Daniel Artana: 'The Government will have to disarm this mini Frankenstein that it created to win the elections'

Silvia Naishtat

08/01/2021 19:40

• Clarín.com

• Economy

Updated 08/01/2021 7:40 PM

How do we get to the elections?

-From here to the elections there will be a deceleration of inflation, because the low rate of devaluation of the official dollar, of around 1% per month, will weigh more than what the exchange gap in prices could make noise.

And what can happen with the salary negotiations, which the government itself is promoting to be reopened.

The drop in inflation is going to be very limited, kicking problems for later, because in addition to the tariffs issue, there is going to be some exchange delay.

The Government is going to raffle off some dollars, to try to contain the exchange gap.

-What awaits us afterwards?

-The government will have to disarm this mini Frankenstein that it is creating after the elections.

-What do you call mini Frankenstein that you created for the elections?

-Delaying the exchange rate, sitting on the rates.

It is putting together a scenario that they themselves know is not sustainable.

They seek to try to sway the voters a bit and pay the consequences later.

For this reason, the magnitude of the correction that is needed later will be proportional to the magnitude of the inconsistencies that it generates now.

In other words, the more the fiscal and the monetary are overflowing, the greater the correction of the exchange rate that will be needed later.

That is very difficult to calculate now.

What we see is that they began to emit much more for the treasury and we know that they are devaluing less than what the other macro variables suggest.

-How does the year end, then?

-The economy recovering a little more than what the IMF says.

After falling 9.9%, it recovered 7%.

If we measure against 2018, the US will be around 11% up, Europe around 4%, Latin America a couple of points up and Argentina still 4 down.

- What exit does Argentina have?

-The Government blames the crisis on the pandemic, but in reality there is something else in the background. I think he has a very wrong vision of what works in the world in terms of economic policy and what is appropriate for Argentina. To an economy that comes with a frustrating economic performance in the last 60 years, particularly bad from just over a decade ago. There is no program in a government that bans meat exports when officials fill their mouths saying they are going to increase exports. And without looking for other instruments. You don't see a medium-term outlook and it seems to me that this is reflected in a high cost of capital due to Country Risk. Which has to do not only with the doubts generated by the government's fiscal and monetary policy, but also with discretion.

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What do you mean by discretion?

-The companies depend more on how they get along with the government, than on the productive effort or the one to convince the consumers of the country and the rest of the world.

In other words, it is a government where discretion prevails, anyone can propose anything.

For example, now we have the Moyano family proposing to nationalize the accesses.

What do they want it for?

To pass on to the whole of society the fact that technology requires less manpower to control tolls.

It is to continue charging the State with the costs that should be resolved within that sector.

It's like saying I'm going to nationalize the stagecoaches, because the railroad is coming.

The world did not progress protecting stagecoach drivers, it reassigned them, relocated them elsewhere.

-What are they asking from the outside?

-What you see is a government that is very confused. From the contracting of vaccines, to economic policy. I think the vision can be changed, at least in economic matters. This is a government that believes in the present state, but believes in a large state, not an efficient state. The present state can be small and efficient in solving problems with professional judgment. Here is spending more, more and more. For example, raising the non-taxable minimum in earnings prior to a campaign; the law of gas rates for cold areas or to load or load into the retirement system the mother who has children. They continue to make the mistakes of the previous Kirchnerism, which led to a gigantic, inefficient State that, even with the tax burden of the highest in the region, is not enough.

-What political margin do you have to lower spending with the level of structural poverty?

- Sometimes you have to make painful decisions in life, not everything is pum up. If you have an out-of-level state at some point they will have to adjust it, because the alternatives are worse. If the alternatives are to go into debt abroad thinking about an access to debt forever, one day it was cut and ended in a recession and an inflationary jump. Now they hit the machine, thinking that it will not generate inflation. It is politically difficult to resolve the issue of the fiscal deficit, and is the political result pleasant? Are the alternatives easy? Macri lost the election, let's see now how the government will fare. We have to realize that it is no more. The other thing is how it is done in the three levels of government, so that the provision of State services is done well.

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Can these reforms be carried out without an agreement with unions, companies and political forces?

-The first thing that is required is that the Executive Power be clear.

Because if it is confusing, in a debate with a lot of parties, with voters and voting niches, obviously, each one is going to try that the benefits that their voting niches receive are the last to fall.

If the Executive does not do its homework and, worse, when crazy ideas come out of Congress, there is a problem.

-With the pandemic, the emission multiplied in the world and the fear of the deficit seems to have been put aside in Europe and the United States ...

-The recipe cannot be the same.

The world today has negative real interest rates and is at risk of deflation.

If we had to borrow in dollars with a country risk of 1,600 points, we would pay crazy.

The United States can place debt at 1% real for 30 years.

We have an annual inflation of 50, 60%.

We don't have the same options.

-Pablo Gerchunoff talks about the need for a popular export coalition.

Its viable?

-It is true that Argentina has not managed to put together an export lobby that makes it more likely that it will join the world. There is no country in the world that exports a lot and imports little. Exporting countries are countries with open economies and today the world is integrated through trade agreements. It took Mercosur an enormous amount of time to advance an agreement with Europe and this government ended up killing it. The export lobby was lacking that says there is a great opportunity, not only agricultural, but also industrial, to generate employment. And surely there will be sectors that are going to suffer, but studies showed that in general it was won. Having that export coalition would lead to an economy more open to trade and an economy that has to lower the volatility of the real exchange rate.An economy that has to prevent the public sector from generating high fiscal deficits, financed with foreign debt, with foreign exchange arrears. Because that bursts the export sector, unfairly.

- Is the agreement with the IMF successful? Will it be a roadmap?

-There will be a roadmap, something similar to a medium-term economic program, something that should have been in the budget.

Argentina has a record of having breached the agreements with the Fund.

It will not be a traditional program, because the fund learned.

But neither is the easy path created by Kirchnerism.