Although the results of the announcements, a month after the irruption of Sergio Massa in the economic plane, are not homogeneous, different analysts, with nuances, approve the objectives set, recognize that it implied a “reorganization” in the Government and a “strengthening” of the area.
However, there are variables regarding the how of the proposed goals. From the financial point of view, the balance of recent weeks is positive: “it has managed to reduce the exchange rate gap based on a balance in the financial exchange rates (CCL and MEP), the value of dollarized debt bonds has recovered and, as a consequence, the index that measures Country Risk has decreased”, described Gustavo Rodolfo Reija, Executive Director at Mecronomic.
But he warned that it is not enough to consider the Tigrense’s first month successful. “The fever drops below 40 degrees but the underlying problem generated by the temperature continues,” he added.
“The measures make up a little plan to stabilize instability with the aim of returning to the path that the economy should have entered, last year, after the legislative ones, when the ruling party lost the election,” said Facundo Martínez, an economist at Macroview, and clarified that “with the inertia left by (Martín) Guzmán, Argentina was going with dizzying speed, to a deficit of 3 to 4 points”.
“Massa comes to box the fiscal part with adjustment measures in higher interest rates, increase in rates plus advance of Earnings that returns in part with bonuses to retirees, and we will see next year, because there are only 4 months left”, Indian.
Ricardo Delgado, head of Analytica, valued as the main contribution “in the very short term” the “centrality” acquired by the Government’s economic policy by “concentrating important areas of economic decision.”
“Sergio Massa’s arrival is the result of a very mediocre first semester where the primary deficit increased, the trade surplus worsened and, in addition, the real exchange rate appreciated; all this made savers launch the first run against most violent pesos of the Fernández administration”.
Hand brake
“Massa put the handbrake centimeters from the abyss,” defined the economist who also highlighted as a significant aspect the “fiscal adjustment” and the signals on debt compliance in pesos that “decompressed the very negative financial expectations.”
However, Delgado clarified that the proposed adjustment is approximately 40% of the total that is needed to meet the goal of 2.5% of the primary deficit that was agreed with the IMF. Massa will have his first face-to-face with Kristalina Georgieva next week on a visit to the United States where she will also look for energy investments in Houston.
Inflation: Rates and Rates
In addition to ratifying and reinforcing the removal of tariff subsidies, one of the first measures taken by the Minister, before the record inflation figure for July (7.4%) was known, was to raise the reference interest rate to 69.5%, 950 basic points more, through the Central Bank (BCRA).
In that sense, financial analyst Javier Timerman said that “without raising the rate there was no way to stop the run on the dollar and attract reserves; we’ll see if it cools down the economy and inflationary expectations a bit.”
on the hunt for dollars
Regarding the accumulation of reserves, which is one of the goals that Guzmán agreed with the IMF and that Massa ratified, Martínez stated that “it is still missing” and anticipated the failure of the “soybean dollar” that did not perform as expected.
The new minister promised that they would enter 5,000 million dollars as export advances, but it is estimated that the different complexes liquidated 3,400 million dollars in August. At the moment, no progress has been made in loans from international banks through the “repo” and it is being evaluated to apply to the IMF Resilience Fund, which would pay 1.3 billion dollars to the Central Bank.
The technical parts of Agriculture continue to work on a more tempting proposal for the Liaison Table, which has liquid currency, while credit lines with the Inter-American Development Bank and the World Bank.
“All very insufficient for the highly unbalanced economy,” according to the Macroview referent who, ahead of the next meeting with the IMF, warned that Sergio Massa will have to “rediscuss a lot of numerical, fiscal issues that put the disbursement at stake of September”.
In this sense, Timerman is optimistic about the results that Sergio Massa’s visit to the United States can bring, where, in addition to the meeting with Kristalina Georgieva, he will talk “only with American companies with shares in Argentina”, as part of a first stage looking for investments.
Although he was confident about the approval of all the projections presented by Massa to the IMF, the AdCap partner acknowledged that “distrust in Argentina does not end overnight.”
Outstanding account
Together with the update by law to pensions, Massa granted a bonus of 7 thousand pesos per month to compensate for the loss of purchasing power due to inflation. However, the definitions on the discussion of the bonus or fixed sum for workers were postponed, a proposal that emerged from the space of the vice president, Cristina Kirchner.
Distrust in Argentina does not end overnight
Specifically, the economists distinguish the situation of the employees of the formal private sector, some 6 million, who have the parity open to negotiate, in contrast to some 14 million —including public, self-employed and informal employees— who “have been systematically losing since 2018,” Martinez said.
In agreement regarding the problem of the salaried sector, Martín Kalos, director of Political Economy and Communication Argentina (Epyca) explained that “although there is little concrete and specific fact about prices and salaries, it has a lot to do with the general expectation of the march of the economy”.
“The reduction of the fiscal deficit gives the signal that monetization -financing through monetary issuance- is going to be more reduced, then, the surplus of money in the economy is going to be less; thus, we can have an improvement to future in terms of an element that today is accelerating the inflationary dynamics,” he summarized.
In one of his first statements as deputy minister, Gabriel Rubinstein denied the versions of official devaluation while a recomposition of 15% in family allowances was announced, to advance in the improvement of pockets that, however, for sectors of the ruling party such as the one that led by Juan Grabois, it was insufficient and could define the departure of the sector from the Frente de Todos.
For deputy Máximo Kirchner, who called for measures to improve income, the improvement in family allowances shows “a few lights that the government can begin to generate measures,” he stressed in an interview with The Uncover Radio.
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