The former Minister of Economy Nicolás Dujovne defended the agreement with the International Monetary Fund (IMF) to which he arrived when he was an official of Mauricio Macri, considered that the current government does not have a serious program and that a plan to “put money in the pocket” of the population “is not consistent in the long term.”
The former official, who agreed in 2018 the loan for $ 45 billion with the IMF, reappeared after several years without making public statements. He emphasized that “it is not the same to lower the fiscal deficit by normalizing rates, than by liquefying pensions.” He considered that the austerity in the accounts he showed Martin Guzman in the first tranche of 2021 it was “generated by the rising inflation”.
For Dujovne, Guzmán’s fiscal balance “is not the product of a structural adjustment policy. The liquefaction of public works and pensions financed the increase in subsidies. None of this is sustainable over time ”. Then the Nicholas Dujovne’s main definitions about the economy that is coming in an interview published this Sunday by the newspaper Clarion.
Inflation in 2022 will be higher than this year, warned Nicolás Dujovne
Although the former Minister of Economy called to be cautious Faced with the threat of an inflationary acceleration after the November elections, he considered that “no big changes in the credibility ”of the Government’s economic program“ it will have to continue to be financed with monetary issuance, which would lead to prices rising above the estimate of the 2022 Budget (33%).
“Inflation is surely higher than that of 2021,” he said. And he added that “the risk that fiscal policy will aggravate the inflationary situation is very close even when this occurs with lags,” he said.
And he added that “nothing is sustainable if it turns from one year to the next. It is not the same to lower the fiscal deficit by normalizing the price of public services than by liquefying retirees as they did now. Average retirements today are 10% down in real terms than they were in August 2019.
Nicolás Dujovne disavows the pre-election “little money in your pocket” plan
The former minister of Mauricio Macri remarked that the government’s electoral defeat in PASO 2021 was not related to the non-application of an expansive spending policy. “They were defeated by the lack of a consistent program and an acceleration of inflation between the end of 2020 and these elections with a rate above 50%, beating wages,” he said.
Consulted on the relief measures that launched Let’s change after losing the STEP of August 2019, and when he was no longer a civil servant, Dujovne said that “from a fiscal point of view the measures of Macri they were irrelevant”.
“There was some modification of the VAT on milk, something with the minimum non-taxable income tax and not much else. The most relevant was the reinstatement of exchange control. The electoral comeback after the PASO for Macri, in my opinion, had no connection with fiscal measures that were ultimately innocuous because we were aiming for a deficit of zero and closed at 0.4% of GDP. The comeback was due to his approach to the people ”.
What Nicolás Dujovne said about the accounting maneuver to compute IMF funds in the Budget
For the former minister, the accounting maneuver by which the Government incorporated into the 2021 Budget, the US $ 4334 million of special drawing rights (SDR) that the IMF issued due to the pandemic, “is not something striking.”
“The simplest way to account for that aid was as Treasury income and use it to pay the IMF. But the BCRA is at the limit of the financing of the Treasury and could only change that ceiling with a decree that modified the Bank’s Charter. Instead he made the space with the money from the Fund “, he indicated.
Dujovne warned in this regard that the accounting maneuver may lead to “more issuance, more dollar gap and more pressure on the reserves ”of the Central Bank.
For Nicolás Dujovne “the program with the IMF did work”
The former head of the Palacio de Hacienda defended that during his tenure and with the markets closed, Argentina had turned to the International Monetary Fund “as a lender of last resort.”
The former head of the Palacio de Hacienda defended that during his tenure and with the markets closed, Argentina had turned to the International Monetary Fund “as a lender of last resort” and argued that “it was not an electoral plan.”
“For me the program with the IMF did work,” emphasized Dujovne, who argued that “avoiding a default was very important for us.” He considered that “to say that the program did not work because they killed him when it began to work is epistemologically incorrect.”
“I think that this administration (Alberto Fernández’s) had a huge opportunity to take advantage of what we had done and say ‘It seems good to us to converge to the fiscal balance but we want to do it instead of reducing spending by increasing taxes’, something that I do not agree, but I think they would have done much better with that vision. The program was not down and even Argentina could have gone to the IMF when the pandemic began to ask the IMF for the rest of the disbursement ”.
Regarding the rescheduling of payments for the loan of US $ 45,000 million that Guzmán’s administration faces with the Fund, the former official indicated that “for two years they have been going around, why not finish closing a negotiation that gives credibility to the Government in matter of its monetary and fiscal program? According to Dujovne, the government of Alberto Fernández “did not present and do not seek to close an agreement until now.”
“You can agree if you have a good tax program. But it did not present and did not seek to close until now. It is my perception, I am not aware of the negotiations, but you see that it has been two years and there was no progress. Putting a solid program on the table would have been a good way to build credibility for peso holders. Now if this program is within the framework of an agreement with the IMF, credibility can increase, “he said.
Dujovne dismissed that “a national agreement is necessary for the agreement with the IMF, as they affirm from the Executive Power. “The Fund wants only political reinsurance, for the country to go in a direction compatible with a solid program and not what the opposition thinks.” And before the criticism of the Front of All to the indebtedness of 2018, he launched: “If the IMF is dedicated to damaging the countries then that Argentina leaves the institution. I did not listen to that proposal.
“The program that Argentina requested and granted by the agency was correct. It was a decision about a program supported by the world in a country that was going in the right direction, that was making the right policies ”, he defended.
Asked for what he believes were the reasons that the injection of money that the agreement with the IMF meant did not favor Macri, the former Minister of Economy considered that “this confirms that it was not an electoral program.”
“We decided that we had to do what was necessary for the economy to be good again, and so did Mexico and Portugal. You cannot do economics from the Ministry thinking about the next month or quarter. Did we lose? Yes, but one does not go to the government to win elections, “he said.
What Nicolás Dujovne believes about the dollar stocks
Two years after the reinstatement of the foreign exchange cap and the limitation for the purchase to $ 200 a month per person, the former Minister of Economy – who left office after the defeat of Cambiemos in the PASO of 2019 – stated that the exchange control regime “is dysfunctional.” He considered that the return of the stocks began “only when it was learned that a government was coming that would reinstate control of capital.”
“It is very difficult for foreign investment to come in the long term with a scheme of this type. It serves temporarily, in the face of a big shock, but then you have to think about how it comes out. In no way can it be a permanent scheme ”, he completed.
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