The answer was blunt: "There are no chances to dollarize the economy of Argentina. There are no chances of a new convertibility. The time that this path was chosen, the result was 50% poverty. " So he responded to The voice a senior government official of Mauricio Macri in the midst of a controversy that fell from the United States.
It happens that the eccentric and controversial director of the National Economic Council of the White House, Larry Kudlow, hinted that there were already negotiations with the Macri administration to advance in the formal dollarization, that is to say, that the peso ceases to exist by directly using the greenback or a new currency tied the dollar.
In fact, Argentina has never been able to ignore a close relationship with the dollar, not only because it is the currency for foreign trade transactions but also because it always acted in the country as a refuge for savers, in addition to the high percentage of components imported into the local industry.
According to data from the National Institute of Statistics and Censuses (INDEC), 60% of capital goods (equipment and machinery) are not produced in the country. In addition, there are sectors of the domestic economy that are handled purely and exclusively with the dollar, such as real estate.
On the other hand, the Government of Mauricio Macri has decided from its origin to finance the deficit with debt issues in pesos and dollars. And while in 2019 there will be primary fiscal balance, debt payments must be paid for about 28,500 million dollars.
What was said
Kudlow said convertibility "worked in the 1990s: it toppled inflation and maintained prosperity" and suggested that "that's what they need to do it again." But he went a step further by saying: "The people of the Treasury Department are in that."
Did it really work? To prop up the convertibility, the entrance of dollars in abundance was needed, something that in the first years was achieved with the privatization of almost all the state enterprises and the retirement and pension funds. The exit was with indicators of poverty around 50% and unemployment in 19.7%.
Despite this, Donald Trump's star adviser considered that "the only way out of Argentina's dilemma is to establish a monetary board, the peso is linked to the dollar." "There is no creation of money unless you have a reserve in dollars," he added in statements to the FOX network.
Those statements generated a strong displeasure within the Government of Cambiemos, where they claim to understand that it is an opinion of the United States but share that it has affirmed that there were already open negotiations to advance the dollarization of the Argentine economy.
"Argentina is not negotiating any dollarization or anything like that with the United States, it's not real," a senior official responded before entering the government coordination meeting that President Macri led this morning at the Casa Rosada. .
"We totally and completely deny this," the official said before saying: "There are no chances to dollarize the economy of Argentina. The time that this path was chosen, the result was 50% poverty. " Thus, he referred to the convulsive exit of the convertibility, triggered by a financial, economic, political and social crisis.
Before the consultation of this means, spokesmen of the ministry of Property they were expressed in the same line to maintain that the declarations of Kudlow only generated misunderstandings and they raised with emphasis: "It is totally denied".
The reappeared leader of the Renovating Front, Sergio Massa, recalled the complex consequences that had the convertibility in Argentina. "I, in the place of the Government, would never go to convertibility, that experience in the country ended with hunger, bankruptcy and death".