Argentina, The Worst Country Prepared Before The Crisis

EL ECONOMISTA – Argentina is the worst prepared country in the region to face the Covid-19 crisis and the “economic fundamentals” in the entire region are in a much more vulnerable position than in the 2008 crisis, said Libertad y Progreso. According to him, the situation is “alarming” and “the impact of this recession will depend on the margin of fiscal and monetary maneuver in each case.”

Comparing Argentina’s fiscal margin with respect to Peru, for example, the latter country lowered the fiscal pressure in the last five years from 14.7% to 13% of GDP and the balance of external public debt from 12.4% to 9, 8%. Furthermore, its fiscal deficit is only 1.6% of GDP, down from 3% at the end of 2017. Thus, this country “can apply a fiscal stimulus plan of 12% of its GDP because it has a fiscal margin to do so.”

For its part, when comparing Argentina’s monetary margin with Ecuador, the difference between the two countries “is abysmal.” In terms of domestic credit as a percentage of GDP, Ecuador increased its ratio from 18.1% in 2002; 21.8% in 2006; 22.9% in 2007 and 42.8% in 2019. In contrast, in Argentina, this indicator does not exceed 16%. In terms of inflation, Ecuador accumulates a price rise in the last 10 years of 26.3%, while in Argentina it climbs to 1,620.3%.

In international reserves, the percentage of coverage with respect to external debt is close to 23.6% in Argentina. However, they are still far below the region: in Peru this ratio is 90.5%, in Brazil 67.2%, in Paraguay 49.5% and in Colombia 35.5%.

In this scenario, the report maintains that “the policies that are implemented to cushion the crisis will depend on the set of decisions that each country made in recent years.” “Unfortunately, both in the 2008 crisis and in this Argentina, it did not initiate the necessary reforms to resolve containment and stimulus measures; being the population ultimately the recipient of the negligence of its rulers, “he concluded.