Sturzenegger analysis on the economic failure of Cambiemos government

The former president of the Central Bank of the Argentine Republic (BCRA), Federico Sturzenegger, has been badyzing the erratic economic model of Cambiemos since taking office in 2015, underlined the "personal mistakes" and acknowledged that the company has not been able to do so. inflation goal was "aggressive".

In a recent article entitled "The Macro Macro: The Winding Road That Leads to Stability and Growth", Sturzenegger acknowledged the existence of an overt confrontation with the Treasury, which has more later reached other sectors of the government because of its decision. to raise the benchmark interest rate.

In addition, he indicated that 28D was at the origin of the debacle, because of the loss of credibility that it engendered.

The former head of the BCRA revealed that "gradualism" was the first condition imposed by Cambiemos executives for the design of the economic program, which began to be defined a year before winning the elections for "a group". economists, businessmen and civil servants. "

In this regard, he indicated that the slogan that adjustment should be progressive had a predominantly political motivation.

"The Macri administration had been stigmatized as a right-wing or center-right party and, as such, it was expected that it would begin its government with a major fiscal and monetary adjustment." Political team felt that it was necessary to remove this stigma. " ", says the text written in English by the former head of the BCRA.

The paper seeks to badyze the main factors that led to the collapse of Cambiemos' economic program. In this regard, he emphasizes that it is difficult not to invoke fiscal policy and its inability to reduce the deficit as the main culprit.

Sturzenegger also removes "inheritance received" – although he recognizes that it was not ideal – and the external context. According to the economist: "In the end, the fault lies in the policies adopted."

"Although the macroeconomic legacy received by the government is not ideal, it is difficult to blame the results," he wrote, contrary to the official discourse.

The economist has relativized the role played in the economic crisis by the historical drought that affected the harvest of the previous year and by the rise in the interest rate in the United States, which Macri summarized – along with other facts – in his emblematic sentence: "We were doing well, but things have happened."

For Sturzenegger, the postponement of fiscal adjustment and, most importantly, the government's interference in the monetary program were the main reasons for the debacle.

"In the end, the fault lies in the policies that have been decided," he said. "The deterioration of fiscal policy in the first place, then the choice to bet on short-term growth, even at the expense of monetary institutions and inflation," he added, referring to "28D ".

Sturzenegger felt that having weakened the fight against inflation was "an onerous and obvious political mistake" and apparently "paradoxical" for a team that had demonstrated outstanding professionalism in its risk badessment. and political advantages and perceived deflationary benefits in the 2017 parliamentary elections. "

In addition, the former president of the central had acknowledged that the goal of inflation that he was supposed to achieve under his leadership was "aggressive."

"In the end, the problem lies in the policies decided upon: the deterioration of fiscal policy in the first place and, later, the choice to bet on short-term growth, even to the detriment of monetary and financial institutions. inflation, "said Sturzenegger. .

In this context, he asked: "Was the inflation target too fast and aggressive?"

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