Cazorla, Head of the Iaef, on $libra: 'it's Absurd to Link Milei With a Scam'

With macroeconomic stabilization underway and structural reforms in progress, we spoke with Diego Cazorla, president of the Argentine Institute of Finance Executives (IAEF). In this interview, Cazorla analyzes the achievements of the 2024 Economic Program, the projections for 2025, and the challenges facing the Argentine economy. Among other topics, he addresses the evolution of the real economy, the availability of foreign currency, and the impact of the agreement with the IMF on the country's financial future.

Additionally, the economist refers to the recent controversy sparked by a tweet from President  Javier Milei about the cryptocurrency $Libra. From his perspective, Cazorla offers an analysis of the market's reaction and the institutional relevance of the issue.

The full interview with Diego Cazorla

Ares: Let's start with a general assessment of the progress of the Economic Program. What are, in your opinion, the main achievements of the 2024 Economic Program and how do you think it will continue in 2025?

Cazorla: Undoubtedly, a major achievement of the economic policy in 2024 has been macroeconomic stabilization, which allowed the reduction of the inflation rate from 211.4% year-on-year in December 2023 to 117.8% in December 2024.  A key fact is that the inflation of the last quarter of last year, measured at an annual rate, was 34%, which gives a very graphic idea of the speed of deceleration. This, moreover, in a context of relative price readjustment, in which public service tariffs had a significant adjustment in the first months of the program.

This stabilization had three pillars. On one hand, fiscal correction: in 2024 a historic primary surplus of 1.8% of GDP was achieved. This way, the monetary expansion of fiscal origin was closed, and the BCRA regained control of monetary policy. On the other hand, progress was made in cleaning up the BCRA's balance sheet, with the elimination of repos and Leliqs being essential, which allowed the reduction of monetary expansion originated in their remuneration. Thirdly, the strategy adopted regarding exchange rate corrections, establishing monthly adjustments slightly below the monetary policy interest rate, and the latter aligned with inflation, allowed the monthly inflation rate to be reduced to 2.5%, a result that exceeded all market expectations.

The first data of 2025 show that this trend continues: the fiscal surplus achieved in January and the inflation rate of 2.2% are very encouraging indicators.

Ares: In the context you have described, what do you think about the progress of the real economy?

Cazorla: In 2024, the economy fell by 3% on an annual average, but if the fourth quarter of 2024 is compared with the same period of 2023, a 3.5% year-on-year growth is observed. It is true that this process was marked by strong intersectoral differences. Even excluding agriculture, the performance was heterogeneous: the energy sector showed more dynamism, construction grew at a slower pace, and the industry and education and health services had an intermediate evolution, tied to the dynamics of population growth. Another encouraging fact for the industry was the gradual recovery of the utilization of installed capacity.

For 2025, our economic team estimates a growth of 5.5%, considering that there was a statistical carryover from 2024 of approximately 3 points. This implies that the economy would grow month by month by 0.2%, a conservative figure in the absence of unfavorable external shocks. Also noteworthy is the recovery of real wages and the expansive effect caused by the growth of credit to individuals and companies.

Ares: Will Argentina obtain in 2025 the dollars it needs for its development and to increase the BCRA's reserves?

Cazorla: In 2024, Argentina obtained a trade balance surplus of 18.9 billion dollars, with exports of 79.7 billion and imports of 60.9 billion. However, due to the services account deficit, the balance of payments was positive, but with moderate reserve accumulation. The BCRA managed to increase its gross reserves and reduce the negative balance of net reserves, although it had to use part of the foreign currency to pay debt commitments with bondholders and international organizations.

The progress of the economic program also allowed a reduction of the country risk to a range of 600/650 basis points by the end of the year, which facilitates companies' access to external financing under more reasonable conditions than in the past. For 2025, our economic team expects a reduction in the trade surplus and possibly a current account between neutral and slightly deficit. Among the risk factors to monitor, I would mention the decline in international commodity prices and the impact of possible global protectionist measures. Also, the climatic factor in the harvest will be key, although the recent rains brought some relief. However, the big news will be the strong growth of exports in the energy sector.

Ares: How do you think the agreement with the IMF will evolve?

Cazorla: Argentina will surely negotiate with the IMF throughout the year, considering the maturities that begin to operate from 2026. It comes to the negotiation with solid fiscal and monetary achievements, although with observations on the pace of accumulation of international reserves.

In the first two points there will be no debate, that is, in fiscal matters and in the consolidation of the BCRA. There will also be no controversy in the progress made in the structural reforms led by Minister Sturzenegger, whose objective is to normalize markets and reduce costs to improve business competitiveness. However, the IMF conceptually adheres to exchange rate floating regimes with minimal BCRA intervention, to prevent its funds from financing capital outflows or excessive domestic spending. We are optimistic that a reasonable agreement will be reached, with a positive impact on expectations and the real economy.

Ares: How do you assess the crisis triggered by President Milei's tweet about the cryptocurrency $Libra?

Cazorla: It is a complex situation. My opinion is strictly personal, as this issue has not been debated within our institution.

Flat out, I consider it absurd to think that the president is involved in an act of corruption or a scam. So far, Milei has tried, for the first time in decades, to get the country back on its feet. His style is impulsive, intense, and committed, and assuming the presidency involves a learning curve. I believe we must be tolerant on this specific issue and let the institutions clarify all doubts.

Beyond well-intentioned opposing positions, it was expected that the sectors responsible for the economic crisis would try to stage a media show around this issue. They will not easily relinquish their privileges while positive changes are taking place in the country. It would be a grave mistake for Argentines to lose sight of the course of transformations initiated by this administration, something that, in my opinion, must be non-negotiable.