After the devaluation that was applied after the STEP and with tall inflationary expectationsthe Government is facing a difficult August with respect to price variations, despite the fact that it has already closed agreements with companies to try to contain the increases. Is it possible to control inflation?
Private consultants have already begun to project that the Consumer Price Index (CPI) August and expect it could be in double digits in the eighth month of the year, which has not yet ended. This is a consequence of the devaluation of the peso that the government implemented after the choices STEP. And the great question is whether the measures announced in terms of prices and the disbursement of the IMF will serve the economic team in this scenario to contain inflation.
the economists Martin Kalos and Federico Zirulnik agreed, in dialogue with Ambitin which a key element will be the disbursement of the International Monetary Fund (IMF)that the Minister of Economy and presidential candidate for the ruling party, Sergio Massawent to look for Washington, where this Wednesday he has agreed a meeting with the director of the multilateral credit organization Kristalina Georgieva.
The directory of IMF must approve this Wednesday a disbursement for at least US$7,500 million agreed within the extended facilities program maintained by the international organization and Argentina.
Inflation: what measures will be key to contain it?
In this sense, Kalos who highlighted the importance of the Economy Minister and presidential candidate showing “initiative” and “driving” for “manage the crisis“.
“The most preponderant minister of this management, currently, is the candidate of the ruling party for president, with which, what he has to show is ability to manage the crisis with concrete proposals and that it is not sustaining, only insisting on what was done,” he said.
And he added, in this regard, that “Massa has to be clear about the measures that they are going to take from here to the elections, since decisions were announced little by little, which have not even been fully implemented in many cases”.
For his part, Zirulnik focused on the inflationary effect of the devaluation and stated that “the prices of many goods and services rose almost immediately.” He warned that if “all prices, including wages, rise by the same amount as the price of official dollarthe desired effect of the devaluationwhich is to diminish the dollar demandIt’s going to dissolve.”
The IMF disbursement
Along these lines, the economist stated that, if the IMF disbursementthe Government could continue to intervene in the parallel dollars so that the gap does not skyrocket, but warned that “it is very difficult for this to serve to contain inflation, in this context.”
Massa He confirmed this Tuesday, from Washington, that the amount of US$7.5 billion has already been secured and anticipated that with part of these funds it is necessary to cancel the commitments with CAF, China and Qatar, which facilitated the loans that were used to meet the maturities discussions with the IMF and that “the goal is keep accumulating reserves in a year, which is the most tragic for Argentina in economic terms due to the drought impact“.
He pointed out that this climatic phenomenon generated a imbalance in the relationship with the IMFbut that the Government is focused on continuing to develop financing without stopping the economic activity of the country while seeking to solve this problem of lower income of dollars.
price agreements
In this sense, he referred to the agreement that the Government announced with 337 companies to renew the agreement of Fair Prices for 90 days, the same as the sector of fuels liquids and the medicines. As Massa explained, this program consists of “the State ceding part of the taxes, on the one hand, and the companies, part of their profitability, on the other.”
For Zirulnick, the program Fair Prices “can help” to advance on the path of inflation control going forward, but he has his doubts, since he points out that “all imported and nationally produced goods, but which use inputs from abroad, as well as fuels and many foods, such as meat, are rising at a rate that is quite above that agreed 5%”. Thus, it seems difficult to achieve the objective sought.
Let us remember that, prior to the agreement of fuel prices, YPF It raised its values by 12.5%, to then freeze them until October 31.
For his part, Kalos stressed the need for clarity in the measures to contain inflationsince the price agreements in this context they have little credibility because it is difficult to think of freezing them or for companies to be tied to price increases well below the inflation“.
Source: Ambito
