MercoPress. South Atlantic News Agency

“Devaluation of the Argentine Peso is a fact of the market”, says Lavagna

Former minister Lavagna says the Argentine economy is going through ‘the worst of possible worlds’

Former minister and ex-presidential hopeful Roberto Lavagna warned that the Argentine economy is going through “the worst scenario possible” since the market has already adapted to the devaluation of the Peso, but the government of President Cristina Fernandez in its fantasy refuses to acknowledge it.

“We are in the worst of worlds. Devaluation is a fact of market and evidence of President Cristina Fernandez administration’s failure, which insists in not accepting it”, said Lavagna who was the architect for the taking off of the Argentine economy in 2003 following the collapse and major default of 2001/02.

“The market has already adopted and adapted to the devaluation of the Peso, so it seems out of touch with reality to keep the artificial official rate, which is well below the level of daily operations by the different economic actors”, added Lavagna. 

President Cristina Fernandez refuses to admit or even use the word inflation in her speeches and similarly accuses manufacturers and farmers of conspiring to force a devaluation of the Peso.

“The Argentine economy is in the process of rapid deterioration; inflation was born out of the printing of money with no reserves; investment is scarce and so is the creation of jobs, plus the energy situation has become most complicated”, warned the former minister who was the brain behind the Argentine sovereign debt restructuring.

He added that the government of President Cristina Fernandez “locks itself in its small wonderland out of touch with the real world, and thus can’t find the way out according to their mental scheme”. The majority of Argentines will end paying the tough adjustment plan, so “we need to build an integral plan to create a sustained growth system”.

Lavagna who now supports Sergio Massa, the rising star in the Peronist movement and the big winner in the province of Buenos Aires in the recent primaries, insisted that the “government has increasing problems, and as objective real difficulties emerge, it makes fiction interpretations of reality and further sinks into those same problems”.

“The only thing that has avoided Argentina from falling into another major crisis is the international scenario tremendously favourable because of grains and oilseed prices and the effect this has on farmers to keep increasing their crops”.

Finally when asked about the invitation to a ‘dialogue table’ made by President Cristina Fernandez to business leaders, organized labour and manufacturers, economist Lavagna was most sceptic: “nothing can come out of that”.

“What can be expected of a meeting with the Construction Chamber that for so many years has been partners of government in this disastrous public works policy?  What can be expected of a meeting with a piece of the organized labour federation that has been quite clear and demanding is asking for eliminating the income tax for workers?”

“Nothing, but I would also say this is the best possible scenario since the worst would be for the different corporations and lobbies to benefit from specific advantages which at the end the bill will be picked up by the rest of the society, by all the hard working Argentines which are the majority of the country”, concluded Lavagna.