However, the anchor does not work if the horizon of economic policy is not lengthened: The government coalition is still careful to spoil the short term by boycotting the agreement, and the opposition’s campaign proposals regarding the management of the stocks contribute to coordinating a collapse in the demand for pesos and a spike in the exchange rate gap.
The inmates do not help and a president trying to reverse the brutal concentration of income generated by a exchange rate gap at 80%indexing wages at prices that rose again and using the improvement in collection (derived from inflation) to finance greater transfers to retirees, recipients of social plans and informal workers.
The reading that the economy and employment are doing well and that we only need to lower inflation shows a worrying misunderstanding Regarding the nominal dynamics in which an economy is involved that tries to stimulate demand in the face of evident supply restrictions mounted on an inflation that runs at 5/6% monthlya dollar that runs at 4% per month, parities that are set with a similar monthly rhythm and prices of rates and fuel that should go somewhat higher.
Being gradual and without structural reforms, the program with the IMF is contractionary and inflationary. Trying to avoid contraction by neglecting reserves and issuance makes it dangerously more inflationary. It is true that for the IMF the incentives to drop the program are low, but the push and pull behind each revision will appear.
Economist and executive director of Eco Go Consultores.
Source: Ambito
