“Tuesday we didn’t know if we were going to make it to Friday, and here we are” said Andrés “Cuervo” Larroque, considering the exchange race that unleashed two weeks ago and which continues to decline.
While the Minister of Development of the Community of Buenos Aires and the boss of Cámpora highlighted the role of the Minister of Economy in the crisis, the team of Sergio Massa emergency aid negotiated to be able to effectively overcome the second strong exchange rate rush of this phase of Kirchnerism: the first after the resignation of Martín Guzmán.
Looking for a emergency loan to strengthen the reserves of the Central Bank (the net would be less than 1,000 million dollars) the first window of the list is that of the International Monetary Fund.
But the surprising fact was this the deputy minister and the head of the councilors for the economy, Gabriel Rubinstein and Leonardo Madcur They were going to travel to Washington, but didn’t. They let it be known that everything continues via zoom.
The government wants the IMF to go ahead, at least $5 billion of the nearly $11,000 million it expects to disburse this year. The agency doubts this operation based on manifest fear.
The Fund’s technicians believe that the advance credit would be used to finance the exchange rate lag maintained by the government. Being able to sell dollars cheaply is a big temptation for any official.
In other words, that the IMF would give $5,000 million for the government to leave selling at the official dollar rate of $222 when the market looks at the dollar at $455 in spot with liquidation.
The alleged authorization of the Fund to operate with dollarized bonds opens the door for the government to make a risky move, even if the minister seems willing to take any risk in his attempt to achieve some stabilisation.
Indeed, raise the benchmark rate by 10 points taking it up a leap to 91% per year (7.6% per month and 141% effective per year) shows that all tools are being used to their fullest.
With inflation at 7.7% per month, the indexing process is galloping and understandable: no one wants to lose in that race and untangling that skein will be a huge job for the next administration and for the entire population.
As the official lopsided scheme is proposed, the short term is characterized by a shortage of dollars and an excess of pesos.
Economists therefore agree on three points: indexation of the official exchange rate; less official dollars to pay for imports and a picture of uncertainty due to prices based on a dollar higher than the 222 official dollars.
Who has to set prices or values for a contract, which dollar will reference $222, $400, $467?
The cost of uncertainty is steep and the government has even lost the will to defend the official dollar as a valid benchmark.
In the race to index, the unions accelerate the demand for quarterly updates and fixed sums to compensate the sharp decline in purchasing power wages, but inflation above 100% per annum is relentless.
The title of the latest report from the consulting firm Ecolatina is “Exchange stress is transferred to prices” calculating the 6,000-strong increase in durable goods in the last week of April, the month in which the blue dollar was up 19.7% between ends.
Inflation in these categories has averaged 6% and the analysis shows that they are there “defensive” raises (10 to 25%) due to uncertainty about future replacement cost in an unstable environment.
The government’s match is on the table: Minister Massa is trying to be the candidate of the Frente de Todos and, for this, he must create the conditions for delude yourself with a certain stability.
For this you will need dollars. The dollar-chasing minister would be the headline for several weeks’ start clenched teeth.
Source: Clarin
