The issue has been the subject of ongoing analysis, both by the president and by the leadership of the Ministry of Economy and the Central Bank. From these analyses it follows that it would be “risky” remove the restrictions now, as it was learned Scope. The President assured that “It is false that you cannot grow with a clamp.
On the same day as the Head of State’s speech, in the afternoon on the 170th anniversary of the Grain Exchange, the Minister of Economy, Luis “Toto” Caputo, He also referred to the cepo. “I know that the restrictions are keeping you up at night, and so are we, but it is not a question of rushing things or doing them wrong. What we have to understand here is that we are ending the most distorting tax of all, which is the inflationary tax,” he asserted.
Official sources acknowledge that could last for the rest of the year, If the conditions for lifting it are not met“since we are not willing to risk what we have achieved so far,” with reference to the drop in inflation and the rebound in activity.
According to different scenarios outlined by the Governmentwould be necessary between US$10,000 million, as a minimum, and US$15,000 million additional in the BCRA reserves to be able to move towards a smooth release (today gross reserves are around US$27.5 billion).
However, the Government does not aim to accelerate the accumulation of reserves, because it does not want to jeopardize the fall in inflation, the recovery of activity and employment, “even if the International Monetary Fund requests it,” according to statements made in government offices.
Furthermore, a large part of the deposits in pesos in the financial system correspond to companies that have pending payments with foreign countries (profits, royalties, imports), according to specialists. If there were no controls, there is a risk that these resources would quickly be used to buy dollars to settle these commitments, generating tensions in the exchange market.
Restrictions
In his speech today, the President devoted several paragraphs to the exchange restrictions. He said that “no one wants to get rid of the currency restrictions as much as I do.” But he also stated that “Removing the patches without first solving the underlying problems would worsen the crisis we inherited.” And he warned: “We don’t care about pressure, wherever it comes from.”
Milei made it clear that as the Central Bank’s balance sheet becomes healthier, the exchange restrictions will be removed. He did not mention dates and said that the restrictions will be removed “when we have definitively cut off the issuance of money” and when “all the surplus money” has been eliminated.
Furthermore, he stated that “It is false that you cannot grow with a clampis a fallacy. There is a recovery in pensions and real wages, that will increase demand and is part of the rebound.” In his speech today, the president dedicated several paragraphs to the exchange restrictions. He said that “nobody wants to get rid of the currency restrictions as much as I do.”
Precisely this Wednesday the INDEC announced the Salary evolution in June which shows progress in real terms, as they grew by 6.2%, against an inflation that was 4.6% in the same period, thus stringing together three consecutive months of recovery.
Caputo Bag of Cereals.jpeg
Noting that the convergence between parallel exchange rates and the official is being given from the top down (and not as historically, it was in Argentina, from the bottom up) was emphatic in stating that “We are not willing to devalue to ruin the Argentines, We are going to work on changing the levels of productivity so that Argentines do not have to become impoverished. “because of the mistakes of poor quality economists and governments of very poor and worse caliber.”
For the President, the priority is maintain a zero deficita policy that will be reflected in the next budget project, as anticipated Scope.
The Minister of Economy, meanwhile, admitted that “We have never had a president with the conviction that macro order is the answer to the ills we have been suffering for more than 100 years. We have a President who is fully convinced that we will not deviate one bit from our fiscal rule.”
In this sense, the official policy contemplates that, if for some reason the income were underestimated and in practice the resources of the State were higher than those anticipated, These surpluses will be used to lower taxes and not to increase spending, as has been done historically.
Source: Ambito
