Journalist: After the strong deterioration that the financial variables had had in January, with the announcement of the agreement with the IMF, the bonds rose up to 10% and the parallel dollars fell up to $10, what were the risks of not paying the due date this Friday? and further stress relations with the body?
Daniel Marx: The risk was that the exchange between both parties would become too emotional and calm would be lost to seek a rational solution. It was going to be difficult to come back from a very emotional situation when the deadlines required to settle the differences were very limited. If the IMF and many of its shareholders began to show strength, a solution would become more complex.
Q.: Regarding the fiscal aspect, which was where there were the greatest differences, do you consider the path proposed by the agreement to be reasonable?
D.M.: The objectives for 2024, of a fiscal deficit equivalent to 0.9% of GDP and zero emissions, are feasible if the economy stabilizes and begins to grow. But the important challenge is to see how this year a deficit of 2.5% and an issue of 1% is reached, for what it means and to set a course for the future.
Q.: The Government assures that there will be no spending cuts in real terms and that the reduction of the deficit will come mainly from the side of economic reactivation and collection. Do you see it possible to meet the goals without lowering, for example, energy subsidies?
D.M.: I think the direction of energy subsidies will be elucidated in the coming days. I wouldn’t be surprised if they go down or stabilize in real terms. It remains to see the letters of intent, which generally do not express subsidies in terms of percentage of GDP but in nominal absolute values.
Q.: What are the main details that are missing to draw further conclusions regarding the agreement?
D.M: The expression of the fiscal goals will be key, perhaps spending, monetary expansion, the path of reserves. It is important to see what will be the combination to apply to reach the US$5 billion that are intended, a priori, to add to the coffers of the monetary authority in 2022, beyond the commercial result. In 2021 there was a notable trade surplus; Even if prices fall, there might be a new positive balance this year. The issue is the capital account.
Q.: This month the Government slightly adjusted the rate of advance of the official exchange rate and the interest rate, but the agreement with the IMF proposes that the rates be positive and an exchange rate in accordance with the reserve accumulation objective. Does this imply that there will be greater corrections in these two variables?
D.M: Regarding interest rates, I think so, it is clear that higher increases are going to be implemented. As for the dollar, it remains to be seen if the agreement involves adapting the devaluation rate to the proposed reserve objective or how it is going to be done to encourage some other currency entry in the official foreign exchange market.
Q.: What might be those other sources of foreign exchange income?
D.M: On the one hand, the Central Bank might start buying foreign currency originating from receptive tourism. Dollars might also come from services produced in the country or from foreign investments.
Q.: Would the return of the nearly US$4.5 billion that were paid to the IMF in these years help?
D.M: Sometimes in the letter of intent this is not counted as reserve accumulation. But this is one of the issues that still needs to be known.
Q.: Regarding inflation, a sharp reduction in emissions is planned, but there might be a greater rise in the dollar, correction of tariffs and more restrictions on imports, which might push prices up. How do you see the impact of this agreement on this variable?
D.M: I believe that the agreement seeks to reduce the inflation rate in the medium and long term, and to try to stabilize the relationship between the peso and the dollar as much as possible, with reductions in the gap and less depreciation of the domestic currency throughout the weather. But the correction of certain imbalances in relative prices has historically meant an acceleration of inflation. There are those who have already marked prices in anticipation of future cost increases, but there are those who have not. In the short term there are upward pressures.
Q.: Would you rate the agreement as positive?
D.M: I think it’s better than several of the alternatives that were being used, but you have to know a little more.
