“We are still very far away” that the conditions are in place, he said, and took the opportunity to question those who proposed removing the stocks from day one. “If we had done it, it would have been a disaster. If we took it out today it would be inappropriate,” he said, and highlighted the improvement in go from “the calamity” left by the previous government to the current condition.
Luis Caputo affirmed that with a new disbursement from the IMF the exit from the stocks could be brought forward
“Today we are 75% away from the normalization of flows and stocks. A lot has improved in these four months, even more than we had thought.“, he stated, although he acknowledged that in the BCRA’s restructuring “it is the one that we are furthest from where we have to be” which makes it difficult to set a date. “We are going to do it when we are sure that there will be no surprises”he insisted.
““If today we entered into a new program with the (International Monetary) Fund that would eventually involve new disbursements, then that ratio of remunerated liabilities and reserves would be at a more reasonable level.”said the minister to the audience.
Regarding the relationship with the IMF, the minister highlighted that the review of the previous program “went very well” and now “we are going to begin the second stage of the program that includes this topic. That is to say, we are going to start negotiations with the Fund soon, now“.
Regarding the evolution of the exchange rate, Caputo He denied that there is an exchange rate delay, unlike what some economists propose. “I don’t perceive (exchange delay). In economics there are different opinions but I don’t subscribe to even half a paragraph to that,” he said and considered the comparisons with the exchange rate of the last government “absurd” since the economy “was terrible” and “In five months we went from that situation to fiscal balance, trade and current account surplus.”
He also questioned those who carry out comparative analyzes between Mauricio Macri’s government and current conditions. “At that time, even leaving the stocks, there were 6 points of fiscal deficit and 2 points of current account deficit,” he recalled.
In any case, he acknowledged that “there is a lot of divergence” on the issue of prices, despite the fact that some values fell due to the fiscal improvement and the slow fall in inflation. “And when you look at salaries in dollars, although they are double what they were in the previous government, today they are at a low level,” he said.
“It makes no sense to validate the forecast error (of the economists) with a devaluation. That is what Argentina has always done. It is nonsense. We have to gain competitiveness by lowering taxes and not devaluing. That is the mistake that was made always,” Caputo continued. And he considered that the recurring devaluations that the country had throughout its history were the result of macro imbalances.
Then the minister said that It is “important” to explain the process that the country is going through so that “people, and in particular businessmen, understand that it is an enormous feat to have gone from hyperinflation to having mortgage loans in five months.”and it is not a coincidence but a logical consequence of what was done.”
The fiscal balance and the results obtained in the first months of government allowed the Government to stop, at least for the moment, the increase in energy rates. In this regard, Caputo explained that due to the improvement in public accounts “We could afford to give the middle class a break and also contribute to the disinflation process.”
“In terms of rates, they are classified as N1, N2 and N3 and businesses. We had updated N1, which are high-income, and businesses. N2 and N3 by law we could not do it more than what we had done. “We did not want to update N1 again and businesses without touching N2 and N3 that are paying 5% of the rate”the minister pointed out.
Luis Caputo on the coin competition: “It will be possible to transact in both pesos and dollars”
The head of the Treasury Palace explained that the coin competition, the objective they aim for with the president Javier Milei, is “the coexistence of the peso with other currenciesparticularly the dollar because it is the currency that people choose here. “It will be possible to transact in both pesos and dollars,” he clarified.
In that sense, he stressed that a measure of this style will not push the value of the dollar to figures close to $8,000, as some economists estimated. “The president was in charge of clarifying a thousand times that it was going to be done at market value,” he said, and not in relation to the reserves and liabilities of the BCRA.
According to the head of the Economy portfolio, currency competition will allow “guaranteeing exchange and monetary stability” to bring inflation to a “normal country” value. “What it will do is solidify the disinflation process,” he added.
In this regard, he valued the task of Santiago Bausili, holder of the BCRA, by channeling the sanitation of the entity and implementing the contraction of the interest rate, a decision that goes against the grain of what usually happens. “In any normal country, when they want to lower inflation, the Central Bank raises rates. In Argentina something particular happens, in a context like the one we inherited, raising the rate is inflationary because in Argentina there is no credit,” he said, which is why he justified the rate reduction.
Caputo affirmed that dollarization “is a goal” but first they will move forward with currency competition
About dollarization said that “it is a goal”but initially progress will be made with currency competition, which will imply, according to the scheme designed by Economy, leave behind monetary issuance to cover deficits or for paid liabilities, he said Caputo.
“The remonetization of the economy is going to happen more through the influx of dollars. In Argentina there are many more dollars than pesos. The remonetization in dollars will probably be higher. The scarce good is going to be the peso, therefore those who are waiting for a devaluation to return cannot be further away. “There will not be an increase in the crawl,” he said regarding the speed of evolution of the exchange rate.
The goal, he said, is return “the inflationary tax that they have charged so much to the people” and “that the economy recovers as soon as possible.” In that sense, he pointed out that the team he leads Javier Milei is focused on continuing with the fiscal balance to lower taxes and stressed that “today the conditions are in place to lower taxes” but it is necessary “convince the business community more of that” so that the activity starts.
Regarding the recovery of the economy, he said be “super optimistic” and expressed that it will occur “in a V shape”. “There are already signs of recovery. On the income side, pensions, allowances, salaries are being recovered…” he said and He announced that “as we manage to continue lowering inflation, they will recover even more.”
At the end he did not hesitate to assure that The current situation is “an opportunity” for the country. “See it as an opportunity because it won’t happen many times; probably never again. We have to build the path out of this together,” he concluded.
Source: Ambito
