The Minister of Economy, Luis Caputo, took advantage of his participation in the IMF assembly in Washington to meet with investors and provide details on how the economic plan will continue. The head of the Treasury assured that inflation will continue to decline, clarified that the unification of the markets is not imminent and said he has full political support from Javier Milei.
Accompanied by the Secretary of Finance, Pablo Quirno, the minister led a private meeting that was organized by the JP Morgan bank and attended by some 400 market representatives.
Downstairs, in a room full of investors, bankers and financial analysts, the Minister of Economy sat in the center of a long table and after the formal presentations He explained what he found when he took charge of the Treasury Palace, where the adjustment program is going and what President Milei’s support is like.
“The inheritance we received was even worse than we expected. No, there are no doubts. I can’t tell you the level of things we witnessed. Once we come to power, it’s really hard to believe. It’s hard to say without making us all feel bad. But the reality is that almost everyone expected a crisis to occur. When I said that I was going to join the President, everyone told me, don’t be the first, because the first one is sure to be the one that also burns,” Caputo described at the beginning of his presentation.
And he added: “Essentially, we are trying to fix all these problems by being extremely orthodox on the fiscal side and also on the monetary side. “The tax side seemed like an impossible task.”
“Even the most respected economists said that it was impossible to reduce the fiscal deficit more than two, two and a half points in a year. And we were able to reach a financial surplus in the first month. And the reason why we put so much emphasis on this It is because, as everyone knows, as policymakers in Argentina, we do not have the same tools as in any developed country, because we do not have credibility. So it does not matter if I come and say that we are going to reach a fiscal surplus in two years, or that the Central Bank is not going to finance the Treasury anymore, people will simply not believe it. They will say, okay, let’s see if when they have 100,000 people on the street, let’s see if they can achieve it. Let’s see when a bond expires, yes. fail to comply or ask for the money from the Central Bank,” he emphasized.
The minister defended his strategy regarding the different exchange rates. “We are going to fiscal balance that serves as a very strong anchor even though some try to undermine it. The second thing we had to do, and it is vitally important although I know there was a lot of criticism at the beginning, was to opt for very high and very severe negative real interest rates. We had no choice, if we hadn’t done it we would probably already be in hyperinflation,” he noted.
JPMorgan’s call to listen to Caputo was titled “Argentina: stabilization, regulation and sustainable growth.” In this framework, the minister’s obligatory comment was linked to inflation and its evolution.
“Inflation will continue. And the only reason is because Argentines have this tendency to think that everything is going to go wrong. So what happened? Almost everyone set the price of their products in the high-street store at one dollar to 2,000, because that’s what all the economists in Argentina told them. This goes to 2,000 per dollar, or 3,000. The prices were set at a very high exchange rate that did not happen,” said the head of the Treasury Palace.
Caputo said they expected inflation to be “significantly lower than what economists were predicting in Argentina. And they predicted 30% in December; 30% in January and 20% in February. Inflation ended up at 25% in December. ; 20% in January; 13% in February, 11% in March. And it will most likely be back to single digits in April.”
“The most important message I want to convey to you is that we are not going to abandon these policies, no matter what. And believe me, I have not seen anyone in my life with a level of conviction like this President has. I highly commend the President for this, because being there, I know that the normal reaction is to back down when things get tense, particularly when you don’t have political support. This President will never back down,” he stressed.
Source: Ambito
