In pursuit of fiscal fundamentalism, Javier Milei managed to veto the university budget and complies with the market

In pursuit of fiscal fundamentalism, Javier Milei managed to veto the university budget and complies with the market

A highly respected economist in the city believes that what is happening is that “Milei goes for fiscal fundamentalismdoes not believe in the role of the State in the economy and It is very likely that you think that there should not even be a public university“. In this position, he considers that, if the deficit is eliminated and the economy is deregulated, investments will rain. “That is what makes him make these types of decisions,” he says.

The truth is that, by train ingratiate yourself with the market in the search for the country tax to drop to 1,000 points or less, The Government is willing to turn its back on society, or, at least, a large part of it, because another supports the adjustment to the letter, although many of that group are beginning to see problems in the evolution of the plan because it is not exactly what they expected. “He promised that he was going to put in a full chainsaw and that is what he is doing, but the issue is who pays the adjustment, he said it was going to be the caste and it is the students and the retirees,” says a voice from the city to Scope.

Social conflict, an element against the Government

This is beginning to raise alarm bells among some analysts regarding a growth in social conflict, which can go against the plans of the ruling party. In fact, the formula: “Beyond the forms, the path is correct” is increasingly heard at all economic and financial congresses. This reflects that, Although there is a positive view in many of the direction, “the forms” worry for the social effect they can have.

“The President sees that achieving support in Congress is a sign of governance and is convinced that setting a firm trend will lower the country’s risk, which will continue to fall, but not for those reasons,” he points out in this regard. the economist Fabián Medina. And he points out that what makes the bonds continue to rise and the country risk subsides is what established the Budget law 2025which changed the way spending is taken, which will be defined based on income.

Indicates that This spending model is similar to the one implemented in 2001, in the management of Fernando De La Rúa, when a sharp drop in country risk was also seen, so it is likely that he will be able to continue down this path. Likewise, he points out that Milei seeks to demonstrate to the market that He does not govern with 39 deputies, but with 80but the problem is that the youth is put against it, which “is not the same as retirees”, due to age, but also because the university community is much larger than that of older adults.

With support from the PRO and the market, Milei measures his political back

Likewise, it is also true that, as pointed out the economist Federico Glustein“beyond the fact that there is a sector that does not, A large part of society agrees with Milei’s direction, He is assembling a new majority and charting a path that the markets expected him to take. “He is fulfilling much of what he promised: he said he was going to slow down inflation and lower the fiscal deficit and he is achieving it,” he says. Although he does not comply with some points, such as lowering taxes and lifting the stocks, he considers that he is focused on validating the message that part of his electorate endorses.

Glustein assesses that What Milei does is ally with the representatives of the PRO, with whom he forms a “pro-market” front to make some fundamental reforms. What it seeks is to continue with a very strong adjustment in order to generate economic variables similar to those of the other countries in the region.

It does not care if poverty increases, unemployment and if there is a worse distribution of income, what it seeks is to achieve macro variables very similar to those of other countries in the region.with low inflation and growth in the product derived from commerce and not from State activity. I think the market validates it in that sense and gives it a chance to approve a budget, like the one for 2025, which proposes a very strong adjustment in sensitive areas, such as education,” Glustein analyzes. And he points out that The market validates that path.

A message to the market but at a high cost?

“It is evident that It is a government that manages for the market and is well received by financial actorsbut the path that he chose for Argentina seems to go against the world trend, where governments have an interventionist tendency and scientific and technological development supported by the State. However, it is undeniable that does what he said he was going to do“, evaluates an economist.

The problem you see is that It is not the caste that pays the adjustment and “the bonds rise because it is evident that there is no money for universities or retirees, but there is money to pay the debt“The truth is that the distance between the ruling party and some sectors of society is becoming increasingly evident.

A businessman from the financial sector tells this medium that The social issue is an element of concern for the Government, which installed the issue of combating social mobilizations with force to avoid an escalation, and for the market, but he is confident that the fact that wage indices in recent months show a recovery is a mitigator of that risk, added to the slowdown in inflation, which relieves pockets.

Likewise, he says that The factor of social conflict worries the majority of governments in the world, so Argentina would not be the exception and is confident that the improvements seen today in financial variables will have an impact on the real economy, although it is not immediate.. “There is progress in financial matters. The market always anticipates reality because it is managed by expectations, but that will translate soon,” confides the businessman. But that takes time and the big question is whether a growth in social conflict, as a cost associated with going for an improvement in the macro, cannot be read as a warning sign about governability and play against Milei’s plan to give signals positive to the market.

Source: Ambito

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