Sunday, October 1, 2023

A calculator showing the potential catastrophe of Javier Milei | The CEPA initiative to measure your salary when applying dollarization

The dollarization proposed by Javier Milei in the media rounds, which made him the candidate with the most voting intentions, is being questioned by experts from the left to the right and even within La Libertad Avanza, but also by those who suffer day after day from inflation suffering in his pockets can still feel the illusion of an improvement in his economic situation. To dispel this illusion, the Center for Political Economy (CEPA) has developed a calculator that makes it possible to predict what would happen to each person’s salary or income if dollarization occurred. At the same time, with another calculation, the economists also measured the possible increase in the prices of the basic basket if the devaluation that the Milei plan would entail is carried out.

“It is important to understand what the dollarization of the economy means for our daily lives. For this reason, our center has developed a tool to bring clarity and data to the current debate,” suggests CEPA in the presentation of the calculator, very easy to use, available on the website www.tusueldoendolares.

The proposal is as simple as entering your salary in pesos and clicking “Calculate” to find out what would happen “if your salary were converted to dollars, as presidential candidate Javier Milei has proposed.” The predictions that can be made are based on one dollar to 3,700 pesos if Milei’s promise is fulfilled. Because? According to CEPA, as of July 31, the BCRA had a total of 23.4 trillion pesos – monetary base 6.39 trillion + Leliq, Notaliq and Repos 17 trillion – and assets in gold and foreign currencies amounting to 6.4 billion dollars. In order to convert all existing pesos into dollars, they must be converted into the dollars that are in the BCRA reserve. The result would be from one dollar to 3,700 pesos.

The calculator not only allows you to estimate how much you would earn in dollars, but also what purchasing power you would have compared to foods in your basic basket such as roasts, milk or pasta. On the last point, CEPA economists explained to page/12 that they had calculated these pass-through prices taking into account what a depreciation of the dollar to 3,700 would mean, using as a benchmark the pass-through (impact on prices) in early 2016 with the devaluation ordered by Mauricio Macri.

According to market studies, the average salary of Argentine workers was 293,967 pesos in June this year. With a pocket salary of this size, the equivalent would be a salary of $79 per month after applying the dollarization promised by Milei. That would allow us to buy 12 kilos of meat per month, whereas now we could buy 122 kilos.

If the calculation is made using the minimum wage for living and mobile living set by the Salary Council, set at 118,000 pesos for September this year, the dollarization of Milei would leave it at 32 dollars per month. This amount could buy the equivalent of 30 liters of milk per month in an Argentine dollar system, whereas now it allows the purchase of 303 liters.

In the case of the higher-income sectors that will benefit from the reduction in income tax this month, one can imagine a minimum pocket salary of 700,000 pesos. After dollarization, the salary would be 189 dollars and would allow the purchase of 65 kilos of bread, while now it would allow the purchase of 655 kilos.

Nation World News Desk
Nation World News Desk
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