Domingo Cavallo: “Inflation does not exceed 80% is the maximum that the government can aspire to”

Domingo Cavallo: “Inflation does not exceed 80% is the maximum that the government can aspire to”

Domingo Cavallo: “Inflation does not exceed 80% is the maximum that the government can aspire to”

The former economy minister has ruled out the possibility that Martin Guzman’s move could improve the economic situation.

Sunday Horse
Sunday Horse

Former Minister of Economy Sunday Horse Rated that In 2022, inflation will be around 72% But he assured that even rising prices could be worse. The former official analyzed that there might be a Average monthly growth of 4.5% From April to December. “If the annual inflation does not exceed 80%, it is the maximum that this government can aspire to.“, – confirms the former official in a personal blog with this title as a prerequisite.

Cavallo considered it so Joint negotiations will increase by about 60% They will still lose inflation. While his calculation, which he showed in graphs, boosts annual growth by 12 percentage points, he said it could be even bigger. “It could reach 80% if deviations from my forecast continue, which have already been observed in April.ლ “.

The former minister spoke, among other things, about the internal sisterhood of the ruling coalition He distanced himself from those who demanded the departure of Martin Guzman Treasury Palace. He wore it too Goals with the International Monetary Fund (IMF) will not be met In terms of inflation and foreign exchange accumulation.

Cavallo projected 72% inflation.
Cavallo projected 72% inflation.

“It is hard for me to imagine that this government will come up with a better alternative scenario, with Guzman or another economy minister who can change it in the current political context,” he wrote. I can imagine much worse consequences if the change of minister takes place in accordance with the ideas of those around the vice-president.“.

Former Minister of the Government of Georgia Carlos Menem Fernando de la Rua Acknowledged the economic recovery data but weighed on its results. “Despite the continuity of post-pandemic economic reactivation, an economic deadly layer is in place by 2024,” he argued. “The economy will not improve, but may deteriorate. And many“, – he explained.

In the face of this scenario, Cavallo argued that However, the International Monetary Fund issues the “denial” that the country demands To be able to lend more than 44 billion pesos and advance payments made by the agency during the administration of Mauricio Macri. “The IMF will try not to allow Argentina to ‘borrow’ (delay) with the institution,” he added.

Statements by the Minister of Economy, Martin Guzman, and the President of La Nación, Alberto Fernandez
Statements by the Minister of Economy, Martin Guzman, and the President of La Nación, Alberto Fernandez

However, Casa Rosada, he said, will have to make gestures towards Washington. “It will have to Will increase the rate of devaluation very soon In the official market (which should be 4 to 5% per month) “and, at the same time,” will have to Increase the central bank intervention rate (And the rate that the Treasury will be willing to pay to settle domestic debt), not less than 4.7% per month, i. 56% annual nominal or 73% Effective annual.

And deepened: “You will also have to A. Sharp increase in electricity, gas and transport tariffsTo reduce economic subsidies by 0.8% of GDP than was spent in 2021. Alternatively, he will have to Reduce capital costs Or another item in the budget, as a percentage of primary expenditures prior to the completion of this reduction.

Cavallo said that every time they tried to improve wage capacity, it lagged behind inflation.
Cavallo said that every time they tried to improve wage capacity, it lagged behind inflation.

Regarding salaries, Cavallo said that due to the price situation in the last three months, the government “will have to receive much higher increases than provided for in the macroeconomic program” presented by Guzman. However, he showed his pessimism: “Whenever there was an attempt to restore the wage growth rate, inflation would rise and real wages would deteriorate.“.

And he expanded: “So even though the unions are demanding a 50% to 80% increase over the next 12 months, We predict that by 2022 wages will increase by 60%, or an average of 4% per month throughout the year.“Given that wages in the informal economy are always lagging behind (as shown in Table 2) and that public sector wages can not rise by more than 4% a month to achieve fiscal targets.”

Source: La Nacion

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