Argentina’s Commerce Secretary Miguel Braun has defended the government’s economic policies, insisting that the country is “far away” from an economic crisis like the one it experienced in 2001.
“The economy is growing. We’ve had seven consecutive months of growth. We’re working gradually, which we believe is the best way forward”, Braun told Metro radio.
“The Central Bank has explained it very well: we underestimated the path from devaluation (of the peso) to inflation and we underestimated the impact of utility prices on inflation”, he said.
The Macri administration lowered its annual inflation target from 10 to 15 percent in December, while private estimates put the figure for 2018 closer to 20 percent.
Braun said the government could slash inflation in six months but warned this would have a “very big” social and economic impact.
“We understand that we have generated big expectations about a reduction in inflation and we understand that this rhythm is not what most people would want to see but we are convinced that we are on the right path to lower it (inflation) gradually”, Braun said.
His comments come after former Economy minister under Carlos Menem, Domingo Cavallo, suggested that the government was walking an economic tight rope.
“The explications are impecable but the ideas on which they are based are wrong. The volatility of the exchange rate increases the demand for dollars”, Cavallo told the TN news channel.
“It is an enormous danger for the Central Bank to continue emitting debt”, he added. “Just as capital comes in, it can also flow outward. The Central Bank must pay: either by raising its (interest) rates or printing (cash)”, he said.
He warned: “A (situation similar to the crisis in) 2001 could happen in a few years if they continue with this exaggerated debt financing policy and they do not reduce the fiscal deficit”.