López Murphy, Abram, Furiase: Why Economists Criticize Government Measures

IPROFESSIONAL – Several economists warned this Friday that the measures launched by the Government are “insufficient and lukewarm” to generate a climate of confidence and pointed out that “it is necessary to resolve the fiscal deficit and announce an economic plan.”

For example, Ricardo López Murphy assessed that the measures announced on Thursday by Martín Guzmán “arrived too late, they are small and did not address the biggest imbalances that exist.”

“Argentina needs a consistent and coherent plan that does not escape from the underlying problems,” he explained.

The former Minister of Economy of Fernando De la Rúa assured that “the danger of insisting with the patches is that the economic problems are much more acute” and that, instead, “a comprehensive program with multilateral support is needed”.

“Palliative” measures for agriculture
The economist Aldo Abram said that the package seeks to “buy time and contain the outflow of reserves”, but warned that the measures “are useless, they are only palliative for sectors that are thought to have some kind of improvement” .

Abram, an economist at the Fundación Libertad y Progreso, added that “we are going to see how the exporters to whom withholdings and refunds were improved react, to see if in this way it is possible to accumulate reserves again.”

He considered that “this is simply temporary and should be something to buy time to implement a plan to get out of the stocks, generating credibility and that is not what we have seen in the measures.”

For Federico Furiase, “we need to give some indication of how the fiscal deficit will be corrected within the framework of an agreement with the International Monetary Fund, that is key and it has not yet been solved.”

Furiase, director of the consultancy EcoGo, said that the reduction in retentions “falls short in what is the soy complex.”

“It does seem logical to me that the Ministry of Finance should go out to capture a part of the surplus of pesos through the linked dollar,” he said.

He also warned that “when you have a gap of almost 100 percent and a very strong excess liquidity, there is no interest rate that compensates if there is not a consistent and credible fiscal signal.” Furiase warned about the fiscal deficit and the lack of agreement with the IMF. Fury warned about the fiscal deficit and the lack of an agreement with the IMF.

Escape (unlikely) from devaluation
According to the consulting firm Analytica, headed by the economist Ricardo Delgado, the announced measures are “the last bullet before devaluing, which is the worst of the roads.”

He added that “giving those who bet on the devaluation bonds tied to the dollar, represents a stimulus for soybean producers to liquidate the harvest in these months.”

According to the consultant, support for construction “is very important, with a strong reduction in taxes for investment and the recreation of mortgage loans.”

For the economist Salvador Di Stefano, “giving benefits for people to invest or sell soybeans without giving long-term predictability is a mistake.”

“The Government makes economic announcements and announces the tax reform that is going to record many taxes on those who adhere to these economic measures,” he explained.

Di Stefano opined that “it should be given predictability about the taxes that are going to be paid and give a tax horizon.”

Economists Eduardo Fracchia and Martín Calveira -of the Austral University- agreed that the package of measures “is very tepid and does not change the climate” of distrust and uncertainty that had been registering.

Fracchia said that the measures do not constitute an economic plan, so the Government’s decisions were made based on a “short-term approach, a communication bet that will not move confidence.” Fracchia warned that the reduction in withholdings It was little and will not serve as an incentive for the liquidation of soybeans. Fracchia warned that the reduction in withholdings was little and will not serve as an incentive for the liquidation of soybeans.

“The package was not surprising: there is a lack of confidence, it is very tepid and the climate does not change,” he emphasized, noting: “Although inflation is perceived to be improving, this is still not very clear. Macro consistency is proclaimed and a firmer attack on the fiscal deficit ”.

For Fracchia, the approach of promoting exports, activating construction, mining and gas is “interesting. But with respect to agriculture, it does not seem that if withholdings are lowered so little, there is an incentive to liquidate. It still makes sense to keep the dollars in the silobags. The exchange rate gap is more important than withholdings to incentivize producers ”.

Calveira, from the same house of high studies, indicated that the set of measures announced reveals the particular objective of recovering the level of international reserves in a context of excess demand for dollars, which can turn into a deep crisis in the external sector.

“Unlike what was announced by the Central Bank during September with the focus on restrictions on the demand for foreign currency, now it seeks to encourage the supply of dollars from exporting agents,” he said.

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