2023-05-20 10:14:00
Establishment economists gave it a witty name long ago: “The last three minutes.” It is the space of time that, following describing the looming abyss, they dedicate to showing the potential that, with reasonable government management and a decent macroeconomics, Argentina might have by 2024. The possible dream.
There are many experts, but few are heard in intimate meetings of the red circle, the one that encompasses money, power and Argentine politics. Before the pandemic, for example, three names regularly coincided in meetings organized by the Clarín Group, directed by Héctor Magnetto, in Mar del Plata. They were Miguel Bein, Carlos Melconian and Ricardo Arriazu.
Melconian is running to be the country’s next finance minister. He talks to Horacio Rodríguez Larreta and Patricia Bullrich alike. This week, they say, he received Facundo Manes, another of the pre-candidates for president. “The most important thing is that it rains”, in his usual sarcastic tone regarding next year, clearly alluding to the drought that this year will subtract some US$20,000 million from the Argentine economy. It is the true “external constraint”.
In those last three upbeat minutes with your customers, you mention energy. He talks regarding oil and gas, “sectors that always win”, he suggests regarding the relationship with companies. Also from YPF. “He has chances”, he says, according to the numbers that his experts approached him this week. Then he goes around regarding lithium, the knowledge economy and the field, questioned by Cristina Kirchner. His small table of the Ieral includes those who would accompany him in a possible landing. List there Marcelo Capello, Jorge Vasconcelos, Gustavo Reyes and Juan Manuel Garzón.
“If the weather normalizes towards spring, international prices are at the levels currently forecast in the futures markets, agricultural production can return to levels of 130-135 million tons in the 2023/24 cycle, generating a flow net foreign exchange of the order of US$33,000-US$34,000 million, and an additional US$13,000-14,000 million next year”affirmed one of the last documents of Vasconcelos and Garzón days ago.
“Argentina has the characteristics of typical countries that, when they raise, they do so with virulence. He has what. Beyond the social disaster, he has talent. You have to direct the macro ”, sentence in that little parenthesis.
Outside of those three minutes, Melconian is stark, like in radio and television studios. Last week, the head of a global company met with the economist in a bar on Figueroa Alcorta Avenue. They went to the bone. They were only interested in how the million-dollar debt for imports is going to be repaid and when they will be able to issue dividends.
Melconian works on the elimination of the exchange stocks on the first day of a new administration, a “furious” reform of the State (“qualitative more than quantitative”), the deregulation of the private sector “to full”, and a structural and conjunctural reform of spending complemented by a tax policy reform. The exchange rate? “You have to see where it is”, He usually repeats regarding the management of Sergio Massa in Economy. He also chatters with the minister from time to time. For the economist, in a future management there is no place for the gradualist announcement. The answer is shock.
Ricardo Arriazu from Tucumán also offered those “three minutes” to his clients. They were global investors in a webinar on May 4 in which they talked regarding macro, markets, Latin America and, in the end, Argentina. Arriazu (Macroanalysts) was accompanied by Fernando Marengo (BlackTORO). This last economist, also from Tucumán, is the chief economist of BlackTORO, but he was Arriazu’s trusted man for 25 years. They continue to share the analysis.
“With the next challenging six months over, it looks like a rosier 2024.” they told their customers. For Arriazu and Marengo, Argentina does not have a current account deficit, not on its own merit, but because of a lack of external financing. This implies that the country does not need an adjustment in aggregate spending, although it does in the public sector.
“Given that there is no current account deficit and that the public sector is in deficit, which is what must be corrected, the private sector is in surplus. The result of this surplus is the holding of external assets for US$350,000 million held by the private sector. The Argentine cycles are strongly associated with the entry of a minuscule part of these funds due to a positive risk-adjusted expected rate of return or deepening the crises by dollarizing the portfolios,” they told investors looking to 2024. Laundering, such as the one sent to Congress, usually helps to return undeclared funds to the country. Mauricio Macri knows it very well; Massa would like to take advantage of it if he is the official candidate. The current minister closed the agreement for the automatic exchange of financial information with the United States, which would begin to function from September of next year, according to the American authorities.
Arriazu and Marengo also mentioned the low prices of Argentine assets measured in dollars at the CCL (accentuated following the devaluation sponsored by the Government this week) and said that, with “an average harvest”, the US$20,000 million that was lost would be recovered. in the last campaign (October 22 – September 23).
Experts believe that to this we must add that, in the world of energy, the authorization of the Néstor Kirchner gas pipeline, the reopening of the oil pipeline to Chile and the expansion of Oldeval “partially” improve the transport bottleneck problems to which oil and gas production in the country has been exposed for years.
“Between non-drought and energy we have the largest ex ante nominal trade surplus in history. Afterwards, all this must be passed through the sieve of politics”they warned their clients at the end of the three minutes of good news for 2024.
But before optimism, the Kirchnerist abyss prevailed. For Arriazu and Marengo, the dollars and pesos are the great drama in a short period of six months. In between, it is worth remembering, there are presidential elections. On the foreign exchange side, there will be a Central Bank (BCRA) with very few reserves and with a flow of foreign currency affected by the drought. “In addition, a government that to enter the agricultural dollar asks you for a price adjustment below inflation, with which you lose what you might earn from the exchange rate due to inflation, and by an agricultural sector that when it sees that the gap increases has less incentive to liquidate”, analysts told their clients.
“To buy dollars you need pesos,” they estimated. The fiscal deficit is rising in real or product terms, they believe, not because of expansion of spending but because of the drop in collection. As? There is no harvest, you do not export; you do not charge withholdings, you step on imports and pesos do not enter due to tariffs; when stepping on purchases abroad, economic activity falls. It is not consumed; earnings and tax fall on the check. To this cycle, they add the noise with the debt maturities in pesos and the increase in nominality, which encourages the exchange rate gap, inflation and then increases the social and political noise. “This is an economy without dollars and without trust, difficult to manage in the short term.”
“The key will be how the next six months go by. It will be important to get dollars and generate some confidence so that the demand for money does not continue to fall, ”they warned. The IMF appears as the lifeline on the horizon, despite Cristina Kirchner’s rhetorical questions. The question, they indicated, is what conditions are going to give you dollars. If Argentina can jump that abyss (and if it rains) it is likely that the “last three minutes” will occupy a little more time in the future.
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