"Cristina's government may be more credible than Macri's"

The Argentinean economist and academic from Columbia University, Guillermo Calvo, presented his projections regarding the economic situation of Argentina just over two weeks after the primary elections.

Asked about the possible return of Cristina Kirchner to the post of Vice President of the Nation, Calvo said that "suddenly (…) is the best thing that can happen in the country." He also considered that to recover the country "You have to do things politically very unpopular, this can only be done if the economy collapses".

"The central question of Argentina is credibility. So nobody makes ambitious investment plans. The investment has collapsed and we can not blame the government; It's already an election issue. To do this, they "replay" the exchange rate with an interest rate that, if the system does not burst, is very high in dollars. It is also a short-term solution, which leads the investor to think that, as it can not last, he can not believe the government, "he said in a dialogue with Diario Financiero .

To be positive, he felt that the Argentine executive had managed to put an end to the devaluation, which had begun to lower the inflation rate. "It's still very high, because what you're talking about in annual terms, we're talking in monthly terms, so it's very high, but the worst that could have happened is that it's Anchor was completely lost, "he added.

Regarding the International Monetary Fund (IMF) forecast for the Argentine economy, Calvo said that "the forecasts of the Monetary Fund are good, because I do not know who can seriously predict and, moreover, hope and nothing 'other, because there is room for a much stronger fall'.

"So, I think it does not make any difference in the investor's thinking, as far as the drama is concerned, we could see if a government came forward and said," Well, we're not going to pay the fund ", we play again, it would be very strong," he warned.

"Whatever it is, I would expect a low growth rate.The problem is that you have to do things politically very unpopular, this can only be done if the ## 147 ## The economy is deteriorating, "he added.

He referred to the increase in public spending, which had increased by 20% over the 12 years of Kirchner government, because of high commodity prices. "It has practically disappeared, now it is no longer possible to finance it.This money went to the lower clbades, which we should applaud in principle, but unfortunately it is not viable in the long run, you have to reduce it, "he said.

For Calvo, public employment in Argentina has grown considerably and apparently ineffectively. "You have to start throwing people into the public sector, which is also very unpopular. And if it's done, you have to do it very slowly, for which they will need funding. What they have from the Fund they now have to pay, they will have to go through a process of extension and, in addition, have more money to do it smoothly, "he said.

For Colombia's economist, Argentina's debt level "is not high" and, as is largely the case with the IMF, it can renegotiate it. "The fund is already at the maximum of what it can give, that is, I think it's going to extend deadlines and all the rest, that's no question." in my opinion, the Fund is so engaged in Argentina that if Argentina says "no I pay you, the fund is facing a very serious problem," he said.

Comparing the current economic crisis with that of 2001, Calvo joked that, "In 2001, the economy had dropped by 20%, make no mistake: we know how to fall further, we are champions. Argentina and the IMF. "

The professor recalled that the Fund "was helping Argentina not to exploit", but he hoped that it would also help "normalize the situation and not do it".

"Basically, the fund put a lot of money on the table saying," do not touch it. "And when they were allowed to touch him, they hurt him badly," Calvo said.

For the economist, the economy lost credibility when reserves had to be used to curb the onset of the exchange rate that should float. "Nothing that has been done has helped credibility," he said.

"The Central Bank has lost its credibility, independence and everything else.When the Fund enters, it must stabilize expectations.It has not been able to do that.That is why its rates Interest are so high. people stay, as Borges said, not out of love but out of fear"Expanded.

Calvo pointed out that the Central Bank had acted badly in the face of the crisis, notably by announcing an annual inflation rate of 5% "out of the kitchen (surprisingly)". He said that they thought the capitals were coming to the country "because this guy is tall and blue-eyed".

He also said that he knew that the government had lied stating that he was not going to intervene. They did it and they thought "nobody notices it".

"That's the kind of attitude." They said "people forget and all that." People forget nothing, except for markets, "he said. declared. "They made the big mistake of having a very short-term debt – a huge amount that took away all the reserves. Then they reached an agreement with the fund, but it was corrective. There is no idea where it starts, where it's going"criticized the economist.

When asked again how the market was anticipating election results, Mr. Calvo said, "I'm going to be misunderstood, I think investors, if Macri supposes, have more time to get their money back, because Macri has shown no ability to handle this situation, which has aggravated the situation. "

"I'm not in favor of Cristina or her people, but I must admit one thing: if it goes up Cristina, she can look back and say … look at the mess that this man has left us. Now I have to make the adjustments that he should have made and that he has not done. & # 39; The advantage of the left in these situations is that the opposition is the right and that it makes right politicshe anticipated.

"Suddenly, Cristina is the best thing that can happen to the country, oddly enough," said the Columbia economist, anticipating that the Frente de Todos candidates will go to "apply fit with popular support, blaming the previous rule".

"A government with Cristina may be more credible than that of Macri, who will get very few marginal votes, with minorities and can not say" what I did was wrong. "The adjustment that it operates will be in principle Macri will need a prestigious personality, but I do not know if these people will want to be part of his government." He is very burned, he said. .

Finally, he felt that Macri could lose the election since the candidate Luis Espert "can vote at will."

"Then, all of a sudden, Fernandez wins in the first round," he concluded.

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