Breakfast with Aldo Abram: Argentina, on a winding path between the crisis, more stocks, dollarization and reforms to get ahead

Aldo Abram respondiendo a las consultas del público. Foto: Conrado Etchebarne

Protagonist of the exclusive breakfast for members of Libertad y Progreso, made with support from the Naumann Foundation at the Feirs Park Hotel, economist Aldo Abram envisioned a difficult path for the coming months, including a possible hardening of the stocks, virtual problems to comply with the obligations incurred and a potential disorderly dollarization, all occurring perhaps before December.

“Whoever the next President is elected on October 28 he should state clearly what he intends to do, and renegotiate with the Fund,” Abram predicted, before an audience of about 80 people. “I think Argentina is going to a dollarization in a disorderly way, with possible hyperinflation beforehand. Now we have to be clear that dollarization gives monetary stability, but it doesn’t correct everything. There are dollarized countries that are progressing and there are poor dollarized countries,” Abram said.

Abram also stressed that he sees a possible hardening of the stocks, and that the only way to regain credibility is to apply the “Freedom and Progress Reform combo” (see subtitle).

Below are tips from Abram’s talk:
1) Reprofiling: “This is a selective default, even if we say reperfilation. Some bonds are not being paid as originally promised”
2) Alberto, in the center: “Here the problem for the market is what Alberto Fernandez thinks, not what Lacunza or Macri think”
3) The laws: “It would be very important, not to enter a crisis in the very short term, that the laws that were sent to Congress with explicit support from Alberto Fernández and his party be passed. That is no guarantee that we will not go to a crisis but the picture improves ”
4) There should be: “Making the accounts of the reserves and the due dates, probably in October the silver will not reach. December is going to be a headache to govern who governs. It will be difficult to get there without a strong crisis”
5) Astronomical debt: “Already in the STEP we had a difficult situation with the debt. Already in August, it was seen that anyone who won was going to have to face the renegotiation, with 87% of GDP GDP”
6) The BCRA, guilty: “Why did the house of cards fall in 2018? Because of the lousy handling of the BCRA. There was a very strong shock of confidence when the government took office. We all believed that the BCRA was going to do things well. of the stocks better than expected. The problem is that the BCRA was there to support gradualism / immobility. It issued to finance the Government and recently did so again. Thus, between the brilliant idea of ​​the financial income tax and the tremor worldwide, we had crises again in 2018, with disastrous management of the BCRA. There we ran to ask the Fund for help. By October 2018 it was shown that giving the little machine did not work ”
7) Weights in fall: “The demand in pesos is collapsing, we are clearly going in a bad way and on top of that the BCRA is issuing at more than 2% per month. Having a BCRA issuing with the demand for pesos falling is having a fireman throwing naphtha in the fire. I would ask the BCRA why if the demand for pesos rises they put the stocks ”
8) Stronger stocks: “The stocks are going to have to be closed and getting stronger. Every time we are going to have to look more at the informal dollar. A large part of the market that moves in dollars was transformed into Pesos, as in the case of professionals who provide services abroad or retirees who charge in other countries ”
9) The AF team: “I think that in the beginning, AF is probably going to rely on the PJ and the figures of Kulfas, Cecilia Todesca, Alvarez Agis. There he will not do well and he will have to call the people like Guillermo Nielsen. Cristina can hardly run or do the Great Chacho Alvarez because she is in danger of having her whole family go to jail. I also believe that a government headed by him will have the BCRA giving the little machine to issue ”
10) Trust, key: “How is the only way to restore credibility? With a serious program of strong reforms. There are no miracles”

The essential reforms
Next, Manuel Solanet took the microphone and explained the combo of reforms proposed by Libertad y Progreso since its founding, and which is explained in the volumes “Progress in Freedom” (2014 and 2016), “The Reforms Needed to Grow in Freedom “(2019) and” La Clave es la Libertad “(2019). To acquire these volumes click here and here.

Among the measures set forth by Solanet, there are labor reform, state reform, commercial opening and tax reform. To know in detail the proposals click here