Tuesday, June 25, 2024

ECONOMY | 11-05-2022 01:19

Guzmán tells AmCham that Argentina needs ‘common sense,’ not ‘fairy tales’

Argentina’s economy minister addresses coalition tensions and inflation at AmCham summit; Opposition leaders Horacio Rodríguez Larreta and Patricia Bullrich pitch their visions to business leaders.

Economy Minister Martín Guzmán this week warned that short-term measures "end up generating crisis,” as he called for Argentina to embrace “common sense” and put aside “fairy tales.”

Speaking at the AmCham Summit 2022, organised by the US Chamber of Commerce in Argentina, Guzmán said on Tuesday that President Alberto Fernández's government wanted to “avoid” crisis and that it is necessary to have "common sense as to which things work and which do not" as he defended his economic programme for the inflation-wracked country.

The minister delivered his remarks to a four-digit audience that included hundreds of business leaders and some 30 national and international speakers, including US Ambassador to Argentina Marc Stanley and Buenos Aires’ envoy in Washington Jorge Argüello, government officials including Productive Development Minister Matías Kulfas and Strategic Affairs Secretary Gustavo Beliz and leading opposition figures like Patricia Bullrich and Horacio Rodríguez Larreta.

In a key week for his portfolio – which includes hearings for public service pricing, the April inflation figure and the beginning of the first quarterly review of the programme agreed with the International Monetary Fund (IMF) – Guzmán asked for greater consensus to “anchor expectations” and combat the scourge of Argentina, inflation. 

“The expectations must be anchored, no more fairy tales, seeing is believing and to see you must do,” answered Guzmán, when consulted about the evolution of inflation. 

Speaking face to face with Facundo Gómez Minujin, the president and senior country officer of JP Morgan for Argentina, Paraguay, Uruguay and Bolivia, the minister gave his considered opinion that “we must construct common sense in Argentina,” referring in these words to the dynamics of inflation.

Addressing the theme of the event – “Construyamos un país Sustentable (“Building a Sustainable Country”) – Guzmán called for a long-term vision that focused on “common sense.”

Quizzed about reports  of Frente de Todos infighting, the minister noted: "Debates are very important. Of course there will always be differences between and within all political fronts but there are certain areas where the country needs to reach a certain consensus – the sustainability of public foreign debt is a necessary condition for any socio-economic development, no matter who is governing.”

He continued by arguing that such an approach should be “state policy.”

“Fiscal sustainability is also an asset for anybody, whatever they believe the role of the state must be, because stability is an asset for this country. Science, technology and education. All that must be state policy, crossing party lines,” he continued.

“Watch out because what we see today in public debate are differences not only within the different wings of the governing coalition but also within various political fronts over things which have already been done and which did not work,” said Guzmán, before going on to criticise the opposition Juntos por el Cambio’s approach.

“When they say that they are going to resolve the fiscal problem in one stroke and also lower taxes at the same time, is that serious? Can Argentina really go down that road? That’s why it is so important to construct stability and for public debate to be constructive. And there are questions which clearly did not work either for one side or the other,” pointed out the minister, ratifying his position.

Turning to the burning issue of the moment, Guzmán said that price hikes “have been around for most of recent Argentine history and have to do with a combination of factors which make the economy restless and not in any good sense of the word.”

“To attack inflation, you have to attack the multiple causes which generate it. And in the first place that is done with a consistent economic programme and then by connecting the short to the medium term,” he said.


Rodríguez Larreta, Bullrich pitch plans

Guzmán spoke after Rodríguez Larreta, who had used his lecture to highlight the need “to do things differently” to produce “real” change in Argentina. 

The Buenos Aires City mayor said the greatest challenge ahead is ending ‘la grieta,’ the local term for the country’s stark political polarisation.

“We never manage to sustain a plan over time because the only thing sustained in this country is political confrontation. I propose cutting short this cycle of petty accusations and cheap tricks which has led to this decadence, trying something different. If we  really want a change, if  we want a developed Argentina which is a protagonist in the world, we have to do things differently,” said Rodríguez Larreta, who will embark upon a Casa Rosada run in 2023.

Meanwhile, Patricia Bullrich, the former security minister who now chairs the PRO centre-right party and is another presidential hopeful, assured that she had the "personality needed" and the qualities to reach the seat of government.

Seeking to outline her economic approach, Bullrich even pointed out that if she succeeded, she would dollarise the economy and initially adopt a bi-monetary  approach. 

The opposition leader considered: “The peso today does not exist in the sense that it means a currency,” remarking: “Dollarisation is an irreversible process for a society which needs to advance towards becoming more productive and competitive.”

Spelling out her economic programme, she said: "I would start off with a  bi-monetary system, using the dollar as a currency like now without abolishing the peso, as is done in Peru and Uruguay."

"All Argentines have dollars both inside and outside the country, using them for transactions, contracts and dodging the cheque tax. An economy generates confidence to the degree that you go stabilising the country by moving towards zero deficit and thus lowering  inflation," she explained, expanding: "The peso has no value in itself but to the degree that you have zero deficit and balance the books in the Argentine  economy. When you balance the macroeconomic factors, deregulate the microeconomic factors and can use both currencies, you will move ahead."

Referring to a possible Juntos por el Cambio government in 2023, the former deputy indicated that what was needed was a coalition “with society and with all sectors, whether public or private, whether trade unions or companies and with all political parties who want change.”

Bullrich also referred to internal rivalries within PRO and her differences with Rodríguez Larreta: “We are debating ideas and there is nothing better than debating ideas. Then society will have to choose and choose it will.”


Massa defends coalition 'disputes'

Finally, Congress Speaker Sergio Massa explained that he had spent 20 years of his life "chasing objectives," which did not permit him "to enjoy what he was doing" because everything hung upon his political career.  

The Frente Renovador leader added that he did not have 2023 in mind "because this year, which is not electoral, should see the entire political, business and trade union leadership picking 10 issues for state policies” across the spectrum.

Referring to Frente de Todos infighting, which heated up the previous week with public statements, Massa said that “the coalition as such is beyond discussion.”

“Its programme is in dispute, which is quite natural,” he continued, also remarking that "the main responsibility of those of us in office is that the government functions," and explaining: "We must get used to debates which are resolved and also not resolved.”

Massa avoided any more precise definitions as to his political future, preferring to deepen his analysis of governability: "Instead of running after candidates, we should run behind state policies and instead of seeing who shouts loudest at the other side, we should seek which are the points of agreement within important issues." 

Furthermore, Massa defended the segmentation of public service pricing pushed by Guzmán: "Argentina has a regime of public service billing which functions like Robin Hood [i.e. but in reverse]. Our tax system is not progressive – those who earn the least pay the most while those who consume the most enjoy the most subsidies in net terms. We have to have a regime of segmented subsidies."

The former Tigre mayor also had something to say about the judicial branch: “We [politicians] have to sit exams every two years but judges only once for entry. We should think of a system which rewards the judge who performs well with a promotion and punish those who rule badly." 

Nevertheless, he differentiated his stance from the ultra-Kirchnerite proposal for judges to be appointed by the popular vote: "It does not seem to me that they should be appointed by the popular vote. There has to be some knowledge of the law there."


'Anti-grieta ambassador'

In another closely watched United States Ambassador to Argentina Marc Stanley spoke of the “strong institutional relationship,” pointing out the bicentenary of the bilateral relationship was coming up early next year. 

The envoy threw his strong support behind Guzmán, considering that “his work with the International Monetary Fund was impressive” and praising “Guzmán’s knowhow and skill in every issue.”

In his presentation, Stanley remarked that the world is “in transition,” mentioning such challenges faced by the planet as climate change and the Covid-19 pandemic.

The ambassador further underlined the relationship of “friendship and cooperation” and the areas of “mutual interest” between the United States and Argentina.

“Our countries are friends, our people are friends. Everybody in the United States loves Argentina for its natural beauty, its human capital and its resources,” he highlighted while at the same time expressing pleasure at having been dubbed the “anti-grieta ambassador” by the press.

Speaking at the 3rd AmCham Summit, Stanley maintained: “We probably do not agree over everything and nor do we have the same friends but we enjoy being together,” while asking for the continuation of “the joint work against the consequences of the Russian invasion of Ukraine, which includes attacks on civilians and human rights violations.”

“Argentina picks its leaders, we want to work with everybody,” he concluded diplomatically.




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