The Minister of Economy emphasized the importance of gaining the trust of businessmen in order to encourage investment, stating that this was a priority over Congress approving the Base Law in the near future. Speaking at the Latam Economic Forum, he addressed concerns from company executives who supported President Javier Milei’s ideals but were skeptical of the government’s ability to implement sustainable political reforms.
Despite calls for trust from Minister Luis Caputo, businessmen highlighted the government’s inability to secure congressional approval for a law after six months. This lack of progress creates hurdles for initiating investments, despite confidence in Milei’s commitment to achieving a fiscal surplus. The recent decrease in inflation figures for May, with expectations of a modest rise below 5%, reinforces the government’s strategy of pursuing fiscal surplus and maintaining a stable exchange rate to curb inflation.
However, recent market turbulence, coupled with challenges in congress and uncertainties in the central bank’s foreign exchange policies, have raised concerns. Discussions at the forum reinforced the notion that maintaining a fixed 2% increase in the official dollar rate was crucial for stabilizing prices and promoting economic growth. Suggestions to temporarily lift this fixed rate to address current challenges were also entertained.
The President’s focus on reducing the central bank’s liabilities and increasing reserves to encourage growth faces obstacles due to conflicting economic priorities. The tension between addressing liabilities and maintaining a stable exchange rate presents a challenge for the government. Moving forward, the government must navigate these complexities to stimulate investment, promote growth, and ensure economic stability.
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