Javier Milei: evaluation

Transcript context

…e Central Bank and transfer it to the Treasury where it should have always been, and that meant an adjustment of approximately 10% of GDP. Everyone said this would be impossible and couldn’t be fixed. Essentially, what we did was implement a fiscal adjustment at the Central Bank, amounting to 10% of GDP. So if you ask me, it’s clear that we have not only made the biggest fiscal adjustment in the history of humanity, because we made a fiscal adjustment of 15 points of the GDP, but also most of that went back to the people as less seigniorage, as a lower inflation rate. It’s true that we temporarily raised the country tax, but we lowered it in September, and now in December, we’re going to eliminate it. Today, for example, we also announced that in December we are eliminating import taxes. In fact, in that regard, what you have is that we return to the people 13 and a half points of GDP because the real tax burden is the size of the state. So while back in December we were discussing hyperinflation, today we are discussing 30-year loans. In other words, all those resources that the national government used to take are now back in the private sector. And that’s what has allowed it to be very dynamic. And this has two very strong impacts. The first one is that if you look at wholesale inflation, it went down from 54% to 2%. So it went down by 27 times. It was divided into 27. So we had inflation at the rate of 17,000% annually, and it’s now close to about 28% a year, but it’s not only that. You could consider consumer inflation, the latest consumer inflation rate was 2.7%. Now, it happens that we essentially, due to a matter that is related to the Central Bank’s balance sheets and also due to the debt stocks, we still have controls in place and we are eliminating restrictions, day by day. Now, the interesting thing is that we have a 2% monthly devaluation standard, and there’s international inflation of course, which means that you then have to subtract two and a half points from the inflation observed by the consumer. This indicates that inflation in Argentina, the true inflation, not the induced one, but the actual monetary inflation is 0.2% per month. At 0.2% per month, this equates to 2.4% annually. What I’m saying is, the original discussion was about whether inflation could reach 17,000%. Now we are bringing inflation down to levels of 2.5% annually, and that is amazing. And we achieved this by considering a number of factors. The first one is that we did not experience a previous hyperinflation, which would’ve simplified the process of implementing a stabilization program. Typically, when hyperinflation occurs, monetary assets are diluted, leading to a natural restoration of demand. And besides, we did not resort to any expropriation. For example, before the Convertibility plan, which was the most successful program in Argentina’s history, Argentina experienced two instances of hyperinflation. During Alfonsin’s administration, inflation reached 5,000%, and under Menem was 1,200%. h was the most successful program in Argentina’s history, Argentina experienced two instances of hyperinflation. During Alfonsin’s administration, inflation reached 5,000%, and under Menem was 1,200%. Additionally, there was the BONEX plan, under which debt was exchanged on a compulsory basis. In other words, what we did instead was clean up the Central Bank balance sheet. So with that, we cleaned up the Central Bank’s balance sheet. We cleared a loss of $45 billion, all voluntarily. And the most amazing thing is that we did it in just six months, and at the same time, we have not controlled prices. And at the same time, we have not controlled prices nor have we fixed the exchange rate. And this is very important. All previous stabilization programs in an effort to show quick results used to do this. What they would do is, before announcing the plan, they would adjust the rates. And once the rates were adjusted, they would launch the plan. But in our case, we couldn’t afford that luxury, so we had to implement it on the go. And also over the past few months, that is to say companies brought in rates that covered only about 10%, whereas today they cover 80% so you get the picture. Just imagine the adjustment we are making. And in that sense, it is also incredible what we have achieved because if we were to work with the inflation we have in our country today, considering the exchange rate situation, the figures are even better than during the convertibility program, which was the most successful economic program in Argentina’s history. And in fact, there is an article called Passing the Buck, which is by Gerardo della Paolera, Bózzoli, and Irigoin that demonstrates that Menem’s first government was the best government in history. And basically, it argues two things in the success of the stabilization of the convertibility program. So if you take a closer look, when you examine it carefully, when you account for all these factors, our disinflation process is actually much more genuine. And not only that, it’s also much deeper. We are restored freedoms to Argentinians while simultaneously implementing a structural reform eight times larger. And we accomplished this with only with 15% of the representatives, 10% of the senators, and within the first six months of government. In other words, our deregulation agenda continues daily and we still have 3,200 structural reforms pending. This will ultimately make Argentina the freest country in the world. Moreover, to have a sense of magnitude, the reforms that we already have made with the executive order 7023, and with the basis law, we have actually jumped 90 places in terms of economic freedom. What this means is that today, Argentina has institutions similar to those of Germany, France, Italy, and we obviously want this to continue. And let’s say we are going to surpass no doubt the levels of economic freedom that Ireland reached in its best moment. And not only that, we’re going to exceed the levels of economic freedom of Australia, New Zealand, and Switzerland. We are undoubtedly going to be the freest country in the world. in its best moment. And not only that, we’re going to exceed the levels of economic freedom of Australia, New Zealand, and Switzerland. We are undoubtedly going to be the freest country in the world. And this means that thanks to what we’ve done today, we are on a path that allows us to multiply our per capita GDP by 2.5 times when you apply the relevant correction. And this of course is something very interesting because it implies a huge increase in well-being. And furthermore, today the Argentinian economy is already strongly and amazingly recovering. And we can say analysts’ hypotheses were suggesting that next year we will be growing between five and 6%. Today, JP Morgan has now corrected or let’s say revised the projections upwards. And besides, when we normalized the price situation, the true poverty rate came up and it was 57% in January. Today it is at 46%, meaning we lowered poverty by 11 percentage points. Let’s say, I mean, it seems truly like a miracle. And not only that, but actually not a single job was lost in the process. When it comes to all of this inflation reduction process, people said that our economy and economic activity would collapse. And actually when you look at the de-seasonalized data, you see that in August there was a recovery that took us back to December levels, to December levels. That means that in the year, we made the largest fiscal adjustment in the history of humanity. We will end up with less inflation, fewer poor people, better real wages, and additionally, a GDP higher than what we started with. And if you look at it in dollars, I can assure you that the numbers are phenomenal because basically today the dollar is below the levels we had when we took office. So the reality is that in all of this, when you take my popularity levels and the government’s acceptance levels, today they are above the moment. We assumed office if you know that the moment of maximum popularity is when you take office. Therefore this means that far from resting on our laurels with this, we’re going for more reforms. We’re going to deepen the reforms. And I tell you, we won’t stop until Argentina is the freest country in the world. Furthermore, a recent work by an Argentinian economist named Juan Pablo Nicolini was presented at the central bank’s monetary meetings and he works at the Federal Reserve. And it’s interesting because he shows that only on the basis of what we have done in fiscal matters it ensures that in the span of 10 years we can double the GDP per capita, meaning that Argentina could grow at rates of 7% annually, which is very much, very much, and that has strong consequences in terms of improving quality of life, reducing poverty, reducing indigence. Therefore, if during the worst moment our image didn’t suffer and we stayed strong in our ideas, now that everything is working much better, why should we change?…

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