“Macroeconomic fundamentals, basically fiscal, monetary and exchange rate policies, would be consistent with monthly inflation rates of 4% or less,” Gabriel Rubinstein, deputy economy minister, said in a statement.
Well. But immediately the official – apart from any doubts about his professional aptitudes – collapsed the reasons for the 6% in January in spite of everything should be different. Many of these reasons – regulated prices, for example – are official responsibility. And the increases in the tourism item seem to break the agreement reached with the sector in exchange for the various Prior Trips that the entire population finances, even though they cannot take holidays. And with garden produce – tomatoes or potatoes, to name a few – it usually happens in all countries but at a more civilized level.
and February It doesn’t even seem to fit the basics.. Wholesale inflation in January reached 6.5%, higher than the CPI, with a very strong increase of 10.2% in agricultural products. This number puts heavy pressure on prices this month. Not necessarily in the same percentage, but just below 6%.
In this sense, there is one problem that officials omit: to put an end to structural inflation it is necessary to limit the fiscal deficit which is financed with emissions. And this implies the adoption of inflationary measures. No puns.
Speaking of fiscal policies, it would be appropriate to recall the effect on the harvest of the “Soybean Dollar I and II”. Without the additional income from various withholding taxes and advances2022 would have had another fiscal result.
As for the foreign exchange policy, no other measures are known than the super import trap, the SIRA (doesn’t that sound like a name of some bot like ChatGTP?) or the claim to know in advance the import needs of the local industry . On the contrary the loss of dollars and the fall in reserves accelerate. And maintaining some lag in the dollar price doesn’t appear to contribute to market equilibrium, as pressure escapes across the gap to the CCL or MEP.
For some reason country risk has crossed the 2,000 mark and dollar bonds can’t find a bottom. Despite the soulless debt buyback interventions.
Let’s talk about the foreign exchange market a related theme. Although it seems long-term, the reserve target agreed with the IMF should be reached by 31 March: 7.8 billion dollars. Reality would seem to indicate that it would be very difficult to get them and that a “waiver” should be requested from the Fund. Drought would be an incontrovertible foundation.
but the week had more than inflation. Economy placed just over $400,000 million to cover a maturity and got, with a slight rate hike, another $107,000 million for the piggy bank. More than 60% of investors have opted for inflation-adjusted bonds (remember that famous “the market is always ahead” apothegm). The downside is that the deal expires after four months. The date of PASO, August 13, seems to be the barrier that no one wants to cross.
Certainly the Treasury will have no problem meeting deadlines rest of February and March, as it shows the government is willing to keep debt in pesos even at the cost of higher inflation. Currently 65% of peso liabilities are in the hands of public bodies, including Banco Nación, and it would not be too difficult to increase this percentage by 15 or 20 points and delegate the rest to medium and long-term investment entities, such as insurance.
Finally the bill “debit in pesos” it will end with bonds and securities in public hands. In this case, sustainability would not come from debt, but from investors, ANSES, for example. And of retirees and retirees, of course. In the country of the July 9 Loan (this is for historians and/or memoirists) and the Bonex Plan, among others, nothing is impossible.
Quite a different situation is the growing volume of the Central Bank’s remunerated liabilities, consisting of Leliq and Pass. They add up to 10.2 trillion and equal 2.2 times the entire monetary base. It is a gigantic mountain of money that the banks have deposited in the BCRA to prevent it from going into price. Solving this is much more complicated and challenging than any reality. But don’t despair In the village of the Bodenes there is a lot of imagination to defy reality.
Finish an epistemological touch. Economists love “ceteris paribus”, which means “with the other constant variables” and statements such as those of the deputy minister – understandable in the current context – are the ones that demonstrate, almost without the need for evidence to the contrary, that the economy is not a science, but a social discipline with some kind of formal development. In other words: Reality aside, my theory – or model, it doesn’t matter – is true.
Source: Clarin
