Buenos Aires Hours | Martín Guzmán: “There will be no devaluation”


Reacting to last week’s turmoil in foreign exchange markets, Argentina’s Economy Minister Martín Guzmán said on Sunday that “there would be no devaluation” of the peso in the immediate future.

Speaking during a debate on debt restructuring in Buenos Aires, the minister said the central bank is “accumulating reserves”, observed that Argentina has a “trade surplus” and said that “the exports are growing “.

“There are many who say ‘devaluation is coming.’ Last year they said the same thing, we said ‘no’, and that didn’t happen. Now we say the same thing. : no, there will be no devaluation, ”Guzmán said.

The minister’s comments come after the peso weakened in informal and parallel local foreign exchange markets last week, with the so-called “blue dollar” hitting a record 195 pesos per greenback last Friday as demand for assets in hard currency is skyrocketing.

Analysts have speculated a lot about a possible devaluation of the peso after the upcoming midterm elections, which could see the government lose its Senate majority after suffering a heavy defeat in the recent primaries.

Speaking in a debate titled “How to Get Out of the External Debt Trap” at Centro Cultural Kirchner in Buenos Aires on Sunday, Guzmán denied that a devaluation is being delayed after the November 14 vote.

“The Central Bank is accumulating reserves and we have a trade surplus and exports are increasing. In other words, we have more resilience and not less on the external front,” he argued.

President Alberto Fernández’s administration has so far insisted on a slow depreciation of the official exchange rate, keeping the currency overvalued through tight capital controls to protect reserves as it attempts to curb inflation above 50% per year. Prices rose 37% in the first nine months of the year.

Earlier this week, the government ordered a 90-day price freeze on more than 1,400 household items to protect citizens, a measure strongly rejected by the opposition and several business leaders.

The IMF loan was “political”

Guzmán, who was virtually joined at the event by Ecuador’s ex-presidential candidate Andrés Arauz and ex-Greek Finance Minister Yanis Varoufakis (both spoke via video conference), had strong words for the Argentine opposition as he broached the subject of the country’s outstanding debt with the International Monetary Fund.

“Ending dependence on the IMF is an act of sovereignty. The IMF is the main problem that [former president Mauricio] The Macri government has left Argentina. He funded Macri’s [election] campaign and today the Argentine people are paying for it with fewer job opportunities and more inflation, ”he said, describing the record $ 57 billion line of credit in 2018 as a“ political loan… in support of the previous government ”which had the approval of the United States government.

Addressing the country’s attempt to restructure its payments and seek a new funding program with the Fund, Guzmán said a new deal was needed to “reassure the economy”.

“What we need to get is that the IMF stops being a destabilizing burden on the balance of payments,” he said. “We are looking for an agreement that is suitable for Argentina and that implies that the burden is sustainable. The volume of debt is so large that it will take several steps to resolve this problem in a way that will ultimately be sustainable.”

Argentina’s economy, in recession since 2018, is recovering after a devastating 9.9% drop in gross domestic product last year, a collapse caused in large part by the coronavirus pandemic.

Economic activity increased 1.1% in August from the previous month, according to the national statistics office of INDEC. Compared to the same month of 2020, activity increased by 12.8%.

Between January and August of this year, gross domestic product increased 10.8% from the previous year, according to government data.


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