Martín Redrado: "Between December 10 and 30 there must be a shock of announcements and laws"

- You lived through the Lehman Brothers crisis when you were president of the BCRA, do you see anything similar today after a week in which the US bailed out two banks, a third is on a tightrope and Credit Suisse is reeling?

- No. For now I do not see a systemic crisis because the plumbing of the US financial system has been improved, especially in the area of ​​derivative products that surprised the regulators at that time.

Today I see a Federal Reserve that raised the interest rate very quickly in 2022 by running from behind the inflationary phenomenon.

In March of last year the rate was 0 and today it is 4.75%.

And in the midst of this increase, stress tests were not carried out to test what happens to bank balance sheets in the event of a sudden increase in rates or a devaluation.

What happens to the capital of the banks before raising rates was not analyzed.

"The value and production chains are adjusting based on the security of suppliers to supply themselves with energy and food. Argentina has an opportunity there"

- What is there to expect in the next few days?

- More

and next week's decision by the Federal Reserve: we will see if it prioritizes financial stability and does not raise interest rates any further, or if it increases it by 25 basis points.

In my opinion it should be the first thing, a

.

- The world changed after the 2008 crisis and the perception in many societies was anger for bailing out the banks.

Can this crisis affect the global economy?

- We are already coming from an economic reconfiguration with the pandemic and the war.

Globalization as we knew it ended and we now live with an established power and an emerging one.

In between there are tensions, fragmentation and regional reconfigurations.

The value and production chains are adjusting based on the security of suppliers to

there

.

- This new globalization, being perhaps exaggerated with what is called 'new', and this profile that Argentina should adopt towards the world, what does it imply when going out to look for capital?

- Perhaps it is necessary to put more focus on the lines of

organizations and less on the capital markets, which are volatile.

- But Argentina should not return to the international debt market?

- He has to come back.

But with an

that restores confidence.

You have to have a fiscal surplus to pay the interest on the debts and then renew the capital.

There is no country that pays the full capital owed.

- Today your role with Horacio Rodríguez Larreta is more of an economist or more of a chancellor?

- With Horacio we talked about everything.

From what to do with social plans to what to do with economic policy.

But there is a team of economists at JxC coordinating the different foundations with top-level technicians.

My role today is in the City in the Secretariat of Strategic Affairs where on a day-to-day basis I work a lot with Fernando Straface, who is in charge of the international task and I in issues of productive integration, seeing what opportunities there are in the world for Argentina.

We propose a foreign policy for development, to solve two problems: export more and create better jobs.

To do this, we must analyze value chains, strengthen the relationship with Brazil on infrastructure and energy, and work with countries to which we believe Argentina has given little importance, such as India and Indonesia.

"The level of protection in the economy has to be given by a competitive exchange rate"

- In the last 30 years the country oscillated with spasms between openness and protectionism, what's next?

opening again?

- In recent years the country's position with the world has been static and ideological.

What I am saying is that more than opening ourselves to trade, we must look for opportunities to integrate.

We are also interested in the

agreement .

We already know that there will be sectors that will feel affected by the latter, but like Brussels, there may be compensatory policies, they are agreements for 10 or 15 years.

- What level of protection does Argentina have to have for what is coming?

- I am with the economist Roberto Frenkel on this, the level of protection in the economy must be given

- What did you think of the reintroduction of import tariffs for notebooks this week?

-

.

I insist, I prefer that the economy be competitive because of the exchange rate and not because of tariffs or bureaucracy.

"The challenge is not to make changes because in Argentina changes have been made but they have not lasted long. The challenge is to make permanent changes backed by Congress"

- What can Argentina expect from the economic relationship with China?

- It is a subject that is discussed a lot with Horacio, who has a very

view of the issues and that is how the relationship with China is seen.

There are complementary interests and others not so much.

For example, we are not going to generate more bases like the ones in Neuquén.

If China is willing to invest in energy, it should do so under competitive and market conditions.

If a country offers an investment but then you have to buy all the inputs and machinery, as in China, for example, our position is that these costs are internationally competitive.

In addition,

.

- The US makes comments on the security of Chinese 5G technology, a decision that Argentina has not yet made.

He did not bid the spectrum.

- We should ask the US what alternative they have and what

in 5G.

Although 4G spectrums still need to be tendered.

We do not tie ourselves to a technology if it is Chinese or from Eriksson;

One cannot depend on a supplier because it could be a strategic error, as the war in Europe on energy matters and what happened to Germany demonstrates.

You have to bring options to a president and he defines.

- Can Argentina expect fresh funds from the IMF and the World Bank for 2024?

- Yes, because there will be laws that support the fiscal and monetary policy of the government and I mean an eventual government of Rodríguez Larreta.

We are working so that Horacio raises between December 10 and 30 the laws and agreements to make a change in expectations.

Last year Horacio traveled to Israel to internalize the experience they had in the eighties with stabilization.

And the synthesis of that case, the Austral and the Convertibility is:

- Can you get out of the trap quickly?

- We have a crisis of confidence.

And the challenge is not to make changes because in Argentina changes have been made but they have not lasted long.

The challenge is to make permanent changes backed by Congress.

If it is allowed to have a

, my vision is that the exchange rate can be unified relatively quickly because the cash will drop.

- What is relatively fast?

It is already different from the release of the stocks of 2015 from what it says...

- There are different

.

Alfonso Prat-Gay negotiated well that time, he had the support of large cereal companies and they reached a swap with China.

But the perception that we were wrong was not as entrenched as it is today and despite the fact that there were no reservations.

Maybe it was difficult to explain in 2015, but it was like when you lose your job and you keep spending your savings and sending the kids to the same school, vacations, outings.

- Then you don't get out of the stocks fast.

- A professor of mine from the UBA of Economics told me “when faced with a difficult question, the answer is

”.

It depends on the confidence that is generated with those 6 or 7 laws that Horacio would propose to Congress.

We work for that.

- Is there a lot of competition among JxC economists to be Minister of Economy?

- No, from me.

At this point in the match I am convinced that Argentina has to put egos aside and it is the president of the Nation who has to indicate the path and where each player is useful.

- Or is it that you do not aspire to go to Economics because you know that what is coming is not easy?

- There is no escaping the definitions.

You need a team with many people who can coordinate all the variables.

When Argentina coordinated economic policy it did well.

For example, the 2017 federal tax policy was a

.

"You need a team with many people who can coordinate all the variables. When Argentina coordinated economic policy, it did well"

- Do you perceive suspicion within JxC when Larreta summons economists like you or Martín Lousteau who went through Kirchnerism?

- We have to look to the future.

Each one can answer for their career and I had to work with

I was president of the Central Bank with the agreement of the Senate and I left there with criminal charges against me in 2010 for the reserves.

On paper, when we talk to JxC economists, I don't see big differences between what needs to be done.

- When you spoke with Cristina Kirchner during this government, what did you ask her?

- Except in a first meeting, we never talked about what to do but check official numbers that she brought from Economy and the Central Bank.

I was not proactive in those conversations but when asked I try to be an economist outside the crack.

Last year I spoke for a long time with

and the meeting was not publicized.

I do the same with governors, mayors.

Cristina consulted me until the assumption of Sergio Massa.

- Then the one who called him was Massa

- The minister knows that I insist on a comprehensive vision of the plan, equipment and laws.

At this point in the game you get into a charge if he can seriously make changes.

- From the economic point of view, do Macri and Larreta see them as very different?

Does Macri mark the field?

- The former president has a very important international presence.

I see the relevance of him when he has to travel abroad.

I don't know what they talk to each other but I understand that there shouldn't be big differences.

"We talked about everything with Horacio. From what to do with social plans to what to do with economic policy"

- Is the word 'agreement' in economics synonymous with soft for the hawks of JvC?

- What will generate a foreseeable, permanent change that cannot be reversed?

More conflict?

We believe that Argentina

.

We must seek synthesis and supported by laws.

The risk of more inflation and the post STEP impact

During the week the data of 6.6% inflation for February was known.

Martín Redrado spoke about the consequences and prospects of the inflationary acceleration unleashed in recent months.

The rate in February increased compared to January (it had been 6%), the annual rate exceeded 100% (it was 102.5% in February) and is already the highest since October 1991.

- How's this going?

can it get complicated?

- Yes.

For this, it would be necessary to have a convergence of fiscal, monetary and income policies.

Clearly each of them is going their own way.

It is true that the monetary policy complies with the financing rule of the IMF but found the device of buying bonds in the secondary market with the approval of the organism, with which the monetary expansion continues and we see that we have many pesos and few dollars.

This equation generates exchange tension and a gap that in our opinion has a floor of 100% and there is no policy that anchors inflation expectations.

The slowdown in activity that we are seeing is a product of supply restrictions, due to the lack of dollars to buy inputs, and due to demand, due to lower wages.

In the last four years, the registered private real wage fell 17.5% and the informal wage 28.5%.

This year's growth will probably be negative, that is, a contraction.

According to the City Statistics Institute, inflation in the first two weeks is closer to 7% than 6%.

- Can there be another round of inflationary acceleration?

- I do not see risks in the short term of hyperinflation.

There should be an increase in the speed of money circulation and a violent fall in the demand for pesos, and that is what makes it different from 1989.

- How can it impact the electoral campaign and the decisions of the Government until the end of the year?

- A lot is missing.

I think we have to wait and see what happens in the PASO in terms of whether they definitely show that after December 10 there will be a change or not.

My vision is that if after the PASO there is confirmation that an opposition government is coming, there will be financial placements in Argentina.

Argentine assets are very cheap and it will be a fact that financial capital will look at the country.

, if the companies will be able to turn dollars or if the rates will be respected at the rate that the costs of the economy grow, what will happen to the dollar and facts more than words.

The path for 2024 is solidity, a new program with the IMF and development-oriented international policy.

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