The economist analyzed what can happen to the economy due to the coronavirus and said that “the deficit may be the highest in the last half century”
The economist and former candidate for president José Luis Espert warned of a possible “macroeconomic destabilization”, a drop in GDP higher than that of 2002 and a soaring fiscal deficit.
In addition, Espert asked to eliminate all labor laws until the end of the year and praised the assistance to the private sector announced by the government on Monday.
“The forecast that I have is that we would be in the order of 2002, around 11%, it is the floor that I have for a drop in GDP for this year. That hides that maybe in the quarter of April, May and June now You have a drop of 15 or 20% and then it stops falling as much, “Espert said in statements to Radio Perfil.
In this sense, the economist added: “I do not want it to happen, the drop in GDP I think may be worse than in 2002.”
When asked for a comparison with one of the worst years in history for Argentina such as 2002, the economist said that he differentiated that “we had 6 presidents in one quarter in 2002.”
“I don’t see a government with the desire to steal people’s deposits as it happened in 2002. I don’t see those conditions of a political evaporation. Yes there may be some macroeconomic destabilization this year, I don’t forecast it but I put it on the table, that it will depend on what is done with the debt, what proposals to finance the fiscal deficit, “he added.
For Espert it is necessary to finance with the just measures of emission, debt and reserves, and not “load the ink with only one of the three”.
“There is my fear, of destabilization. I am talking about the fact that we are left with very few bullets to finance the mega fiscal deficit to which we are going due to the collapse in activity, in the collection and the increase in public spending for salvage – correct for me- from the private sector. That is why it is important that Argentina does not default on the debt. “
According to the candidate of liberalism in the last elections of 2019, “the fiscal deficit with which we can be arming it now in this annualized second quarter is 10 points of the product, among the highest in the last half century.”
It is within this framework that Espert asked to cut the salaries of public employees who, due to the obligatory isolation, are not working: “Here it doesn’t matter if you are liberal, Keynesian, communist, you have to use your head. You have a quarantine that you collapse the activity, the collection, nobody can or should pay taxes. You increase the deficit to correctly save the private sector. You have to lower public spending and wages of the state sectors that are closed without providing services should not have the 100% of wages, because apart from that people are not paying taxes. “
However, when asked if there is a possibility that Argentina will experience “hyperinflation” again, Espert said that he does not believe it possible, but that “if the inks were heavily loaded on the issue, we could have a very strong jump in prices and with very high inflation. We have to have all the channels open, I mean the debt. “
On the other hand, the economist assured that due to this world crisis, “unfailingly all contracts are going to be reformulated, like that of rents.” But he emphasized in the employment contract laws, the dismissal compensation law and the entire architecture of labor laws: “they should be suspended until the end of the year and allow fully decentralized and unlimited freedom of negotiation between workers and companies to signing a contract that can be sustained in the midst of a quarantine and care, after the quarantine it is not that companies are going to start producing at once, it is necessary to give the system a lot of flexibility to avoid bankruptcies and to exploit the unemployment rate”.
Regarding the debt renegotiation offer, he argued that “it would have done something else with the debt. It would be critical not to default. Pay with reserves, agree with the fund (IMF) and leave the negotiation after the pandemic, foreseeing that would exploit the deficit. “
Regarding the reaction of the Argentine government, he was very critical in his analysis, considering that the pandemic came late with economic and health measures: “We had a Minister of Health (Ginés González García) who dismissed the possibility of having a coronavirus in the country, obviously behind that diagnosis comes everything else. You underestimated it, you didn’t buy tests, respirators. Everything has to do with everything, if you started early with that. They would have taken the economic measures of now. There are companies that have already died. There must be lower taxes, income taxes. Companies are not going to be able to pay the aliquots of profits. There has to be an adjustment in public spending in the part of the state that is closed. In private ones it is already happening and it is going to keep going. “
Finally, Espert analyzed the international situation and compared the Marshall Plan with the credit system of the United States and the International Monetary Fund: “The fund is with very large support programs, a Marshall Plan is occurring in the world in a more institutional”.
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