“I don’t know if upon the arrival of the new government there was a risk of hyperinflation if the stocks were not lifted,” the economist began by saying. Marina Dal Poggetto at the 41st IEFA Congress.
The director of Eco Go pointed out that the economic team chose a pragmatic path given the options that existed, which were “restructuring or liquefaction.” Thus, the analyst referred to the options that the Government had to resolve the problem of the liabilities of the Central Bank (BCRA).
Three inconsistencies in Milei’s economic program
But he warned that, according to his vision, “the program begins to show contradictions in the scheme.” In that sense, he mentioned that the 80/20% settlement system “is a big drawback because it generates the need for a very strong recession to continue buying dollars.”
He said that, although at first it could be read as putting wheels on the bicycle and then taking them off, the problem is that it seems that they are going to leave them on for a long time.
Likewise, Dal Poggetto pointed out a conceptual error in President Javier Milei’s reading when he says that it is issued to pay the BCRA’s liabilities. “You are not issuing more to pay the quasi-fiscal deficit. There is no real emission,” he emphasized and warned that It is a risk to transform all passes to lecapsas the economic team is doing.
And finally he said that “Another inconsistency is the sequence of the interest reduction with a devaluation rate of 2% monthly”.
What should have been done according to Dal Poggetto?
Regarding how to rethink this scenario, Dal Poggetto assured: “Once inflation passed 100%, as it did in 2023, we had to analyze the experiences of the 1980-1990 decade to see what works. The only thing that worked was Rodrigazo today was Convertibility.”
The economist pointed out that the Government seemed to be going in a similar direction when relative prices were changed with the strong devaluation, but that inflation far exceeded the exchange rate, which remained behind.
He acknowledged that “the president is right that productivity is a problem” but emphasized that setting inflation at 2% as the Government seeks is very complex and that It was necessary, after the initial stock, “to have a smaller exchange rate delay, to be less drastic in lowering rates and to draw up a financial program that does not depend solely on recirculating the pesos from the BCRA to the Treasury.”.
“My feeling is that this path has many inconsistencies and is not the best,” said Dal Poggetto.
ABECEB highlights the macro corrections
From alphabetfor its part, Mariana Caminopresident of the consulting firm, highlighted that going forward, the Government chose to deepen inflation control at the cost of lowering activity.
He said there are doubts about what the path and speed of recovery will be like. “It is true that the scheme today works with stocks but there is a positive view of what has been done so far”he acknowledged.
And, in that sense, he considered that It is not a stabilization program due to the inconsistencies it poses, but “the micro is attentive to the macro corrections that are being observed”.
“There is some calm in the financial market that makes investors anticipate a recovery scenario,” Camino said.
For her, The doubt is today in the Bases Law forward. And he said that this will be key to consolidating the recovery. “The businessman who looks at the long term has his focus on what will be the difference in the opening of the economy and what will be the scheme that is proposed to improve business dynamics”said.
He highlighted, for example, that salaries in dollars today give an opportunity to the service sector, for example. “Some sectors are showing some recovery at the margin,” she noted. But he anticipated that for this to be consolidated, the economy must be opened and agreed with Dal Poggetto that there are still doubts about the path to follow.
Source: Ambito
