March 12, 2014
Gov't warns about 'convertibility logic'
Cabinet Chief Jorge Capitanich has called to “break the logic of convertibility” –the peso’s one-to-one peg to the dollar, a decade-old system Argentina exit from with a historic default and a major social, economic and political crisis in 2001- and protect the South American country's “sovereignty, production and jobs.”
“It is important to break the logic of Convertibility, there hasn’t have to be necessarily a relation between the level of reserves and the monetary base. We have to commit with having more production, more jobs and more exports,” the head of ministers stated in his daily brief to the press at the government house this morning.
In that sense, Capitanich questioned the IMF draconian policies that “determine” the administration of a country’s economy. Such scenario would mean, the official added, “more adjustment.” “Argentina, instead, has chosen the exercise of its sovereignty and autonomy,” he insisted defending the government’s decision to use the Central Bank international reserves to pay debt. “We have to defend what is ours, our industry, our jobs,” the minister warned.
With the Cristina Fernández de Kirchner administration under fire for the drop in Argentina’s reserves, Jorge Capitanich explained the government “has used the reserves to face public debt and the import of supplies (needed) for productive development.”
Following yesterday’s historic peak when the US dollar in the informal market skyrocketed to 11.21 pesos climbing 28 cents and official rates trading at 6.765 pesos, the Central Bank reserves hit its lowest level since 2006 at 29.8 billion dollars.
“We have understood that public investment has to be promoted so that, along with private investments, it creates jobs and improves Argentineans’ income,” Capitanich affirmed.