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Guillermo Nielsen: “I thought that we would never have an agreement with the IMF, I thought we learned”



Worse, the international scenario became uncertain in the hands of the President of the United States, who did not flinch, questioning the historical independence of the Federal Reserve, equivalent to the Central Bank in other economies, with a consequent effect on other currencies and commodity prices.

Guillermo Nielsen, Former Minister of Finance, who was responsible for the first stage of negotiations with the dissenters, between 2003 and 2005.and now works as a professional economist and business consultant, being a candidate for the post of head of government of Buenos Aires in the Front Renovador, and now he is closer to the ideas and proposals of the libertarian space, led by José Luis Espert, analyzed in an interview with Infobae the balance of 2018 in the face of what he leaves for the next year.

– What leaves the country, in economic matters, this complex 2018 for 2019, in good and bad?
– The bad thing that comes easier to me is that by 2019 and in subsequent years it will be a program with the International Monetary Fund, with all the ensuing consequences. Many of the results can be seen clearly, as is the fall, which is recorded by the industrial sector. Those of us who have experience with the IMF knew that something was wrong, because it is the result of high interest rates that bring us back into the past, when we thought it was all over. After what happened to us, the culmination of which was the crisis of the end of 2001; and then we exit, and it ends in December 2005, when it is announced that the debt will be paid to the Fund, it will materialize in the first days of January 2006. I figured we would never have an agreement with the IMF, which is the end of the stage that we Argentines have learned from the value it means. But the government very quickly paid off debts,

– Did you have another alternative to finance the huge inherited budget deficit?
– Yes of course. The alternative was a “laburar,” which they did not do. Work as an economist; as managers in management, who did something, but, unfortunately, did not achieve very satisfactory results, especially in terms of reducing the budget deficit. And besides, he also lacked a corresponding transition from the municipal to the national problem. I think that President Mauricio Macri has treated himself with disdain for the economy, and together with Marcos Peña and PRO the top has not changed, because the radicals whom I see have noted that they think they are going to pass by the old policy.

Interesting question what are they they are very good from the point of view of the electorate and have no doubt about hiring Cambridge Analytic and sharpening the electorate with message segmentation, depending on what people reject,

– What do you associate with the fact that the opposition forces could not perceive this logic and act accordingly in order to cut off a long period of electoral triumphs from missile defense?
– I think that although there is always a guru to advise different candidates, Brazilians; Spanish; Some kind of american The opposition continues to engage in election campaigns, as in the 50s or 60s. They never stop understanding social network management., collecting information from Facebook and other utilities, as well as processing. This PRO was a pioneer, and in fact it is known that Cambridge Analytic worked in Argentina.

That is why it is important that the difference in the polls, so that, in my opinion, they indicate that some opponent can beat candidate Makri, should be at least 5 percentage points. Because they are processing “big data” technology. And I think that’s what gives him that advantage.

– I mentioned that with the positive and negative 2018 is a program with the IMF, it looks positive, because one of the criticisms that they make to the government is that it does not have an economic plan. Do you see it like this?
– I would really like it if the government presented the economic program and implemented it. I do not see the positive in that I have a program with the IMF. And I do not see this when we all see what happens with interest rates. And already entering the next year, which is the subject of this interview, look at the problem of the level of the country risk index, because it will be very difficult to reduce it, both for internal problems of Argentina and for international problems.

What is the big surprise of the last weeks? Extreme volatility on Wall Street, Donald Trump's opposition to the creation of the Republican Party, that we don’t know how this will end. I could conclude empeachment. For the first time, despite the fact that there was always some noise, to dismiss the US president, there are already columns of opinions that look at this possibility in a concrete way.

– Again, as was observed this year, the international scenario of these characteristics will affect Argentina more than other developing countries …
– Absolutely What we have is an increase in country risk in the United States, which takes a different form. This is not JP Morgan EMBI, but the relationship between the dollar and the euro. Everything is under control. We should not take market behavior to Reyes because we all know that from Christmas to the first week of January operations are reduced to a minimum. but I see that when Argentina will have to renew the agreement with the IMF, I do not know whether we will have a decision that Donald Trump would impose decisions on the Board of Directors of the monetary fund.,

– What reinsurance should and, above all, can Argentina take to foresee another scenario, because it may seem that the economic team has lost its degree of freedom?
– He doesn't have it. Unfortunately, Argentina, which failed the first agreement with the IMF and did not approve the first review, after unsuccessful negotiations, has no degrees of freedom. Today it is necessary to follow the instructions of the Foundation, based on daily, weekly and monthly data sent by the economic group, which are written in writing. Everything is very sad and very sad,

– Do you see a light of hope for change, whether from the government, as in the proposals of the opposition, the next day, about how to get out of this situation?
– The day after tomorrow will not come in 2019, which, unfortunately, will have constituencies. Why am I saying this? Because I think that the complexity of what Argentina has before this is very great, and this goes beyond the capabilities of a political faction or party. From now on, Cambiemos’s opportunities are completely overwhelming, but something more comprehensive will be needed where the economic problems of Argentina will be seriously discussed and measures will be taken that are working all over the world.

– For example?
– Labor deregulation is a reality. In this world, we cannot support not only labor laws, but also rules; but also the internal customs that we have in Argentina, as requirements that are required in many municipalities; that is, changes must be made completely.

– By 2019, this does not seem viable, in the middle of an election contest …
– Unfortunately, in 2019, political forces will face other problems, expelling each other. Therefore, I do not see a simple solution.

“But given the lack of freedom of government to make changes and taking into account the electoral scenario, do you think that an opposition that does not make contributions to begin to get out of this situation from 2019 will prevent it from having degrees of freedom in the event of access?” on the presidential alternation?
– I think that the government, which will occur, even the second Kambiemos mandate, will have to solve a very difficult situation, even if it is Mauricio Macri, because when the president announces the second of the agreements with the IMF, Augustus, and expects all funds advanced that it was a very serious mistake of the monetary fund, because it left part of the inheritance as a refinancing for the new governmentHow this is solved is within the rules of the IMF. Because the point is not that the Board or Christina Lagarde can do what they want, but the fact that there are specific and very strict rules. Therefore, from this point of view, I am convinced that inheritance will be difficult.

– The history of Argentina with the IMF shows that as soon as the conditional agreement (reserve) was reached, it was very difficult to leave. Therefore, in the light of the scenario you are putting forward, in 2020 you should have access to the renewal of the agreement and the restructuring of the maturity. Do you see it like this?
– You will have to negotiate, but it will not be automatic and will not be free. Argentina is in great demand. Look at what happens with government debt bonds, that is, with a country risk level above 800 basis points: this reflects the fact that investors do not see how Argentina can cope with all this. This will complicate the situation, which is already observed today in the difficulty that is observed for a significant reduction in interest rates. This is a problem for the real economy. And besides, the government is costly to maintain the competitiveness of the exchange rate.

It is good, on the one hand, that this policy allows the economic team not to have a drastic change in the exchange rate, but at the same time it postpones the main decisions that Argentina needs. because The only way for a country to get out of this complex scenario is to export more, and this requires the predictability of the exchange rate.,

– Are you for the creation of an anchor exchange?
– The exchange anchor, which does not have to be fixed, can be indexed. But I think that this should be a priority, because those who work for export can plan quotes with some confidence, and not with volatility.

“Will the government not be criticized for providing export insurance and financial speculation?”
– I distinguish between two things: 1) for exporters, all to allay uncertainty, to welcome it; 2) I am absolutely against financial flows. I think that a very serious mistake of this government is that it was so dogmatic, because there can be no freedom of capital inflowsThat happened to us (N. P.: Nestor Kirchner government) and we had to limit and increase capital inflows. I think these things work.

– Even under the current scenario, in which investors are freed from Argentine debt, will not the country risk index cause even more?
– In this scenario, unfortunately, there is a risk of growing external distrust. It was not done on time, and it can be expensive to do at the wrong time. But I am convinced that we must limit to trade because keeping it completely open determines the deterioration of an important institution, such as the Central Bank.

– The Central Bank’s non-interference zone on the stock market with a gap of 30% does not prevent speculation between the dollar and the exchange rate, because it moves down when capital flows in and grows, when they want to leave, and then spring interest rates will come?
– It is true that the band is very wide, but the biggest problem is that the Central Bank failed to keep the exchange rate in the center of the non-interference zone. This is what would be desirable. That is why they do not stop using the interest rate to make it happen. Here they were absorbed in a very naive strategy that lowers the price of the dollar. That is why they are very pleased with the type of changes in the gender of the group. I think this is a mistake.

– In the financial and foreign exchange market, as small as in Argentina, lowering the interest rate so that the price of the dollar was in the center of the intervention zone could not cause lack of control and create new volatility and feed uncertainty?
– Yes, this risk will go, first of all, because in the present conditions there is a government that lacks trust. In particular, no one believes Finance Minister Nikolas Duyovna. So simple, neither on Wall Street, nor in Argentina. This leads to a high interest rate, which, moreover, has the problem of maintaining an increased country risk index.

– What is the significance of the jump in the country risk index to the excessive delay of the treasury in the regulation of the tax on financial income for residents when it was introduced for foreigners in April?
– This measure was a mistake. A country that is always thirsty for capital, such as Argentina, not now, cannot have this tax. Here, because of the ideological dogmatism that was promoted, and because of ignorance of how the markets worked, and the regulation was published in the official newspaper one day before the end of the financial year. I think it was regrettable.

– You have become part of the Repair Front, which was one of the initiators of the Taxation of financial income, based on the alleged criteria for the fairness of taxation. Not heard by top leaders and economists of this group?
– I was a candidate for the front Renovador at the headquarters of the city, but when the mass leads a tax on financial income, which I have already separated, when the elections are over, because I am a professional economist, and this greatly limits the policy. I am not in favor of signing something, for exaggerated protectionism or this tax. That's why I took a distance, The same on social networks, I still charge, although I always tried to clarify my position and my link to the subject in complete disagreement.

– In this complex scenario, how do you see the behavior of the real economy, is it moving towards depression or stagnation?
“One of the legacies that this government will leave and that scares me is socialist economic policy, which is difficult for us to understand.” The first for the socio-economic extraction of the main leaders: President Mauricio Macri-Blanco Villegas; Prime Minister Rodriguez Larreta; Minister of Social Development Carolina Stanley. Using the old-fashioned language, it can be said that from a socio-economic point of view, the government of oligarchic mining and that in some aspects it has taken liberal measuresAs I said, freedom of capital flow.

Now that it’s worth it when the government starts walking, this is what it does with the tax structure and what it does with the increase in spending. and What is visible, this is out of the question, the situation of excessive tax pressure, and that additional government spending went to social policy and subsidies. Consequently, we are faced with a government that is actually pursuing a left-wing socialist policy.Speaking to an Italian political analyst, he recently told me: “The world is very similar to Bettino Craxi, who, by doing such things as raising taxes and social spending, brought Italy to a standstill, which is still going on.

I am afraid that this government with its policies, to which it is necessary to add an excess of debt and all that this means in the future, leaves an economically stagnant economy. This is something that we all have to fight, because stagnant Argentina is a country where emigration is important again, where young people go, even the elderly. I do not agree with such a country, but in the struggle to become a growing Argentina.

– What recommendation or policy would you suggest if you were responsible for managing the economy or were close to the advice of the Minister of Finance in order not to fall into secular stagnation?
– There is no way out, if there is no complete deregulation. Not only labor, but also small internal customs, which I mentioned earlier, which meet the absurd rules of the public sector itself, which requires other things from the public sector. I think that there we changed, did not do a good job, spinning well. But the big goal should be to cut government spending.

And another question on the side of the proposal. We, as a country, I can’t imagine that this is a question of the government or a political party, we must create conditions for the full exploitation of natural resources, whether Vaca Muerta or other very important shale formations, lithium mines, or salt marshes of different parts of Argentina. We must give guarantees to pursue a policy that absolutely respects obligations. This is a way to expand on the supply side. Wet pampas are not enough.

– During the passage, he said: “Nobody trusts the Minister Nicolas Duyovna” Why, by inaction, by what he says, by what he does not say?
Nicholas Duyovna was part of the press conference a year ago, where it was announced that the Central Bank would be shut off, and that this was the starting point for the adjustment that is still happening in Argentina. Dujovne – the official who agreed on the failed first agreement with the International Monetary Fund; and ultimately renounce all the questions and gaps that I had to defend in the second agreement with the IMFDo you think that any of this can be considered a success, a contribution?

– Итак, стоит ли удивляться, почему МВФ одобрил это? Принудительная отставка президента Центрального банка Федерико Стурзенеггера, который подписал первое соглашение с министром, до первой выплаты 15 000 миллионов долларов США …
– Я не покупаю, чтобы МВФ попросил главу Федерико Штурценеггера. Были проблемы с бывшим министром финансов, а затем президентом Центрального правительства Луисом Капуто. Посмотрите, что странно и странно, с президентом, который имеет опыт предпринимательской деятельности в одной из самых важных групп в Аргентине, как в то время была группа Макри, и который имел доступ к ряду экономистов и количеству консультанты; и он даже брал уроки с людьми самого высокого уровня, что существует большое ограничение на консультации с первоклассными экономистами, и насколько это дорого, прежде всего для его собственного правительства.

Луис Капуто проделал потрясающую работу для скорости решения иска с несогласными. И в то же время бывший министр финансов никогда не мог быть президентом Центрального банка, потому что его никогда не обучали этому., Что делает Макри? Он ставит его в качестве замены для Штурценеггера, и, конечно, он не ходил. Там, если у МВФ были очень большие резервы.

Я думаю, что гарантий Фонда не существует, они работают с чиновниками, с которыми им приходится работать, министром экономики, президентом Центрального банка и министром финансов. Если это так, то это выражение правительственной распущенности, которая неуместна.

Фотографии: Мартин Розенцвейг


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