An adviser to Donald Trump told the President that making his program conditional on the arrival of new disbursements is “illogical” and “will lead to failure.” There was also criticism of the exchange rate policy from a former IMF official and a former Treasury undersecretary.
Warnings from Donald Trump’s advisor, Mauricio Claver Carone, did not go unnoticed in the Casa Rosada or in the Ministry of Economy. The former head of the Inter-American Development Bank He told President Javier Milei that if he expects a Christmas gift from the Republican candidate to free the exchange market, he is wasting his time.. This had previously been pointed out by a former IMF director and a former US Treasury Secretary.
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The government is betting heavily on a Donald Trump victory that will release fresh funds from the IMF and other financial institutions. The Black Monday that global financial markets experienced at the beginning of this week and that led to the country risk exceeding 1,700 points invites us to pay even greater attention to the chances of success of this movement.
The statements of Mauricio Claver Carone, who was the US representative at the Fund, president of the IDB and now serves as advisor to the Republican candidate, did not go unnoticed: “Gaining time thinking that they will get more money from the Fund is an illusion, it is illogical and will lead to failure. First, it doesn’t work that way. And second, Milei and Trump have no relationship,” he said at the end of last week.
In dialogue with Ambitthe former Argentine representative to the FundHector Torres, He considered that these statements should be taken seriously because “It would be very reckless for a Trump adviser to make such a public statement without having tested the waters first.”
Claver Carone’s was, until now, the last sign but not the first. At the end of July, former US Treasury Undersecretary Mark Sobel shared a note from the Financial Times Titled: “Milei’s honeymoon in the market ends as investors question the economic plan.”
The caption that the former White House official accompanied the article in the British newspaper is more than eloquent: “Time to float”. In Spanish it means “time to float”but in Argentine: “time to move forward with the release of the cepo.” It all happened in the midst of currency turbulence.
Is Mark Sobel speaking in a personal capacity? An economist who, due to his public office positions, had to come into contact with Washington on several occasions, explained that “Every time the International Monetary Fund or the White House want to send a message, since they cannot speak, they do so through a former official” and added: “These people never stop belonging.”
Warnings about dollarization
In addition to what has already been mentioned, there is a recent article by the former Director of the Western Hemisphere Department of the International Monetary Fund, Alejandro WernerIn the opening paragraphs of the note, also published in the Financial Times, he praised the progress made on the fiscal and monetary front, but at the end he warned: “Milei’s government needs to establish a clear commitment not to dollarize the economy and support its currency competition strategy”As if that were not enough, he asked that “the Central Bank allow the official currency to adjust to a more realistic and flexible level.”
These postulates seem like blasphemy in the current state of affairs, if even the Minister of Economy Luis Caputo He went out to spread through unofficial spokesmen that Argentina had weathered the financial storm calmly thanks to the continuation of the exchange rate controls.. At this point, the base scenario of some of the most important businessmen in the country is that “there will be restrictions for a while”. All of 2024 and 2025 too?
In the market, everyone is discounting that there will be a new program with the IMF. The question is whether there will be fresh funds, how much and in exchange for what. Hector Torres said that “Many people at the Fund think that everything is going well in terms of spending cuts, but they are worried because reserves are not increasing, in fact they are decreasing, the exchange rate is lagging and there are queues of Argentine cars in Chile to buy things.”
Source: Ambito