The professor of Development Economics at Harvard University, the Venezuelan Ricardo Hausmann, He referred to the situation in Argentina regarding the negotiation of the debt and maintained that “The question is whether or not a restructuring was really necessary.”
In dialogue with The Question, issued by LN +, the current director of the Center for International Development said: “The creditors invested in Argentina thinking that it was going to be to them well, but it did not happen. There are many people who lost a lot. The question is whether in these circumstances holders of financial assets should lose something or nothing. “
Asked about the government’s position with the latest offer, the economist and professor at the Kennedy School of Government at Harvard University revealed: “The question about Argentina is whether or not debt restructuring was really necessary.” And compared it to the case of Ecuador where “there was no way out without doing it”.
“You have a primary deficit of more than 5% of GDP, closer to 7%. What you need is new money to finance that deficit. Even if we forget all the interest on the debt,” he explained.
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Hausmann also said that the problem of Argentina “is not solved only by ceasing to serve the debt, because there is a large primary deficit and additional money is needed. ”
“If they want to restructure the debt, they are not going to give them additional money, which is why the country today is practically financing itself 100% with the money-making machine. That reason is what generates the fragility and the need for other controls. That is your original sin. What they resolve with the restructuring is not enough to finance this year and next year “, remarked.
According to the specialist, he would seek “a growth strategy more focused on opportunities” that the country has abroad: “Argentina has handled itself with certain fear to the rest of the world and did not take advantage of the opportunities you can have. It is the only country that I know of that puts an agricultural export tax, but it is in turn for reasons of this fiscal situation. This problem cannot be solved either with import substitution or with price controls. “
Regarding the global situation due to the coronavirus pandemic, Hausmann said: “This is going to be a longer recession than anyone thought. Many countries prepared to do a 2 or 3 month confinement, thinking that after that they would come the recovery, the opening. Now we understand that after quarantine, policies of social distancing must be maintained and the recovery will be much slower. There has been a phenomenal drop in tax collection. Fiscal deficits are expanding and so far the markets have many countries have supported them. “
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