“What the Central Bank of Uruguay (BCU) is doing is very good, but at the producers it doesn’t work for us”reflected Jorge Andrés Rodríguez –president of the Rural Federation (FR)–, after a meeting held by the directors of the ruralista entity with the two main hierarchs of the bank, its president Diego Labat and vice president Washington Ribeiro.
The meeting, which was held this Monday at the union’s headquarters in Montevideo, was requested by the RF considering that since the beginning of June the drop in the value of the dollar has been accentuated.
“The first important thing is that they agreed to come to our house, they showed their faces and explained everything in a very good way,” Rodríguez stressed to The Observer.
Regarding what both economists explained in relation to the bank’s monetary management, “It is to congratulate them,” he said, alluding to the value of keeping inflation low and sustaining free trade, without interventions.
For the president of the union, what he defined as “total independence from the BCU” is important, so that the monetary variables work without being affected by the government, “because although the credit that the BCU government may have for accountability, somehow the increase in the fiscal deficit to finance the State is another variable that aggravates the exchange rate we receive and that makes business difficult for us”.
The president and vice-president of the BCU at the RF headquarters, with executives from the rural union.
However, he pointed out, the value of the dollar, already below $40, “affects our companies and we asked them if they were aware of that, we told them that the drop in the dollar, the fall in farm prices and the Inflation in services that are paid in pesos is a formula that greatly affects small and medium-sized producers, who use their available dollars to pay for services that are almost all non-tradable, which are the ones with the highest inflation data, such as costs of the State”.
What worries the RF executives the most is the scenario to come, “we have no hope that this will change, for the BCU the dollar is only a consequence, but it hits us and that makes us nervous.”
“What gives us hope is that the most serious thing has already happened, but if now they don’t believe the BCU that in the future inflation will be 5% and rates and salaries go up… you are going to try to reduce, to turn on less light, to invest less”he warned.
The “union struggle”, he indicated, “should focus on fighting for the efficiency of the State so that we can dispose of inputs in the cheapest way possible and on telling producers that in an open, tradable economy, with international prices You have to work to take great care of the costs”.
“Competitiveness, it was clear to us, we have to fight it from another side, because the dollar side is not working,” he concluded.
Rodríguez recalled that in December 2022 Labat made a first visit to the RF, to inform about the work guidelines of the BCU, when the concern of the producers in relation to the value of the dollar was already relevant. In that instance, Labat developed “in great detail” the monetary policy carried out by the BCU, “for example, he spoke of the main objective, which was to keep inflation low.”
