Juan Manzur’s response to Deputies, on inflation, dollar and adjustment

the chief of staff, John Manzur It is presented this Wednesday from 11 am in the Chamber of Deputies to answer some of the 1950 questions that parliamentarians approached him about the management of the national government, many of which the tucuman already responded in a report which was sent on Tuesday to the different blocks.

In the 2,190 pages, the queries formulated by the deputies have the economy as the main axiswith inflation in his sights, which Manzur defines as “a multi-causal phenomenon”, and anticipates that the plan carried out by the minister Serge Massa (who will soon visit the venue to discuss the budget 2023) will continue until it meets the IMF goals. Here are the main definitions left by what was developed by the Chief of Staff in his writing.

Inflation: “The inflation rate is a multi-causal phenomenon, which must be addressed with a comprehensive macroeconomic plan, which reconciles fiscal, monetary, exchange policy, and the coordination of price and income policies.” “The rise in rates is a necessary condition, but, by itself, it is not enough to reduce inflation.” Manzur points out there, the implementation of “price and salary agreements that seek to protect the real income of the population, while avoiding the inflationary amplification of the recent external shock through the coordination of expectations.” And he highlights measures such as “the recently constituted public trust fund for wheat”, which “allows cushioning the effects of the international price shock”.

Deficit. “The economic program has fiscal order as its principle. The national government committed to meeting the fiscal deficit goal of 2.5% of GDP and the emission goal, established in the budget and in the Extended Flexibilities Agreement with the IMF “.

Bookings. “The consolidation of exchange rate stability through a process of accumulation of international reserves,” Manzur defines in his report, dispelling the specter of a devaluation jump. “Other policies and conditions that will contribute,” he anticipates. And he points to “a downward trajectory of the stock of remunerated liabilities of the BCRA (LELIQ, NOTALIQ and Repos) in terms of GDP, as a consequence of the lower primary issue -and, therefore, lower sterilization needs”.

Dollar. “The downward exchange gap in the so-called financial dollars” is “a reflection of the perception that the fundamental determinants of the macroeconomy have improved.” And he adds that there is “a level of the multilateral real exchange rate that is adequate to preserve the current account surplus of the balance of payments in the coming years”.

Adjustment. “The freezing of the plant” and “the segmentation of subsidies for electricity and gas rates” will make it possible to cut $210,000 million, states the chief of ministers. Reducing the deficit will allow less monetary financing: “they have returned to historical levels after the peak observed during the pandemic.” “The gradual convergence towards fiscal balance and a greater demand for money due to the consolidation of a sustained growth process”, adds Manzur.

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