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With inflation at 50%, they already propose a shock plan such as Austral or the 1 to 1


The rise in prepayments would consolidate a 3% monthly rate and lower it will demand more substantive changes.

Ezequiel Burgo

07/31/2021 21:00

  • Clarí

  • Economy

Updated 07/31/2021 9:20 PM

The 9% increase in prepaid since August and in four stages confirms the fearful: the rate at which prices rise will continue to come under pressure in the coming months.

Even when

inflation in July pierces 3% and is the lowest value since September 2020

, something that the Government and Martín Guzmán are quick to underline at this time.

But what guarantees are there that the drop in inflation will be consolidated if the year will close at 50% with the dollar and low rates?

For this reason, there are more and more economists, academics and consultants, (some close to the ruling party) who argue that, as the dynamics come.

A stabilization plan such as fixing the dollar or agreeing prices-wages is no longer enough

. In addition








are needed

. As were the


with Raúl Alfonsín and the


with Carlos Menem.

These specialists, who speak of reforms,

are not orthodox


They do not propose introducing changes for ideological reasons, as they argue, but rather instrumental to the practice of economic policy.

Rafael Di Tella, Martín Rapetti, Marina Dal Poggetto, are some of them.

Also Miguel Kiguel, former Secretary of Finance of the Alliance and who studied high inflation processes such as Israel in the eighties.

"Fernández affirms that he does not believe in economic plans. The economic disorder in which we live reminds us that it is urgent that he change his beliefs. It is to believe or to burst." Rafael Di Tella, professor of economics at Harvard University.

Resolving the

fiscal (substantive) issue

and access to


are two crucial aspects for an attempt at stabilization to be sustainable and followed by growth.

But the


that leads to introducing these reforms is not a non-trivial issue.

Economists emphasize technical aspects of stabilization such as pension reform, but they forget that talking about it can be counterproductive.

The success of a plan would therefore be associated with whether the government and the opposition

agree to

the adjustment.

The economist and professor at Harvard University, Rafael Di Tella, wonders what happens if the country really has, in addition to high inflation, problems of economic organization.

What happens if the level of public spending is so high that the State cannot use it to reduce poverty and the private sector cannot finance it?

"In that case, the stabilization of inflation would be temporary and in a short time it would break due to lack of growth or monetization of new deficits,"

Di Tella tells



"The less structural changes they are willing to make to adapt productivity to the post-Covid world, the greater pressure on the dollar and the gap there will be." Marina Dal Poggetto, director of the Eco Go consultancy.

The current level of public spending in Argentina is almost 10 percentage points higher than the peak to which Néstor Kirchner took it.

The increase did not serve to lower poverty.

Economists such as Di Tella or Rapetti emphasize that the reforms today are necessary to deflate for



not ideological


, in the case of the Washington Consensus.

"Countries with high inflation are 'demonetized, and pro-market economic reforms usually attract some capital inflows that allow it to be' re-monetized 'without that banknote printing being seen as inflationary,"

says Di Tella.

Fixing the dollar or any other mechanism so that the currencies of the Argentineans come out from under the mattress, will lubricate the economy without the need to issue.

“You need dollars to stabilize and

relying solely on exports can be insufficient and risky


That is why the reforms give more room to grow and lower inflation ”

, says Rapetti, director of the consulting firm Equilibra.

"Why did countries like




stabilize and deflate in the 90s?

Because there was an inflow of capital.

How do you manage those currency flows is another matter ”


Minister Martín Guzmán maintains that Austral and 1 to 1 were exchange rate regimes, not plans, and they failed because they were rigid in unstable frameworks and "never work."

Dal Poggetto says that Argentina faces a challenge no less in the face of exiting the pandemic. Almost a four-way play.

"A correction that accommodates

relative prices

, closes the

fiscal gap

, cuts



the Central Bank to the Treasury

and deindexes the




The economist, director of Eco Go, points out that

"the fewer structural changes they are willing to make to adapt productivity to the post-Covid world, the greater the pressure to close the gap with an exchange rate jump that collapses wages



Dal Poggetto introduces an unpleasant term for politics:


, a word associated with working more for the same salary.

But it is also producing more in less time.

"Increasing wages through this route is not inflationary as it is currently by giving increases by parity," says Rapetti.

"For a decade Argentina has not only increased its inflation rate but also its inefficiencies: a modernizing strategy is needed." Martín Rapetti, director of Equilibra.

Another window that Dal Poggetto opens is

what world awaits Argentina


This week it was known that

the US GDP reached the pre-pandemic level


Europe will do it at the end of the year.

According to Matías Rajnerman, chief economist at Ecolatina,

Argentina would reach its prepandemic GDP by the end of 2022

, a correction of the dollar by means of.

The world has already started.

While the AT&S company announced this week that it plans to recruit more than 5,000 workers in Europe to manufacture electronic components, Toyota in Argentina does not get 200 people with the secondary completed.

The bottlenecks appear and the cover of The Economist this week anticipates what is coming: developing economies will grow less.

"Some reforms are necessary because inflation is falling at the cost of distortions in the dollar and rates that will have to be corrected." Miguel Kiguel, former Secretary of Finance.

"The stabilization plans in general are recessive in the short term, although if they are successful they lower inflation and stimulate growth,"

explains Kiguel.

"To lower the cost of these programs, many times it is sought to accelerate disinflation with income policies and they are a complement to the monetary and fiscal policies that must be done



Will politics be willing?

Source: clarin

All business articles on 2021-08-01

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