Special envoy to Mendoza.- He Central Bank (BCRA) highlights several aspects of the current administration so far, such as the dismantling of liabilities, the path that was initiated with the Bopreales to resolve the debt of companies and the slowdown in inflation, but He admits that he has problems moving forward in lifting the exchange rate restrictions and is experiencing some frustration.. This was stated by the director and vice president of the monetary regulator, Vladimir Werning, in the framework of his presentation at the 45th Annual Congress of the Argentine Institute of Financial Executives (IAEF).
He also acknowledged that They are surprised by the support for the economic program. “The public’s acceptance of the plan is striking, and the banks have quickly adapted to all the changes we are implementing,” he said. He acknowledged the abruptness of the current plan and said that “when there is such an abrupt change as the one we are seeing today, it creates a very complex situation in the functioning of the financial system.”
That, he said, makes are not yet in a position to eliminate exchange restrictions, although he assured: “We are not in love with the stocks, we are only in love with our women. We want to lift it and the impossibility of doing so is a frustration.“. Werning said that, going forward, “the possibility of emerging with the least possible trauma is an important responsibility that we cannot ignore.”
Werning said they need the mattress dollars
The official began his presentation with a criticism of the previous administration. He emphasized that they were in love with the exchange rate trapthat there was a The BCRA’s great lack of independence from the Treasury He said that the current board of directors is seeking to change that path. He also noted that they are focused on getting local banks to finance the private sector again.
“We are facing a great opportunity because, thanks to the zero deficit that was achieved, We have the possibility of having a stabilization plan that goes towards the objective of the financial system not being at the service of the state,” he said.
Another of the objectives he highlighted is to achieve “the return of Argentine dollars to the financial system”something the government has repeatedly insisted on. “We are seeing a return to dollar deposits and banks turning to the private sector for business with financing offers,” Werning stressed.
The director of the BCRA said that The current management of the monetary regulatory body managed to “avoid a Bonex plan, which was discussed at the beginning of Javier Milei’s mandate, a hyperinflation, since we were two weeks away from entering a cycle of that type, a debt default and a banking crisis.” He explained that, A financial system cannot turn 360 degrees in a short time and it takes time to reach a model focused on the private and productive sector.
The problem of the BCRA reserves
On the other hand, he spoke of the goals of the program with the IMF in terms of reservesHe acknowledged that, although these objectives were initially exceeded, they then began to fall and this began to worry the market. However, he said, they are within the established plan.We have been stabilizing the economy without generating recurrent exchange rate jumps, “While in the previous program, the rate of acceleration of the dollar was modified every month, but the real exchange rate was not maintained at a positive level,” he said.
“Now The market is nervous because it is counting its ribs to see if the reserves are enough. Meanwhile, we are offering dollars to the market to pay for imports, but we know that there will be no problem in paying the debt coupons for next year,” he said in response to the criticism that there is these days in the city regarding the BCRA dollar shortage.
For Werning, If the Government manages to make the financial system work well, the exchange rate policy will give them better results.“We have a lot of pesos, but there are Argentines with a large amount of dollars under the mattress and we are seeing that Several are putting them in the financial system“For this to be effective, we must ensure currency competition. If we do it right, the results will be as expected,” he promised.
The problems that the BCRA recognizes in order to move forward
And he assured that, if we enter into a process of economic recovery, the path to fiscal surplus will be strengthened. In that sense, he was confident that the economy had already hit a bottom in the fall and said that, although “we are lowering inflation strongly and now progress is starting to be a little slower, We must continue to follow the fundamental path and this will be translated into more attractive rates and an improvement in salaries.”
In short, His speech was in line with what the Government has stated in all of its latest presentations.. What caught the attention was the recognition that the current program is a very abrupt change of paradigm and that this greatly complicates the plans to lift the cepo, a task that takes longer than initially expected by the officials of the BCRA and the Minister of Economy himself, Luis Caputo. In addition, an element that is repeated over and over again is the obsession with capturing the dollars from the mattress and the position of ignoring the warnings about reservations that are repeatedly made by City analysts and about the need to speed up the “crawling peg”.
Source: Ambito
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