Former Economy Minister Domingo Cavallo expressed his concern about the lack of measures to prevent a destabilizing devaluation in Argentina. He pointed out that the government does not recognize the problem with the current exchange rate system and warned about the risk of a devaluation jump that could negatively impact the economy.
Cavallo proposed increasing net reserves without resorting to sharp devaluations. He suggested measures such as eliminating the 'blue' dollar for exports, increasing tax incentives for exports, and establishing conditions for paying for tourism services and imports of non-essential goods with foreign currency liquidation.
The former minister emphasized the importance of increasing net reserves in order to eliminate foreign exchange restrictions in the future. He warned that maintaining the use of surplus trade foreign currency to control the exchange rate would only delay the inevitable exchange rate correction.
In this context, he raised the need to liberalize the exchange market and allow capital intended for foreign direct investments to enter through the free exchange market. Cavallo emphasized that increasing net reserves is essential to avoid a devaluation jump and maintain economic stability.
Finally, Cavallo questioned the effectiveness of maintaining a crawling peg to contain inflation and warned that the evolution of net reserves is more relevant to the exchange rate than the artificially controlled gap. He stated that reducing the crawl to 1% per month is not having the expected impact on inflation, highlighting the need to implement more effective measures to strengthen the economy.
