Former government officials that form Patricia Bullrich’s economic team met with business leaders and anticipated the economic plan they are crafting. The list includes trade openness, reduction of tariffs, differentiated exchange rates, welfare cuts, and an “iron fist” to appease protests. They acknowledge that there will be a regressive effect in the first half of 2024, but they expect a rebound for the “second semester.”
Former Economy Minister Domingo Cavallo — creator of the “corralito” which precipitated the 2001 socioeconomic crisis and resulted in the resignation of President De la Rúa — is allegedly an external advisor, consulted on how to craft their proposed reforms.
Despite the picture of unity carefully organized by the presidential candidates within opposition coalition Juntos por el Cambio (JxC) and their staff in the Emperador Hotel, internal differences exist. They emerge mostly in their political structuring. On the economic side, these differences are related to the speed and the how-to. With nuances, they all propose a spending cut in order to reach fiscal balance, a more or less drastic devaluation, and changes to labor legislation.
This cocktail of measures also monopolized a private meeting Bullrich’s economic staff held with business leaders a few days ago. Head of the table was former Production Minister Dante Sica, an economist who was on the staff of former presidents Mauricio Macri and Eduardo Duhalde’s administrations. Sica’s name is being floated as a possible future chief of staff if Bullrich were to win the elections.
A dozen leading business owners from different sectors participated in the meeting. The Herald’s sister publication Ambito was able to talk to three of them, who revealed some details about the conversation. No one will deny it: the PRO presidential candidate’s program would result in a recessive shock in early 2024. Yet people working in the program promise the recovery would take place “in the second semester” of next year.
Although that proposed timeframe was labeled as “unfortunate” by some participants who recalled Macri’s promises, they were more surprised to hear the mention of Cavallo. In the same conversation, the former economy minister was named as one of the external consultants advising Bullrich on the crafting of her planned “reforms”.
Regarding the currency exchange issue, they are analyzing a currency rate splitting. This would result in a single official rate for imports and exports and all other operations would take place in a financial market where the government would not intervene in its exchange rate. “It will go as high as it has to”, the presidential candidate’s team summarized. According to them, that scheme would result in removing currency controls, leaving a single rate for the US currency.
Those around Bullrich don’t hide the fact that they are planning to open up immediately to trade, which would also include a considerable reduction of import duties.
“In late 2019 we were about to do that together with Brazil, but it didn’t make sense because we were already on our way out,” acknowledged an economist working for that space who sees no difficulties in discussing that plan with Lula.
As the rest of the opposition candidates point out, the former security minister aims to reach fiscal balance in the first year. For that, she claims she will cut down on economic subsidies and control social spending.
“We will cut out the middlemen in state welfare programs. That will go straight through bank transfers,” one of her economists told the businesspeople.
Likewise, he suggested that changes will provoke social unrest, so economic policies cannot be considered separately from security policies. Bullrich’s closest advisors said that they would exercise an “iron fist” to bring order to the streets. They said that they “do not care if [protesters] block the Aeroparque for a week or camp on 9 de julio avenue for six months, there will be no backing down on the reforms”.
Cavallo’s shadow is hovering over Argentine politics once again. In some cases, candidates such as far-right presidential candidate Javier Milei make it public. Others do so only in more private scenarios. But in a cafe close to the Malba museum, you can often see politicians and businessmen listening carefully to the advice of the former minister.