Kulfas cruzó a Above: "He had an attitude that is not the most suitable"

The Minister of Production questioned that the Secretary of Commerce has publicly suggested an increase in withholdings on meat

The Minister of Production, Matías Kulfas, publicly crossed the Secretary of Internal Trade, Roberto Feletti, for publicly exposing his idea of ​​increasing meat withholdings.

“Feletti had an attitude that is not the most appropriate,” said the official in dialogue with Luis Novaresio on radio La Red.

And I add: “Thinking aloud is not the most appropriate thing, there is no way a decision has been made and what is being done is analyzing different alternatives “.

Over the weekend, during a report for Página 12, Feletti was asked about the increase in the price of meat in the local market. “If we want to ensure meat, chicken, bread and milk, we have to decouple domestic prices from international ones,” he replied.

And before a cross-question about what mechanisms they will use to “unlink” prices, the official said: “The more traditional one of increasing export duties and an alternative of creating cross subsidy trusts, as it happens in the mixed oil market “.

Currently, withholdings on meat are at 9 percent.

Feletti: “If we want to ensure meat, chicken, bread and milk, we have to decouple domestic prices from international ones”

The current mechanisms continue

“This is an issue that is in the head of the Minister of Agriculture and until December 31 we continue with the mechanisms that are in force,” Kulfas made clear on Wednesday.

Julián Domínguez recently avoided giving a definition on the issue. “I am not going to give any opinion on the matter,” he replied at a year-end event organized by agricultural chains.

Feletti’s statements provoked the rejection of the leaders who represent the agricultural producers. From different sectors they were against new intervention measures and an increase in tax pressure. The members of the Confederation of Rural Associations of Buenos Aires and La Pampa (CARBAP) they released a video on social networks, in which they pointed out that “closing beef exports does not cause the consumer price to drop”.

The long weekend passed and the truce that the Government had made with the supermarket chains to keep the price of meat stable, after a week in which the farm had risen 20 percent, ended. What happened the day after? Some kept their prices; Others accommodated their values, but what really matters when talking about meat is what happened in the butcher shops, which account for 70% of consumption. And there is no agreement that works: the kilo of the most demanded cuts are already sold for $ 1,000 or more in Buenos Aires and in the interior of the country.

The challenges that Argentina must face

The Minister of Finance continues with the debt renegotiation

In relation to a future agreement with the IMF, former BCRA president Martin Redrado, in a speech at a real estate event this weekend in Mar del Plata, stated that “Argentina is going to pay the IMF, despite the fact that The agreement with which the government seeks to restructure around 44.2 billion dollars is not yet closed. I do not see in the governing coalition a willingness to break with the IMF. ”

And adds: “The first challenge for Argentina is to achieve the agreement. I think a light agreement will be reached that will allow things to move forward but first the plane will go through some air holes“Redrado proposed that the agreement should contain a simultaneous program that stabilizes the value of the dollar, lowers the inflation rate and promotes the growth of the economy so that dollars enter to increase the international reserves of the BCRA.

“It is very likely that more than an understanding with the IMF, the multi-year program contains the plan that the Government intends to sign with the IMF. And it is also likely that, like the budgets that this administration presented to Congress, the multi-year plan will be just an expression of wishes, very distant from the reality that is coming “, Buscaglia explains.

Most economists are of the opinion that The main obstacle for the Government is not the loan with the IMF, as the President says, but a part of Argentine society that does not believe in this type of agreement.

What will the Government do to comply with the main demands of the IMF, among which are to unify the exchange market, increase international reserves, lower inflation?

Apparently the BCRA after the elections showed continuities and changes in the handling of exchange policy, which is one of the most difficult problems that the Government has to solve in the coming months. On the one hand, he kept the soft depreciation of the peso daily in the months leading up to the elections, contrary to expectations that it would accelerate the pace. Moreover, in the post-elections, the Central slowed down the pace of daily devaluation. Another continuity was the introduction of new exchange regulations, to close taps where the market eluded the exchange traps.

But there were also changes with respect to what it had been doing until the Sunday before the elections: it stopped intervening in some markets to contain the gap, so the MEP dollar suffered a strong appreciation.

According to Buscaglia’s opinion, “the objective of the change should be to stop losing reserves to keep the gap between the official exchange rate and free markets below 100 percent. Until September they would have used u $ s2,000 million of international reserves for what, if it were the Macri government, would have been called financing the flight, but now in the words of Martín Guzmán is called keeping the exchange gap stable. ”

Redrado, for his part, questions the economic policy of the government. “What is done in exchange matters is not sustainable, there are no dollars to maintain this radicalization. Argentina today has a significant confidence problem. What is distorting is the 100 percent gap in the dollar. We are going to have a strong currency challenge in the next three months, “he warned. “The exchange problems that Argentina has are not solved with measures to repress the exchange rate,” said the former president of the BCRA. Faced with a future agreement with the IMF, another question we must ask is: what macro problems will the government have to face in order to achieve the objectives that the IMF will ask for?

An inflation that does not give truce

What is seen in the short term is that there are more pesos and less dollars

In particular, a very high fiscal deficit, which is financed with monetary issuance and which, therefore, has generated high inflation, at the same time that there is an unsustainable tax pressure for the productive sector; few international reserves and a lagging official exchange rate and at the same time with a very large gap, a combination that stimulates imports and discourages exports. “The problem is that, according to expressions of the Government itself and according to reports, Its objective would be to reduce the primary fiscal deficit by just one point of GDP in 2022, to 3%, partly on the basis of tax increases. Also, in his own words, he seeks to avoid a devaluation of the peso, “he says.

“This combination has several problems. A primary deficit of 3% of GDP would imply, according to budget numbers, an issuance to finance the deficit of more than 1.1 trillion pesos in 2022. This issuance would follow the 2 trillion issued in 2020 (7.4% of GDP) and the nearly 1.6 trillion it will end up issuing this year (3.7% of GDP). More issuance implies more gap and more inflation. It also implies more issuance of Leliq to sterilize part of the impact on prices, feeding a ball that is eating away the banks’ credit to the private sector “, Buscaglia explains.

For his part, Redrado states that “the country cannot enter the hyperinflation. For there to be hyperinflation, there must be a flight of money and that is still not seen. “And he adds:” There is no outflow of pesos because the economy is locked up. Companies that want to go to other types of assets cannot do so. As there is no flight of pesos, you do not have a hyperinflationary process. Inflation is going up step by step. ”

Redrado expressed concern about the distortions in the economy and mentioned inflation, poverty and inequality. “The center of economic and social policy is the fight against inequality. Latin America is the most unequal continent in the world,” he says. “In the midst of an inflation that does not stop there is a great dispersion of prices. Electricity rates increased by 9 percent in the AMBA and in the construction sector prices soared 87%,” compares Redrado.

To grow to 3.5% in the next 10 years, it asked to invest 23% of GDP per year, about 6 percentage points above the average observed in recent years. “We have to increase our exports to have more dollars,” he says. He also affirms that the country needs “a tax and export revolution”, and to double the exports of goods and services in 10 years, until reaching the u $ s150,000 million. To get out of the crisis, Redrado raises the need for an agreement between the ruling party and the opposition in Congress. “If they agree and vote five laws on economic and fiscal matters, I assure you that Argentina has 10 years of growth. This crisis can allow us to generate a country that deserves to be lived,” he says.

According to Redrado, there is a policy of repression on demand. “All policies that are repressive always generate damaging effects on the economy. Today we have more than 15 values ​​for the same product, which is the dollar. As long as there are no policies that encourage dollar offer, it is clear that there is a difficulty to be able to project. What is seen in the short term is that there are more pesos and less dollars. We need to create incentives for the supply of foreign currency, “says the former president of the BCRA.

Most likely, without a devaluation of the peso nor a strong reduction in monetary issue, the exchange rate gap will remain very high and, therefore, exports will not boost the economy. In addition, the productive sector would be pressured by the lack of credit, by increasing and uncertain inflation and by greater tax pressure.

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