Capitalism prefers Evo, not Macri

The reality is that Morales has sponsored a more market-friendly policy than Argentina, although it is still far away. In the mountainous countries, the tax burden is around 26% of GDP (with Macri, 33%), cumulative inflation in 2018 was 1.51% (in Argentina, 47.6%), unemployment fell at a historical minimum of 4.2% and interest rates are well below those of Argentina.

Bolivia is therefore among the most expanding in the region. It closed the year 2018 with GDP growth of 4.7% and ECLAC estimates at 4.4% in 2019, after having increased by 78% at constant prices over the period 2006-2017 which reduced poverty from 59.9% to 36.4%. %, almost the level that Argentina will reach in 2019 when GDP per capita is estimated to return to 2007 levels.

And Wall Street knows it. In addition, Bolivia has access to international credit at reasonable rates – not if Macri – is receiving more and more foreign direct investment (-116% more in 2017 than in 2016) and, in Argentina they decrease. But all is not good, for example, the profitability of the AFP (private, although with a oligopoly established by the State) exceeds 8% per year in December 2010, but in 2018 it has fallen to 2%, because now The government forbids them to invest in the most profitable instruments.

During this time, we spend here an artificial summer or the tranquility of the cemetery according to your appearance. Stable dollar – thanks to the very high rates of Leliq, which kills production – to country risk and falling rates, while the very high tax burden increases (60.5% of FADA's agricultural income).

Admittedly, they exceed the budget deficit targets and may reach the zero primary deficit in 2019, although it is necessary that the deficit – taking into account the interest on the debt – be reduced to zero, mainly because the Recovering the tax that falls, in real terms, will complicate everything. But that does not go directly to the private sector, to the productive sector.

The 2018 data point to a worse future, despite forecasts. In November, activity fell by 7.5% (and -6.4% in December, according to Ferreres), the industry collapsed by 13.3%, construction by 15.9%, consumption 6% and employment. Regulated at 1.4%.

According to the latest report on recovery policies, real GDP in 2019 would fall by 1.2% and by 2020 by 2.5%. But as always, EMNs are fixed, we should expect much worse numbers. In fact, they predict that inflation would reach 29.9% by December, while they had recently "only" 15.5% expected.

Since the BCRA bought only $ 560 million – $ 20,876 million – in January, the basic monetary objective rose from $ 1,351,000 million to $ 1,358,000 million, or $ 1,372,000 million. dollars the following months. The WB today is $ 1,367,319 million; if we add the debt to Leliq, pbadions and others amounted to $ 2,186,682 million. The reserves of the BCRA amount to $ 66 413 million and, with the entry of the fourth tranche of the IMF in March, $ 11 000 million would remain in approximately US $ 77 000 M. The total debt of the BCRA, including Leliq, pbades and other, is $ 823,245 million, or approximately US $ 22,164 million, or 33.4% of reserves.

At present, the strategy seems to consist of collecting reserves without broadening the monetary base. For example, receiving IMF dollars and absorbing pesos via Leliq. But, failing to understand that inflation is the surpbading of real-time emissions relative to the demand for money, a series of mistakes is made which, contrary to what they claim, fuels inflation such as inflation. issue to buy dollars or save Leliq.

Ironically, Leliq's same positioning is inflationary because it absorbs the demand for money in real time, which increases the gap with excess supply, even though the BCRA and many badysts – Keynesians or conventional – consider that inflation is the surplus – static of the currency in the market and, therefore, believe that the absorption of weights is resolved. In addition, if the banks dispose of these securities, it is likely that the BCRA will force reserve requirements to increase, which is inflationary to the extent that it implies a contraction of the money demand.

Any artificial monetary movement – not coming from the market – is inflationary. Thus, the drop in February's reserves would inject more money and, although it does not change the total of the MB (equal to the volume of circulation plus reserves), it is inflationary because it implies an increase in the supply of currency not requested by the market.

Whatever it is, just like Macri did not get any investments during his first trip to Davos nor in any other trip, he will not get them in India as long as the tax burden, inflation and interest rates will not decrease. So, instead of spending this next trip, the money from this impoverished country should at least mimic Morales' policy.

(*) Member of the Advisory Board of the Center on Global Prosperity of Oakland, California.