenon is completely different, because inertia and the speed of contract and price adjustments are accelerating.
“That – points out Scaletta – leads us to conclude that the policy to follow is a “shock stabilization”. But he acknowledges that the economic team is in a trap right now because he indicates that such a plan needs several things to work:
- The first is a lot of political power.
- The second is to have a broad social consensus.
- And the third is time.
Thus, “it seems clear that the government, a few months after the PASO and with problems of internal cohesion, does not have any of these three things”, so he anticipates that stabilizing will be a task for the government that takes office in 2023.
The government does what it can do
“Whether they know it or not, society is going to vote on the form the stabilization program will take and how the inevitable costs of that program will be distributed,” Scaletta sanctions in this regard. So consider that the government is taking all the measures it can because, given the context, the degrees of freedom for economic policy are quite low.
And, in this context, he assesses that the Minister of Economy, Sergio Massa, is doing what i could do. “The only criticism I would make of him is that, perhaps, he did not take advantage of the opportunity to implement a stabilization plan as soon as he took office, when he had more power and time,” he observes. But he reckons the reason he didn’t do it was because the outcome of a stabilization is never assured.
Thus, he posits that Argentina’s real problem today is being in debtbut he assures that he sees “a government desperately trying to avoid the development of an external crisis” and affirms that the evolution of the dollar will be the expression of the result that is achieved in this task of avoiding it.
Source: Ambito
