Matías Kulfas: “If despite the new measures we see unjustified price increases, we will take drastic measures”

The Minister of Productive Development, Matías Kulfas, today defended the increase in oil and soybean meal retentions, explained that tomorrow's meeting with employers and unions will seek to coordinate expectations and reverse “unjustified” and “speculative” price increases, although he clarified that the government will need a few days to form the wheat fund to be financed with the increase in withholdings with which it intends to attack the increase in flour and bread.

“With the wheat fund we seek to resolve the wholesale price of wheat, as of February, for that the trust operates, we need a few days for its formation,” said the official in dialogue with Futuröck radio. “There is the question of increases that have no justification in costs, but rather speculative reasons. We are going to be very tough on that,” he said. Asked about what it means to “be very tough”, Kulfas replied that the government seeks persuasion, but if it is not enough, “we will use the law of supply, the law of defense of competition, tools that we have already used in the pandemic.”

The minister said that inflation was complicated in the world and in Argentina with the recent rise in commodities due to the war in Europe. “Inflation is a macroeconomic phenomenon, but we are going to work on expectations so that this increase is not validated,” he stressed.

In a statement that hardly pleases hard Kirchnerism, Kulfas said that the current inflationary process “is a problem of more than 15 years in Argentina, of double-digit inflation, for a lot of reasons. The problem is not only monetary, we must remember how Macri did in 2018. This requires multiple approaches and does not have immediate results. In 2020 we reduced inflation and in 2021 we had problems, but it is a global problem, which hits us the hardest.”

Two problems solved

As a positive fact to resolve inflation forward, Kulfas pointed to two changes that he considered “extremely important”. Have resolved the debt to private creditors and be in the implementation stage to resolve the issue with the IMF.

“These are two key problems solved. In this context, from the macro, which is the central computer, it makes us have tools to solve this issue.

The official said that entrepreneurs are “clearly not collaborating” to solve the inflation problem. “There are sectors where increases are justified, such as wheat, for which we offer a concrete response so that the increase does not move to the gondola. The trust will compensate the price at which the flour mills buy, so that it does not move to the noodles, to the bread. The goal is to roll back increases,” he said. In addition, he announced that between Tuesday and Wednesday the Secretary of Internal Trade, Roberto Feletti, will announce new measures on “local” businesses. “There is a lot of price dispersion. We see good compliance in supermarket chains, but the products appear with much higher prices in neighborhood supermarkets and local shops,” he explained.

Asked whether that will involve tougher measures, Kulfas replied: “Yes, we are going to that stage. We are going to apply the trust to compensate for increased costs, whereby the redialing became invalid.

- What if they don't roll back the prices? , they asked him.

-If we see unjustified increases despite the new measures, we will take drastic measures.

Kulfas acknowledged that whenever the retentions were touched, there were negative reactions from the camp. But, he insisted, now the retention on wheat was not increased, but on soy by-products. “The Minister of Agriculture (Minister of Agriculture) Julián Domínguez explained it well, it is a temporary measure, to take care of the Argentinean table, to resolve these impacts as in the whole world. This has no prejudice to the price of a product, linked to the international price. And the soy complex also benefits from higher prices. It is a transitional measure until the end of the year, until the international system is stabilized.”

The government preferred not to increase wheat retentions, the minister said, to give producers greater certainty and better expectation for planting. “The war affects just two wheat countries: about 30% of the world's wheat exports come from Ukraine and Russia,” he said. “This (for the increase in export withholdings of soybean oil and flour) will be paid by the 6 or 7 major exporters in the soy sector.” On the other hand, he ruled out that the inmates of the Frente de Todos affect government action and the fight against inflation. “I don't see any impact,” he observed.

It's not that way

Although, in line with Economy Minister Martín Guzmán, Kulfas reiterated that inflation is a “multi-causal” phenomenon, he refused to include among its causes economic concentration, usually referred to as “price makers.”

“Economic concentration is not a cause of inflation, in any case it amplifies it. If it were the cause, there would be inflation all over the world. It is true that with such concentrated markets, it happens that at the slightest movement there is a rapid reaction and the concentrated sectors are the ones that earn the most,” he observed, adding that his portfolio seeks to generate a greater supply of SMEs that arrives with good prices and quality and facilitates compliance with the gondola law.

¿Sin gas?

Instead, he refused to give an answer as to whether a possible lack of gas will affect production, and in particular industry in the coming months. “Undoubtedly, it's a concern. We are talking with the sector and with Economics to have ways of anticipation and coordination so that there is gas for electricity generation and production. The Energy Secretariat is working on the necessary imports. When we know what is going to be, we will take the corresponding measures,” he said.

Finally, Kulfas defended the agreement with the IMF seamlessly. “We are convinced that we have come to the best possible understanding. We would have preferred not to receive the aberration that Macri made, but we got this. The people did not vote for us to make speeches against the Fund, but to solve the problem.”

In the agreement, he stressed, “there is no traditional neoliberal reform, nor is there any measure that one could say by this I do not agree.” He argued in favor of reducing the fiscal deficit, increasing the Central Bank's reserves and seeking interest rates higher than inflation. “There is nothing that we disagree on, although we would prefer not to have a program constantly subject to review,” he said.

Kulfas said that positive interest rates do not mean taking them to levels of 80 or 90% of Guido Sandleris' stage in the BCRA, but to levels slightly higher than inflation, “so that the saver stays in pesos and does not go to the dollar.” He also defended the goal of achieving “reasonable rates and subsidies only for those who need them.” And a path to fiscal balance “with growth”.

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