The executive of the food firm checked that his little daughter did not do crazy things while she walked through the square recounting her hardships. “We always kept a low profile. Get off the radar to avoid trouble,” she said. “Now we doubt what to do. We don’t know if they’re going to give us any SIRA (import permits) if we don’t enter,” added. The entrance is to the price agreements that, more and more often, the Secretary of Commerce proposes.
The Government adjusted its intervention on the most basic economic equation. Never before, quantity and price depended so directly on a call to an official. The one who usually answers the phone is Germán Cervantes, a long-standing friend of Diego Bossio (he was with him for 16 years) who works for Matías Tombolini. Every morning, Tombolini gathers his team and holds three meetings at a large table: an administrative one, one on price agreements, and another on imports.
There is a symptomatic case to understand the process. Last week, the Argentine Chamber of Chemical Products sent a letter to the Government due to the problems that its companies have to access imported inputs for national production. It was complicating the manufacture of soft drinks, medicines, and shampoos, among other things. What did Commerce do? Although it already has Dow and Alpek in an agreement for diffused inputs, it is preparing an agreement for plastics. Signing is the guarantee of access to import permits. Chacinados and construction might be the next items. A player who does not fulfill the contract, which will now run until the end of the year, receives escrache, fines, closures and the import ban. The Día chain was the exemplary case these days. Sergio Massa displayed them on his Twitter account. “We are going to intensify the surprise controls”, they promised in the Secretary of Commerce.
Those who don’t matter run. In the Secretary of Commerce they are sure that many warehouses dodge the Fair Prices – now present in the wholesalers – to skip the inspections of the mayors, who take a percentage of the fines. It does not matter so much the infraction as manage thus freely those who pass in their gondolas.
“All [las empresas] We are having difficulties, we have had several plant shutdowns. We are in a critical situation.”, said on Radio Miter Sergio Doldán, president of the Argentine Chamber of Refrigeration and Air Conditioning Industries (Cairaa) and director of the Autosal company (Kohinoor and Columbia). They are, among other things, producers of refrigerators. They are speaking, ironically, at a time when the economy is beginning to cool, just as the World Bank and the World Economic Forum predicted. Doldán said that the SIRA does not authorize them because there are no dollars. He also explained that when one is authorized sporadically, the payment term is 180 days, so he must convince his suppliers to pay them in six months -provided that the Central Bank authorizes it-, but he must also calculate the value of the future dollar and include it. in your costs. In the sector, others made the decision to approach the government’s price agreements to speed up those deadlines and be able to work. Those waiting outside fear the impact of intra-industry price distortions.
If they do not have dollars of their own, Cervantes offers a Treasury bill dollar link, which is included for those who enter into agreements and which helps the Treasury in its collection of pesos. In turn, it is used to access letters of credit through Banco Nación. Thus, the reserves of the Central Bank are bypassed, but the debt in dollars of the companies grows. The companies’ liabilities are already US$7.3 billion, according to a publication THE NATION, weeks ago. Another ball under the rug.
In the Ministry of Economy they are obfuscated when it is mentioned that the official remedy is only this artisanal methodology. There is another equation, they trust, behind the counter problems, which focuses on “fiscal order and the accumulation of reserves.” The equation, they say, is a positive interest rate slightly above the devaluation rate and price variation. In addition, that there is a salary increase that does not puncture consumption. The bet is that –despite the economic slowdown in process- official financing programs serve as an anticyclical spring to keep activity lukewarm and also help to rebuild the demand for pesos, a key to absorbing the huge ball of leliqs in times of deposits in record pesos, but with banks and depositors discouraged from taking credit.
“To reach growth without inflation, the emphasis must be placed on creating the right incentives. Leaving aside the wrong ones”, said the Deputy Minister of Economy, Gabriel Rubinstein, on his Twitter account. “A balanced macro will be achieved when we have at least achieved two basic objectives: primary fiscal surplus, and single exchange market (without gaps)”, added the economist just 48 hours ago. It is not clear the work yet on the breach.
The peso –and the dollars- are the problem. Not for nothing, Massa visited Sao Paulo weeks ago for a meeting with the Brazilian Economy Minister, Fernando Haddad, and the Vice President, Geraldo Alckim. After the meeting, his spokespersons stressed that, among other things, the project for a single currency was discussed. “A path is going to be announced that, in the medium or long term, [lleve a la creación] of a common currency said Ambassador Daniel Scioli weeks ago.
Last week, in the midst of the doubts generated by his designation in the market and, above all, the plans to associate monetarily with Argentina, Haddad clarified: “There is no single currency, there is no such proposal.” With some malice, in Economy they explained to the Minister of Economy of Brazil: “He hit Scioli with a steak for talking too much.”
In an interview with ProfileMassa sse elaborated: “We need to leverage ourselves in a common currency, not a single one, each with their currency, but a common currency trade umbrella. That is the idea that we began to work on, which Alberto also discussed with Lula a few days ago in Asunción. Somewhat the idea is to consolidate it as a project for the entire region”. In May 2022, in the middle of the campaign, Lula had said: “We cannot depend on the dollar.” The current president took the idea from Gabriel Galípolo, former president of Banco Fator. Haddad supported her. “We are going to re-establish our relationship with Latin America. And God willing, we will create a single currency in Latin America”, Lula said then.
The idea of SUR, a Latin American digital currency, issued by a South American Central Bank (with initial capitalization made by member countries in proportion to their regional trade shares) for trade and financial flows, seems to have cooled when Haddad sat on the Treasury. He has other problems.
In Argentina, now they had baby steps. First, they say, progress will be made in a current account for foreign trade. The idea is to create a clearing account that avoids using freely available reserves from the Central Bank. Then, with more time, they would begin to think of a common tradable currency that would not imply the abandonment of individual currencies. The Brazilian executives who are preparing Lula’s visit to Argentina confirm this version. “In the absence of dollars [de la Argentina]the idea is to be able to use the local currency in foreign trade”, They said from Brazil. The weak weight survives. The country is far from being part of a block with hard currency.
The problems of pesos and dollars, more linked to the macroeconomy, also coexist with the regulatory and union problems of the micro. In the last hours, the Industrial Federation of Santa Fe sent a letter to the governor of Santa Fe, Omar Perotti, asking for an “urgent intervention” in the Port of Rosario. The ships moored there are still unable to lower their containers with supplies and are already thinking of sailing to Zárate. The problem is no longer SUPA but the left parties. The situation, like the lack of SIRA, directly affects several sectors of the national industry.
Meanwhile, the governor of La Rioja, Ricardo Quintela, has just generated an institutional uproar that is spreading throughout the country. Argentina is the second player in lithium in the world. Quintela resolved to suspend for 120 days the permits granted for exploration and concessions to private companies related to lithium and declared them of public interest and strategic resources. Despite the fact that the projects in that province were in their infancy, what is worrying is the signal for the initiatives that are progressing in other northern provinces. A regulatory minutiae for a man who only days ago said publicly: “I am not going to listen to the Court or abide by their ruling”. Lithium is a bet by Massa.
Like Quintela, the Frente de Todos has experience in stopping large investments. The largest disbursement announced in the management of Alberto Fernández was that of the Australian Fortescue. The $8.4 billion promised in 2021 is still waiting for rules of the game that never came. The company expects to be guaranteed that the cost of hydrogen is competitive compared to other countries (price), access to international financing, favorable tax regime, financial and fiscal stability, coexistence between the Hydrogen Promotion Law and Free Zones, and the expansion of the national electrical system. These are issues that would be missing in the final text that Massa would like to take to extraordinary.
In the midst of this macro and microeconomic turmoil in an election year, the Minister of Economy is betting on good inflation data in December to outline the start of his campaign. This is beyond the fact that the price rise will be the highest in more than 30 years and will double the “scorched earth” described by Kirchnerism in 2019. Anticipating Juan Schiaretti, who launched his candidacy for an Argentina without cracks in the last few hours, Massa would have already given a nod to politics on his last visit to Córdoba to announce funds for dairy farmers. They say that the Tigrense, in one of his speeches that followingnoon, would have recovered the classic slogan of Juan Manuel De la Sota. “Thank you Córdoba, productive heart of the country,” he greeted.
