Monday, November 29

Guzmán foresees lower inflation and announced that the freeze will be replaced by a price agreement

The head of the Palacio de Hacienda also stressed that the country needs “more dollars from exports to be able to maintain the exchange policy, with greater stability and less depreciation” of the peso, as part of a process, “which takes time, although it is already happening. “

Inflation in October reached 3.5%, similar to that of September, despite having frozen the price of 1,432 essential products in supermarkets until January 7.

In the last 12 months inflation reached 52.1% and in the first ten months of the year 41.8%.

Guzmán added that the debt problem must be solved, “which put a burden on the demand for foreign currency, which implies more inflationary pressures,” as well as the problems of public financing.

In this context, he assured that “the one who leads and negotiates with the IMF is the national government” to renegotiate the US $ 45 billion debt that the country maintains with that organization.

“We are looking for an agreement that is based on our political vision. We seek to send Congress (a proposal) once we have reached an understanding with the IMF staff ”.

To all this are added the international problems: “what happened this year was very difficult to predict, there was a disruption of the production chains that affected the supply of products, and at the same time the pandemic changed consumption patterns; this put great pressure on prices around the world, with inflation peaks in decades. “

The minister also stressed the importance of “coordinating expectations and price formation decisions.”

“When there is going to be a great devaluation and a very large inflationary effect, and in advance everyone begins to update profit margins, then prices rise. That gives persistence to the inflationary process,” he explained.

In this process, said the head of the Palacio de Hacienda, “the unions responded in a coordinated manner,” while “among the businessmen we had more difficulty.”

“There are sectors that decide not to accompany and even demonstrate and take actions against or lobby, and the State cannot sit idly by,” he warned.

In this sense, Guzmán said: “we seek greater, more constructive support so that we can complement the macroeconomic policy that we are carrying out, through consistent price agreements that anchor expectations.”

The minister recalled that Argentina “is limited in its instruments, when there was access to credit, it was raffled, and the currency was weakened,” while there are “enormous needs after three years of recession and pandemic in which the role of the State had to increase” .

In this framework, he anticipated that the economy will grow this year by more than 9%, after having fallen by 9.9% in 2020, 2.9% in 2019, and 2.1% in 2018.

In the midst of this tension between debt, inflation and growth, Guzmán pointed out that “there are very fine corridors, the fiscal deficit that can be financed is low compared to the needs of higher spending and the financing restrictions are such that we have to resort to good measure to the monetary issue “.

That, “in an economy that has reached this de facto bimonetary character, puts pressure on the exchange rate and generates instability.”

The official also specified that the evolution of salary “beats inflation by 4 points”, although in a very heterogeneous context, with an advance of 4.8% among formal employees, so “the distribution of income is more just as it was a year ago. “

The minister, finally, also highlighted that the economy is “better on the external front”, since the Central Bank accumulated reserves this year for more than US $ 3,000 million, exports are growing and are record since 2012-13, with a jump of more than 60% in value and quantities.

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