Minister Sergio Massa during the closure of the promotion regime for agro-industrial exports
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The former Minister of Finance Nicholas Dujovne participated tonight in +Interviews, the program hosted by Luis Novaresio on LN+, where he gave his opinion on the economic situation and raised a possible recipe against the fiscal imbalance.

Asked about what he plans for next year, the former Mauricio Macri official was categorical: “We are going to be worse.” As he argued, the reasons are several. “The climatic conditions are showing a high probability of a significant drought, we already see it in wheat, we hope not to have it in corn and soybeans. But if it does happen, the supply of currency will be less and the quantity produced will be less. We are going to have a contraction in the GDP, the economy is going to decrease. Since we are not facing the fiscal problem and we are issuing money and we do not have another source of financing inflation will be higher because there are also many Treasury debt maturities in pesos, which the Central Bank is probably going to buy on the market,” he predicted.

In this context, raised a solution and he said what the Government should do to face this macroeconomic imbalance. “The solution to all this is very clear: the Government would need a forceful fiscal program that changes expectations and that he does not want to, cannot or does not know how to do. It is what we need today and it is the only thing that would turn this situation around ”, asked the economist.

Dujovne held that the country is at risk of entering hyperinflation, although he clarified that time is lacking. “When one goes to a speed of 100% annual inflation, that is showing us the symptom of something complicated. A serious fiscal situation where the deficit is very high. In addition, another phenomenon is taking place, which is that people increasingly want fewer pesos in their pockets”.

Regarding inflation, Dujovne maintained that next year it will be higher and added that it will also depend on the speed at which Argentines want to get rid of the pesos. “If the demand for money falls at a faster rate, the risk is greater,” he said.

In this line, he expressed his opinion why he believes that the Minister of Economy, Sergio Massa, projects inflation of 3% for March. “I think they are trying to drive expectations towards that level, thinking that in some way they can rebuild the demand for pesos, but without a very powerful signal from the point of view of economic policy, without that it is very difficult for it to go down. There is voluntarism and an objective decision to guide expectations down. But there is no objective fact of reality that tells us that this is going to happen today ”, analyzed.

And he added: “When one looks at the fundamentals, the fiscal deficit will still be very high in 2023, the deficit of the Central Bank is getting higher, because it is trying to control the parallel prices of the dollar by raising the interest rate, On the one hand, it helps to avoid an escape of the parallel dollars, but on the other hand, it greatly increases the issue. It is a factory of pesos so much bigger than the one generated by the fiscal deficit that it is very unlikely that inflation could be below the levels we are seeing now and it is almost a miracle that inflation is not rising”.

It was then that Novaresio asked him about the wick of the bomb that the Government is extending to reach December 2023. “Hold on?” he asked. “It’s hard to answer because you have to define ‘hold on’, but the economy is entering a recession. Wages are losing against inflation, investment is slowing down, because to produce you have to import and the Central Bank today prohibits imports, so it is very difficult to think that the economy is going to continue expanding,” said Dujovne. And he added: “They are playing with fire. The most unpredictable part of all this is how the private sector reacts.”

With a view to a possible political change in 2023, the economist predicted that the new authorities “will face the fiscal and quasi-fiscal problem” and in this way the country will be able to avoid hyperinflation.

Dujovne gave his opinion on Sergio Massa’s management at the Palacio de Hacienda and maintained that the minister is correcting the strong imbalances of the first part of the year. “When Massa arrived, I saw some movements towards a more pragmatic vision of handling the economic issue with respect to what former Minister Guzmán had been carrying out. He was able to navigate a peso debt crisis by offering bonds that met market demand at the time. He set foot in public spending, but delaying payments for a while is not solving the fiscal issue and today Argentina has a problem, ”said the former official.

Minister Sergio Massa during the closure of the promotion regime for agro-industrial exportsSantiago Filipuzzi – THE NATION

Then he ironized: “If Massa was a plumber, he put chewing gum in a pipe to cover it. The gum does not hold, you have to change the pipes.

“The healthy thing for the whole of society and especially for the most vulnerable sectors is to correct the deficit and stop issuing money and charging the inflation tax every day,” he said.

The former minister maintained that he would resort to the International Monetary Fund again if he were in the same situation as in 2015. “Of course he would return to the Fund. Look what happens when there is a deficit and money is issued. When one has a fiscal deficit, the alternatives are to issue debt, use the Central Bank’s reserves or issue money. The IMF was created for this, if it is so harmful we should leave the entity. We use the money from the Fund to correct the fiscal situation without going into debt default, which is something very serious. For us it was very important to continue paying the debt, ”he argued.

At another time, Novaresio asked Dujovne if he had proposed to Mauricio Macri, during the Cambiemos administration, to dollarize the economy. It was there when the former official assured that no, but recounted a concrete fact about monetary policy that he managed to evaluate with the then president.

As he put it, it was a common currency with Brazil which was not finally proposed because the Central Bank of the neighboring country did not approve it. The idea arose in a conversation between Dujovne and Bolsonaro’s Finance Minister, Paulo Guedes, and proposed a supranational bank with a common currency called “Real Peso.”

“The idea seemed very generous to me coming from a country that had inflation of 2% per year, a country with which we share the terms of trade, because we both export basic goods and because we are integrated through Mercosur,” recalled Dujovne.

“A few days after the conversation I traveled to see Guedes with the idea of bring the proposal to both congresses and we were very close to announcing it, we couldn’t because the Central Bank of Brazil did not agree at the time, so President Bolsonaro decided that we wait longer. It was the most concrete fact that we had in terms of discussion of exchange rate monetary policy with President Macri”, closed the economist.


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