What are the plans of Kulfas and Guzman, the economic bet of Alberto Fernandez


The urgency is what prevails, because the starting point of the Fernandez Administration, due to the strong crisis left by the Government of Macri, imposes the need to provide quick solutions to different problems to avoid deepening the debacle.

The Heritage

Detailing the legacy of Macri is a basic input to make a correct diagnosis and, from that base, have more and better tools to start implementing a program of economic, social and labor reconstruction.

This is what Alberto Fernandez did in his inaugural address before the Legislative Assembly.

The four-year balance of the macro economy in relation to the December 2015 situation is more inflation, more unemployment, more debt, less industry, more poverty, mega-devaluation and less real wages.

The Argentine economy had detached itself from the traditional audits of the International Monetary Fund. The Government of Macri reintroduced the IMF in the country and did so with an immense loan that will make refinancing very complex as the negotiation of the new conditions of the agreement.

It is a very heavy inheritance for the Fernandez Government.

The problem with the debt is twofold: on the one hand, it has a high concentration of maturities in the short term with a closed debt market and, therefore, with the impossibility of refinancing the maturities.

Further, Maturities with the IMF are concentrated in 2022-2023.

The path to address this situation is in line with the need to agree with private creditors and with the Fund a plan to restructure the debt.

There are several possible scenarios that open after that objective, in which alternatives for lengthening terms with and without removing capital and interest are combined.

The schedule of maturities of public debt is concentrated in the first half of 2020, which means that the negotiation with the creditors should be quick.

The Guzman Plan

For that task, Alberto Fernandez chose Martin Guzman, a 37-year-old economist, disciple of Nobel Prize Joseph Stiglitz, a researcher at Columbia University, United States, and specialist in the subject of debt restructuring.

Guzman will be the Minister of Economy and proposes to negotiate quickly with private creditors, with an immediate horizon next March to close the agreement.
Evaluate that the situation in Argentina is a deep macroeconomic crisis and to begin to overcome it, you must first solve the debt problem.

It considers that the economy is in a critical state in terms of liquidity (availability of funds) and solvency (ability to pay). Both issues are not independent stadiums.

Perceptions of solvency affect access to liquidity and vice versa. Guzman is convinced that there are both weaknesses and that overcoming them is a necessary condition for recovery.

He has studied a lot and in depth all the debt exit programs. He knows which have failed and which are sustainable.
As the debt burden is concentrated in the very short term, proposes not to pay capital or interest in 2020 and 2021, although in the negotiation you can extend that order to 2022. That is, the proposal is not to make disbursements for two to three years.

This implies changing the debt profile, extending payment terms plus the search for a reduction in the interest rate. The concept that guides this plan is that every dollar that is paid off debt is more recession.

Guzman knows that there is a risk that this proposal will not be accepted, but, at the same time, he challenges the creditors with the phrase of who was president of Argentina 2003-2007, Nestor Kirchner: "the dead do not pay."

The plan has four main points:

  1. The first is the aforementioned postponement in the payment of capital and interest for two or three years.
  2. The second, not to request new disbursements from the IMF, taking into account that 13,000 million dollars of the agreement agreed with Macri are pending.
  3. The third, negotiate quickly and in good faith with creditors to avoid a generalized default, an instance that is considered very expensive for the country.
  4. Finally, to recover the sustainability of the debt, this means that the government must have a fiscal plan that allows for future payments. For this, it points out the need to generate a fiscal surplus in order to pay. But he warns that this adjustment should not be made now, because it would mean deepening the current crisis. He is convinced that the improvement of the fiscal accounts will be achieved by restarting a firm growth cycle, which will be promoted by freeing up resources with the postponement of the payment of the debt.

The Kulfas plan

If the Guzman Plan is to postpone the payment of the debt to be able to grow and with the growth to be able to pay the debt, the Kulfas Plan is focused on how to resume the path of growth.

Martin Kulfas is part of the group of economists who have been working very closely, for several months, with Alberto Fernandez. He affirms that the main problem of the Argentine economy is the external restriction.

This definition for peripheral countries, indebted in foreign currency and with intermediate development, means that they do not generate the necessary foreign exchange to consolidate a process of sustained growth.

This is the relative shortage of foreign exchange, that is, there are no dollars for all sectors that demand them. Whether it is the requirements of the productive sector or private treasury, the intensity of demand for dollars establishes a strong restriction to development.

This restriction can be relaxed in several cases: when there are good international prices of export raw materials, when there are bulky reserves or when there is fluid access to external financing.

None of these three conditions is present at the beginning of the Government of Alberto Fernandez.

Kulfas will be the Minister of Productive Development and raises the need to implement a consistent macroeconomic and productive program that allows generating a genuine surplus of foreign exchange to guarantee economic growth and face debt maturities.

It proposes that productive development policies prioritize investment in those projects that increase exports that genuinely substitute imports.

The way to carry out this strategy will be with different financial instruments, promoting the financing at interest rates of long-term development of such projects.

Specifically, the Kulfas rule will be the following: companies that generate genuine dollars will be assisted with cheap credits in national currency and in favorable terms.


Sustained growth and ordering the external front of the external debt are the immediate objectives proposed by the new Argentine government. Starting to comply with them requires close coordination between the Kulfas and Guzman plans, positions that both will be responsible for generating the conditions to achieve them.

Kulfas explains that it is necessary to align the different facets of economic policy: fiscal, monetary, exchange rate, productive and financial.

In the opening speech, Fernandez gave immediate answers to address the urgencies of the sectors punished for the four years of Mauricio Macri's neoliberal project.

In the following days there will be an extraordinary increase for minimum wages and pensions, to recompose popular incomes that allow feeding consumption. At the same time, there will be an additional improvement in income indirectly, by temporarily freezing the increases in tariffs for public services.

These services had increases of up to 3,000% in these years of macro economy, which implied a substantial decrease in disposable income affecting consumption and, consequently, depressing the level of activity.

The freezing of tariffs will cause an opposite effect. Together with the special increase in salaries and pensions, Fernandez believes that they will be the initial kick to resume the growth path.


Starting a cycle of growth is the mission that Fernandez entrusted to Kulfas and Guzman. It is an imperative need to improve the situation of the majority of the population after the Macri Government will culminate in recession in three of four years of its mandate.

But it is also an indispensable goal for Fernandez to consolidate his political legitimacy, achieved in origin in the last elections, but that needs to be consolidated in broad terms in a society that, as in much of Latin America, is divided and in a scenario of much tension demanding improvements in the quality of life.


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