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https://www.clarin.com/economia/alianza-cristina-massa-surge-ancla-principal-dolar_0_McEyvKC2oJ.html

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Every day that it doesn’t rain, the forecasts on the production and export losses that the drought is generating worsen.

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A consultant’s report abeceb is alarming: “it is estimated that Argentina would lose between $16 billion and $21 billion estimated harvest this season and would experience a decline of between $9.2 billion and $13.2 billion in agribusiness exports.”

According to specialists, this decrease in foreign exchange income cannot be compensated for by other exports.

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For example, it is estimated that increased exports from the automotive and energy sectors could bring in around US$2,000 million.

It was because of the drought that the International Monetary Fund relaxed its goal of building foreign exchange reserves by $3,000 million for March and that “temporary exchange rate measures enabled” (3 soy dollar?) And it is for the same reason that La Cámpora and Axel Kicillof’s former Minister of Economy, Emmanuel Álvarez Agis, raised fiscal issues.

La Cámpora’s statement defended the pension moratorium questioned by the IMF and Alvarez Agis and focused on the fact that if the Fund reduces its reserve accumulation target, it should also lower the fiscal surplus (by 1 .9% of GDP for this year) because it is clear that there will be less collection.

one proposes spend more (the moratorium alone would cost 0.4% of GDP) while Agis believes that the government could relaunch failure to meet the tax target.

Both sides have put pressure on the tandem proposal Sergio Massa-Gabriel Rubinstein follow the path of deficit reduction as a possible way to keep the foreign exchange market within a certain calm.

There are three key cards in the economy that are turned upside down: the official dollar has fallen by 15% in the last year alone, The drought implies a very strong and unexpected blow and the Central Bank’s reserves are decreasing and the “net” ones are around 2,000 million dollars, a low figure even with the tightening of the exchange rate in recent months.

The government could obtain loans from international organizations, but experts say they could be used to pay for the $2 billion in additional funding to the IMF. They would be currencies that would enter through an account, but exit from the same account.

So the devaluation It is inevitable?

The numbers argue for an exchange rate hike, but politics in an election year is a very powerful argument.

In a sense, one could say that the deal they keep Cristina Kirchner AND Sergio Massa It constitutes the main exchange containment dam.

The vice president criticizes the fiscal adjustment and calls for an agreement to overcome the peso-dollar bimonetarism (there was no time since 2003?) but, like his main political arm, La Cámpora, they underline the management of Sergio Massa. To the point that they question the agreement with the IMF, but do not touch the Minister of Economy. Martín Guzmán, a former minister of his government, would have been destroyed.

The exchange dilemma of the Cristina-Massa axis is concrete: if the official dollar rose faster, they would send a signal to encourage foreign exchange settlement for exporters, but they would also add pressure on food prices in times of skyrocketing inflation.

The vice president and the minister of the economy calculate the damage that a further increase in the cost of living would affect the possibilities of the Frente de Todos elections at the end of the year and the resignation of Martín Guzmán and its consequences on the dollar and on inflation were fresh.

If neither wants to devalue and there are no additional dollars, the way forward would be to think more about inventories to postpone payment of imports and then the victim would end up being the level of activity.

Just as there is a “calculation” on dollar revenue due to drought, there is another on the possible reduction of imports which maintain a high correlation with economic activity.

A lower level of imports goes hand in hand with a reduction in activity, economists place the decline in GDP between 1% and 3%.

The sheds of tax warehouses They are crammed full of imported products awaiting their shipment to market and government authorization so they can be paid for in official dollars.

Cristina Kirchner praised Sergio Massa for stopping the “import festival” from enforcing give-and-take that involves companies agreeing to moderate price hikes in exchange for a promise to get dollars at the official wholesale price ($202) to pay the imports.

The prize is important for those who need to import and for the government in its attempt to moderate somewhat the price increase that continues to hit pockets hard.

Fiscal adjustment or non-compliance with the IMF? To further delay the dollar so that it acts as an anchor against inflation or to bring it forward by favoring the liquidation of exporters’ dollars?

The Cristina-Massa alliance adds pressure, but for now continues to act as a containment levee to bring some stability to the exchange rate.

Source: Clarin

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