The Governor of the BCRA, Miguel Ángel Pesce, asserted that some productive sectors in Argentina have huge potential to increase the level of exports and, thus, boost growth in the following years. “Argentina needs to export 90 billion dollars. In this sense, it has competitive advantages as a producer of proteins, hydrocarbons and by-products, and as a provider of services to companies and technology,” said Pesce at the 2020 Latin American Cities Conferences organized by the Council of the Americas.
He explained that in order to achieve this goal—which is expected to improve the exchange and payments balance—the BCRA rose to the challenge of strengthening and stabilizing the peso, which had been devalued in the context of a deep economic crisis sparked off by the previous administration, with high levels of poverty and inequality and an inflation rate higher than 53%. “When we took office, we did not set quantitative targets, but adopted different courses of action. One of them was aimed at fostering a positive interest rate in real terms so that the inflationary process did not affect savings in pesos. We also maintained the exchange rate as it was and is still competitive,” he commented.
He further explained that BCRA was also determined to encourage the growth of the financial system and to create capital markets in order to channel domestic savings. “There is consensus on the importance of foreign investment. Indeed, it contributes to achieving technological development and innovation, among other benefits. However, the biggest challenge in Argentina is to drive domestic savings into investment and credit”, he explained.
He highlighted that, despite the crisis brought about by the COVID-19 pandemic, the current BCRA’s administration has successfully implemented these courses of action. “The State intervention to protect income and foster credit lines to companies and households made the fall of the employment rate turn into one of the lowest in the world,” he added. Moreover, he noted that, even though the amount of currency issued to meet the needs of the Treasury was significant—in the absence of credit during the debt restructuring process—, there was no price acceleration.
He pointed out once again that the slowdown in inflation is likewise explained by an increase of deposits in pesos and a sharp growth of capital markets. “In the first seven months of the year, capital markets recorded significant dynamism and grew by 75%. For example, corporate bonds increased by 100%,” Pesce remarked.
Last, he referred to the post-pandemic future and said: “We expect a rise in global demand which may help Argentina to develop its export potential.”
