Nicolas Dujovne: “20 years of growth have come for Argentina”


When he arrived at the Ministry of Finance, Nicolas Dujovne took up the peculiar habit of coining phrases that transcended it into slogans for the Casa Rosada. He was the author of the so-called “green shoots”, the image that the Government used to show the first signs of recovery of the activity. And the saga continued earlier this year with a striking statement: “The recession is over,” he said in February. In those days, some took it as an expression of desire, but then the Indec corroborated the words of the official.

Tonight, at 22, will be transmitted by the LN + channel the program “A fondo”, with the interview with the Minister of Finance. The channel is available on DirecTV (715/1715); CablevisiĆ³n (19 Digital / 618 HD and Flow) and Telecentro (705 of the digital grid).

Perhaps with the new impetus that gives Cambiemos the electoral result of the PASO, Dujovne has just removed the most ambitious construction of his discursive repertoire. In an interview with five journalists from LA NACION, he said that the Argentine economy is awaiting “20 years of growth”. And he anticipated key decisions for people’s lives and the future of companies. He said that it is “very reasonable” a dollar of between 17 and 18 pesos; That increases in utility rates will remain beyond the swings of politics; That there would soon be labor laundering and that the tax changes will gradually come. Regarding that reform, the tax, justified not to be discussed this year: “In the middle of the campaign we would have forced the opposition to come out against, when we believe that after the elections we will support,” he said.

Finance Minister Nicolas Dujovne
Finance Minister Nicolas Dujovne.
– Are you comfortable with this dollar level? Do you think that in July did not impact on prices, but could impact in August?

“I’m comfortable with the floating exchange rate scheme that Argentina really never had. Because although during some stage of the Kirchner was supposed that the weight could float, they did not leave it, it was a very dirty flotation, and what we are trying is that the price can fluctuate with much more freedom. In that movement is sometimes more appreciated, sometimes more depreciated, and the truth is that we have to get used to living with both times, because it is the only way for Argentines to actually adopt weight as a unit of reference.

– Is it logical to have a value of 18 or 19 pesos for the end of the year?

-We now have a value that is between 17 and 18 pesos, I find it very reasonable.

– Regarding the need for the arrival of investments, there is much talk about pending reforms, such as tax, but are not discussed this year because it is electoral. Is not it delaying, by politics, what needs to be done and is urgent for the arrival of investments?

-I would say that this 2017 is going to be a great year for investment in Argentina; Is expected to grow by about 10% year-on-year, the figures for the second quarter are very good, with a jump in imports of capital goods, with a very large increase in the production of capital goods, machinery and local equipment. And this increase in investment was not seen for many years: the last year that the investment grew in Argentina at a reasonable rate was in 2011 before the stocks and before the prices of basic goods collapsed. This year investment has begun to react strongly. We started at a very low level, until last year we had an investment level close to 16% of GDP, at those levels we barely managed to recover the amortization of the equipment.

-What would be the appropriate level of investment in the country?

– Argentina has to reach an investment of about 20% of GDP, so that the potential growth of the economy can be sustained at annual levels above 4%. I believe that we can see the fruits of what we have been sowing since President Macri took over. First was the arrangement with the holdouts and the exit of the block, which allowed the cost of borrowing to fall very low, now the projects to invest in Argentina are discounted at much lower rates than before. In terms of what is missing, we are missing a lot, we have come from 12 years of a very disordered macroeconomy, in which we were destroying the infrastructure, the institutions and the confidence of the private sector. And we are in a process of rebuilding, we need infrastructure, tax reform … We have many challenges, but we are optimistic.

– There is a part of the population that does not feel that the economy is reactivated and is easily identifiable in the Buenosairean conurbano, where it was voted by the ex- president. What are the economic reasons why someone, in the conurbano, does not choose the Cambiemos formula?

-I’m not an analyst, but as a minister I can say how to make the conurbano not the most backward area in social terms and so that it has the same possibilities as the rest of the country. For many years, the state abandoned the inhabitants of the conurbano; No infrastructure work was done, public education deteriorated, there was a management that for years only painted orange and did marketing. Now the drug trade is fought, education is promoted and works are done for a very delayed area. The only way to generate prosperity is to have education. It is true that in the metropolitan area of Buenos Aires it is also where we had the greatest tariff backwardness, and an industrial fabric very affected by the Brazilian recession. There we were joined by a storm that affects more intensely than in the rest of the country, where productive activity is more aligned with agriculture. I believe that, just as the economy began first with exports, then investment, and now we see that consumption is recovering, the suburban will start to perceive economic normalization and the benefits of a better economy.

-The president of the Central Bank, Federico Sturzenegger, set an inflation target of 17%. The Minister of Production, Francisco Cabrera, acknowledged that they would not meet the target and placed the expected inflation near 20%. Which side are you on?

“The goal of the Central Bank is a goal, not a projection. It forces us to a methodology of work. It implies that the Central Bank works with an interest rate, with an absorption of money and an exchange rate that helps. It is a goal and at the end of the year we will see where we are.

“What number do you foresee?”

“I do not have a forecast.”

“Is not he aligned with the Central Bank?”

“Well, I have a set goal, but not a forecast.

“Would not that be a failure?”

-Not at all. All the countries that have lowered inflation coming from high levels do not pay that much attention. What matters is persistence in the pursuit of the goal.

– There is a commitment to reform the pension system and financing is a central issue. You have said that hiring is expensive in Argentina. How do you reconcile the objectives if you want to lower costs and provide long-term social sustainability? And what is your position regarding a possible increase in retirement age?

– It is a subject so relevant and sensitive that there is no way to produce a pension reform other than by consensus. The Government has to take those three years [which gives the law for reform] and draw up a proposal where we have the agreement of the opposition, the CGT and the business. With respect to the labor market, we are clear that the costs are very high, not for the pocket salary, but for the huge overhead, with taxes on labor. We want to help those who have very low wages, where it competes with informality, giving an answer so that in the lower salaries the costs lower faster. That has to go with a more comprehensive reform.

– Will there be money laundering?

“We are working on that and possibly have news from the Ministry of Labor.

– In September will know the data of GDP of the second quarter, how optimistic is it?

“I think we’re going to keep growing at a very good rate.” In the first quarter we had grown 1.1% compared to the fourth quarter of 2016, which, if annualized, reaches 4%, and I guess we will be at a similar level, driven by a very good performance of the investment.

– Among the not so good news is the consumption data. According to the Indec, supermarket sales fell 1.2% in June and shopping centers, 5.1% year-on-year. The consultants say that in June the consumption fell 2.5%. When is it going to start that variable?

-We are confusing sales in supermarkets or shopping malls with consumption; Is not the same, because the world is changing the way in which products are marketed, with a great growth of electronic channels and wholesalers and local shops. That is not shown by the supermarkets and shopping malls survey. In the Ministry of Finance we developed a consumption indicator and since the first quarter we see an interesting recovery in consumption, and we believe that this year will end up growing near the GDP. While the product will be at 3%, consumption will grow slightly below, 2.7% year-on-year.

“Gradualism in politics, is not the dog biting its tail?” Does it not lead to a further delay in investments? One businessman recently said that Argentina did not make any structural reforms.

“I think the dog bit its tail first.” It generated a problem, which had to provoke a solution, to generate another problem that entailed another solution. For example, stump, export drop, import ban … Now we have an economy growing at 3%, we continue to normalize public tariffs. We could not send the tax reform because in the middle of the campaign we would have forced the opposition to come out against it, when we believe that after the elections they will support us. It is a good renovation. We are politically realistic and we think that in order to have a consistent fiscal program, we must have a consistent and comprehensive program. Everything must be consistent. We must continue with the support of society. The north is clear: “Dress me slowly because I’m in a hurry.” We have clear objectives and we can not go wrong. Let’s move in times that society tolerates and supports, because if not, there is no way.

-The tax reform, could leave some change in the relationship of forces between provinces and nation, as to who collects and how resources are distributed? Will there be any way to avoid discretion?

-We have a proposal for tax reform that covers national taxes. Now the reform would be incomplete if the provinces do not move in a similar direction to reduce Gross Revenue and turn that tax into something more similar to the sales tax, because today it accumulates in cascade and makes export prohibitive. We can make a proposal to work together, but we have to work outside of the national tax reform. The other issue is to discuss how spending is carried out in Argentina. Much of the expenditure that the national state does is in the provinces. The State transfers resources for the provinces to carry out, and this is probably not the most efficient way. If it were directly in the provinces, and the Nation would keep mechanisms to evaluate the execution, we could lower the costs very much, because the province is closer to who receives that expense. That should be inside a discussion board.

– Is there a proposal of the Nation to the provinces on what to do with Gross Income?

-We have to talk.

-You talked about green shoots, the end of the recession, green forests … what’s next?

“Twenty years of growth. We are on the way to building a solvent economy, which can withstand shocks, where growth is led by investment, which allows us to be more productive, prosperous and with high wages. There will be place in this economy for all Argentines. If we grow 20 years to 3% annually, we will double the income and live in a better country. This will be the first generation that will leave a better country than the one it received.


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