After maintaining three months of silence about the economic situation, Cristina Kirchner reappeared on the scene with strong questions about Javier Milei's shock plan.
In a 33-page letter, the former vice president reviewed the failure of stabilization plans from the last dictatorship to the present, opened the door to negotiating some reforms and warned that the Government could order a new devaluation in the coming weeks, among others. of its main economic definitions which were the following:
1) Milei's program
"So far, the new government has only deployed a ferocious adjustment program that acts as a true destabilization plan and that not only feeds back the inflationary spiral, placing society on the brink of shock, but will also inevitably cause an increase in inflation. unemployment and social desperation in a kind of planned chaos. It is more than evident that in the President's head the only stabilization plan is that of dollarization."
2) "Failed officials"
In her letter, Cristina questions the recycling of "characters and officials": "The most worrying is that of Luis Caputo, architect of the serial indebtedness of Mauricio Macri's government and the return of the IMF to Argentina, whom she names, nothing more or nothing less than as Minister of Economy. Added to this is the reappearance as a star figure of Federico Sturzenegger, former president of the BCRA during the Macri government and protagonist of the “Mega swap” of the foreign debt together with Domingo Cavallo in the government of De La Rúa".
(...) Recycling failed officials to reissue failed policies can only lead to bad results."
3) The cause of inflation
"Unlike what is usually stated, in that the main problem of the Argentine economy is the fiscal deficit and the main cause of inflation, the monetary issue necessary to cover it; we maintain that inflation in Argentina skyrockets due to the shortage of dollars and that the compulsive indebtedness in said currency only aggravates said shortage by deepening the already known and structural external restriction of our bi-monetary economy.
On Valentine's Day and, as always, in love with the Homeland, I share with you the working document “Argentina in its third debt crisis.
Situation table”.
It goes with a quote from Juan Bautista Alberdi 😉 https://t.co/qI9aHm6l4D pic.twitter.com/BsH85d25g5
— Cristina Kirchner (@CFKArgentina) February 14, 2024
4) "Third debt crisis"
"40 years after having recovered democracy, Argentina is going through its third debt crisis. The first, originating in the last civil-military dictatorship and unleashed in 1989 with the UCR at the head of the government; the second, incubated in the convertibility and which imploded in 2001 with the Alliance government and this third, germinated in the process of fierce indebtedness of the Mauricio Macri government that implied the return of the IMF and whose outcome we are experiencing. This time with a deepening of the bi character -monetary of our economy, which aggravates the already known and structural external restriction".
4) Labor reform
"It is unavoidable to seriously discuss a labor updating plan that provides answers to the new forms of labor relations that have emerged in light of technological advances and a pandemic that disrupted each and every area of people's lives.(. ..) These updates must respect the rights achieved by workers, but they must also be carried out under the concept that once enshrined, rights carry obligations that must be fulfilled."
5) Privatizations and investments
"We also want to discuss the integration of State companies both through the participation of private capital and the provinces, in the event that their resources are affected by their economic exploitation, as well as their listing on the stock market to add value. and efficiency in the form of a virtuous public-private partnership. We are willing to discuss a regime that encourages large investments that add value and transfer technology. The opposite would be to re-primarize our economy and condemn us to extractivism."
6) Dollarization
"However, the novelty that Milei presents is his true stabilization plan, which is neither more nor less than dollarization, as he expressed it in the electoral campaign in numerous television interviews. To carry out this “plan” he has to obtain the dollars to rescue the Monetary Base and the remunerated liabilities of the BCRA. When in the electoral campaign it was suggested to him that he did not have enough dollars to do so, he replied that he was going to obtain financing from the Investment Funds. Milei became president but the financing did not appear".
7) "Debt in dollars is poison"
The former vice president pointed out against the reforms contained in the omnibus law: "The National Executive Branch (Milei-Caputo) will be able to re-indebt Argentina in dollars, without limits and under foreign jurisdiction without going through Congress, it will be able to restructure the external debt without the obligation to improve the amount, term or interest, will be empowered to liquidate the FGS of the ANSES and privatize the assets of the State. If these reforms are approved, more than a legal authorization, Congress would be granting a patent of marque to the President and his Minister of Economy. (...) That is why excessive debt in dollars is poison for our bi-monetary economy. And in the case of the IMF loan it is even more serious."
8) New devaluation
"Meanwhile, Milei is also deploying another alternative to dollarize. It is liquefying the remunerated liabilities of the BCRA and the Monetary Base via inflation and hopes that the brutal recession it is causing will interrupt the inflationary inertia and even allow it to carry out a new devaluation prior to the harvest. without the pass through prices being equivalent in percentage terms; as happened in 2002 when the fall of convertibility meant a devaluation of more than 300% and inflation was only 41% annually, given the context of recession and "a drop in the level of employment that would lead to 25% unemployment the following year."
10) Another Bonex plan?
In turn, according to the former president, a new devaluation "would allow her to rescue the entire Monetary Base that is increasingly liquefied with the dollars from the harvest that will come in starting in March and, if she still did not obtain enough dollars with the powers that Congress would grant him if the “Omnibus” law were approved, the President, despite saying that it would never affect private property, could issue a bond in dollars on the remunerated liabilities of the BCRA, also increasingly liquefied, thus giving a third appropriation of Argentines' savings as the outcome of this third debt crisis."