For economist Miguel Kiguel, the next government must bring down inflation with a plan similar to that applied by Israel

After the number of inflation January which touched 6%, the economist Miguel Kiguel recommended that the next government apply a plan similar to the one put in place Israel in the 1980s to reduce the general rise in prices.

Kiguel explained that “inflation is a problem, but it is not the only one” and recalled that Argentina had high levels of inflation, without having a high percentage of poverty. In this sense, he claimed that one of the difficult points is that “the economy does not generate formal jobs, almost everything it generates is informal”, as he indicated in an interview with TN .

For this very reason, given the elections, asked the candidates “to be realistic” in their campaign promises and that they propose “achievable objectives”. In this way, he projected that “in six or eight months inflation may be brought down to livable levels”. “Let it begin to decline six months after the start of the new government, allowing it to reach an annual figure of around 20%, as has been done in Israel,” he said.

Kiguel referred to the plan that the Middle Eastern country implemented in the 1980s when it was going through a situation very similar to that of Argentina, with a strong budget deficit, high inflation and heavy debt. In order to control the economic situation, the prices of most products and wagesa rigid exchange rate was fixed between the shekel, the local currency, and the dollar, public expenditure was reduced by 4% of GDP, including public sector salaries, subsidies and social protection programs.

This program was complemented by the enactment of laws that led Israel to an institutional change in economic policy. Regarding these measures, Kiguel specified that they required a “strong political consensus” to make cuts in all sectors. This is what allowed the country to reduce inflation from 450% to 20% so as not to experience an inflationary crisis again in the decades that followed.

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Currently, Israel stands out by offering technological and innovative solutions for a large number of sectors such as health, biotechnology, cybersecurity, renewable energies, water treatment and the agricultural sector.

Likewise, Kiguel clarified that “all of these changes cannot be made together”. “We need to create a critical mass to make this situation functional again. Now you have a dysfunctional economy”, he assured and defined the current moment as “a real challenge”.

Beyond that he assured that it should not necessarily be “traumatic” to apply the measures, he acknowledged that the strategy will not be easy to implement.

According to data from the National Institute of Statistics and Censuses (indec), the first inflation data for 2023 was 6%; Thus, the cumulative figure for the last twelve months is 98.8%. In January, the position that saw the most increases was “Leisure and culture“, while the category “Food and non-alcoholic beveragesrecorded an increase of 6.8%, a figure that was positioned above average inflation.

Faced with the upcoming elections, economic projects are beginning to play a central role between the parties. Faced with this, Kiguel advised politicians “not to think about winning the next elections”, but rather to focus on “fixing the country”, since he stressed that “whoever is elected will be elected to improve the country and, in a few years, they will ask for another country, a country without inflation”.

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