Sunday Horse, the former Minister of Economy who carried out the convertibility plan in the presidency of Carlos Menemmade a harsh diagnosis of the country’s situation and warned of a possible social unrest prior to next year’s presidential elections. “I don’t want to predict anything… but in an economy that is so disorganized and weak, with sectors that benefit, anything can happen“, he stated.
In a television interview, Cavallo explained the movements that the Minister of Economy should carry out, Serge Massa, to prevent a situation of this caliber from happening in 2023 in Argentina. “If at least they comply with the plan that I had formulated Martín Guzmán before the International Monetary Fund, made to avoid an explosion in 2023, we may survive,” he said. Although he differentiated the conversion plan that he established in the first Menem administration where he equalized the value of the peso to that of the dollar: «But stabilize the economy like we did, never«.
In that sense, Cavallo recognized how “impossible” to be able to apply a convertibility like that, but in the current economic situation of our country and detailed the reasons. “A plan like that rrequires trust and legal certainty, two things that we do not have. Therefore, if tomorrow a law is enacted that dollarizes the economy under Argentine law, it will be very difficult for citizens to believe that contracts in dollars will later be maintained. no guarantees«, indicated the former Minister of Economy in dialogue with +Voces por LN+.
Cavallo delved into his opinion and assured that “a new government” could reverse that situation as long as “it has a different orientation in economic matters, that creates a market that allocates resources well, that allows the private sector to make production, investment and employment decisions and that disciplines the public sector to manage itself under a balanced budget.” And he sentenced: «It is a 180 degree turn in relation to the current administration«, he highlighted.
The former Menemist and La Alianza minister classified the implementation of two measures to defuse the crisis as “extremely dangerous experiments”: a covert devaluation together with a generalized freeze. And he compared that scenario to what happened during the presidency of Maria Estela Martinez de Peronwhen Celestine Rodrigo, its Minister of Economy, carried out various adjustment measures that recognized the delay in tariffs and exchange controls. Consequently, he ordered a 100% devaluation and a 200% increase in monthly bills. The price liberalization generated from these decisions hit wages and large popular mobilizations took place.
“Both decisions brought some of the big problems that we have today. And if we continue with this type of experiment, given the current organization of the foreign exchange market, I have no doubt that a ‘Rodrigazo’ is going to start. Everything will end up being like in June 1975, when they tried to close a gap in a poorly organized foreign exchange market and resulted in chaosCavallo said.
Despite the bleak outlook that he predicted, Cavallo stressed that the government could implement a measure at the level of buying and selling foreign currency that would reduce the imminent danger. “So that all this does not happen, the government could let a free market work,” he said. And he reflected: «That is to say, everything that cannot or should not be channeled through the official market, would have to go to a free market. It is a market where everyone could participate and bring capital to the country so they can sell it at the prevailing price in that sector. The Central Bank could not control it either«.
And finally, Cavallo once again highlighted the harsh diagnosis of the economic situation in Argentina. «Not even the magician Mandrake is capable of stabilizing this economy, much less making it grow. There is no minister that you put in to fix this because the problem is ideas and not people“, he concluded.
Source: Elintransigente
