Sunday, June 4, 2023

Martin Rapetti: “The average salary today at the official exchange rate is US$1,200, and with dollarization it will drop to less than US$200”

In a conversation with Gustavo Silvestre, economists close to Facundo Manes hinted against an eventual dollarization of the economy, and assured that implementing it would mean living at an exchange rate of 1,600 dollars today, which would reduce wages.

Martin Rapetti is an economist and founding member and executive director of the consultancy Equilibria. He is part of the team advising on economic issues for Facundo Manes, the presidential candidate of the UCR within the Juntos. In a conversation with Mana Silvestre, the economist eventually raised his differences regarding the dollarization plan, such as that supported by Javier Milli, and believed that a gradual exit from stocks is necessary.

“I absolutely disagree with dollarization for various reasons. The first is implementation, because if one wants to dollarize the economy, which means removing the pesos that are in circulation and which are in the banks, dollars are needed and not with the Central Bank. And the exchange rate that we’d be talking roughly would be $1,600. That would be twice the brutal devaluation that happened in 2001,” Rapetti conceded.

On Radio 10, he said that “the average salary today at the official exchange rate is US$1,200, and it will drop to less than US$200, it will be a pulverization of salaries. After implementation, there is a set of problems that follow”. If there is a demand for wage hike, there will be inflation in the dollar, the problems will not end.

Regarding what to do with the exchange rate, Rapetti said: “If there is an exchange rate, it is because devaluation is being avoided. The problem is that it is a good temporary measure in times of panic, but The problem is that stocks don’t let you grow, because when there are such high exchange rates it’s main business of the economy is trying to buy dollars in the market.Officials and sell it in parallel which is more expensive.It Nets should be used for removal”.

“The question is how do you get it out. There are people who think that doing it as soon as possible is the solution. This is a serious mistake because in the current circumstances it would lead to a huge devaluation and a huge inflationary acceleration, a loss of purchasing power.” Will generate losses and deceleration. The key is to do it slowly, the point is to do the right engineering to get out of that situation,” he said.

On the country’s economic potential in the future, the economist raised a possible scenario of macro stabilization based on the use of the resources that the country has today.

“The product of a little bit of luck, Argentina has enormous economic potential in two sectors that have gained great relevance on the global geopolitical level, such as energy and mining. Vaca Muerta has a vast reserve of gas and oil and if these resources If used judiciously, US$35,000 million can be exported per year, which is equivalent to the entire soybean complex. And due to the inevitable energy transition, two minerals, namely lithium and copper, will be mainly demanded. copper, which Argentina is rich in both”, he said.

Nation World News Desk
Nation World News Desk
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