The next few days will be crucial for the government. All eyes are on the measures that Sergio Massa will take another attempt at stabilize the economy. The Minister of Economy arrived this Sunday from Panama and is already preparing to lead the meetings with his trusted team. In these exchanges and in the midst of a strong secrecy, he will finish defining announcements to calm the climate “anxiety” they observe on the street and at the market.
The changes aim to contain the two most difficult variables to “tame” on the fifth floor of the Palacio de Hacienda: inflation and lack of dollars. Massa had already proposed it to him in August of last year, but prices could rise by 7% per month in March, the same level at which he took office. And already the Central Bank lost $1.8 billion on the year, more than 60% of what the soybean dollar made. “The team is solid,” they say.
The government has taken sides “carrots” and “sticks” with dubious results. In one case, with price agreements and access to dollars for imports, imposing sanctions and fines. In another, offer drought credits and negotiate with IMF margin to multiply exchange rates, while AFIP and Customs tighten controls on agriculture and foreign trade. “A dollar of 3 soybeans is not on the table,” they slip in Economy.
Lack of rain in the hottest climate in 70 years and unliquidated soybean inventories are complicating the oil industry. In the industry they ensure it bean imports from Brazil and Paraguay are growing and idle capacity would reach 75% in March. “The soybean industry will not be a lifeline this year, we have all flat tires,” said an exporter, while the oil industry says this spare capacity “isn’t there yet”.
On the inflation side, the 9.8% increase in food prices tripled the ceilings agreed with entrepreneurs and questioned the effectiveness of the Fair Prices program on 50,000 products. Despite the addition of a ‘robot’ computer in February, the Commerce Secretary believes prices have risen in nearby supermarkets and what goes on in the gondolas is worrying for its impact on poverty. “We respect,” they said in a large network.
Without too many tools, Massa balances between the IMF, with which he has his own agree to a US$2,000 million relief in the drought reserve target, and internal pressure to revise the agreement. Cristina Kirchner raised it 10 days ago in an act and the head of the Budget Commission for Deputies, Carlos Heller, proposed this Sunday to reduce the surcharge paid by Argentina to the IMF, which implies “renegotiate the tax guideline”.
Among analysts, an auspicious scenario with a drought that threatens to cut US$20,000 million from exports and cause the biggest recession in a decade. “One must reconfigure the agreement with the Fund, moving from net payments to net disbursements by 2023. Either that, or a recession with accelerating inflation in dangerous places,” he said clarion Emmanuel Álvarez Agis, former Deputy Minister of Economy and head of PxQ.
The proposal would be that the Fund shelling out more money this year than you need to get paid. According to the scheduled schedule, Argentina will receive $16 billion and will have to pay $20.5 billion in 2023. A hole that is difficult to fill even with the easing of the reserve fund. First, Massa will have to deal with reserves bordering on i payment of US$ 2,680 million due between this Monday and Tuesday, or kick it pending the next round of the Fund.
Due to the drought, harvesting is another worrying side. Not only will there be fewer export duties, but there will also be fewer profits and other taxes collected. Will they raise taxes or cut spending further to contain the deficit? According to the Argentine Institute of Fiscal Analysis (IARAF), the Treasury it would lose 0.5% of GDP, about 4,000 million dollars. For this reason, the institution proposes easing the IMF target of a 1.9% primary deficit in 2023.
Source: Clarin
