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Thursday, December 01, 2022

“Business Margins”: Deputy Minister of Economy Rubinstein Responds to Christina Kirchner

"Business Margins": Deputy Minister of Economy Rubinstein Responds to Christina Kirchner

After it was learned that the poverty figures increased during the first half of the year, Vice President Christina Kirchner pointed to the Ministry of Economy. In a series of tweets, he confirmed that the Palacio de Hacienda had “worked hard in all areas”, but encouraged the establishment of “more precise and effective” intervention policies on food companies.

This morning, the Deputy Minister of Economy, Gabriel Rubinstein Responds to the Vice PresidentHowever, he did not mention it explicitly. He stressed that companies are not “to blame” for Argentina’s current imbalances and acknowledged that trade margins will remain “higher than normal” if macros are not stabilized.

In the afternoon, Rubinstein retweeted with the intention of downplaying the impact of his previous messages. “As much as you want to create controversy, Whatever I published on Twitter today was already stated in the National Congress yesterday afternoon,” he said.

The series of tweets made by the deputy minister in the morning had sparked controversy. ,Until we achieve exchange rate integration, there will be a certain disorder and higher-than-normal trading margins. But consolidating the foreign exchange market without a strong primary fiscal surplus, and almost without reserves, seems too risky. The answer (3 years?) should be that (sic),” he had said.

Along these lines, the economist indicated that Excess demand because of the fiscal deficit will continue to fuel higher inflation. And he stressed that the economy ministry seeks to reduce the exchange rate gap, generate agreements and other actions, so that the consumer price index falls from 90%—which is projected for this year—to 60%, Which is considered in 2023. The budget is “just a first step,” he said.

In turn, he stressed the need to “return to the macro” of the years 2003–2005. At the time, as he recalled, the primary surplus was 3% of GDP and an external surplus was the dollar, inflation was 5% per year “without price controls”, the layback rate was 6% annually. and had net reserves of US$ 40 billion.

“The fault of exchange disorder, Liability to be financed for 180 days for very long gaps, imports, quotas, etc., etc., Companies do not. However there are regulatory abuses and corruption. It is our responsibility (government) to rectify all this. That’s what we are on (sic),” said the deputy minister of economy.

The entrance to Rubinstein’s Palacio de Hacienda was characterized by a prior wait and precariousness. When her name began to be rumoured, a few days later Sergio Massa was chosen to replace Silvina Batakis, thus stabilizing expectations, His openly anti-Kirchnerist past was placed under the magnifying glass.

on more than one occasion, The Economist published criticism of the current government on social networks, specifically aimed at Christina Kirchner. This would have delayed his taking office, although it was officially reported that the delay was due to “a family issue” and because “contractual responsibilities inconsistent with public function” had to be resolved.

one in foreign ministry criminalRubinstein later included him in the team, highlighting the “breadth of government”, “Despite the offensive comments on my part on social networks, which did not correspond to the making”.

Yesterday afternoon, the Index released poverty figures for the first half of the year. 36.5% of Argentines cannot reach the total basic basket (a universe of 17 million people), while 8.8% of the population is poor and even its food needs are not covered (4.2 million persons).

Although poverty registered a decline of 0.8 points over the previous measure, the poverty index increased by 0.6 points. The data upset the government and worried economists, especially because the period observed The effects generated by the acceleration in inflation are still not fully observed.

“It is more than clear that we are facing an inflation phenomenon due to supply and not demand. Food companies have increased their profit margins tremendously. The Ministry of Economy has worked hard in all its areas of competence, But a more precise and effective policy of intervention is necessary in this area. and, at the same time, design a tool that strengthens food security in the face of poverty”, attacked Vice President Christina Kirchner yesterday afternoon.

Sources close to Massa conceded that it was not a message addressed to him, but was intended to “contain” social demands. However, the open claim against the Ministry of Economy did not go unnoticed. not only because of the past with Rubinstein, but also because The short circuit that the Vice President had with Martin Guzmán, the former Economy Minister.

The poverty numbers still belong to the Guzmán administration. In addition, given food inflation, Kirchner’s critique, according to a report by economic advisor EcoLatina, began to accelerate in the first quarter of the year. In three of the first four months of the year, items rose above normal levels, an average of 6.4%, One percentage point above the normal price level.

This increase was explained by a number of events. Among them, the outbreak of war in Ukraine led to a rise in world prices, a massive revaluation of consumer prices and drought after the late 2021 freeze, which affected the country’s crops and livestock.

However, the relationship reversed in the second quarter. In three of the four months of that period, food went below normal levels, about one percent below average. “This lower evolution of food, more calmly rooted primarily in the price of meat, favored more low-income areas”. Explained.

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