Buenos Aires (Reuters) – Argentina’s cabinet chief, Agustin Rossi, has stated that the country’s financial crisis, characterized by exchange rate instability and surging inflation, is set to ease in November and December. This relief is expected to come from significant foreign currency inflows resulting from the wheat harvest.
Argentina’s ongoing financial crisis has been worsened by an intense drought that has caused a estimated $20 billion decline in crucial agricultural exports this year.
Rossi, who is also a candidate for vice president in the October elections, made the comments from his office at the Casa Rosada presidential palace in Buenos Aires. He said, “This situation ends in November, December of this year. Next year, there will not be a drought. Additionally, we will have savings of $4 billion from the operation of the Nestor Kirchner gas pipeline, which will transport natural gas from the Vaca Muerta shale formation. This will lead to a favorable trade balance, reserve recovery, and a more controlled exchange rate. Consequently, inflation will decrease and the purchasing power of wages will be restored.”
Rossi emphasized that Argentina should avoid devaluing the currency in order to combat inflation, which has soared to over 115% in the past year, while poverty levels approach 40%. The ruling Peronist bloc, which aims to win the election with current Economy Minister Sergio Massa as the presidential candidate and Rossi as his running mate, is deeply concerned about this situation.
In an effort to prevent further depletion of the central bank reserves, the government has limited access to foreign currency. Rossi argued that further devaluation of the peso would only exacerbate the difficulties faced by the country.
“Inflation does not decrease through abrupt devaluation… We do not believe that this is necessary in Argentina,” Rossi stated.
The center-left government hopes to reach an agreement with the International Monetary Fund (IMF) before the presidential primaries in August. This agreement would facilitate fresh cash injections for the remainder of the year within the existing $44 billion loan framework.
“We are optimistic. We believe that we will find a way,” Rossi expressed regarding the IMF negotiations.
Rossi mentioned that a future Peronist government, which has a new broad consensus among the candidates, would not experience the frequent disputes that have plagued the current coalition government of President Alberto Fernandez.
However, most pollsters anticipate that Massa’s Peronists will face a difficult challenge from opposition candidates.
(Reporting by Nicolás Misculin, Editing by Alexander Villegas and Rosalba O’Brien)
Credit: The Star : News Feed
