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Dollarization again at the center of the debate: defenders and detractors analyze how close it is - Infobae
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www.infobae.com
February 15, 2024
By Virginia Porcella
With or without restrictions on access to foreign currency, how to dollarize the economy before the end of the year. Why is it true that today the possibilities are greater but still far away?
EUTERS/Matias Baglietto/
The recent video by Steve Forbes , in which the editor of the influential North American business magazine called for immediate dollarization in Argentina and the recent statements by Javier Milei himself that the implementation of the measure “is getting closer and closer” , revived the debate among economists regarding the viability of this plan and, also, about its costs and benefits.
Promoters and detractors of the idea of adopting the dollar as legal tender once again presented arguments and, in particular, analyzed how possible it is to carry it out in the short term. In that sense, one of the first to comment on the possibility of an imminent dollarization was Carlos Rodríguez , former economic advisor to the President, at the beginning of the electoral campaign. The economist highlighted that today there are still “no dollars” to dollarize the economy and that the only option, eventually, to do so in the short term would be “with stocks.” This approach collides with another of Milei's most recent promises, who assured that in June restrictions on access to the official exchange market will be lifted.
Cachanosky himself, one of the defenders of the initiative although not necessarily in the format described by Rodríguez, also joined the discussion. He considered that “if Milei actually wants to dollarize, I am not entirely clear about her timing. She sometimes she says that she is close to her. Other times she says that this year she is not coming,” he clarified but admitted that she may be closer in two ways. First, if she wants to complete certain reforms before dollarizing, for example balancing fiscal accounts. Secondly, he maintained that she may also be closer in the event that Argentina ends up dollarizing “out of necessity,” that is, in the midst of a currency crisis like in Ecuador. “If this gradual transition of Milei fails, a complicated economic scenario cannot be ruled out. For example, with the failure of the omnibus law, how likely is it that Caputo will balance the fiscal accounts?” the economist stated. In any case, Cachanosky considered that it is the only definitive solution for the Argentine economy, given the lack of credibility of the country's leadership. Reversing dollarization is much more difficult.
Steve Forbes, editor of the traditional business magazine, once again agitated for the dollarization agenda.
The author of the book “Dolarizing” and head of Romano Group, Alfredo Romano , said the same : “Dolarizing is a suboptimal option, but the reality is that to build stabilization programs that consistently lower inflation to one digit annually, requires a consensus of those political parties that represent part of society that is not present today and, above all, an agreement sustained over time.” Romano considered that, indeed, Milei is closer to being able to implement his plan and even risked that by the end of the year the conditions will be fully met.
From a much less enthusiastic perspective regarding dollarization, the Econviews consultant, Andrés Borensztein , conceded that, taking the starting point of the economic inheritance that the Government received, “it is obvious that it is closer because the dollar deficit is smaller, the reservations are less negative than before. From that point of view, it is closer. But it is still a long way off because there are still many dollars missing. Today it is not possible or a very, very high exchange rate would be needed,” he stated.
In any case, that impact seems cushioned for the moment. “Looking at various aspects of the market, there does not seem to be fear of dollarization,” said Nery Persichini , of GMA Capital. “The most paradigmatic case is that of bonds in pesos, which have parities of 130%. In dollarization, they should be equal to that of their dollar peers (40%) - he added - I understand that what the market is buying most from Milei is its ironclad fiscal stance, the temporary recomposition of reserves and a pro-reform agenda, which For now it is just a promise because of how harsh Congress is for LLA.”
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La dolarización otra vez en el centro del debate: defensores y detractores analizan qué tan cerca está
Con o sin restricciones en el acceso a las divisas, cómo dolarizar la economía antes de fin de año. Por qué es verdad que hoy las posibilidades son mayores pero todavía lejanas
www.infobae.com
February 15, 2024
By Virginia Porcella
With or without restrictions on access to foreign currency, how to dollarize the economy before the end of the year. Why is it true that today the possibilities are greater but still far away?
EUTERS/Matias Baglietto/
The recent video by Steve Forbes , in which the editor of the influential North American business magazine called for immediate dollarization in Argentina and the recent statements by Javier Milei himself that the implementation of the measure “is getting closer and closer” , revived the debate among economists regarding the viability of this plan and, also, about its costs and benefits.
Promoters and detractors of the idea of adopting the dollar as legal tender once again presented arguments and, in particular, analyzed how possible it is to carry it out in the short term. In that sense, one of the first to comment on the possibility of an imminent dollarization was Carlos Rodríguez , former economic advisor to the President, at the beginning of the electoral campaign. The economist highlighted that today there are still “no dollars” to dollarize the economy and that the only option, eventually, to do so in the short term would be “with stocks.” This approach collides with another of Milei's most recent promises, who assured that in June restrictions on access to the official exchange market will be lifted.
Cachanosky himself, one of the defenders of the initiative although not necessarily in the format described by Rodríguez, also joined the discussion. He considered that “if Milei actually wants to dollarize, I am not entirely clear about her timing. She sometimes she says that she is close to her. Other times she says that this year she is not coming,” he clarified but admitted that she may be closer in two ways. First, if she wants to complete certain reforms before dollarizing, for example balancing fiscal accounts. Secondly, he maintained that she may also be closer in the event that Argentina ends up dollarizing “out of necessity,” that is, in the midst of a currency crisis like in Ecuador. “If this gradual transition of Milei fails, a complicated economic scenario cannot be ruled out. For example, with the failure of the omnibus law, how likely is it that Caputo will balance the fiscal accounts?” the economist stated. In any case, Cachanosky considered that it is the only definitive solution for the Argentine economy, given the lack of credibility of the country's leadership. Reversing dollarization is much more difficult.
Steve Forbes, editor of the traditional business magazine, once again agitated for the dollarization agenda.
The author of the book “Dolarizing” and head of Romano Group, Alfredo Romano , said the same : “Dolarizing is a suboptimal option, but the reality is that to build stabilization programs that consistently lower inflation to one digit annually, requires a consensus of those political parties that represent part of society that is not present today and, above all, an agreement sustained over time.” Romano considered that, indeed, Milei is closer to being able to implement his plan and even risked that by the end of the year the conditions will be fully met.
From a much less enthusiastic perspective regarding dollarization, the Econviews consultant, Andrés Borensztein , conceded that, taking the starting point of the economic inheritance that the Government received, “it is obvious that it is closer because the dollar deficit is smaller, the reservations are less negative than before. From that point of view, it is closer. But it is still a long way off because there are still many dollars missing. Today it is not possible or a very, very high exchange rate would be needed,” he stated.
In the midst of this debate, which tends to reaffirm Milei's dollarization intention, the immediate impact of his statements sneaks in. “Insisting on the dollarization agenda with the current BCRA balance sheet, with two out of every three pesos of deposits invested in remunerated liabilities and a short maturation of the indexed peso debt that is quoted above parity, does not contribute to the minimal to stabilize the demand for pesos,” the founder of EcoGo, Marina Dal Poggetto, said in a recent interview .
In any case, that impact seems cushioned for the moment. “Looking at various aspects of the market, there does not seem to be fear of dollarization,” said Nery Persichini , of GMA Capital. “The most paradigmatic case is that of bonds in pesos, which have parities of 130%. In dollarization, they should be equal to that of their dollar peers (40%) - he added - I understand that what the market is buying most from Milei is its ironclad fiscal stance, the temporary recomposition of reserves and a pro-reform agenda, which For now it is just a promise because of how harsh Congress is for LLA.”
