A brake on the dollar counted with liquidation and more money from the IMF to strengthen reserves: Alejandro Vanoli’s recommendations to get out of the crisis
Alexandre vanoli, the last head of the Central Bank in the leadership of Cristina Kirchner, estimated that the dollar counted with liquidation -which results from the sale of bonds to obtain foreign currency abroad- is “at panic levels” and said the government must take action “to stop this nominality ”. who on Friday took this parallel financial option (Senebi dollar) above $ 200.
However, the economist ruled out that Casa Rosada is heading towards a brutal devaluation of the peso and stressed: “The worst thing that can happen to us is to devalue without having a plan ”. For Vanoli, it is necessary that after the elections, the management of Alberto Fernández launches “an economic plan which changes expectations by 180 degrees” whose axis is to attack the issue of exchange rates and inflation.
“It’s a complex situation. After November 14, the government must formulate an economic plan, which rreverse expectations, change that feeling that inflation cannot be resolved and will remain inertial high the next months, the greater the sensitivity of the currency issue. You need a set of requirements. The main thing is for it to be systematic, for there to be coherent and consistent initiatives, ”he said in an interview with the newspaper. Profile.
In addition, he noted that it was essential that an agreement with the IMF include “whether by any mechanism whatsoever “a transfer between 5000 and 8000 million US dollars to reinforce Reservations The internationals of Central.
Argentina “not in a devaluation shock”, says Alejandro Vanoli
The former official, who went through the management of ANSES in the first tranche of the government of Alberto Fernández, stressed that “the exchange rate is in equilibrium” even when the difference exchange rate close to 100%. He attributes this difference to “the trust issues and imbalances that come from the 2018 crisis and worsen due to the pandemic is the counted with liquidate ”.
Vanoli said the CCL “He’s in panic levels. These are levels that We only see in 1989, in 1991, before the convertibility plan or in April 2002. It is fundamentalHe will take measures to sharply lower cash flowdated. Stop what is happening with nominality ”.
Regarding the official dollar, insisted that at historical levels it is in equilibrium, rejected a strong devaluation although he considered that the adjustment should be higher than the current one, around 1% per month when prices rise to 3%, to avoid the lag of the exchange rate and also to disarm the expectation of a hike of the dollar that results from inflation.
“Argentina is not shocked. For a plan to be successful, it must have economic, but also political and social sustainability. In Argentina, wages are falling and the social situation is dramatic. The official exchange rate is at reasonable levels and I think devaluing the official dollar much more would have very complex social effects, ”he said.
What measures is Alejandro Vanoli proposing to lower inflation?
Vanoli considered key to implement both unorthodox as well as unorthodox tools “to achieve a significant drop in inflation”. In this sense, he enumerated, to have a “monetary and fiscal policy compatible with a fall in inflation; a pricing policy, stopping the distributive offer. And of course all this is linked to stop this nominality from the question of exchange ”.
“In this sense, this is the question we all ask ourselves: are there any expectations of devaluation in Argentina? The worst that can happen to us is that there is devaluation without a plan. Government It must take a series of initiatives to reduce the exchange rate differential and gradually modify expectations. Combine stabilization and growth, in a context where real wages are very low. It is necessary to reach an agreement with the IMF to have a reserve buffer, ”he said.
In addition, he said that “a timetable is needed in which the set of economic variables are aligned over time. Commit to reducing the budget deficit by 3.5%. Make a multi-year plan to reduce the budget surplus, in which we are moving towards monetary unification ”.
“Once the cash with settlement has been lowered, with all the policies, with more reserves, with an immediately higher interest rate, we can say that in 12 months Argentina will have a single exchange rate. and will get out of this complex situation of various exchange rates which generate a series of distortions; communicate what the emissions will be and establish a growth trajectory for wages, prices and rates, which are maintained for these very vulnerable sectors, ”he added.
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