July 23, 2014
Ferrer: ‘We have wasted time on inflation’
Unortodox analyst sees delay on tackling problems
Pro-government economists and politicians agreed yesterday that the federal government has “wasted time” in fighting the current high inflation by not announcing “sooner” the new national price index, while they asked for additional policies to fight price hikes and maintain the current employment level.
“Not being honest about the current inflation made us waste a lot of time,” pro-government economist Aldo Ferrer, said yesterday to La Nación newspaper. “The fiscal policy applied by the government contributed to the inflation. By having a shortage of foreign currencies, an economy on the verge of its capacity and boosting public expenditure, inflation is created.”
Ferrer, former Argentine ambassador in France, criticized the foreign currency restrictions applied by the government in the last few years but highlighted the economic changes made in the past weeks such as the steep peso devaluation and the price agreements.
“Inflation is a long-time problem in Argentina. As soon as uncertainties raise, as it happened due to the foreign restrictions and some inadequate responses, inflation grows,” Ferrer said. “We need a change of expectations based on a better management of the shortage of currencies.”
Speculation of business people was considered something “normal in the economy” by Ferrer, who said “when there’s uncertainties that privileges speculation, there will be speculation.” The pro-government economist highlighted the economy has a reduced level of debt and that “there’s a favourable international trade perspective” for the government.”
Agreeing with Ferrer, San Juan’s governor José Luis Gioja asked the federal government that the economic adjustment after the peso devaluation be “completely fair” in order not to make “the less vulnerable people” pay the consequences.
“Devaluation was a long-time claim of regional economies so I agree with the policy. Nevertheless, the less vulnerable people shouldn’t bear the brunt of the adjustment. It has to be fair,” Gioja said. “We have to look out for jobs and production in order to maintain the employment level.”
Regarding inflation, the San Juan Governor expects prices “to normalize soon” and pointed fingers at business people since “there are products where the dollar has no impact but they raised the prices anyway.”
“The ‘Price Watch’ programme is being respected in supermarkets, even though there are some exceptions. It’s a tool that helps to maintain a price level of products people consume every day,” Gioja said. “People will put things back in order with their participation.”
Former head of the Argentine Industrial Union (UIA) and newly elected congressman José Ignacio de Mendiguren asked to postpone wage discussions until “the economic variables are stabilized,” while he anticipated a high inflation rate for the upcoming months.
“The industry needs to grow at least two percent to keep the current employment level but there are already some areas that are struggling,” De Mendiguren said. “By denying the current high inflation, the competitive exchange rate was lost. The government spent a lot of time discussing a supposed speculation instead of correcting mistakes.”
Herald with Télam,DyN