2023-05-14 15:02:00
It is not a plan to lower inflation. the battery of measures announced by the government ” class=”com-link” data-reactroot=””>measures announced by the government today they are new defensive patches so that the distortions on prices -and above all, the exchange rate- do not end up getting out of control before the elections. There is no guarantee that this will not eventually happen.
They may work to contain, but not to change, a dynamic that has as its background the non-existence of dollars in the Central Bank (BCRA), the excess of pesos as a consequence of a savage monetary issue to finance the fiscal deficit, and a vacuum of power in the Government in the midst of an electoral process that creates nothing but uncertainty. Therefore, will not change market expectations.
The rise in interest rates that would be announced already reaches a risky limit. On the one hand, the Government will have to deal with the sharp increase in quasi-qualified liabilities -it already reaches 13 trillion pesos- which will automatically be generated at a faster rate and with the expectations that this ball of Leliq and paid liabilities creates, but it will also stop the already scarce financing to the companies in the entrance to an economic stagnation.
On the other hand, with a dollarization in the offing due to the elections -on average it reaches some US$5 billion in the second semester of the years in which there are elections- it is possible that what the former Minister of Economy, Martín Guzmán liked to criticize the Macri government: the carry trade (thanks to a blow to the rate, the greatest brake on crawling of the last weeks and the intervention in the financiers). Be gain time in the face of an instability that was already looming close and that can be kicked a little more. However, More and more Argentines are afraid of staying in pesos, beyond what they are paid, especially considering the growing inflation.
The Minister of Economy, Sergio Massa, will continue to seek dollars in all possible international organizations, which includes the possible advance of more debt from the International Monetary Fund (IMF). The Fund has already shown enormous flexibilities with a government that has failed to meet the goals of a new program and that does not show political consensus. Massa will try to increase the use of yuan for foreign trade. He has already used the five planned sections of his last trip to China. In days he will go for more. Brazil? Political support, for now.
There will not be, for the moment, a new exchange rate for soybeans, despite the slow advance of the special dollar. Financial dollars will continue to be intervened through bonds in the hands of the Central Bank and public organizations. This was a commitment that Massa had assumed with the IMF in March and breached two months later in the midst of the currency run. The reserve accumulation goals had already been modified by the drought. About the fiscal deficit? Nothing yet, despite the fact that, among the measures announced by the minister, The fixed sum claimed by the vice’s son does not appear.
A new tax moratorium will be launched with the intention of covering the sharp drop in income from withholdings as a result of the drought; It will be for SMEs, who, given the lack of financing and cash, today already covered themselves from the lack of cash deferring taxes. To complete, credit in installments (Now 12) will be further subsidized in the midst of strong financial repression and with expectations of devaluation, which may boost the consumption of durable goods (in dollars). It is more VAT and they are less loose pesos. The BCRA dreams that this consumption will shrink Leliq’s ball. Difficult.
The latter are symbolic measures within the Kirchner universe, but they will be ineffective: The government will lower tariffs for the importation of widespread inputs (containers, plastic, glass, preservatives, additives, parts, fungicides) with the aim of lowering the costs of what food companies sell. “Did you see that the steel is not there?”, an important economist said witty this noon. The supply is a recurring complaint from these companies when it comes to staying at Fair Prices. The sustainability of this price path remains in check given the expectations of a sudden jump in the exchange rate and the acceleration of inflation. The Government offers this bait so that the firms remain within the ineffective price control. Negotiations and supply will have to be closely followed.
In addition, they would seek to import food from abroad through the Central Market via a trust. An admission that it is very expensive to eat in Argentina. Won’t this income from abroad affect work in national factories? One more rhetorical somersault, following the IMF and the cereal companies, for the Kirchners. In the summary distributed by the Ministry of Economy, everything seems conditional. It all sounds more like a threat. The example they propose are the baskets that never saw the light of day in small supermarkets and stores; where the highest price increases are generated due to the impossibility of applying official control. It would serve to seat that sector once more at the table.
Finally, Economy will seek to promote a Trade Analysis Unit, another discussion table between organizations, like the one that already exists for SIRA (import permits), without much success, that is, according to the companies that work in foreign trade. . The entire small table of Sergio Massa and Cristina Kirchner will be there, and there will be a chair for Alberto Fernández (synonymous with his blurred news): AFIP, CNV; Customs, Commerce, FIU and BCRA.
The objective of this battery of measures that brought together all the economic referents of the Government in the Palacio de Hacienda this weekend is to get the Plan Llargar. Avoid early burst. Nothing else. There is no decision to turn off the engines of inflation: the fiscal deficit and its financing (indexed debt or issuance), to signal price distortions to curb indexation, or to control costs via import traps. The dynamics, perhaps more contained in the coming weeks, will remain the same, waiting for the next government to do the job.
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