Thursday , August 18 2022

"After the IMF arrived, the model had some consistency"


It closes a difficult year for the economy. The fall in the remainder of April indicated the period rhythm indicated by dollar calls, emergency assistance of the International Monetary Fund (IMF) and the continuing inflation that, according to the private consultants, can close; This circle is 50% per year. According to the director of the Master of Economics and Political Sciences, Eseade, Adrián Ravier, President Mauricio Macri's control was an important estimate of financial, financial and foreign imbalance imbalances. In conversation with MONEY, he notes that the next administration will have to start by solving structural problems in the Argentine economy.

-Where is the Argentine economy reaching the end of the year?

-It brings a deep recession and without clear signs of recovery or recovery for the following months. After the 2016 devaluation, the economy was recovered in 2017. Following the 2018 devaluation, some analysts expected a similar recovery or recovery in 2019. But this will not happen due to the late decision of the Central Bank of the Argentine Republic to attack the problem of inflation. The keeping of the financial base consistently from October to June 2019 will be effective in reducing inflation, but economic activity will suffer even more than it was already evident from the impact of the currency crisis.

– What can be a statistical drag for 2019?

I would like to explain the importance of the drag. Recall that there was a talk about a positive drag after the 2017 closure with a growth of 2.9%, and even the first quarter of growth was 2018, but there was a strong currency crisis that left Argentina's economy in an unfavorable and very long time of & The prospects. Something similar happens here. Argentina's macro is very weak, and the international context promises some short-term shock, which is why it's hard to imagine Argentina spent the months this without scanning the economy and the new prospects. There are still instability in the exchange rate, and in addition, Central Bank treats a quite large gap between the floor and the ceiling of the band. It's worrying that, if today's floor rate is rising by 30%, it's too late to intervene. The demand for pesos may fall, and the dollars in the reserves would not be sufficient to include stamped.

– Will inflation be reduced? Or will it continue at high levels?

If there is no surprise, the route shows inflation which may fall by half compared to the level 2018 closes. This, however, has several explanations. First, the Central Bank is making its promise to keep the financial base consistent until June 2019. The measure would be effective, but today the financial authority does not enjoy it; the largest credibility. Secondly, the Leliqs ball is included, which represents future inflation on the day it is monitored. The only way to avoid this is for the government to achieve a strong financial surplus to patiently uninstall. This situation is too optimistic for an election year.

– The dollar depends more on the external changes of the internal policies?

– The world is volatile, less liquid and, as well, the Federal Reserve is hardening the dollar. The rise in interest rates will continue on their way and this reduces the investments needed in the region and Argentina. As I said above, it is expected that external shocks will compromise the dollar price during 2019. Even it can be said, given that Argentina has a weakness more than neighboring countries, these shows will hit our country more in relative terms. Having said that, it is also true that financial policy becomes more illegal in its fight against inflation, which can be effective in reducing its level. This seems essential for me to reduce the levels of instability observed in 2018.

Why did not the Government find the return to the economic course?

– Because he underestimates the importance of financial imbalance, financial and exchange. The rating and rating rates are good for a low inflation economy, but Argentina needs higher doses of a market to solve the macroeconomic problems. A businessman is scared by observing levels of inflation, taxes and interest rates in our country, as well as the dollar price volatility or levels of pollution and bureaucracy. Unfortunately, there has been little progress and no, in solving the structural problems. The next government will have to face these structural problems with more conviction.

-What will happen to public spending? Was the deficit reduced? Will temptation be for the election year?

After the IMF arrived, the model was somewhat consistent. It seems that economic policy is now prioritizing some objectives and there appears to be more disorders. 2018 will close with fiscal red much more limited than what the year started. The reduction in value and the adaptation measures taken contribute to this. If 2019 does not bring surprising external shocks, the financial red may be further narrowed and we are getting close enough to the primary financial balance. This is not great, but the government should not be satisfied. Argentina needs to move towards a combined financial surplus, which includes provincial budgets, and also debt benefits. The main challenge is to achieve this in an election year.

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