Economic experts in Argentina predict a double D (devaluation + default) for the economic system of the South American country, while warning that it is currently experiencing an environment similar to the so-called “corralito”, a financial crisis that punished Argentina at the beginning of the 21st century.
“We are seeing a scenario similar to the one that preceded the outbreak of the corralito crisis, with a recession that could be prolonged and lead the country to an economic collapse. Today, the national government, in its eagerness to fix relative prices, has not succeeded, which has led to the failure of the stabilization program. This has produced a historic drop in the level of activity and I believe that this is the worst standard of living for Argentines since 2001,” said Roberto Feletti, former Secretary of Domestic Trade of Argentina during the previous government.
Feletti said that “history repeats itself” once again due to the implementation of anti-inflationary policies by Javier Milei’s government based on fiscal and exchange rate retraction, without considering the impact on growth and social well-being of the people of Buenos Aires and of Argentines themselves.
The team of economists from the Buenos Aires Peronist Party, led by Feletti, current administrative secretary of the Senate of the province, released a report warning of the “serious inconsistencies” in the short-term stabilization plan of the Minister of Economy of the Nation, Luis Caputo.
According to the research, Milei’s government is heading towards a “double D” situation: devaluation and default, with profound consequences for the national economy and, especially, for the province of Buenos Aires, which has been mitigating the impacts of these policies for months.
The province of Buenos Aires is one of the regions most affected by the adjustment policies of Milei’s government. According to the report, the fall in consumption, the decrease in economic activity and the recent adjustment measures, such as the elimination of the integrated ticket and the removal of the maximum price of fuel, have had a severe impact on the pockets of the people of Buenos Aires.
The economists’ research highlights that, unlike previous governments such as those of Carlos Menem and Mauricio Macri, Milei’s administration does not have capital inflows from privatizations or the possibility of borrowing abroad, which worsens the situation.
Uncertain future
The report by the team of economists concludes that the inability of Milei’s government to accumulate international reserves and stabilize the external sector has put the country on a dangerous path towards devaluation and default.
Feletti warns that if these inconsistencies are not corrected, Argentina could face an economic crisis similar to that of 2001, with devastating consequences for the province of Buenos Aires and the rest of the country.
In Feletti’s words, “the lack of a sustainable national project and the inability of the political and economic elites to provide the country with a viable economic model only demonstrate the need for a new political and economic order in Argentina. It is essential that economic policies be oriented towards the accumulation of international reserves and the strengthening of the productive sector, to avoid a collapse that could be catastrophic for all Argentines.”
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2024-09-02 22:52:17