“When one evaluates an agreement with the Fund, it is placed on the scale of very bad, horrible, bad or not very bad. Now, if one looks at what the IMF has done in recent years or even the Fund manual where it grants financing for ten years , Argentina came out with an agreement that does not have the typical structural reforms that the Fund asks for, that is a political merit of the government”, said Agis in dialogue with Gustavo Sylvestre. At the same time, he affirmed that unlike previous programs of the Fund, the Deficit reduction occurs via growth and not through spending adjustments.
“The Fund with Mauricio Macri departed from its technical standards to give it US$57 billion, here it departed from its technical standards so as not to ask you to put the economy into a recession.”
2. No alternatives
Regarding the resignation of Máximo Kirchner and the disagreement of a sector of the Frente de Todos with the pre-agreement reached, the economist expressed: “The frustration on the part of the government has its reason for being because something that the Cambiemos government resolved in five minutes, now we are going to to try to solve it in 2035” and added: “I did not hear in any field any reasonable alternative to this”.
Later, he compared the program reached with the one signed by Néstor Kirchner: “It surprises me because not long ago the vice president herself said that when Néstor Kirchner had to sign an agreement in 2003 it was because we fell out of the world. What Néstor Kirchner signed with him the Fund itself, included a pension reform. He was against the wall, he signed an agreement that was not good things for the country to buy time and when he had the money, he got rid of it. Nestor was in default with private creditors, not with the Fund” and reaffirmed: “He got rid of it, he didn’t stop paying it.”
3. Investments
During the analysis, Agis mentioned the agreement reached yesterday between Argentina and China for the construction of the fourth nuclear power plant in the country. The project is part of the Nucleoeléctrica Argentina Action Plan, approved by the National Executive Power on June 23 of last year, and involves an investment of more than US$8 billion.
“It is no coincidence that yesterday the governor of the Province of Buenos Aires announced the creation of Atucha III, it is no coincidence that this announcement comes four days after the agreement with the Fund. Even the Chinese who are communists asked you to settle with the Fund. China does not fight with the Fund but tries to dominate it. I would have loved for the Chinese to tell us ‘take what they owe the Fund, pay me in 20 years without asking for anything in return’, but that alternative was not there”.
4. Resort to international organizations?
One of the criticisms mentioned in the internal government was the possibility of not paying the debt to the Monetary Fund and resorting to international organizations. However, the economist explained that the option of default with the Fund was going to generate a drop in financing, a contraction of the economy and an increase in the dollar. “The strategies that take time you could not afford to use them because you are financially complicated”
“Today you have US$2 billion in reserves. When you say don’t agree with the IMF because if not the poor are going to have a bad time, the poor have a worse time if you have a dollar at 200 pesos,” emphasized the economist.
“The agreement is not bad, the bad thing is having the Fund inside. The challenge of the economic team is to continue the growth of the Argentine economy, this agreement is not a brake on the economy. There was no real better option than the agreement with the IMF,” he concluded.
Source: Ambito
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