The so-called “economic emergency law” announced by the new government in Argentina is simply another massive set of tariffs and burdens on the private sector to finance the bloated public expenditure, in a country where confiscatory monetary and fiscal policy is the norm.
What is the big problem of the recent Economic Emergency Law? That it does not address the country’s massive monetary and fiscal imbalances. Moreover, the big problem of the law and, in particular, of the decisions to raise retentions to the agricultural sector, is that they aim to increase the confiscatory nature of Argentina’s fiscal policy.
Part of the economic debate in Latin America, particularly in Argentina after the elections, focuses on what type of financial and trade relationship is most convenient for the region, and several discussions talk about the merit of strengthening relations with China instead of the United States
The unprecedented monetary expansion we have witnessed in the past years is on track to put the balance sheet of some of these central banks at 20% to 100% of the GDP of their countries. Massive monetary stimulus and more than 600 interest-rate cuts have been drivers to support a global recovery. But the risks cannot be underestimated.