The magazine The Bankerfrom the group that publishes the newspaper Financial Timesannounced this week the winners for the best economic ministers and presidents of central banks around the world during 2024. In each category there is one winner per continent. In the case of the American, the winners were the representatives of Paraguay and the United States respectively: Carlos Fernández Valdovinos and Jerome Powell.
“It was our turn to score the goal”he told Clarion Fernández Valdovinos on the same Thursday after learning of the award. “Although the distinction is for 2024, the coronation is a mix of work that has already been going on for 22 years.”
One of the most important milestones of the period was the improvement of Paraguay’s credit rating by Moody’s Ratings, which, in July of last year, raised the country to investment grade level (investment grade). “This improvement reflects not only sustained economic growth, but also a solid record of institutional reforms,” the minister said.
In his analysis, The Banker underlines the reason for the award: “As Paraguay strengthens its economic and international position, the positive impact of the work of the Ministry of Economy and Finance deserves to be recognized.”
Fernández Valdovinos has held his position since August 2023. Twelve months ago, in February 2024, Paraguay placed a bond in its own currency, guaraníes, for seven years with an annual rate of 7.9%. “Our plan is to return to New York next month and I want to extend the deadline for the operation”.
Paraguay’s country risk is around 160 basis points. For 2024, estimated inflation is 3.9% annually, more than half a point below that of 2023.
Paraguay signed an agreement with the IMF in 2003. Then it began to travel a path of macroeconomic stability. Uruguay did something similar but a year earlier, in 2002, at the end of its banking crisis and in the midst of the blows of the Argentine depression and the chaotic end of the fixed exchange rate scheme of the Fernando de la Rúa government. Paraguay, Uruguay and also Argentina signed agreements with the IMF and stabilized their economies at that time. Paraguay and Uruguay followed the same path until today. Argentina destabilized the stabilization that it had achieved for 2003-2006. In the middle he canceled his debt with the IMF and Néstor Kirchner assumed a virtual role as Minister of Economy by displacing Roberto Lavagna.
Fernández Valdovinos, a Chicago Boy, explained to Clarín that precisely a fundamental factor in the conduct of recent Paraguayan economic policy has been the creation of the Ministry of Economy in Paraguay, merging the financial, planning, human capital and even operation areas of the State from where, for example, competitions and appointments are monitored (“we eliminated almost 90 hierarchical positions”). Chainsaw in Guaraní is said ‘yvyrakytĩha’.
Powell, in his case, was distinguished as the best Central Bank president in the region. The head of the Federal Reserve began a process of reducing interest rates in 2024, taking the economy to what many experts point out as a “soft landing” after in 2023 he began to stop raising rates and in September 2024 to lower them.
According to The BankerPowell “attributed the rise in post-pandemic inflation to an extraordinary collision between overheated and temporarily distorted demand and constrained supply. In turn, he said that disinflation has occurred as a result of the dissipation of these shocks, monetary policy that moderates demand and well-anchored inflation expectations.
The award also mentioned “Powell’s contribution to avoiding a recession in the United States and controlling inflation, recognizing the effectiveness of the Federal Reserve’s communication with the markets, which was fundamental in setting inflation expectations.”
All eyes will be on Powell once Donald Trump takes office as US president on January 20. The president said he will not seek to remove the Fed chair until his term expires in 2026, something he sought to do in his previous presidency when he pressured Powell to lower rates. But many are distrustful. “Will Trump fire Powell from the Fed?” Kenneth Rogoff, a Harvard professor and former IMF economist, asked in a recent column.
The prize elections The Banker They did not coincide with those of the specialized magazine LatinFinance, which, as winners in 2024, chose Luis Caputo (Minister of Economy) and Roberto Campos Neto, president of the Central Bank of Brazil. The Banker award that was given to Fernández Valdovinos is the same one that Alfonso Prat-Gay received in 2016, when he was Minister of Treasury and Finance in the government of Mauricio Macri. Will it be Argentina’s turn to win this award again next year?