A24 – In an exclusive interview with A24.com, economist Aldo Abram recommended attacking inflation by stopping issuing pesos and devising a suitable economic plan to prop up the local GDP. In addition, he spoke about the impact of inflation on small businesses.
He started by stating that he sees “the president’s messages with great concern because rather than a war against inflation it seems like a war against the productive sector.”
“The Government has a terrible diagnosis of the causes of inflation. They believe that it is caused by concentrated powers that form prices”, he criticized.
ARGENTINA’S BIGGEST PROBLEM
According to the economic analyst, “the aim is to combat price increases by closing imports and withholdings exports. This increase in withholdings is unconstitutional and does not have positive results because it affects few.”
“In an average year for Argentina, inflation in February is usually much lower than in January. This year it was much higher in the second month. We have a phenomenal acceleration of prices”, reflected Abram.
Contrary to what the president said in his speech on Friday, March 18, when he announced the War against Inflation, Abram explained that “the first thing to understand is that inflation is not multi-causal. It occurs because the government in power makes the BCRA print more currency than the people want“.
THE CENTRAL BANK’S ROLE
In addition, he stressed that “for Argentines, having pesos is synonymous with fraud. We are saving so the BCRA can appropriate what we are generating. People don’t want their money stolen anymore.”
He added that: “the only cause of out currency’s loss of the purchasing power is the Central Bank, since is the only entity that can produce it.”
“If we continue on this path, we are going to lose the peso as a currency, which is what happened to Venezuelans in recent years and to Argentines in the 1970s and 1980s, when the phenomenon of hyperinflation occurred,” he diagnosed.
AN URGENCY FOR SMALL BUSINESSES
Towards the end of the talk, the economist recommended that SMB entrepreneurs be very “cautious”, because “it is very unlikely that the economic recovery can be sustained over time“.
“It is impossible to produce in the current conditions we have,” he concluded.