Sunday, January 16

Fanelli: “With this investment rate it is impossible to create jobs and reduce poverty”

He noted that income distribution has recently improved (Gini coefficient) because it was bad for the poor, but it was worse for the rich.

After indicating the high relationship between poverty and inflation, Professor Fanelli argued that solving the problem of growth demands think holistically, considering the fiscal deficit but also the distributive conflict.

The Argentine economy has structural problems that are manifested in the fact that the most productive sectors (agriculture, industry) tend to lose position in the generation of employment, while the less productive sectors (services, government) advance.

Dollars left over

Para Fanelli it is not true that dollars are missing. He recalled that the trade surplus until October accumulated 13,940 million dollars and that Argentines are net creditors of the world in about 150,000 million dollars, with external assets exceeding 400,000 million.

Why are these dollars not in Argentina? Paraphrasing Bill Clinton noted “It’s the uncertainty, stupid”, referring to the core of the problem.

The economist was emphatic in pointing out that the Argentine economy does not only have a short-term problem, but that it is “In a trap that has structural characteristics”. And to get out of this situation you need to grow with more investment, private jobs and exports.

In the field of solutions, he considered A priority is to reduce the fiscal deficit, define a nominal anchor to combat inflation and correct distortions in relative prices. In this sense, he evaluated how critical that an agreement be reached with the IMF and that the political forces achieve minimal consensus.


He remarked that it is necessary for politics to agree on some substantial issues, such as that there should never be fiscal dominance again, that is, to put it rudely (he apologized) “With the fiscal deficit it is not screwed”.

Their recommendations also contemplate that avoid “anti-tradable” and “anti-employment” biases. This requires a new monetary regime, proper management of the exchange rate, tax reforms, facilitating access to private credit and improving labor regulation.

In addition to alerting to the need for estability in the necessary reforms, culminated by pointing out that Argentina also needs “a bit of luck” in a world that is witnessing a tightening of monetary conditions after the passage of the pandemic.


Source: JMFanelli