Overview

• Economist Carlos Melconian argued the current exchange rate is not truly free and called it a disequilibrium that will shift to a higher level after the elections.
• He listed cuts to education and health, a rushed easing of currency controls, and overly rapid disinflation as policy errors that worsened economic pressures.
• He highlighted that residents bought about US$5,432 million in July after the partial lifting of the cepo, a move he said strained reserves and market balance.
• Melconian warned any depreciation could pass through to prices but said the inflation impact would likely be moderate rather than galloping.
• He urged securing new financing by January 1, curbing private dollar demand such as travel, meeting IMF-related commitments, and building political consensus, noting a strong La Libertad Avanza result could buy time but not replace monetary and exchange fixes.