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Javier Milei assured in the interview with Time magazine that the worst part of the economic adjustment “is already over” - Infobae
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Javier Milei aseguró en la entrevista con la revista Time que la peor parte del ajuste económico “ya pasó”
En un mano a mano con la prestigiosa publicación internacional —que lo eligió como la tapa de su última edición—, el Presidente defendió su plan económico y sostuvo: “Lo que se empieza a ver es que la economía está rebotando fuertemente”. Además, precisó: “Estamos atravesando la punta de la V corta”
www.infobae.com
May 24, 2024
In a head-to-head with the prestigious international publication – which chose it as the cover of its latest edition – the President defended his economic plan and maintained: “What we are beginning to see is that the economy is rebounding strongly.” Furthermore, he specified: “We are going through the tip of the short V.”
The cover of the latest edition of Time magazine
After the event held by President Javier Milei at Luna Park last night, where he presented his recent book “ Capitalism, Socialism and the Neoclassical Trap ” and gave a musical show at the beginning of the event, it was learned early that the prestigious Time magazine chose the President of the Nation for the cover of its latest edition and analyzed its “ radical plan to transform Argentina . ” In the afternoon today, meanwhile, the content of the dialogue with the Argentine president was known. There, the Head of State specified that the worst part of the economic adjustment “is already over.”
“You said that the Argentine people were going to live [this economic plan] like a short V , and that the hardest part was going to be between March and April. Now it's almost May. Is the worst part over?” asked journalist Vera Bergengruen. “ Exactly ,” the president said at the beginning of his response. Then, substantiating his words, he added: “ What you are beginning to see is that the economy is rebounding strongly.” “We are going through the tip of the short V,” he noted.
“Afterwards, not only are we going to have a rebound. When we open the stocks, there we will have an additional rebound push. Not only that, but also, since Argentina is very undercapitalized, there is little capital, what is happening? The return of capital, when something is scarce, generates a lot of value, that is, it has high returns, which favors investment, even with the institutional framework we have,” he commented.
The article was written by journalist Vera Bergengruen, who had already written a review in April of this year when they included the Head of State in their list of the 100 most influential people in the world. On that occasion she had described that “with Milei in power, Argentina will have no turning back.” She now catalogs him as the “most eccentric president in the world”, in a country that became a witness case worldwide.
The fragment of the interview
—You said that the Argentine people were going to experience [this economic plan] like a short V, and that the hardest part was going to be between March and April. Now it's almost May. Is the worst part over?
—Milei: Exactly. Yes. Let's see, I say to contextualize it. If you have twin deficits of four points of GDP, you have a yellow alert. If you have eight points of twin deficit in terms of GDP, you are on the verge of a major crisis. We inherited twin deficits of 17 points of GDP. Of those 17, 15 were fiscal deficits, 5 in the Treasury, 10 in the Central Bank.
We had capital controls that implied an exchange rate gap of 200%, a three to one relationship between the market exchange rate and the official one. We had negative net international reserves, we had fallen out of the agreement with the International Monetary Fund, we had monetary liabilities in the Central Bank for the equivalent of three monetary bases and they were due one day, therefore the amount of money could quadruple in one day.
Inflation, at the time we assumed office, was running at 7,500% annually, which later manifested itself in the wholesale index, which was 54%. That annualized gives 17,000. It's interesting because today that number is 5%. We have solved the problem of inflation by 90%. There is a long way to go, but we are on the right track. That is the context in which we arrive.
What's going on? When you make an adjustment, so that the adjustment is not recessive or, in fact, it can even be expansive, the increase in savings generated by the adjustment must have as a counterpart an increase in investment.
We knew that with all the misdeeds committed by Kirchnerism, with the failed experience of Macrism and with the composition of cameras that we had, we potentially knew that this could not-- Then I will give you the facts. We knew that we were not going to be able to change the regulatory framework in such a way that investment would react quickly. This increase in savings without an investment counterpart was going to make activity fall sharply.
What was the most interesting? That we did it from the beginning. At the beginning, if you notice, we took over on Sunday the 10th and on the 13th we were making the announcements. Why did it take us until the 13th, three days? Basically because the appointment of the President of the Central Bank was not there. We needed the specifications, otherwise we couldn't launch the program. Can you imagine you can't be taking--?
Javier Milei, on the cover of the latest edition of Time magazine
—Journalist: Yesterday I spoke with your Minister of Economy.
—Milei: It is launched on the 13th, we announce the zero deficit program, we announce the process of cleaning up the Central Bank and we open up the exchange market. We do all of this out of shock. This is important. First, there was no alternative to the shock, because when you look at all the adjustment programs in Argentina, all the gradualism ended badly and all the shock programs, taking out one, ended well. That is the first point. Taking out the '59, all the others were expansive. Activity increased, employment increased, real wages rose, inflation fell. Empirical evidence supported the shock.
The other thing is, to do gradualism you have to have financing. Argentina had about 2,900 basis points of country risk, there was no financing for Argentina, so you had no other alternative. What you had to do was stop the monetary issue, for that you had to close the fiscal deficit and you had to close the problems of the Central Bank. There, what we did, we did from day one.
Why is this important? Because the strongest impact occurs between January and February, but during January and February people are on vacation. We made the largest adjustment in the history of humanity, because standing in the first quarter of the 15 points, we adjusted 13. There is no historical record of something like that. Not only in Argentine history, but in world history, the International Monetary Fund itself recognizes it, apart from doing it in three months.
When the worst was happening, people were on vacation. When he arrived in March, she was met with shock. What is starting to happen during the month of April and what are you starting to see? First, the inflation rate is falling, and now salaries are beginning to outpace inflation, which means you are beginning to have a recomposition of real salaries that will allow you to recompose consumption. First point.
Second point. You had an honesty of relative prices. When prices are honest, there are sectors that are expanding strongly, which you previously had dormant. You can see that there is a strong expansion in mining, gas, oil and the countryside. There you have the recovery. On the other hand, when you look at the consumption indicators, the non-durable consumption indicators did not move much.
What I always say is typical of the cycle is durable goods, and what you are seeing today, that all those things that had shown a fall, either found a floor, or drastically reduced their fall. What you are beginning to see is that the economy is rebounding strongly. That is to say, the economy is preparing for a strong rebound. In fact, it is incredible, anyone could say, that mortgage credit has returned in Argentina last week.
—Journalist: So if we have to graph it, it would be like here in the short V.
—Milei: We are crossing the tip of the short V.
—Journalist: Yes.
—Milei: Afterwards, not only are we going to have a rebound. When we open the stocks, there we will have an additional rebound push. Not only that, but also, since Argentina is very undercapitalized, there is little capital, what is happening? The return of capital, when something is scarce, generates a lot of value, that is, it has high returns, which favors investment, even with the institutional framework we have.
Furthermore, the tax cut implies 15 points of savings that are no longer used by the state parasite to be used productively by the private sector, which gives you another push for growth. If at some point we can begin to add structural reforms to all of this, Argentina is in a position to grow at rates between 7% and 10% per capita annually.
Look, when we sent the DNU, which is still in force, they have not been able to overturn it and rulings from the Court are already beginning to come out in our favor, and the Bases Law, that combined made Argentina jump 90 places in the economic freedom index to make it look like Germany. In those first 30 days we sent 1,000 structural reforms, that is, much more than was done during the entire 20th century, if you think about it.
Not only that, but also, I don't know how many of all the reforms we sent will remain, but if we achieve a good electoral result in 2025 and we manage to change the composition of the chambers, not only will we finish send the reforms that now they did not let us pass, but we also have 3,000 more.
Because we don't want to look like Germany, in terms of economic freedom we want to look like Ireland, Switzerland, the freest countries in the world. That is, we want in the long term to have a GDP per capita 50% higher than that of the United States.
More phrases from the interview with Javier Milei:
- "I also told the people that the road was hard, but that this time it was going to be worth it."- “I am here to do a job, they voted for me to lower inflation, they voted for me to grow again and to end insecurity. I am ending inflation, I am laying the foundations to grow again and we have the street in order, that is, I am doing my job, I am doing my homework. Afterwards, the way I use my social networks is my personal problem. I opened my network X, I propose it to you, tell me what it says on the cover?”
- “A lot of institutions are created to save prebendary businessmen, obviously they do it in alignment with politicians. All these measures were against the people. This generated great resentment in Argentina towards businessmen. In the United States, businessmen are treated like heroes.”
- “Make Argentina Great Again is, let's make Argentina a world power again based on the fundamentals of economic growth”
- “Dollarization is the title they gave it. “We have always talked about currency competition”
- “They issued a lot of money to try to win the elections”
- “(About universities) If you don't want to be audited it is because you are dirty, that is the reality”
- “My social networks have much more traffic than all the news channels in Argentina”
- “My position is that people do what they want. They can market to whoever they want. What I don't do is make strategic alliances with communists.”
- “What I am saying is that culture flows however people want. If you have a guy from the armchair to demand that you use the repressive apparatus of the State to force you to speak in a certain way”
- “I am pro-life and to defend that I have biological, philosophical and moral arguments. I have mathematical arguments to do it."
