Why the double zero plan failed

Why a simple, easy-to-communicate program that benefits from extraordinary support (and co-creation) from the IMF has finally frayed and seen how to stretch your life month by month?
The plan is based on the badumption that inflation is caused by the deficit financed by a monetary issue. When the monetary base rose to zero and a primary deficit was sought, a strong signal was given to reduce inflation expectations. It started with a strong dollar that gave a competitive cushion, a high real rate and a liquefaction of the Lebacs pump. The IMF's super loan has eliminated the risk of default for lack of dollars. In addition, such IMF support would convince markets to charge a reasonable premium for repaying market debt.
Time has always been a key factor in the success of this program because it had deadlines to meet.
The idea was that: 1) the recession caused by the collapse of the Sturzenegger, Caputo and Corporate program and the first IMF program would be quickly overcome. 2) Inflation in this context would converge rapidly to reach 23%. 3) The dollar would appreciate slightly. 4) It would keep a real rate always positive, but down. 5) To the IMF's dollars would add voluntary funds of speculators and agriculture and 6) all this would consolidate the electoral probabilities of continuity of the scheme. But there are at least five factors that explain this failure:
1. The policy of monetary aggregates and the zero deficit did not coordinate expectations.
2. The dollar was more volatile than desirable because of a very wide "no-intervention zone";
3. Dollar rates have put a lot of inertia in inflation;
4. The interest rate was higher than expected for longer than expected;
5. The recession lasted longer than expected.
The plan was not enough to coordinate expectations in a binary country where the dollar is the best price coordinator.
The problem is that monetary policy, although the key to stabilization, is not the only determining factor. Inflation accelerates when relative prices, such as tariffs and the dollar, change. Especially in the Argentine economy where reigns a high inertia context with many semi-automatic adjustments making inflation persistent. It was necessary to have a specific policy on the dollar, but the IMF only granted a "no-intervention zone" that complicated things by forcing the BCRA to use the rate so that the dollar is not transferred to prices and prevents price leakage. Savers in pesos.
Fixed pazos (PF), especially wholesalers, are the star of this plan, with growth of 370 billion (45%). Every month, a FP holder receives 3 to 4% per month, but he actually knows that the dollar can vary according to the plan of 25% without reaching the roof of the region, which would eliminate in a few days the fixed term income. several months
The BCRA has fallen into the trap of having to exaggerate the interest rate to extreme levels so that people stay at a fixed rate and the holders of dollars and grains sell them.
We come to another key problem of the plan. A high interest rate that lasts a long time is explosive. Generates very high interest that is capitalized and makes a snowball of the stock. Thus, the Leliq which began in October with 400 billion dollars has reached in six months a trillion pesos.
As far as tariffs are concerned, the dollarization of these has generated a lot of inflation that has spread to all goods. An income policy should have been made by moderating the rate adjustment.
As the recession is wider and deeper than expected, real collection is declining, unemployment and poverty are increasing, creating greater stress on the political and social sustainability of the plan. Thus, it is not the political and electoral uncertainties, but the very conception of the plan that generated the inconsistencies that led to its failure.

* UNLP economist.
@jorgecarreraok