– Yes, a social security reform is necessary, because there is a demographic dynamic that means that the current parameters mean that the system is not financially sustainable. The project aims to stabilize the pension deficit. We share that objective, because a social security system that is not sustainable, that is a spiral of growing deficit, at some point it will explode.
We made reforms in four pension funds in our government. In all cases, an increase in the minimum retirement age and other contributions by active workers was proposed. But it was not the only thing: the “cost” of the reforms was distributed among workers, liabilities, companies and the State. The problem with this reform is that the only ones who donate blood are the workers. That is the main point of our disagreement. A reform is necessary, but it is not.
– Can the consequences that the Broad Front warns be reversed in the future?
– Something probably. We believe that there are some aspects that are not at the core of the reform but are important for some vulnerable groups, such as what has to do with pensions in cases of disability. In that, this project is too harsh and I would agree that in a future government it can be reviewed. It is clear that this project implies a very long transition, so it is not that you have to go out “like crazy” to turn things around.
– The project is generating a strong discussion within the government coalition, what do you think about it?
– It’s part of a game where they’re going to end up monolithically voting for the project anyway. The partners of the coalition look for in this type of negotiations some question that does not necessarily have to do with the project. I do not assign too much political salience to these questions, it is a game of tug of war.
– What is your opinion on the reduction of personal income tax and IASS?
– This reduction has not even been significant, it is more of an electoral political announcement. The government does nothing more than return the tax increase of the previous two years.
– Should I have been older?
– With the expectation that was generated, without a doubt it should have been higher.
Monetary policy in Uruguay
– What considerations do you make regarding the decisions that the government is making regarding monetary policy?
– He central bank makes a major mistake by keeping the interest rate too high. There the BCU starts from a wrong diagnosis.
– Because?
-Because, beyond its real impact, it operates as a signal that seeks to cool credit and consumption so that there is less pressure on prices, and the issue is that prices have risen last year for reasons of imported inflation, not because Uruguayans consumed like crazy. That is, it was not on the domestic demand side. Therefore, the government tries to combat something that is not happening.
– The latest Copom report states that until expectations converge with inflation targets, the rate will be maintained. That will happen?
– I think not at the moment. And it’s not going to be because one sets the interest rate at 11.5% that expectations are going to converge. But we must also evaluate this issue with the exchange issue, today the exchange rate in Uruguay is in the basement.
– What order of relevance do you assign to that?
– A lot. We have a very significant level of exchange rate delay, we are very expensive in dollars. When we were in government, the strategy was for the evolution of the dollar to accompany that of the world. We did that by intervening in the market: we tried to sustain the exchange rate by buying dollars in the market when it was low and we softened the rise by selling, like a cushion against the volatility.
This government has not intervened for a year and a half by buying a single dollar in the market. We believe that we must return to the strategy of selective and intelligent intervention, which gives signals. The Central Bank is at fault, it should intervene in the market.
The inmate of the Broad Front
– The image of the government is falling in the latest polls, is the Broad Front being able to capitalize on this discontent?
– The chain of embarrassments and scandals affects the credibility of the government. But it has also been exposed that wages and pensions have fallen, prices have risen and there is more poverty. The government has collapsed in the polls and the discontent is notorious. Now, this does not automatically mean that all those people come to support the Broad Front. Only now, in these months, is the Front beginning to capitalize a bit on all that discontent.
– Fernando Pereira said that it is necessary to establish clear rules to define the formulas of the Broad Front for 2024, how should that be settled?
– We had an experience that was not good in the previous election regarding this issue. So, it’s okay to raise that concern. We have to have taken that lesson so as not to repeat mistakes. The Front is in a leadership renewal process, therefore they are also decanting the three, four or five main names that will be able to compete. It is being a healthy process.
– In this renewal, do you think that the discussions that are taking place are being processed correctly?
– The process in general is going quite well, although some mistake is always made. Two or three mistakes have been made, but corrected in time. There is a more powerful political direction.
– Do you feel prepared to be a candidate?
– Yes, I feel prepared. But the definitions will only be taken in April, on the basis that our space, Sereignist summons, it has to be expressed electorally, because we have differences. It is healthy for the Broad Front that the different profiles express themselves in an internal one. Afterwards, we will all go after the candidate chosen by the Frente Amplistas.
Source: Ambito
