November 20, 2014
Gov’t plays down monetary base growth's impact on inflation
Cabinet Chief Jorge Capitanich adressed the warnings issued by different analysts about the government’s record monetary base expansion in August. He dismissed a negative impact on inflation rates saying “analyst’s forecasts will not necessarily happen.”
Amid growing concern over the monetary base growth in the context of slow economic activity and record US dollar rates hikes, the chief of ministers played down the government’s monetary issue -24,919 million pesos in August- saying the Central Bank is only honouring its charter.
Capitanich stated that the current Central Bank’s behaviour “is no criteria for future consequences.”
“Last year the US increased its monetary base by three times, and some European countries up to five times, without problems. In Argentina, in the first six months of the country, the increase was only of 18%,” he explained.
The official also referred to the remarks made by Germany’s Finance Minister Wolfgang Schäuble yesterday, who sided with vulture funds, accusing Argentina of “spending more than it earns.”
“Economists and Finance officials from the world’s most important countries often comment on Argentina but in all truth, the debt crisis suffered by many European (countries) and the US is caused by public debt surpassing GDP,” the cabinet chief said and pointed out that Argentina’s debt-to-GDP rate is of 8%.
“Argentina used the debt relief fund to pay off debt in the past 15 years, while Europeans accumulated fiscal deficit and public debt that they then transferred to the rest of the world,” Capitanich fired back.