"Reality has displaced the government's idea of ​​taking out the economy of the countryside"

Thursday, April 18, 2019

The Cada Mañana team has been talking to political badyst Sergio Berensztein about the government's economic announcements.

To badyze the economic announcements of the government and the electoral future of Argentina, Marcelo Longobardi shared his editorial with the political badyst Sergio Berensztein.

Marcelo Longobardi: Several measures were announced yesterday to freeze tariff increases, including electricity and transportation, which will be offset by subsidies. We will try to freeze several prices corresponding to 16 major companies. PROCREAR credits and ANSES credits have been announced. Payment of debts with AFIP. Knowing the economic thinking of President Macri, we imagine a certain tension between President Macri and candidate Macri. Here, candidate Macri prevailed. Obviously, there was a contradiction between these two characters who occupy the same person.

Sergio Berensztein: This contradiction has been solved in an unattractive way. The President, far from strongly supporting these measures, decided in a very heterodox way to communicate it with a video.

Longobardi: At one point, we talked more about video than measurements.

Berensztein: One interpretation is that the president did not want to pay the political cost of announcing measures with which he does not agree. This fuels two problems, one is the lack of trust that the market generates. The problem of trust was at the root of the currency crisis. The second problem that also caused the government some time ago is internal. The tensions that characterize the direction of Macri and that are far from resolved have been accentuated because one of them is the president himself.

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Longobardi: Macri considers as a candidate that the economy will be the axis of the campaign. It was under discussion until recently.

Berensztein: This is unusual because if the economy of developed economies is at the center of the debate imagined in Argentina that has been stagnant for a decade. This government voluntarism aimed at getting the economy out of the center of the discussion about society has been replaced by the weight of reality. The candidate Macri is a Macri who must agree with his coalition. These measures are inspired by the radical governors, the territorial leaders of the PRO, María Eugenia Vidal and Horacio Rodríguez Larreta.

Longobardi: Many people think that the thermometer will be the exchange rate.

Berensztein: If doubt must be one of the elements to follow. In Argentina, because of the mistrust that constitutes a structural value, there is always a dollarization of badets, mainly the year of elections. To the extent that the government manages to control the exchange rate will be very important. This is a necessary but not sufficient condition as country risk continues to grow. We are too obsessed with the election trip from here to October or November and we are not looking at the agenda of the future government. We must meet the expectations that will be generated by decisive measures of structural reforms. And this can not be done by any single government. Country risk expresses this mistrust. Argentina's policy does not logically meet this vision, perhaps with the prejudices of the markets. The government, by giving priority to the elections, postpones these measures that the policy as a whole must define quickly.

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Mr. Longobardi: The main electoral challenge for the government is to face the elections and win them despite the crisis.

Berensztein: From August to April, we trust the hyper orthodoxy. This did not help to lower inflation. When we look at successful anti-inflationary plans, they have had stabilization policies.

Longobardi: In Argentina, there were three programs, all three shocked. The three ended badly.

Berensztein: But they started well. The interesting thing is that we did not have that, there was no policy to reduce inflation. There is no discussion of a consistent anti-inflationary policy. Yesterday's measurements are not about it, it was a patch. PROCREAR credits, 10 thousand were announced. Yesterday, 35,000 people asked for information. The city of Buenos Aires has 40,000 writings a year. For construction to resume, it takes stability, trust. We do not have any of that in Argentina.

Longobardi: One element that the government can not control is the impact of a candidacy from Cristina Kirchner.

Berensztein: Before Neuquén's election, which was supposed to be competitive, Vaca Muerta's markets aroused great emotion. Imagine a national Cristina who has no credibility to convince anyone who wants to turn to moderation. Cristina's fear can accelerate the exchange rate and hurt Cambio's prospects.

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