This week, the government announced the start of a zero monetary emission policy aimed at stabilizing inflation alongside a crawling peg adjustment. President Javier Milei even stated his goal of achieving zero inflation, which would require significant economic adjustments. In light of these developments, we spoke with social sciences expert Julio Gambina.
Gambina expressed that today is filled with anticipation and uncertainty. He noted the focus on a zero monetary emission policy and a strong government intervention. He highlighted the contradiction in the government’s stance; although the President initially criticized the state, claiming he would dismantle it, he is now initiating a new phase with increased state involvement.
Gambina pointed out that the earlier notion of blowing up the Central Bank is far from reality. Instead of shutting it down, the government is working to stabilize the Central Bank to transfer its debt to the Treasury. This move reflects a broader agenda that leans toward deeper budgetary adjustments. He warned that if the debt is transferred to the government, it will need to manage the interest associated with that debt.
The government’s primary objective remains the reduction of inflation. Gambina remarked that while there has been talk of starting zero emissions, prior actions were meant to address financial issues. He emphasized that the primary concern for the population extends beyond rising prices to include recession and unemployment. Nonetheless, the government continues to prioritize inflation above all.
Furthermore, Gambina explained that the goal is for inflation to align with the 2% devaluation rate. The President has expressed a desire for zero inflation, which presents a challenging scenario, as achieving this would necessitate extensive fiscal adjustments. This raises the crucial question of how much the society can withstand these budget cuts.
In terms of economic recovery, Gambina noted that revitalization must stem from the industrial sector, particularly manufacturing. He pointed to the latest economic activity indicators from May, which showed a decline, indicating that employment improvements are not materializing. Overall, he stated that there are no signs of an economic rebound, not even a V-shaped recovery, which leaves the outlook bleak.
Source: https://www.perfil.com/noticias/canal-e/julio-gambina-van-por-la-inflacion-cero-y-eso-supone-un-ajuste-impresionante.phtml
