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A brake on the dollar counted with liquidation and more money from the IMF to reinforce reserves: Alejandro Vanoli’s recommendations to overcome the crisis

Alejandro Vanoli, the last head of the Central Bank in the management of Cristina Kirchner, considered that the dollar counted with liquidation -which arises from the sale of bonds to get foreign currency abroad- is “at panic levels” and stated that the Government must take measures “to stop that nominality ”. that on Friday took that parallel financial option (Senebi dollar) above $ 200.

However, the economist dismissed that the Casa Rosada is going to an abrupt devaluation of the peso and highlighted: “The worst thing that can happen to us is to devalue without having a plan ”. For Vanoli, it is necessary that after the elections, the management of Alberto Fernández launch “an economic plan that changes expectations 180 degrees” whose axis is to attack the exchange and inflation issue.

“It is a complex situation. After November 14, the Government has to formulate an economic plan, which rreverse expectations, change this feeling that inflation cannot be solved and that it will remain inertially high the next few months, plus the sensitivity of the exchange issue. You need a set of requirements. The fundamental thing is that it is systematic, that there are coherent and consistent initiatives, “he said in an interview with the newspaper. Profile.

In addition, he noted as essential that an agreement with the IMF include “be it by whatever mechanism “a transfer of between US $ 5000 and US$8000 millones to reinforce Bookings Central’s internationals.

Argentina “is not in for a devaluation shock”, according to Alejandro Vanoli

The former official, who went through the leadership of the Anses in the first tranche of Alberto Fernández’s government, pointed out that “the exchange rate is in equilibrium” even when the gap exchange rate close to 100%. He attributed this difference to “the trust issues and imbalances that come from the 2018 crisis and deepens due to the pandemic is the counted with liquidation ”.

Vanoli stated that the CCL “He’s in panic levels. They are levels that We can only see in 1989, in 1991, before the convertibility plan or in April 2002. It is fundamentalHe will take steps to strongly lower the cash flowdation. Stop what happens with nominality ”.

Regarding the official dollar, insisted that at historical levels it is in equilibrium, dismissed a steep devaluation although he considered that the adjustment should be higher than the current one, around 1% per month when prices rise to 3%, to avoid the exchange rate delay and also disarm the expectation of a rise in the dollar that derives from inflation.

Argentina is not in for a shock. For a plan to be successful it must have economic, but also political and social sustainability. In Argentina, wages are falling and the social situation is dramatic. The official exchange rate is at reasonable levels and I believe that devaluing the official dollar much more would have very complex social effects, ”he emphasized.

What measures does Alejandro Vanoli propose to lower inflation?

Vanoli considered as key to implement both unorthodox as well as unorthodox tools “to achieve a serious drop in inflation”. In that sense, he listed, having a “monetary and fiscal policy consistent with a drop in inflation; a price policy, stop the distributive bid. And of course all this is tied to stop this nominality to the exchange question ”.

“In this sense is the question that we all ask ourselves: are there expectations of devaluation in Argentina? The worst that could happen to us is that there is a devaluation without a plan. Government It must take a series of initiatives to reduce the exchange rate gap and gradually modify expectations. Combine stabilization and growth, in a context where real wages are very low. It is necessary to reach an agreement with the IMF to have a buffer of reserves ”, he said.

In addition, he said that “a schedule is needed in which the set of economic variables is aligned in time. Commit to reducing the fiscal deficit by 3.5%. Make a multi-year plan to reduce the fiscal surplus, in which we go to a currency unification ”.

“Once the cash with settlement has been lowered, with the set of policies, with more reserves, with an immediate higher interest rate, it can be said that in 12 months Argentina will have a single exchange rate and get out of this complex situation of various exchange rates that generate a series of distortions; communicate what the emission will be, and establish a path of growth of wages, prices and rates, which are maintained for those very vulnerable sectors, “he added.

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