Carlos Melconian, economist: 'We are not shooting ourselves because Vaca Muerta exists'

Economist Carlos Melconian has cautioned that while dollar revenues from the energy and mining sectors are preventing an immediate financial crisis, they are inadequate for a broad economic recovery. "We are not shooting ourselves because Vaca Muerta exists," Melconian stated, referring to Argentina's significant shale gas and oil reserves, implying these resources are the sole buffer against a complete financial collapse.

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We are not shooting ourselves because Vaca Muerta exists.

Melconian argued that the government faces a critical choice: prioritize disinflation, rebuild foreign reserves, or reactivate economic activity. He noted that the incoming dollars from energy and mining exports could be diverted to debt payments, dollar accumulation, or simply leave the productive circuit. "We have to distinguish between avoiding a financial crisis and rehabilitating Argentina," he told Radio Splendid.

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We have to distinguish between avoiding a financial crisis and rehabilitating Argentina.

He further elaborated that these dollars often disappear quickly, either through external payments or speculative purchases. "The dollars from Vaca Muerta end up in Punta Cana or paying something via Mercado Libre or under the mattress," he observed, highlighting the leakage from the productive economy. This contrasts the temporary relief provided by exports with the capacity for sustained recovery.

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The dollars from Vaca Muerta end up in Punta Cana or paying something via Mercado Libre or under the mattress.

Melconian also critiqued the government's communication strategy regarding inflation, particularly predictions of a sharp collapse in August. He believes this has been communicatively damaging. The economist outlined the administration's complex challenges: lacking reserves, needing to buy dollars, requiring economic reactivation, and aiming for inflation collapse. He asserted that achieving all these simultaneously with current tools is impossible, forcing difficult policy choices that will likely be influenced by the electoral calendar.

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Saying that inflation would collapse in August has been very damaging communicatively for the government.