A new era will begin in Argentina at this time. Like every beginning, it contains a share of certainties, and the same amount of questions, that is, uncertainty.
A new era will begin in Argentina at this time. Like every beginning, it contains a share of certainties – the majority rejection of society to the continuity of the ruling party expressed in the candidacy of Sergio Massa – and the same amount of questions, that is, uncertainty.. Two edges stand out. On the one hand, what dynamic will prosper within La Libertad Avanza. That is to say, What degree of autonomy will their references have in that ecosystem that they integrate with the PRO and even Together for Change?.
Quickly put: who will be part of the new government, what officials will be part of the party, how the discussion will be organized at the definition table, etc. On the other hand, the second, more important aspect, with what degree of forcefulness will the ideas proposed in Milei’s campaign reach the control board of the policies to be implemented?. Always in the economic framework, issues emerge that will surely require a short-term definition, dollarization, the lack of foreign currency, the public’s demand for pesos, the possibility of leading a short-term downward path for inflation, to name a few.
Dollar without a roof and after
Javier Milei’s speech on the night of the victory left two pieces of evidence. The responsibility that, in the future, the Government will pay the debts, alluding to the IMF, and another, linked more to an omission: there was no mention linked to a potential transition that would put a floor and ceiling on the price of the dollar. This, in the terms of the corpus of mileist proposals, necessarily implies the idea that market forces (not heaven) are the ones that anticipate a virtual upward modification in the price of the dollar, a significant devaluation, which in fact would also imply a notable reduction in the liabilities that accumulate in the local currency, especially of the quasi-fiscal order. Ergo, Milei not only kept the promise of dollarization virgin in his speech, but also what it implies, the possibility of a kind of strong rearrangement of the expectations of the exchange market, while traveling the road to reach December. If we could look for a figure, we would clearly have to lean towards the expression of French origin laissez faire, laissez passer, which Adam Smith made famous, and which literally translated means «let it be done, let it pass», under the idea that the functioning of the economy (and the exchange market) must be left to the free play of Supply and the demandavoiding the intervention of the State or any authority.
Regime change
There is much that could be mentioned that summarizes the question. What government program is La Libertad Avanza preparing? How many potential officials will the PRO and Together for Change provide? What measures will be the first to be carried out?
In an odd, unprecedented, complex scenario, issues as relevant as inflation, debt, IMF, exports, reserves will surely demand more concrete signals.. The question that may not be revealed in the next few hours is what type of stabilization plan will be applied and who will pay the cost of said reform. That is the question that seeks an answer and that will probably have to wait until December 10. Reset the monetary system, change the regime, cut public spending, reform of the State, education, deregulation of the capital account, etc., all of this will begin to be evaluated by those who will seek to foreshadow what awaits Argentines..
In the meantime, variables such as production, employment, consumption, and investment have registered an acceptable performance, although with some volatility. The lack of dollars and the exorbitant debt policy in the immediate past have strained the administration of public spending, has triggered inflation to unprecedented levels. There he promises to intervene Milei. The malpractice in the management of the Central Bank promoted by the co-government with the IMF has done the rest. Here the time variable is more important. Because it could be thought that both the agro-export complex – in 2024 without drought – and the exports of critical minerals and hydrocarbons could return a strong income of foreign currency.. And that this vital injection of resources could serve to consolidate economic sectors that take pressure off external restriction. As never, the question is about the short term. In the long run, Keynes already said it. Also Milei.
