A lunatic cannot preside over a party of sane people. The PRO, the Civic Coalition and also members of the residual UCR, in general, are not in good health. But the economists of that new Alliance were no exception -2015-2019-, they acted as scarecrows of foreign direct investment, they cultivated fear.
Even at this moment, the most crazy troops of the cruel parties assure that they are going to go with more savagery. previously they had won the prizes: “unfair of democracy”, for having taken away children’s notebooks, taken medicines from the elderly and increased prices without considering electro-dependents… in the pandemic we saw the nonsense of the anti-vaccine and the proposal: “let those who have to die die” . Remember.
2018 ended and 2019 proceeded. The real fall in tax collection could be accentuated in the coming months due to the recession. The Treasury in 2019 would not have the property income of 2018, part of its deposits in the BNA would be used to pay its obligations in pesos in the last month of 2018. It was impossible for spending on subsidies to exhibit a real fall in 2019, the electricity rate was going to increase, they planned a minimum of 60%.
It was funny, but the “friendly” economists said that a spiraling of the inflation rate had stopped, due to the monthly inflation in November, after the peaks in September and October. They made a mistake, in August Lacunza defaulted (compulsive reprofiling of the debt in pesos).
The IMF II agreement did not make it possible to lower the country risk, it continued from 600 to 700 basis points for fear of default. This time the other friends were right, the comrades of JP Morgan. – How was it possible if you met all the goals agreed with the IMF at the end of October? – It is that, in November, the issuance of $122,000 million for the disarmament of the Lebacs transported the monetary base to $1,384 trillion before the end of the month. That made the wholesale dollar jump from $36.5 to $39 in the last week of November (+7%). The increase in the monetary base jeopardized the possibility of expanding in December 2018, due to the goal agreed with the IMF. Noticing that at the end of November the monetary base was already 2.5% above the December target was the task. In the last business days of November, the BCRA vacuum cleaner absorbed $104,670 million through the Leliqs.
They said the “friendly private consultants” (private consultants friends of Cambiemos) that economic activity would stop falling. Cheerful forecast that was based on the assumption that the real wage would stop falling between December and February with slowing inflation.
They could no longer hide, nor continue to correct the fall of (-2.6%) in 2018. They had said that the growth would be +2.5/3.5%. For 2019, a fall of 1% was projected, which was far from the official forecast of Minister Dujovne (+ 8% between points). Poor sales managers who worked with the forecast of the “friendly private consultants”.
Now they redoubled the bet and projected inflation 2019 at 25/28%, after a 2018 that would close with an inflation of 47%, They would fail by more than double (54%). And that the monetary restriction would be fatal, together with the extravagant interest rates and the monumental fall in credit.
According to the monetarist child’s manual, everything would contribute to the decrease in inflation. The pass through it would be low, due to the severity of the recession. As it was possible to verify, there is no monetary program that can face the inflationary inertia and the rate adjustment when it is disproportionate.
fermented everything
The program could not withstand a further drop in demand for Argentine assets. The real polls showed the return of Peronism and the hegemonic media bombarded the possibility with all kinds of calamities. They said that it was in case Peronism returned that the country risk would rise -which they made rise-, and that it would make the renewal of the Letes much more difficult, it would increase the dollarization of portfolios and the price of the dollar, despite the fact that they counted on the supply of foreign currency from the harvest and the possibility, starting in March, that the Treasury would sell the surplus dollars from the IMF in the exchange market.
We all knew that inflation would drop less than what was vaunted. The monetary program faced a major challenge to achieve a drop in inflation in 2019, only because of inflationary inertia, and the rate. The drop in effective inflation would also depend on how inflation expectations evolved, which depended on the performance of the first figure: the dollar.
An appreciation of the peso or a rise in the real interest rate would jeopardize the impalpable cyclical recovery expected from the beginning of 2019. The Government would have difficulties meeting the goal of “zero primary deficit” in 2019.
The recession could accentuate the real drop in collection. There were doubts that the short-term debt with the private sector (Letes) could be refinanced from 50% for the first quarter to 70% in the fourth quarter of 2019.
There were difficulties in achieving said percentage of renewal and Lacunza had to default on the debt in pesos. The bond yield curve indicated that the market was hesitant about public financing. The titles screamed. Short-term bonds would yield less than half of what medium- and long-term bonds would yield. Serious consultants warned that a compulsory debt restructuring could not be avoided. Only businessmen like Belocopitt would remain, who were hooked, accusing them: “they screwed it all up,” he said.
The new program with the IMF had gotten off to a socially cruel start. He stopped the 100% risk that he left for the next president and improved the country risk, but he never allayed questions about default 2019. Later Dujovne would leave terrified and Lacunza with phlegmatic and amazing calm would come to do the dirty work..
Hernán Lacunza is an economist from the team of former Menemista-Kirchnerista, current Larretista Martín Redrado. Lacunza was the Buenos Aires Minister of Economy of María Eugenia Vidal, together they put the province they detonated into debt, and fled to the city. Reprofiling the debt is called default selective”once Lacunza made the announcement, he would remain in history forever, for being the voluntary scapegoat of the tragedy Cambiemos: Macri, Prat Gay, Sturzenegger, Dujovne, Caputo, Sandleris.
There was no way to avoid so many challenges, risks and accidental occurrences. The emergency had forced the application of an ultra-fundamentalist, unbeatable monetary policy. The monetary restriction, the collapse of credit and an absurd 170% overdraft rate for SMEs had aggravated the recessive situation, to the point of intolerability.
A full debt restructuring was just around the corner. To avoid a social outbreak, two conditions were required: that Peronism return and that in the electoral campaign the Peronist candidates said that the plan “that they all die” was going to end.
It was proven that as a government there was no candidate outside of the stabilizing discourse that had the temerity to undertake structural reforms. With an income per inhabitant that at the end of 2019 would be 11% lower than that of 2015, once again Argentina confirmed the economic failure, which once again came hand in hand with the conservative-neoliberal restoration.
Executive Director of Fundación Esperanza, Graduate Professor UBA and Masters in private universities. Master in International Economic Policy, Doctor in Political Science, author of 6 books.
Source: Ambito
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