After Argentina elected its current president, Mauricio Marci, the new administration has poured tremendous effort into its economic policies to rectify what the former administration had left behind (sound familiar?). Junior Staff Writer Timmy Wu tells his experience about that time when Argentina’s minister of finance graced Columbia with his presentation on the impact of the new administration’s economic policies and its remaining challenges.
Yesterday, Argentina’s minister of the Treasury and Public Finance, Alfonso Prat Gay, graced Columbia in an event collaborated between SIPA (School of International and Public Affairs) and OMFIF (Official Monetary and Financial Institutions Forum). The event was titled “Argentina – Graduating from Populism after One Too Many Spring Breaks.” Before it began, the moderator and Senior Research Scholar at SIPA, Patrica Mosser, listed Gay’s endless accomplishments: Consultant, President of the Central Bank of Argentina, winner of 2004 Euromoney Central Bank Governor of the Year, Congressman and head of the Civic Coalition party and now, minister of finance. “Quite a resume, right?” Mosser commented.
Once ensuring that the speaker’s credibility was established (and the audience wouldn’t flee in the absence of food) the presentation started.
“For those who had read about Argentina, you might be thinking ‘what’s gonna be different this time?’” Gay rhetorically asked. And, after a pause peppered with belated laughter, firmly answered the (apparently no longer rhetorical) question: “It will be different.”
After the former populist administration went out of power, Argentina has been bedridden with a series of economic fevers. As Gay pointed out, the populist cycle had depleted the country’s international reserve, caused 6% GDP worth of fiscal deficit, and managed to somehow achieve 30% of inflation in a stagnant economy with one third of the population in poverty.
“It had been a crazy ride,” he said, “and the people decided to stop before the train hits the wall.”.
Despite his position as a crucial actor in the repair of Argentina’s economy, Gay repeatedly emphasized the importance of the people – “the boss”, so he called them. The people are the “engine”, the driving force of all the improvement that has been made within the ten months of the new administration. He explained that, due to Argentina’s delicate condition, policymakers and lawmakers have been tiptoeing on a “very narrow path to change the economic regime”. It has been a “balancing act” that needs to be framed by sensitive challenges, Gay told the crowd. And it has been the trust of the people for the government that allows bills to pass through the congress without much friction between the parties.
The new administration has been implementing comprehensive policies to combat Argentina’s economic distress, including unifying exchange rate, disentangling debt disputes, and eliminating subsidies for the rich. With a steady gradualist approach, it has successfully driven the inflation rate down to single-digit figures.
“Populism focused on the present than on the future, and people know all too well that things weren’t sustainable.” Gay commented, while showing a graph depicting a rise in the people’s confidence in financial situation for the future. He added, “Some people said that our plans are not ambitious enough, but we want to keep it realistic to establish credibility.”
As a side note, Gay reminded all the students who aspired to become policymakers or hold governmental positions in the room that “credibility” is the most powerful thing a government could have. He stated that, “If the people don’t believe, you have no future.” It was apparent that Gay is satisfied with the progress that Argentina is making.
At the end of the presentation, he said with a slight chuckle: “Many journalists used to make fun of us, our plans, but now they have to make fun of some other stuff.” Gay had wondered aloud if he was the guinea pig of the collaboration between the SIPA and OMFIF, and it was clear that he was, as David Marsh, the managing director of OMFIF, put it, the “guinea dragon.”