The correction of exchange delay that would lead to dollar from its current value to 45 pesos, in line with the fundamentals of the exchange rate observed by the Central Bank of Uruguay (BCU), would entail a level of inflation close to 9%, warned the director of Ceres, Ignacio Munyo.
The executive director of the Center for Studies of Economic and Social Reality considered in dialogue with Radio Montecarlo that the CPI, which has been within the target range for a year, is at “unprecedented levels” and argued that they are explained by “a ironed dollar for a long time”.
“If the models are analyzed, the dollar would be at 45 pesos and would not leave the exporters happy, while the inflation would reach 9%, levels similar to those of previous governments,” he explained. Munyo.
It is worth remembering that the Rural Federation claimed that the dollar be updated to 58 pesos and, otherwise, he demanded from the government a tax relief, so the vision of some sectors is that of an even higher exchange rate.
The goal of the Central Bank of Uruguay is to lower inflation
The economist admitted that “the decision was made to prioritize inflation” and considered that “it is good that it is lower and that the objective of the range of the BCU”, because that translates into several improvements.
Among the benefits, he listed “a lower internal price increase, a gain of real salary, higher household income, increase in domestic consumption and record sales of cars and in shopping centers.”
In this regard, he assessed that while in the last two years the purchasing power of Uruguayans in dollars, “the exporters complain because Uruguay With this dollar it becomes a very expensive country.”
“It is generating a subsidy from the export sector to the non-export sector, which is what made the country grow and translated into a significant number of almost 100,000 new jobs,” Munyo highlighted and specified: “95% was in companies that work in the non-tradable sector and they are not affected by the low dollar.”
Correcting the exchange rate delay does not solve competitiveness
For the director of Ceres, “the dollar will not provide a solution to the competitiveness”, by disagreeing with the claims of rural and exporting sectors. “Uruguay It cannot have such a low level of competitiveness forever. The dollar will have to rise or conditions improve as this government tries but at a faster speed,” she observed.
When referring to the reforms that must be undertaken, Munyo mentioned “the readaptation of the labor sphere and regulations of the quartermasters and of environmental aspect “We have to make them more agile.”
“We cannot survive with the current costs that these regulations and the dollar imply. A country becomes competitive not with a rise in the dollar, but when producing internally becomes efficient because the resources are competitive,” he stated and graphed: “For example, there can be improvement in the issue of public rates, that both electric As the gasoil “They are too high.”
Source: Ambito
