2023-12-13 01:23:00
In the midst of great expectations and with a delay of almost two hours, the Minister of Economy Luis Caputo announced the package of economic measures that will begin to be applied starting tomorrow, among which the jump of the official exchange rate at $800the elimination of SIRAthe end of new public works and the removal of energy and transportation subsidies.
Faced with the news contained in the list of the first 10 economic initiatives of the government of Javier MileyPERFIL held a round of consultations with economists and analysts of different stripes, who expressed different positions on the scope of the announcements.
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First of all, the head of Research at Romano Group, Salvador Vitellihighlighted that the battery of measures produces a considerable change in the exchange rate scheme that prevailed until the transfer of administration.
“Until last Thursday, we had a system in which the export exchange rate was higher than the import exchange rate and now it is the other way around. This is to try to compress the demand of importers and improve the vital signs of the balance of trade and payments which has been strongly deteriorating the balance sheet of the Central Bank,” he judged.
Regarding the increase in the official dollar, Vitelli remarked that “The increase in the exchange rate in real terms is the largest since the exit of Convertibility“and anticipated that it will lead to “higher inflation because we have many products and services linked to the dollar, especially the tariff and fuel issue.”
For his part, Empiria’s senior economist, Matías de Lucaconsidered that Caputo’s vision “is accurate“since he focused on the red of public accounts:”The root of all the nominal problems that we are experiencing is the fiscal deficit“.
In this sense, de Luca described it as a “very good news” the elimination of SIRA stating that it will make “the flow of trade much more flexible, that will bring predictability to the industry and certain variables that affect pricing will begin to be normalized.”
Regarding the exchange rate adjustment, the economic analyst expressed that it is “competitive” in relation to the one that prevailed until this day and aims to rebuild the BCRA’s assets through the accumulation of international reserves.
The deputy director of the Economic Research Institute of the Córdoba Stock Exchange expressed the same opinion, Fabio Ventrewhen considering the fiscal outlook of the Minister of Economy.
“If they solve the deficit, they eliminate a very important part of inflation and long-term expectations should be anchored when that effect begins to be felt in the economy. The measures attack the deficit and many of them are linked to the honesty of the exchange rate,” he stressed.
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Beyond highlighting the announcements, Ventre noted that it remains to know the details of “how they are going to be implemented, in what period of time and in what way“. One of the main questions raised by the speech of the head of the Treasury Palace is what will happen to the COUNTRY tax and what percentage will be applied to imports.
For the chief economist of Libertad y Progreso, Eugenio Mari“with the fiscal deficit closing, There must be a commitment not to issue to finance the Treasury that makes it credible that the Central debt will be reduced and the issuance and inflation can be lowered.”
On the other hand, Marí emphasized the suppression of authorizations to import by arguing that “foreign trade is one of the areas hardest hit by discretionary regulations and, on top of that, there were protected items whose prices increased much more than the average , such as textiles and clothing”.
“Removing discretionary import permissions may contribute to increasing the supply in the domestic market of some tradable goods and moderate the rise in prices,” he indicated.
In turn, the Analytica economist, Tomás Álvarez Kuhnlepainted a complex picture by graphing that “with prices running above 10% monthly and a significant level of inertia, the 118% devaluation and the liberation of price and tariff agreements, Inflation in the coming months will not drop below 30%“.
In this context of reduced activity and possible job losses, Álvarez Kuhnle anticipated that “salaries will not be able to sustain purchasing powermuch less those of the 50% of the population working informally.
“The crisis will be profound on the social level and will generate tensions in the government regarding the ability to continue with the stabilization plan. The social palliatives announced with the doubling of the AUH and the 50% increase in the food card, both with good segmentation capacity, aim to alleviate the effects on child poverty,” he said.
Doubts and criticisms of the adjustment raised by Luis Caputo
Contrary to the agreement among experts, the economist Pablo Tigani asserted that the package of measures communicated by Luis Caputo “promotes a extraordinary transfer of resources from the popular and middle sectors, to agriculture, livestock and banks“.
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From his perspective, the opening of imports will lead to “the destruction of the industry” and the fiscal adjustment will result in the “pulverization of wages in pesos”, an increase in unemployment, a fall in consumption and an increase in poverty and destitution. .
Similarly, the former vice minister of Economy Fernando Morra He questioned certain points of Caputo’s speech and stated that “the fiscal aspect continues to be the weakest side and looks very diffuse” and “It is not known what the formal path will bewhether or not it is decided to extend the current one or we will have a new one.
“Removing the SIRA can generate disorder if importers want to advance payments in any way, solutions via price do not always work and reserves are scarce. We have to wait to see how it is implemented,” added Morra, very close to the former Minister of Economy. Martin Guzman.
And he closed: “With the basic basket rising at the rate of the dollar and a huge rate jump, the increase in AUH and Alimentar is not going to compensate for the regressive effects of the devaluation and fiscal adjustment, mainly because They leave out the informal workers without plans and the retirees“.
One by one the emergency measures announced by Luis Caputo
► State labor contracts: The Minister of Economy announced that “State labor contracts that are less than one year old are not renewed.” It is, Caputo said, “a common practice in politics is to incorporate family members, friends, before the end of a term of office.”
► Suspension of the national government guideline for one year. “There is no money for expenses that are not strictly necessary, much less to support with money from average taxpayers that are created only to praise the virtues of the governments in power,” he said.
► The ministries will be reduced from 18 to 9 and the secretariats from 106 to 54. “This will result in a reduction of more than 50% of the hierarchical positions in politics and 34% of the total political positions of the National State,” he explained.
► Reduction to a minimum of transfers to provinces. “We are going to reduce discretionary transfers from the National State to the provinces to a minimum. Resources that, unfortunately, in our recent history have been used as bargaining chips to exchange political favors.”
► Cancellation of public works tenders whose development has not begun: “The national State is not going to tender any more new public works and is going to cancel those approved whose development has not begun,” Caputo said. “Public works has always been one of the sources of corruption in the State and with us that ends.”
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► Reduction of energy and transportation subsidies: “The national State is not going to tender any more new public works and is going to cancel those approved whose development has not begun.” “There is no money to pay for works that often end up in the pockets of politicians and businessmen,” Caputo said.
► The Empower Work plans and strengthen social policies will be maintained without intermediaries. “And above all, we are going to strengthen social policies that are received directly by those who need them, without intermediaries, such as the Universal Child Allowance and the Food Card,” added the minister.
► Official dollar at 800 pesos: “The exchange rate will be worth $800 and will be accompanied by a provisional increase in the Country Tax and an increase in non-agricultural withholdings,” said the minister.
► End of the SIRA import system and its replacement with another scheme in which companies will not have to request permits in advance for their operations. “This eliminates discretion and guarantees the transparency of the import approval process. Whoever wants to import can now do so, period,” he said.
► Doubling of the amounts of the Universal Child Allowance (AUH) and Food Card. “This is in line with what we said before, that we are going to strengthen the plans that go directly to the people, without intermediaries, and to the people who need it most,” he explained.
MFN / ED
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