Some call him the "Messi" of finance, the Minister of Economy of Argentina, Luis Caputo, has implemented an economic stabilization plan aimed at strengthening the Argentine peso and controlling inflation. Below, the main measures and strategies adopted are detailed:
1. Elimination of monetary issuance: Caputo announced in July 2024, that the Central Bank would stop printing pesos to finance the fiscal deficit, seeking to curb inflation and stabilize the national currency.
2. Controlled devaluation: A policy of gradual devaluation of the peso against the dollar was established, with a pace of 2% per month, avoiding sharp jumps in the exchange rate and allowing for a gradual adaptation of the economy.
3. Reduction of the fiscal deficit: The government implemented a significant fiscal adjustment, eliminating the public sector deficit and correcting prices and exchange rates, in order to achieve balance in public accounts.
4. Intervention in the exchange market: To contain the volatility of the dollar in parallel markets, strategic interventions were carried out, establishing ceiling prices and using reserves to stabilize the exchange rate.
5. Negotiations with the International Monetary Fund (IMF): The government began discussions with the IMF to renew an agreement for $44 billion, seeking financial support and the possibility of lifting currency restrictions in the future.
Results to date:
Inflation: In November 2024, an inflation rate of 2.4% was recorded, the lowest in the last four years, although the year-on-year inflation rate remains high at 166%.
Real exchange rate: Despite the measures, the multilateral real exchange rate has returned to the level it had at the beginning of Caputo's administration, indicating persistent challenges in exchange rate competitiveness.
Challenges and perspectives: Although progress has been made in reducing inflation and stabilizing the exchange rate, significant challenges persist, such as the need to maintain fiscal discipline, strengthen confidence in the peso, and promote sustainable economic growth.
Caputo's plan seeks a sustainable "disinflation" and economic recovery, considering a more flexible exchange rate policy and possible legislative reforms to ensure fiscal responsibility and the independence of the Central Bank.
In summary, Minister Caputo has implemented a set of measures aimed at stabilizing the Argentine economy, focusing on controlling inflation, strengthening the peso, and achieving fiscal balance. While progress has been observed, long-term success will depend on the continuity and effectiveness of these policies in a complex economic environment.
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