It is surprising that the Minister of Economy, Sergio Massado not resort to your own economic plan “to get out of the crisis that Argentina is going through”, as announced on July 5, 2018 after two years of the government of let’s change and a few days after the FMI approve it stand-by for almost 50,000 million dollars in favor of Argentina.
That year, the economy had collapsed due to the terrible drought and the rise in the Federal Reserve interest rate, which caused a run against the peso, taking its price from 20 to 40 pesos at the end of 2018. The country risk exceeded 800 points, inflation reached 47% and poverty 33%.
Shocked by the situation in the country, he brought together the best talents in the Front Renovator and he put in black on white the renewing formulas to get out of the crisis. In his diagnosis, the most serious thing was inflation, since, in two years, it had exceeded 100%, the dollar had risen 280% and Argentina was the country that had devalued its currency the most in the world. Had we hit rock bottom then? Our country will never stop surprising us. It’s just a matter of patience.
The stellar team was integrated with Jose Ignacio de Mendiguren (current Secretary of Industry and Productive Development); Matias Tombolini (current Secretary of Commerce); Marco Lavagna (current director of INDEC) and the late economist Aldo Pignanelli – the four under the guardianship of their dean, Roberto Lavagna.
The important thing was to teach Mauricio Macri how could inflation be curbed without resorting to IMF recipes. And how can you issue money to reactivate without worrying, as long as the banknotes are printed with a national and popular sense.
As a first measure, the menu proposed to eliminate the IVA of the basic food basket and apply the gondola law to break the cartelization of concentrated sectors. Not a word about fiscal deficit and monetary issue.
Why doesn’t Massa eliminate VAT now? Simply, because it does not serve to lower prices, neither now nor before. It implies more fiscal deficit with no guarantee that the reduction will be passed on to the public. A misallocated fiscal effort that favors the entire population without discriminating between rich and poor. Macri did it the following year to cushion the impact of the devaluation, although he did not extend it, for the reasons indicated.
As a second measure, Massa and his team dazzled with another idea as surprising as it was innovative: maintaining the subsidy on rates, adjusting them with the salary. If it had been an excellent measure then, why don’t you apply it today instead of increasing them in a segment? when he grabbed “the hot potato” and had to ask the IMF for help, with hard numbers and soft knees?
If there is any consistency between Massa’s plan of 2018 and that of 2023, it is the systematic refusal to recognize that, without reforms that touch vested interests during 80 years of Peronism, inflation will not subside nor will the country ever come out on top.
To demonstrate to the macrismo that the economy is not only trade and finance, José de Mendiguren sharpened his pencil and added two luminous measures to support SMEs, “the main source of employment and engine of the national economy”: the suspension of executions of the AFIP for 180 days and five-year loans at a fixed rate subsidized by the Central Bank. Undoubtedly, the renewal team put its best gray matter in the design of tools “to get out of the crisis.”
Did Massa seriously think in 2018 that he would move the ammeter of SMEs by suspending executions for 180 days? Didn’t it occur to you to eliminate distortionary taxes, such as checks, gross income and abusive municipal taxes? Was that all she could think of then? whatAnd he can’t think of anything else now?
As regards five-year loans, what company would want to borrow with rising inflation, a hacked exchange rate and digitalized imports? Massa knew and knows that soft loans, when there is no confidence, are diverted to financial speculation and not to production. Massa knew and knows that SMEs are overwhelmed by tax pressure, jeopardized by the trial industry, cornered by cost increases, cornered by the lack of inputs, fed up with trucker arrogance and anguished by political disputes.
However, by his pact with Cristina Kirchner to privilege his impunity, he cannot talk about structural reforms of any kind. If in 2018 you diagnosed that the problem was inflation, in 2023 he lowers his head and continues emitting without brake so that she does not lower her thumb. The SMEs will remain there: neither accompanied nor encouraged.
In 2018, Massa proposed a “managed float” of the exchange rate or crawling peg, to avoid exchange rate delays and devaluation jumps. In 2023, use the dollar as a cardboard anchor in an economy adrift, shaken by the perverse hurricanes generated by the exchange rate gap. Just afloat with dollars begged from the IMF that will increase the external debt.
In 2018, Massa called for restrictions on the entry of capital, such as the Chilean model of “financial parking” to scare away swallows. In 2023, with the massive departure through all available means, not even sparrows enter Argentina. Massa would sign the elimination of the parking as long as a “Fitito” or a 2CV entered paying the stay in green bills.
Five years ago, Massa required a customs emergency for 180 days to review imports and “finish the dollars that go with unnecessary products.” Perhaps he believed then, as he seems to believe now, that this leakage can be combated by reviewing containers instead of putting privilege regimes under the magnifying glasssuch as Tierra del Fuego, whose remittances abroad and frameworks offshore they are never audited by their trained hounds.
In 2018, Massa also proposed an “intelligent” administration of trade, so as not to worry the owners of captive markets. In 2023, she learned that commerce “managed” by Matias Tombolini it causes unjustified price increases and profits, paralyzes value chains and invites corruption, with its arsenal of exceptions and managers. It remains to be seen if his renewal team fights it, tolerates it or takes advantage of it.
In 2018, Massa prescribed an Export Promotion Regime with a subsidized rate insurance in dollars. With an industrialist vision, perhaps he was thinking of exporting manufactures with cheap financing and sales to Cuba, Angola or Venezuela, as is the trademark of Peronism, old or renovating. However, in 2023 the industry was left in a drawer and Massa has only applied Export Increase Programs with the sole purpose of accelerating the liquidation of foreign currency from the countryside to burn them at the stake of exchange intervention and the businesses of friends.
Industrial vision? In 2023, Massa emits as much as its leader demands, even though due to the “gap” there is a lack of industrial inputs and the competitiveness of any value-added activity is demolished, such as regional economies. Neither crawling peg neither managed trade nor productivist bias.
In 2018, Massa proposed an Emergency Bonus for the 4 million retirees with the minimum that would be financed with the Anses Sustainability Guarantee Fund. In 2023, Massa emptied that fund by taking out his bonds in dollars, to maintain the exchange rate gap. AND, instead of benefiting retirees, it is suffocating them with below-inflation payroll increases. Instead of touching privileged pensions, like the ones Cristina Kirchner charges without blushing.
In 2018, Massa advised to release parities to recover the purchasing power of wages. In 2023, he knows that this would be fueling the race with prices, which will never go down with his “renovation” program. As long as the public does not change its expectations, trusting in the Argentine currency and reducing its speed of circulation, the purchasing power of wages will always vanish, as in that Rodrigazo of 1975 or in subsequent hyperinflations.
In 2023, submissive to Homeland Institutefor whom currency is a fetish and inflation a prejudice, now Massa intends to increase consumption by extending credit limits and card limits, even knowing that people’s incomes are improved by strengthening the peso and not spending more firewood To consume with a card is to get into debt and, for debts, the national and popular one reflected in the Leliq is enough.
Neither Massa in 2018 nor Massa in 2023 spoke or speaks of investment or competitiveness or technology or value chains or cost reduction or entrepreneurial spirit or integration into the world or economies of scale or synergies or job retraining neither real salary nor genuine employment. No convening idea to promote sustained growth, with greater well-being and inclusion.
If there is any consistency between his 2018 plan and his 2023 administration, it is the systematic refusal to acknowledge that, without reforms that touch vested interests during 80 years of Peronism, inflation will not abate and the country will never come out afloat. A real pity for those who insist on making us believe that he took the renewal as a flag to overcome.