Martín Redrado pointed out what is the “Achilles heel” of Javier Milei’s government

Economist Martín Redrado pointed out that Javier Milei’s government “should correct the exchange rate with the same emphasis with which it works on fiscal balance.” And in that sense, he warned that “in the long term no country could sustain a fixed exchange rate”. In this way, the former head of the Central Bank said What is the “Achilles heel” of the Government’s economic plan.

For Redrado, the Government’s objective It should be about correcting the exchange rate policy and eliminating the stocks. “With stocks we do not have investments y without reservations we have doubts about the ability to pay of debt maturities,” he said. And he asked: “The way is how to recover reserves in the short term.”

“There is an opportunity with money laundering,” he said. And in that sense, he remarked: “Just over US$12 billion have arrived since August 15which were left as a precaution in the banks. In the last two days US$300 million went away, as some chose to launder and take the cash. There were US$10 billion left in the banks, and US$2 billion are available, part in reserve requirements and part in loans,” he explained. And he added: “The key would be for them to be converted into productive dollars and go into the real economy, perhaps through loans.

Regarding the recovery of all loans, both consumer, mortgage and pledge, Redrado commented that “until the month of May there were an evolution of dollar loans. After the devaluation and a Central Bank that bought reserves, the dynamic changed. Since May, loans in pesos have increased and the others decreased-, due to exchange rate uncertainty because interest rates in pesos are relatively low, because there are long-term bank loans and greater mortgage credit. But in recent weeks, more credit in dollars began to be granted.”

“There are more companies that are having greater confidence in the long term. In terms of reserves, this means that when a bank grants a loan in dollars, especially to exporters in Argentina, the Central’s net reserves increase. The path is more loans to the private sector and a turn of the screw by giving canceling power to the dollar, so that it can be used in any transaction: for a merchant to buy more products, for an industrialist to acquire more inputs, for an individual to buy things in their daily life. The idea is that the dollars go into national production,” concluded in an interview on LN+.

A day before, in dialogue with CNN Radio, former president of the BCRA: “Without a doubt we have had a favorable situation during the month of September and a few days in October. The whitewashing exceeded expectations. This generated a growth in the Central Bank’s gross reserves. There was an improvement in the prices of agricultural products, a drop in the international interest rate,” he remarked.

Regarding the economy, he said: “I would love for us to be focused on the laws that can allow productive innovation to be generated formalize economic activities that are informal. We must propose a modernization of the tax structure. “The sectors that want to export today have complications that make the task impossible, which also includes exchange rate policy.”

“The key is to broaden the tax base so that we have a simpler system, less tax burden and an international policy that is dedicated to seeking new markets. For now the financial variables are stabilizing,” he assured.