Argentina's problems are such that solving them requires much more than “ordering the macro”; it demands institutional reforms that, moreover, are sustained over time. It is no longer a matter of obtaining financing to postpone debt payments, avoid or soften spending adjustments, or manage supply in the foreign exchange market, it is also a matter of generating reforms that will prevent going backwards, wasting all sacrifices carried out, and that generate expectations of a prolonged virtuous change.
It is not impossible to achieve this: Estonia, Lithuania and Latvia were part of the Soviet Union 35 years ago and today they are among the top 30 countries according to the Institutional Quality Index. Rwanda was mired in civil war and ranked 169th in 2007 and is now 62nd. That same year Albania was the legacy of a Maoist reign in the Balkans ranked 134th, today it is 82nd. Closer, Uruguay was in 60th place, today it is in 31st.
On the contrary, Argentina reached its worst moment in 2016 in position 142, improved to 106 in 2020 to fall again, for the moment, to 116. In that period there was a certain "ordering", which collapsed with a simple blow. The reforms were not consistent and generated neither incentives to continue them nor barriers to protect them.
Hence, the question is, then, how are the stability and continuity of reforms guaranteed over time, in such a way as to follow one of those virtuous paths? It is necessary to make it a continuous path, which is not easy in this country, which has already reversed convertibility, the private pension system, or the privatization of the state oil company YPF.
Alternatives can be:
In the first place, that results be obtained quickly (fall in inflation, unemployment, reactivation of production and trade) in a way that strengthens the possible continuity of the government that carries out the reforms, or that guarantees their continuity even if the change of government occurs (for example, Chile, Uruguay or Peru). The first years of convertibility are a case in point, but also that if fiscal discipline is not regularly maintained, the course enters a collision course.
...to be continued
