Point by point, how will Alberto Fernández as president handle the economy, according to Nielsen

Guillermo Nielsen is the economic reference of the Front of All. That is why, every time he speaks and explains about the next Argentina, the market listens very carefully.

In the hands of the very high chances that Alberto Fernández has to prevail in the next elections in October, if Nielsen refers to the dollar, the agreement with the IMF or inflation, investors pay attention because they believe that many of these definitions can then be seen embodied in the roadmap of the next government.

On this occasion, Nielsen had an extensive dialogue with the Brazilian economic environment Valor, during which he reviewed, point by point, the measures that will be taken from day one in case Alberto F. hangs the presidential band.

Dollar, inflation, salaries, agreement with the IMF, retentions, fiscal policy, import control and more issues were addressed by Nielsen when it comes to what Argentina 2020 will look like if Macri is defeated in the October elections.

1. The role model will be the first government of Nestor Kirchner

When asked if an eventual government of Alberto F. will be similar to Cristina Kirchner's, Nielsen denied it. "It would be more like the beginning of the Néstor government, which was characterized by much lower levels of inflation, lower interest rates and a stricter control of public spending. It is necessary to take as a reference the Argentina of 2003, 2005 and 2006 It is there where we will find the type of economic policy that we propose, "he said.

"But, of course, with some broader aspects of the social policy that characterized Cristina's government. But the essence of the economy will be to return to a strong and strong fiscal policy as soon as possible, and also monetary, that allow the activity economic function in a mode of growth, something that is not happening in Argentina today, characterized by a strong recession, "he said.

2. One of its first measures will be to boost investments in Vaca Muerta

"There are a number of measures that we are preparing, and we will send bills to Congress for quick approval. But the most important one refers to a new regulatory framework for oil and gas, different from what it is today," Nielsen anticipated. .

As he specified, the idea "is to modify the tax and accounting treatment, in line with the current situation in the United States basin. That is, a lower tax and accelerated amortization as an accounting standard. The corporate income tax, meanwhile, it would be 20%, when today it is basically 35%. "

"We are predicting that the revolution of unconventional oil and gas, which in the United States took 15 years to occur, in Argentina could happen in half the time. We believe this is possible because technology is already available and the only thing what we want is to change certain rules of the game, "he said.

3. Your plan to contain inflation includes a large social agreement

"A social agreement will be proposed to reduce inflation levels as soon as possible. It will be a very important price and salary agreement to moderate inflation, which is one of Argentina's big problems," Nielsen said.

"It would be a price and salary agreement. And, on the other hand, a fiscal and monetary policy coordinated with that pact. There is no solution for inflation without a solid fiscal policy and a non-expansive monetary policy within the planned sobriety agenda. prosecutor, "explained the referent of the Frente de Todos.

"It would be a kind of Pact of the Moncloa (the 1977 agreement of Spain between parties, unions and businessmen in which they promised to follow a political and economic program in the period of transition after Franco). With increases in prices and wages preprogrammed, a fiscal and monetary policy consistent with the objectives of this agreement, "he said.

4. Look for a two-point interest rate level

Nielsen considered that for the economy to work "there has to be a very low real interest rate of one or two points in real terms."

"The problem is that the Macri government will leave us with very high interest rates, especially due to a total lack of trust. Argentine society has long lost confidence in the Macri government, and our task will be, in first, recover it, "he explained.

5. Will aim to have a sustainable fiscal policy

"The level of debt to which Argentina has been subjected requires that the country have a primary surplus. It is no longer enough to have a fiscal balance, primary surplus is also needed," he said.

"It will have to be a cost-adjusted management. All this should be closely observed, and this will be a key part of the initial work. But it will also be a matter of realism. The problem today is not to have a primary surplus, but the interest rate on the debt to be paid in the coming years for all the debt incurred under the Macri government, "he criticized.

6. You will choose to have a floating exchange rate

According to Nielsen, in principle the strategy will be to move towards "a floating exchange rate. I don't think a fixed exchange rate is appropriate. We need to maintain the competitive exchange rate."

The economist had already anticipated that one of the keys was to lower the volatility of the currency. To do this, he had said that the "reserve requirement" will be reinstated to discourage the entry of speculative financial capital, in reference to the measure set forth in the months prior to the renegotiation of the 2005 debt, when he accompanied the former Minister of Economy Roberto Lavagna. 

7. They will shorten deadlines to settle exports and there will be "reasonable" limitations

"There will undoubtedly be some changes in the exchange and absolute freedom policy in the capital market, which ended up characterizing the Macri government and that was very negative. That is because very high interest rates and monetary instruments were combined that gave rise to the ' carry trade 'and that cost us dearly. Then, there will be some limitations, but very reasonable, "he said.

Among the planned measures, he said that "it will be required that dollars from exports will have to enter the market in a period that we still do not know if it will be eight or twelve months. But they will have to be liquidated. It is not possible to take years to be able to liquidate exports. This creates a situation of exchange market instability that we must avoid. "

8. There will be extensive renegotiation with the IMF

"As Argentina has an agreement with the IMF, there are certain things that we will necessarily have to talk to the Fund. It is not that we will do what we want. But that there must be a negotiation. Macri will deliver a poor country on the one hand, and on the other, a country in an awkward situation with a low degree of freedom under the agreement with the Fund, "he said.

According to Nielsen, it is not possible to maintain the current agreement with the IMF: "We will seek a greater degree of freedom under this agreement. We understand that if we win, we will have a popular mandate given by the votes that authorize us and force us to renegotiate the agreement with the Background".

The renegotiation will cover all aspects: "We will seek a renegotiation of everything: payments, terms ... We have to be realistic about the economic and social situation of the country. We have to think that a very important part of the population cannot pay for public services as gas , electricity or water. We must bear in mind that in Argentina, today half of the young people are poor. This is the biggest obligation to solve. "

9. They will not reduce agricultural withholdings but they do evaluate measures for other exporters

"With the fiscal problem left by the Macri government, it is very clear that we cannot put an end to the withholdings for some time. This is really not feasible. It is not desirable, but it is not feasible," said Nielsen, who recalled that It was "the Macri government that has imposed withholdings on almost all exports, not only agriculture, but also services and high-tech sectors."

"Macri has set taxes on almost everything Argentina exports and we will have to see how we can reduce this. Anyway, it is a very negative policy. No country has progressed punishing its exports. It seems very out of place, a very irrational tax "he said.

10. Imports will not return

When asked from Valor if they were going to return the import controls, the economist said: "No, not at all."

"I am not in favor of import controls. I am in favor of a sharp increase in exports. That is why what we want to do in the oil and gas sector in Argentina is so important," he said.

11. It will seek to have a good bilateral relationship with Brazil

Nielsen minimized the crossings between Alberto F. and Bolsonaro. "Countries do not have friends or enemies, they have permanent interests. Brazil has permanent interests in Argentina, and Argentina has permanent interests in Brazil. Except for football, Argentines have a deep sympathy for Brazil," he explained.

"I am very optimistic and I think that once Alberto Fernández arrives at the Presidency, we will have much closer relations than we have with Brazil. I do not give much importance to the differences I see in some statements. I think that deep Argentina and Deep Brazil has many coincidences, and that these are above all, "he said.

12. The Mercosur-EU agreement will be reviewed

Nielsen said "our position is very favorable to the agreement." However, he clarified that "we have to see what has been done, because the truth is that we do not know the text."

"This agreement is something we have been working on for many years in Argentina and Brazil. But we need to see the details of everything. And then we have the challenge, especially in Argentina, but also in Brazil, to have a healthier and more stable macroeconomy. so that the agreement with the EU can really bring benefits to the economies, "he concluded.