Economy Minister Martín Guzmán traveled to Washington to participate in the International Monetary Fund’s spring meeting.
Economist Marina Dal Poggetto said that in recent weeks she has been receiving three main questions from her clients depending on the sector in question.
One of them, corresponding to industrial entrepreneursis: the Central Bank he would sell me dollars to pay for imports What do I plan until the end of the year?
This is complemented by another more sensitive issue reaching the private sector and government officials who, despite statements by Minister Martín Guzmán, they are skeptical about the uninterrupted supply of gas in the winter.
The second question came from bankssensitive clients for any economist, and came from the salient behavior of recent months that the rate of increase of public debt in pesos.
The question can be summarized this way: whether the debt on the market reaches $ 4 trillion (there are also in banks and public bodies, which is approximately another $ 4.5 million, and the $ 5.2 trillion of the Central Bank in Letters of Liquidity, Leliq), and updated mainly by inflation, Isn’t a huge debt “ball” that is forming that will end up being insolvent and, therefore, unpaid?
At this point, there seems to be little room left for fear, but the third question, which the economist associates with the journalism side, is whether Argentina is inevitable towards another hyperinflation.
Doubts among industrialists as to whether the Central Bank will sell them the dollars they have to pay for imports are expected by the end of the year.
The three questions, amid the important political crisis facing the ruling party and the tension added by the dispute between the vice president and the Supreme Court of Justice over the composition of the Magistrates Council, occur in the midst of a particular situation. characterized by some particular financial stabilization that can be synthesized into The dollars are entering Argentina.
Part of the foreign currency earnings is based on the fact that Russia’s invasion of Ukraine translates into another increase in prices of raw materials and especially in grains. Ang toyo returned to US $ 620 a tonne, and wheat and corn are at a high level.
Thus, in April the liquidations of agricultural exports they reached US $ 1,504 million, which exceeds entries in 2021, but the data leaves little room for celebration.
Last year, in the same month, the Central Bank bought US $ 882 million and now it only gets about US $ 80 million, 10%. Does everyone come in, come out?
Finding dollars at the official price continues to be the most important asset for traders who need to import, even if the Central Bank the devaluation rate rose to almost 4%.
And this year, in addition, the specter of demand for dollars to import focused on energy. It is February that Central will have to disburse foreign currency to buy imported gas.
There is one of the answers to the first question which, in turn, is related to the second by raising the interest rate ordered by the Central Bank to comply with what has been agreed with the International Monetary Fund.
After the bad news of 6.7% increase in cost of living In March, the Central Bank raised the monetary policy rate by 2.5 points to bring it to 47% per year, which is 3.9% per month, making it clear that their intention was to run behind inflation.
The central decreases by about 4% and aligns the rate at about 4% per month, and outlines a scheme of less than 5%, which is inflation expectations for this month but drives away the specter of a hyper.
Miguel Pesce, president of the Central Bank, was relieved of the IMF dollars that came in.
With dollars coming in from the IMF and from the countryside, and the exchange rate trap, Miguel Pesce seeks to lower expectations of rising instability. Are you without ambition? Likely, but the scale of the political-judicial crisis is believable leaving no room for danger.
Besides, each rate increase multiplies the amount of interest on a public debt in pesos which is fast growing and has maturity concentrated between now and April 2023.
On the financial side of the peso, moreover, the “carrytrade” characterized by the passage of dollars into peso placements, both to take advantage of the letters that fit the CER (cost of living index) in the face of rising inflation, such as the 3.8% per month that fixed term deposits offer to people against a blue dollar that remains below $ 200.
The agreement with the IMF acts as short -term stabilizer of the financial situation, although there may always be surprises such as new bonds to alleviate the situation of some sectors in the face of rising inflation.
Economist Nadin Argañaraz calculates that the new bonds will have a fiscal cost equal to at least 0.25% of GDP (between $ 176,000 million and $ 235,000 million), half of the financial effort provided to the IMF for 2022“.
The weakness of the moderate stabilization of recent weeks is overwhelming and political tension will come in contention over the strengthening of Central Bank reserves.
The fourth question is who will prevail?
Source: Clarin