Argentina: the paradox of control

Lic. in Business Administration. Master in Applied Economics of the UCA. PhD in Economics from the UCA.

EL OJO DIGITAL – According to data from the National Institute of Statistics and Censuses (INDEC), Argentine exports fell 15%, in the twelve-month rolling sum measurement, from the moment the exchange rate was implemented, in September 2019. In this way, exports went from US $ 64,044 million to US $ 54,486 million. The same happened with the stocks implemented in 2011. Since it was installed in October 2011 and until December 2015 (when it was lifted), exports have fallen by around 30%, while, with the current stocks -implemented in September 2019 and with data up to December 2020-, exports decreased by around 15%, but in 1/4 of the elapsed time.

The drop in exports is a great problem for Argentina, fundamentally for two reasons. In the first place, because the entry of dollars in a country that is today notoriously in need of foreign currency is limited. On the other hand, after the implementation of the first stocks, Argentina entered a phase of economic stagnation that it has not yet been able to abandon, in a present instance in which the application of an old recipe that is known never has worked is resumed.

As such, the lack of reaction on the part of a government that, as stated by its referents, seems to be very concerned about the dollars that are leaving, but not about the few that enter. The aforementioned stock generates even more distrust when planning investments. It is an instinctive question: no one enters where he cannot leave. For example, if a fan of a soccer team knows that the rival barrabrava will wait for him at the start of the game, it is most likely that he will not go to the field. Similarly, they will never enter dollars, if later it becomes clear that they will not be able to clear a stocks. In this sense, it should be taken into account that an exit from the stocks does not guarantee economic growth either; It is a necessary but insufficient condition when it comes to regaining competitiveness. The validity of the stocks is only one of the many “patches” that the governments of the day have decided to use; recent policies are only intended to buy time, never to adopt genuine solutions to the underlying problems.

However, today Argentina once again has an opportunity, within the framework of the renegotiation with the IMF. If the government presents an economic plan that generates confidence, this would be a great first step, in order to recover lost ground. In any case, it must be taken into consideration that the origin of the crisis is of a political nature, and that it will not be enough just to design a coherent economic plan.