EL ARGENTINO – After the statements of the Minister of Economy, Martín Guzmán, who spoke of an economic plan whose objective is to stop the inflationary process and increase the recovery of the purchasing power of wages, the economist, Iván Cachanosky expressed his doubts about this program promoted by the Government: “What it tries to show as a victory, in truth, is still a failure,” he said. In addition, he blamed the Central Bank for the rise in prices and the opportunity with the IMF.
Despite the optimism and expectations generated by this recent recovery in economic activity announced by Martín Guzmán, Minister of Economy, yesterday (02/10) in TN, January inflation did not give up and reached 4 points, as did in December. On the other hand, there are those who allow themselves to doubt about this new economic program that the National Government has in its fight for wages to beat inflation.
The economist and head of the Fundación Libertad y Progreso, Iván Cachanosky, referred to the official’s statements and said: “It did not seem to me that the minister gave very strong indications to show an economic program,” he began. “The lack of a plan is the great debt that this government has. The proof of this is the high level of country risk that does not decrease “- he continued” – “If there were a credible economic plan, the country risk would be much lower. Guzmán let us see some particular issues that do not shape a plan. “
In addition, he added: “Later, he made rather political statements such as saying that inflation fell 18 percentage points, understanding that the opposite is that the economy was destroyed and fell 10%. I don’t know if it’s a positive thing. Nor would it pose as something positive that the economy fell 10% when it was supposed to fall 12.5%. We continue to be among the 10 economies that fell the most in activity due to the pandemic and due to a very long quarantine that also influenced the fall in activity. It seems to me that what he tries to show as a victory, in truth, is still a failure, ”he assured.
However, he stressed that the Government still “has an opportunity to regain the confidence that is negotiating with the IMF,” he warned. “It is not easy but the opportunity is there. That confidence is not recovered only taking into account economic variables. The crisis is political, too. You can put together the best economic program, but if there is political mistrust, you are going to have problems, ”he said.
On the other hand, as we have already said, one of the priority axes for the government is that prices do not win the race over wages. This is why the ruling party is constantly looking for a person in charge. First it was the supermarkets and then the countryside. When asked who is responsible for the price increase, Cachanosky argued:
“The main person responsible for the rise in prices is the Central Bank of the Argentine Republic, which issues a lot. It is not discussed in the world. Inflation, in short, is one more price. The currency has a price that depends on supply and demand. If you exceed the supply, you will have inflation. It is exactly what happens ”-he continued-“ I said that in April and May you had a growth in the demand for money, because if it hadn’t this would have been worse. The demand is now starting to drop and that is why inflation is very high ”, he completed.
“The effects of growing the money supply and printing money are not seen in the short term; it is seen in the medium or long term. Here we have been 6 months since money began to be printed and we are beginning to see the effects. Most likely, Argentina, in the first months of the year, will have to live with high inflation. Inflation in 2021 is going to be much higher than what the budget says ”, he projected.
Speaking about inflation in January, which was 4%, the business administration graduate explained: “It was totally to be expected. Most of the consultancies had numbers that ranged from 3.7% to 4.2%. Our estimate gave 4% as did the INDEC. The December one had given us a little lower ”.
In addition, he spoke about February inflation: “We are projecting that February inflation is going to be close to 4 points as well. This first fortnight is having a very similar evolution to that of January. You have to take into account that it is 4% per month, which is a lot, added to the low rates, careful prices, the prepayments that increased much less than what they were going to increase ”.
Finally, he added: “We have a pressure cooker that will uncover at any moment. Price controls have failed since the Roman Empire to date. When you have a Central Bank that issues like crazy, the consequences are these “-he continued-” There is an irresponsible Central Bank that responds to a monetary policy or an economic plan that is not very clear and that
he is not doing the right thing. So, this fiscal dominance, because there is a fiscal deficit, forces the Bank to print money and generates inflation ”, he closed. Source: (Libertad y Progreso).