The director of Fundación Capital and former president of the Central Bank, Martin Redrado, spoke of inflation, proposed measures to contain it and admitted that he has “periodically” contacts with Cristina Kirchnerwhile the versions about possible changes in the Government’s economic Cabinet continue.
Regarding the 6.7% CPI for March, the economist assured that “It means that in the war against inflation, the Government lost the first game 7 to 0” and warned that “There are still 19 dates left and the team can’t seem to anchor expectations going forward.”
“The issue is how to propose a solution. And in my opinion, Argentina needs to propose three measures going forward,” Redrado said in statements to radio Miter.
“The merchants, the production companies, for the next month they don’t know what interest rate they are going to face,” he reflected on the matter, and remarked that “Argentina needs laws that give it certainty beyond this government”.
In this sense, he maintained that the solution for inflation passes “through three fundamental axes”. “Three laws are needed to change this inflationary expectation: the first is a law that changes the Organic Charter of the Central Bank and reduce by half the possibilities of monetary issuance; the second is a law of deindexation of public spending; and the third is an idea that I took from the agreement that Israel made to lower inflation, a legal framework to agree on prices and wages to the extent that the two previous conditions are met.
When asked if Cristina Kirchner contacted him again, the economist admitted: “Periodically there is a WhatsApp call and a month ago we exchanged some idea about the Monetary Fund“. And I add: “Beyond the crack, I’m always open to talk to everyone, government and opposition. When I finish this conversation I am going to speak with a governor who asked me what idea I had about Argentina going forward.
Another point on which he was consulted and that he did not avoid was the idea of dollarizing the economy as proposed by some sectors of the opposition. Although he emphasized that it is “good discussion” how we anchor inflation, assured that “dollarization is not the way out. “We don’t need to walk into a cage and throw away the key”he pointed.
“When we had a fixed exchange rate, the problem was that we continued borrowing more than necessary, issuing quasi-currencies, and we ended up generating a debt crisis in 2001“, said.
At this point, he added that “another reason is that there are not enough reserves in the Central Bank to tell the Argentines as of April 30 we will change currency and they will be able to change pesos for dollars.” “Unfortunately, we do not have a reserve accumulation policy,” he said.
“Today there are many pesos circulating, compared to the dollars accumulated in reserves, that would give us one dollar to $560″added to demolish that idea.
Looking ahead, Redrado said that “Each point of annual inflation is 230,000 more Argentines who fall below the poverty line” and I consider that “the main policy to get Argentines out of poverty is a solid anti-inflationary policy that today the Government does not have; if we continue with more of the same we are going to have a recession”.
“We must look for ideas and debates that give us a sense of direction and put us all on route 2, on the way to Mar del Plata,” he warned.
Regarding the end, when asked about the possibility of taking over as Minister of Economy, Martín Redrado maintained: “It is not a matter of personalities. Argentina needs a comprehensive economic and social program. You cannot have the Ministry of Economy and social policy divided”.
SN